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<p style="font: 10pt times new roman, times, serif; margin: 0px;"><b>Note 1—Basis of Presentation</b></p><p style="text-align: justify; font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">The accompanying unaudited consolidated financial statements of Straight Path Communications Inc. and its subsidiaries (“Straight Path”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended October 31, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2017. The balance sheet at July 31, 2016 has been derived from Straight Path’s audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and footnotes thereto included in Straight Path’s Annual Report on Form 10-K for the fiscal year ended July 31, 2016, as filed with the U.S. Securities and Exchange Commission (the “SEC”).</p><p style="text-align: justify; font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">Straight Path Communications Inc., a Delaware corporation, was incorporated in April 2013. Straight Path owns 100% of Straight Path Spectrum, Inc. (“Straight Path Spectrum”) and Straight Path Ventures, LLC (“Straight Path Ventures”), and 84.5% of Straight Path IP Group, Inc. (“Straight Path IP Group”). In these financial statements, the terms “the Company,” “Straight Path,” “we,” “us,” and “our” refer to Straight Path, Straight Path Spectrum, Straight Path Ventures, Straight Path IP Group, and their respective subsidiaries on a consolidated basis. All material intercompany balances and transactions have been eliminated in consolidation.</p><p style="text-align: justify; font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">The Company was formerly a subsidiary of IDT Corporation (“IDT”). On July 31, 2013, the Company was spun-off by IDT to its stockholders and became an independent public company (the “Spin-Off”). The Company authorized the issuance of two classes of its common stock, Class A (“Class A common stock”) and Class B (“Class B common stock”).</p><p style="text-align: justify; font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">The Company’s fiscal year ends on July 31 of each calendar year. Each reference below to a fiscal year refers to the fiscal year ending in the calendar year indicated (e.g., Fiscal 2017 refers to the fiscal year ending July 31, 2017).</p>
<p style="font: 10pt times new roman, times, serif; margin: 0px; background-color: white;"><font style="background-color: white;"><b>Note 2—Summary of Significant Accounting Policies and Recent Pronouncements</b></font></p><p style="text-align: justify; font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">The Company’s significant accounting policies are described in Note 1 of the Notes to Combined and Consolidated Financial Statements in the Annual Report on Form 10-K for the year <font style="background-color: white;">ended July 31, 2016.</font></p><p style="font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In May 2014, ASU No. 2014-09, “<i>Revenue from Contracts with Customers</i>” (“ASU 2014-09”) was issued. The comprehensive new standard will supersede existing revenue recognition guidance and require revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. The guidance will also require that certain contract costs incurred to obtain or fulfill a contract, such as sales commissions, be capitalized as an asset and amortized as revenue is recognized. Adoption of the new rules could affect the timing of both revenue recognition and the incurrence of contract costs for certain transactions. The guidance permits two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years and one requiring prospective application of the new standard with disclosure of results under old standards.</p><p style="font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">ASU 2014-09 was scheduled to be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. In August 2015, the FASB issued ASU 2015-14, “R<i>evenue from Contracts with Customers (Topic 606): Deferral of Effective Date</i>” (“ASU 2015-14”) which defers the effective date of ASU 2014-09 by one year. ASU 2014-09 is now effective for annual reporting periods after December 15, 2017 including interim periods within that reporting period.  Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company will adopt the new standard effective August 1, 2018. The Company is currently evaluating the impact of adoption and the implementation approach to be used.</p><p style="font: 10pt times new roman, times, serif; margin: 0px;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In June 2014, ASU 2014-15, “<i>Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern</i>” (“ASU 2014-15”) was issued.  Before the issuance of ASU 2014-15, there was no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. This guidance is expected to reduce the diversity in the timing and content of footnote disclosures. ASU 2014-15 requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards as specified in the guidance. ASU 2014-15 becomes effective for the annual period ending after December 15, 2016 (Fiscal 2018 for the Company) and for annual and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the effects of adopting ASU 2014-15 on its consolidated financial statements but the adoption is not expected to have a significant impact on the Company’s consolidated financial statements.</p><p style="font: 10pt times new roman, times, serif; margin: 0px;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">Effective August 1, 2016, the Company adopted ASU 2015-01, “<i>Income Statement – Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items</i>” (“ASU 2015-01”). ASU 2015-01 eliminates from GAAP the concept of extraordinary items. ASU 2015-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. The adoption of ASU 2015-01 did not have a significant impact on the Company’s consolidated financial statements.</p><p style="text-align: justify; font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">Effective August 1, 2016, the Company adopted ASU 2015-02, “<i>Consolidation (Topic 810): Amendments to the Consolidation Analysis</i>” (“ASU 2015-02”). The amendments in ASU 2015-02 change the analysis that reporting entity must perform to determine whether it should consolidate certain types of legal entities. The amendments in ASU 2015-02 are effective for fiscal years beginning after December 15, 2015. A reporting entity may apply the amendments in ASU 2015-02 using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. A reporting entity also may apply the amendments retrospectively. The adoption of ASU 2015-02 did not have a material impact on the Company’s consolidated financial statements.</p><p style="font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">Effective August 1, 2016, the Company adopted ASU 2015-03, “<i>Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs</i>” (“ASU 2015-03”) as part of its initiative to reduce complexity in accounting standards (the Simplification Initiative). The Board received feedback that having different balance sheet presentation requirements for debt issuance costs and debt discount and premium creates unnecessary complexity. Recognizing debt issuance costs as a
deferred charge (that is, an asset) also is different from the guidance in International Financial Reporting Standards, which requires that transaction costs be deducted from the carrying value of the financial liability and not recorded as separate assets. Additionally, the requirement to recognize debt issuance costs as deferred charges conflicts with the guidance in FASB Concepts Statement No. 6, “Elements of Financial Statements,” which states that debt issuance costs are similar to debt discounts and in effect reduce the proceeds of borrowing, thereby increasing the effective interest rate. FASB Concepts Statement No. 6 further states that debt issuance costs cannot be an asset because they provide no future economic benefit. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. The amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The adoption of ASU 2015-03 did not have a material impact on the Company’s consolidated financial statements.</p><p style="font: 10pt times new roman, times, serif; margin: 0px;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In January 2016, the FASB issued ASU 2016-01, “<i>Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities</i>” (“ASU 2016-01”). The amendments require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). The amendments also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the amendments eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities and the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities. This guidance is effective for fiscal years beginning after December 15, 2017 (Fiscal 2019 for the Company), including interim periods within those fiscal years. The Company will evaluate the effects of adopting ASU 2016-01 if and when it is deemed to be applicable.</p><p style="font: 10pt times new roman, times, serif; margin: 0px;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In February 2016, the FASB issued ASU 2016-02, “<i>Leases (Topic 842)</i>” (“ASU 2016-02”) which supersedes existing guidance on accounting for leases in “<i>Leases (Topic 840)</i>.”  The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet.  A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term.  The new guidance is effective for annual reporting periods beginning after December 15, 2018 (Fiscal 2020 for the Company) and interim periods within those fiscal years. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the effects of adopting ASU 2016-02 on its consolidated financial statements.</p><p style="text-align: justify; font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In March 2016, the FASB issued ASU 2016-09, “<i>Improvements to Employee Share-Based Payment Accounting</i>” (“ASU 2016-09”). ASU 2016-09 affects entities that issue share-based payment awards to their employees. ASU 2016-09 is designed to simplify several aspects of accounting for share-based payment award transactions which include – the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows and forfeiture rate calculations. This guidance is effective for annual periods beginning after December 15, 2016 (Fiscal 2018 for the Company), including interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2016-09 on its consolidated financial statements.</p><p style="font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In April 2016, the FASB issued ASU 2016-10, “<i>Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing</i>” (“ASU 2016-10”) related to identifying performance obligations and licensing. ASU 2016-10 is meant to clarify the guidance in FASB ASU 2014-09, “<i>Revenue from Contracts with Customers</i>.” Specifically, ASU 2016-10 addresses an entity’s identification of its performance obligations in a contract, as well as an entity’s evaluation of the nature of its promise to grant a license of intellectual property and whether or not that revenue is recognized over time or at a point in time. The pronouncement has the same effective date as the new revenue standard, which is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017 (Fiscal 2019 for the Company). The Company is currently evaluating the impact of ASU 2016-10 on its consolidated financial statements.</p><p style="text-align: justify; font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In May 2016, the FASB issued ASU 2016-12, “<i>Revenue from Contracts with Customers (Topic 606): Narrow Scope Improvements and Practical Expedients</i>” (“ASU 2016-12”). The amendments in ASU 2016-12 affect the guidance in ASU 2014-09 by clarifying certain specific aspects of
the guidance, including assessment of collectability, treatment of sales taxes and contract modifications, and providing certain technical corrections. ASU 2016-12 will have the same effective date and transition requirements as the ASU 2014-09. The Company is currently evaluating the impact of ASU 2016-12 on its consolidated financial statements.</p><p style="font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In August 2016, the FASB issued ASU 2016-15, “<i>Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments</i>” (“ASU 2016-15”). ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017 (Fiscal 2019 for the Company). The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements.</p><p style="font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In November 2016, the FASB issued ASU 2016-18, “<i>Statement of Cash Flows (Topic 230): Restricted Cash</i>” (“ASU 2016-18”). ASU 2016-18 require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017 (Fiscal 2019 for the Company). Early adoption is permitted. The Company will evaluate the effects of adopting ASU 2016-18 if and when it is deemed to be applicable.</p><p style="font: 10pt times new roman, times, serif; margin: 0px;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">The Company does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying consolidated financial statements.</p>
<div><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;"><b>Note 3— Fair Value Measures</b></p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;"><b> </b></p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;">At October 31, 2016 and July 31, 2016, the Company did not have any assets or liabilities measured at fair value on a recurring basis.</p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; text-indent: 0.5in; font-size-adjust: none; font-stretch: normal;"> </p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;">At October 31, 2016 and July 31, 2016, the carrying amounts of the financial instruments included in cash and cash equivalents, trade accounts receivable, prepaid expenses and other current assets, trade accounts payable, and accrued expenses approximated fair value due to their short-term nature.</p></div>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"><b>Note 4—Equity</b></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify; text-indent: 0.5in;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"><i>Issuances of Class B Common Stock: </i></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"> </p>
<p style="font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify; color: #231f20;">Class B common stock activity for the three months ended October 31, 2016 was as follows:</p>
<p style="font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify; text-indent: 0.5in; color: #231f20;"></p>
<p style="font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify; text-indent: 0.5in; color: #231f20;"> </p>
<table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0">
<tr style="vertical-align: top;">
<td style="width: 48px;"> </td>
<td style="width: 24px; line-height: 14.2666664123535px; font-size: 10pt;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">1.</font></td>
<td style="line-height: 14.2666664123535px; font-size: 10pt;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt; color: #231f20;">The Company issued 120,000 shares</font> <font style="font-family: 'times new roman', times, serif; font-size: 10pt;">to Davidi Jonas, the Company’s Chief Executive Officer and President, as compensation.</font></td>
</tr>
</table>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"></p>
<table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0">
<tr style="vertical-align: top;">
<td style="width: 48px;"> </td>
<td style="width: 24px; line-height: 14.2666664123535px; font-size: 10pt;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">2.</font></td>
<td style="line-height: 14.2666664123535px; font-size: 10pt;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt; color: #231f20;">The Company issued 108,000 shares to officers and 56,000 shares to other employees as compensation.</font></td>
</tr>
</table>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"></p>
<table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0">
<tr style="vertical-align: top;">
<td style="width: 48px;"> </td>
<td style="width: 24px; line-height: 14.2666664123535px; font-size: 10pt;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">3.</font></td>
<td style="line-height: 14.2666664123535px; font-size: 10pt;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt; color: #231f20;">The Company issued 1,250 shares to a consultant as compensation.</font></td>
</tr>
</table>
<p style="font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify; text-indent: 0.5in; color: #231f20;"> </p>
<p style="font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;
text-align: justify; text-indent: 0.5in; color: #231f20;"></p>
<p style="font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify; color: #231f20;">See Note 5 - Stock-Based Compensation below for a further discussion.</p>
<p style="font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify; color: #231f20;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><i>Treasury Stock for Payroll Tax Withholding:</i></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify; text-indent: 0.5in;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">Treasury stock consists of shares of Class B common stock that were tendered by our employees to satisfy their tax withholding obligations in connection with the lapsing of restrictions on awards of restricted stock. The cost of the shares tendered was based on the trading day immediately prior to the vesting date and the proceeds utilized to pay the withholding taxes due upon such vesting event.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">At both October 31, 2016 and July 31, 2016, there were 39,693 shares of treasury stock totaling approximately $428,000.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"><b>Note 5—Stock-Based Compensation</b></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><i> </i></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><i>Stock Options: </i></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify; text-indent: 0.5in;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">Effective as of July 31, 2013, the Company adopted the 2013 Stock Option and Incentive Plan (as amended and restated to date, the “2013 Plan”). As of January 12, 2016, there are 1,503,532 shares of the Company’s Class B common stock reserved for the grant of awards under the 2013 Plan.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">No stock options were issued in the three months ended October 31, 2016.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">Stock-based compensation is included in selling, general and administrative and amounted to approximately $97,000 and $0 for the three months ended October 31, 2016 and 2015, respectively.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><i>Common Stock: </i></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">From time to time, the Company issues Class B common stock (and options to purchase Class B common stock – options covered just above) to non-employee directors, officers, other employees, and other service providers.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">Issuances of Class B common stock included in stock-based compensation for the three months ended October 31, 2016 are as
follows:</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify; text-indent: 0.5in;"> </p>
<p style="font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; color: #231f20;">In October 2016, the Company granted officers and employees 164,000 restricted shares of Class B common stock. The shares will vest over a two-to-four-year period. The aggregate fair value of the grant was approximately $4,392,000 which is being charged to expense on a straight-line basis over the vesting periods.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"><font style="color: #231f20;">In addition, in October 2016, the Company issued 120,000 restricted shares of Class B common stock</font> to Davidi Jonas as compensation as follows:</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.25in;"> </p>
<table style="font: 10pt/normal 'times new roman', times, serif; width: 100%; text-transform: none; text-indent: 0px; letter-spacing: normal; margin-top: 0px; margin-bottom: 0px; word-spacing: 0px; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0">
<tr style="vertical-align: top;">
<td style="width: 1in;"></td>
<td style="width: 0.5in;">1.</td>
<td>60,000 shares which vested immediately. <font style="color: #231f20;">The aggregate fair value of the grant was $1,866,000 which was charged to expense in the period issued.</font></td>
</tr>
</table>
<table style="font: 10pt/normal 'times new roman', times, serif; width: 100%; text-transform: none; text-indent: 0px; letter-spacing: normal; margin-top: 0px; margin-bottom: 0px; word-spacing: 0px; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0">
<tr style="vertical-align: top;">
<td style="width: 1in;"></td>
<td style="width: 0.5in;">2.</td>
<td><font style="color: #231f20;">60,000 shares which will vest over a three-year period. The aggregate fair value of the grant was $1,866,000 which is being charged to expense on a straight-line basis over the vesting period.</font></td>
</tr>
</table>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"><font style="color: #231f20;">The Company issued 1,250 restricted shares of Class B common stock</font> to a consultant as compensation. The shares vest over a 13-month period. <font style="color: #231f20;">The aggregate fair value of the grant is being charged to expense on a straight-line basis over the vesting period.</font></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">Stock-based compensation is included in selling, general and administrative expense and amounted to approximately $2,417,000 and $598,000 for the three months ended October 31, 2016 and 2015, respectively. As of October 31, 2016, there was approximately $8,030,000 of total unrecognized compensation cost related to issued but non-vested restricted shares. The Company expects to recognize the unrecognized compensation cost as follows: Fiscal 2017 - $2,581,000, Fiscal 2018 - $2,781,000, Fiscal 2019 - $1,990,000, fiscal 2020 - $615,000 and Fiscal 2021 - $63,000.</p>
<div><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;"><b>Note 6— (Loss) Earnings Per Share</b></p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; text-align: justify; text-indent: 0.5in; font-size-adjust: none; font-stretch: normal;"> </p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;">Basic (loss) earnings per share is computed by dividing net (loss) income attributable to all classes of common stockholders of the Company by the weighted average number of shares of all classes of common stock outstanding during the applicable period. Diluted earnings per share is computed in the same manner as basic earnings per share, except that the number of shares is increased to include restricted stock still subject to risk of forfeiture and to assume exercise of potentially dilutive stock options using the treasury stock method, unless the effect of such increase would be anti-dilutive.</p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;"> </p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;">The following table sets forth the number of Class B shares of common stock issuable upon the exercise of stock options which were excluded from the diluted per share calculation even though the exercise price was less than the average market price of the Class B common shares and non-vested restricted Class B common stock because the effect of including these potential shares was anti-dilutive due to the net loss incurred during that period:</p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; text-align: justify; text-indent: 0.5in; font-size-adjust: none; font-stretch: normal;"> </p><table style="font: 10pt/normal times new roman, times, serif; width: 100%; border-collapse: collapse; font-size-adjust: none; font-stretch: normal;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="6">Three Months Ended<br /> October 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2016</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2015</td><td style="padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="6">(in thousands)</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 76%; text-align: left;">Stock options</td><td style="width: 1%; font-weight: bold;"> </td><td style="width: 1%; text-align: left; font-weight: bold;"> </td><td style="width: 9%; text-align: right; font-weight: bold;">3</td><td style="width: 1%; text-align: left; font-weight: bold;"> </td><td style="width: 1%;"> </td><td style="width: 1%; text-align: left;"> </td><td style="width: 9%; text-align: right;">2</td><td style="width: 1%; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; padding-bottom: 1.5pt;">Non-vested restricted Class B common stock</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: left; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">118</td><td style="text-align: left; padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">239</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left; padding-bottom: 4pt;">Shares excluded from the calculation of diluted loss per share</td><td style="padding-bottom: 4pt; font-weight: bold;"> </td><td style="text-align: left; font-weight: bold; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; font-weight: bold; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">121</td><td style="text-align: left; padding-bottom: 4pt; font-weight: bold;"> </td><td style="padding-bottom: 4pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">241</td><td style="text-align: left; padding-bottom: 4pt;"> </td></tr></table><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;">  </p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;">The following table sets forth the number of stock options to purchase Class B common stock which were excluded from the diluted per share calculation because the exercise price was greater than the average market price of the Class B common shares:</p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;"> </p><table style="font: 10pt/normal times new roman, times, serif; width: 100%; border-collapse: collapse; font-size-adjust: none; font-stretch: normal;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="6">Three Months Ended<br /> October 31,</td><td style="padding-bottom: 1.5pt; font-weight:
bold;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2016</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2015</td><td style="padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="6">(in thousands)</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 76%; text-align: left; padding-bottom: 4pt;">Stock options</td><td style="width: 1%; padding-bottom: 4pt; font-weight: bold;"> </td><td style="width: 1%; text-align: left; font-weight: bold; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="width: 9%; text-align: right; font-weight: bold; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">88</td><td style="width: 1%; text-align: left; padding-bottom: 4pt; font-weight: bold;"> </td><td style="width: 1%; padding-bottom: 4pt;"> </td><td style="width: 1%; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="width: 9%; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">—</td><td style="width: 1%; text-align: left; padding-bottom: 4pt;"> </td></tr></table></div>
<p style="font: 10pt times new roman, times, serif; margin: 0px;"><b>Note 7—Related Party Transactions</b></p><p style="text-align: justify; font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In connection with the Spin-Off, the Company and IDT entered into a Separation and Distribution Agreement and a Tax Separation Agreement to complete the separation of the Company’s businesses from IDT, distribute the Company’s common stock to IDT’s stockholders, and set forth certain understandings related to the Spin-Off. These agreements govern the relationship between the Company and IDT after the distribution and also provide for the allocation of employee benefits, taxes, and other liabilities and obligations attributable to periods prior to the distribution. These agreements reflect terms between affiliated parties established without arms-length negotiation. The Company believes that the terms of these agreements equitably reflect the benefits and costs of the Company’s ongoing relationships with IDT.</p><p style="font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;">  </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">Pursuant to the Separation and Distribution Agreement, the Company has agreed to indemnify IDT and IDT has agreed to indemnify the Company for losses related to the failure of the other to pay, perform, or otherwise discharge any of the liabilities and obligations set forth in the agreement. The Separation and Distribution Agreement includes, among other things, that IDT is obligated to reimburse the Company for the payment of any liabilities of the Company arising or related to the period prior to the Spin-Off. No payments were received in Fiscal 2016 or through October 31, 2016.</p><p style="font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">At the Spin-Off, the Company entered into a Transition Services Agreement (“TSA”) with IDT, pursuant to which IDT has provided certain services, including, but not limited to information and technology, human resources, payroll, tax, accounts payable, purchasing, treasury, financial systems, investor relations, legal, corporate accounting, internal audit, and facilities for an agreed period following the Spin-Off. As of January 1, 2015, all of these services are provided by other vendors. The Company and IDT extended the TSA enabling the Company to seek input from IDT on an ad hoc basis if the Company deemed it necessary. No services were provided under the TSA in the three months ended October 31, 2016 and 2015.</p>
<div><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><b>Note 8—Concentration of Customers</b></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">Straight Path Spectrum’s revenues from transactions with a single customer that amounted to 10% or more of total Straight Path Spectrum revenues were as follows:</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td nowrap="nowrap" style="padding-bottom: 1.5pt;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="6">Three Months Ended<br />October 31,</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td nowrap="nowrap" style="padding-bottom: 1.5pt;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2016</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt;"> </td><td nowrap="nowrap" style="text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2015</td><td nowrap="nowrap" style="padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="6">(in thousands)</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 1160px;">Customer 1</td><td style="width: 16px; font-weight: bold;"> </td><td style="width: 16px; text-align: left; font-weight: bold;">$</td><td style="width: 157px; text-align: right; font-weight: bold;">48</td><td style="width: 16px; text-align: left; font-weight: bold;"> </td><td style="width: 16px;"> </td><td style="width: 15px; text-align: left;">$</td><td style="width: 156px; text-align: right;">41</td><td style="width: 15px; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td>Customer 2</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">41</td><td style="text-align: left; font-weight: bold;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">21</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td>Customer 3</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">21</td><td style="text-align: left; font-weight: bold;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">15</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td>Customer 4</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">16</td><td style="text-align: left; font-weight: bold;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">*</font></td><td style="text-align: left;"> </td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">* below 10%</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">The loss of any of these major customers may have a material adverse effect on the Company’s results of operations and cash flows.</p></div>
<p style="text-align: justify; font: 10pt times new roman, times, serif; margin: 0px;"><b>Note 9—Income Taxes</b></p><p style="text-align: justify; font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">The Company recorded no federal income tax expense for Fiscal 2017 and Fiscal 2016 because the estimated annual effective tax rate was zero. As of October 31, 2016, the Company continues to provide a valuation allowance against its net deferred tax assets since the Company believes it is more likely than not that its deferred tax assets will not be realized.</p><p style="font: 10pt times new roman, times, serif; margin: 0px;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">The provision for both the three months ended October 31, 2016 and 2015 represents state income taxes.</p><p style="font: 10pt times new roman, times, serif; margin: 0px;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">The federal return of Straight Path for the year ended July 31, 2015 is currently under audit by the Internal Revenue Service (“IRS”). As the audit has not been completed, the Company cannot determine if the IRS will assess additional tax, interest, and penalties.</p>
<div><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;"><b>Note 10—Business Segment Information</b></p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; text-align: justify; text-indent: 0.5in; font-size-adjust: none; font-stretch: normal;"> </p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;">Prior to November 1, 2015, the Company had two reportable business segments, Straight Path Spectrum, which holds, leases, and markets fixed wireless spectrum, and Straight Path IP Group, which holds intellectual property primarily related to communications over computer networks, and the licensing and other businesses related to this intellectual property. Effective November 1, 2015, a third segment, referred to as Straight Path Ventures, has been designated. Straight Path Ventures focuses on developing next generation wireless technology for 39 GHz at the Company’s Gigabit Mobility Lab in Plano, Texas.</p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; text-indent: 24pt; font-size-adjust: none; font-stretch: normal;"> </p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;">The Company’s reportable segments are distinguished by types of service, customers, and methods used to provide their services. The operating results of these business segments are regularly reviewed by the Company’s chief operating decision maker.</p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; text-align: justify; text-indent: 0.5in; font-size-adjust: none; font-stretch: normal;"> </p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;">The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The Company evaluates the performance of its business segments based primarily on income (loss) from operations. There are no significant asymmetrical allocations to segments.</p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; text-indent: 0.5in; font-size-adjust: none; font-stretch: normal;"> </p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;">The Company allocates all of the corporate general and administrative expenses of Straight Path to Straight Path IP Group, Straight Path Spectrum, and Straight Path Ventures based upon the relative time of management and other corporate resources expended relative to each business as well as the revenues earned by each division. For all periods through January 31, 2016, these were allocated 80% to Straight Path IP Group and 20% to Straight Path Spectrum. No expenses were allocated to Straight Path Ventures because they were deemed to be immaterial. Commencing on February 1, 2016, these expenses are being allocated 20% to Straight Path IP Group and 80% to Straight Path Spectrum, except for the following: expenses related to the Gigabit Mobility Lab are being allocated 100% to Straight Path Ventures; employment expenses of our Chief Technology Officer are being allocated 20% to Straight Path IP Group, 20% to Straight Path Spectrum, and 60% to Straight Path Ventures; and employment expenses related to another employee are being allocated 20% to Straight Path Spectrum and 80% to Straight Path Ventures. The changes in allocations were brought about by the expiration of the licensed patents held by Straight Path IP Group and the increase in activities of Straight Path Ventures. Straight Path IP Group has been recognizing revenues over the terms of the settlements and license agreements related to such patents entered into in prior periods. With the expiration of the key patents and the increase in activities of Straight Path Ventures, the Company determined to modify the allocation, and in light of the anticipated level of activity in Straight Path IP Group’s enforcement activities and Straight Path Ventures’ development activities, the Company determined that a general 20% allocation to Straight Path IP Group, subject to the specific allocations listed above, represented the appropriate split in light of all factors.</p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; text-align: justify; text-indent: 0.5in; font-size-adjust: none; font-stretch: normal;"> </p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;">Operating results for the business segments of the Company were as follows:</p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;"> </p><table style="font: 10pt/normal times new roman, times, serif; width: 100%; border-collapse: collapse; font-size-adjust: none; font-stretch: normal;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td nowrap="nowrap" style="text-align: center;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Straight</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Straight</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Straight</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap"> </td><td nowrap="nowrap" style="text-align: center;" colspan="2"> </td><td nowrap="nowrap"> </td></tr><tr style="vertical-align: bottom;"><td nowrap="nowrap" style="text-align: center;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Path</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Path</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Path</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap"> </td><td nowrap="nowrap" style="text-align: center;" colspan="2"> </td><td nowrap="nowrap"> </td></tr><tr style="vertical-align: bottom;"><td nowrap="nowrap" style="text-align: center; padding-bottom: 1.5pt;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight:
bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Spectrum</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">IP Group</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Ventures</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Total</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td> </td><td style="text-align: center;" colspan="2"> </td><td> </td><td> </td><td style="text-align: center;" colspan="2"> </td><td> </td><td> </td><td style="text-align: center;" colspan="2"> </td><td> </td><td> </td><td style="text-align: center;" colspan="2"> </td><td> </td></tr><tr style="vertical-align: bottom;"><td style="font-weight: bold;">Three Months Ended October 31, 2016</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 48%; font-weight: bold;">Revenues</td><td style="width: 1%; font-weight: bold;"> </td><td style="width: 1%; text-align: left; font-weight: bold;">$</td><td style="width: 10%; text-align: right; font-weight: bold;">159</td><td style="width: 1%; text-align: left; font-weight: bold;"> </td><td style="width: 1%; font-weight: bold;"> </td><td style="width: 1%; text-align: left; font-weight: bold;">$</td><td style="width: 10%; text-align: right; font-weight: bold;">—</td><td style="width: 1%; text-align: left; font-weight: bold;"> </td><td style="width: 1%; font-weight: bold;"> </td><td style="width: 1%; text-align: left; font-weight: bold;">$</td><td style="width: 10%; text-align: right; font-weight: bold;">—</td><td style="width: 1%; text-align: left; font-weight: bold;"> </td><td style="width: 1%; font-weight: bold;"> </td><td style="width: 1%; text-align: left; font-weight: bold;">$</td><td style="width: 10%; text-align: right; font-weight: bold;">159</td><td style="width: 1%; text-align: left; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; font-weight: bold;">Loss from operations</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(2,985</td><td style="text-align: left; font-weight: bold;">)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(875</td><td style="text-align: left; font-weight: bold;">)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(417</td><td style="text-align: left; font-weight: bold;">)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(4,277</td><td style="text-align: left; font-weight: bold;">)</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td>Three Months Ended October 31, 2015</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td>Revenues</td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">105</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">1,598</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">1,703</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left;">Loss from operations</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(334</td><td style="text-align: left;">)</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(357</td><td style="text-align: left;">)</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td
style="text-align: left;"> </td><td style="text-align: right;">(691</td><td style="text-align: left;">)</td></tr></table><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;"> </p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;">Total assets for the business segments of the Company were as follows:</p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; text-align: justify; text-indent: 0.5in; font-size-adjust: none; font-stretch: normal;"> </p><table style="font: 10pt/normal times new roman, times, serif; width: 100%; border-collapse: collapse; font-size-adjust: none; font-stretch: normal;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td nowrap="nowrap" style="text-align: center;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Straight</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Straight</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Straight</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap"> </td><td nowrap="nowrap" style="text-align: center;" colspan="2"> </td><td nowrap="nowrap"> </td></tr><tr style="vertical-align: bottom;"><td nowrap="nowrap" style="text-align: center;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Path</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Path</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Path</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap"> </td><td nowrap="nowrap" style="text-align: center;" colspan="2"> </td><td nowrap="nowrap"> </td></tr><tr style="vertical-align: bottom;"><td nowrap="nowrap" style="text-align: center; padding-bottom: 1.5pt;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Spectrum</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">IP Group</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Ventures</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Total</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="14">(in thousands)</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td style="text-align: left;">Total assets</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 48%; font-weight: bold;">October 31, 2016</td><td style="width: 1%; font-weight: bold;"> </td><td style="width: 1%; text-align: left; font-weight: bold;">$</td><td style="width: 10%; text-align: right; font-weight: bold;">8,583</td><td style="width: 1%; text-align: left; font-weight: bold;"> </td><td style="width: 1%; font-weight: bold;"> </td><td style="width: 1%; text-align: left; font-weight: bold;">$</td><td style="width: 10%; text-align: right; font-weight: bold;">2,029</td><td style="width: 1%; text-align: left; font-weight: bold;"> </td><td style="width: 1%; font-weight: bold;"> </td><td style="width: 1%; text-align: left; font-weight: bold;">$</td><td style="width: 10%; text-align: right; font-weight: bold;">1,100</td><td style="width: 1%; text-align: left; font-weight: bold;"> </td><td style="width: 1%; font-weight: bold;"> </td><td style="width: 1%; text-align: left; font-weight: bold;">$</td><td style="width: 10%; text-align: right; font-weight: bold;">11,712</td><td style="width: 1%; text-align: left; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td>July 31, 2016</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">10,174</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">2,223</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1,100</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">13,497</td><td style="text-align: left;"> </td></tr></table><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; text-indent: 0.5in; font-size-adjust: none; font-stretch: normal;"> </p><p style="font: 10pt/normal times new roman, times, serif; margin: 0px; font-size-adjust: none; font-stretch: normal;">None of the Company’s
revenues were generated outside of the United States for either Fiscal 2017 or Fiscal 2016. The Company did not have any assets outside the United States at October 31, 2016 or July 31, 2016.</p></div>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"><b>Note 11—Commitments and Contingencies</b></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify; text-indent: 0.5in;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"><i>Legal Proceedings</i></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"><i> </i></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"><i>Regulatory Enforcement</i></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">Allegations were made in an anonymous report released in November 2015 regarding the circumstances under which certain of our spectrum licenses were renewed by the Federal Communications Commission (the “FCC” or the “Commission”) in 2011 and 2012. The Company retained Morgan Lewis, a leading multi-national law firm, to conduct an independent investigation into these allegations. Morgan Lewis, with assistance from Kroll, completed its investigation and reported the results to the Company. We met with the FCC and shared the investigators’ conclusions, and the Company subsequently provided certain additional information requested by the FCC. On September 20, 2016, the Company received a letter of inquiry from the FCC requesting additional documents and information regarding the Registrant’s 39 GHz (38.6 – 40.0 GHz) and 28 GHz (27.5 – 28.35 GHz) spectrum licenses. Straight Path intends to continue to cooperate with the FCC in this matter, and hopes to bring it to a satisfactory resolution in a timely manner. We cannot, at this time, give any assurances as to how the FCC may proceed in this matter. If the FCC were to conclude that we have not complied with its rules, it may impose fines and/or additional reporting or operational requirements, condition or revoke our licenses, and/or take other action. If the FCC were to revoke a significant portion of our licenses or impose material conditions on the use of our licenses, it could have a material adverse effect on the value of our spectrum licenses and our ability to generate revenues from utilization of our spectrum assets.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"><i>Putative Class Action</i></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">On November 13, 2015, a putative shareholder class action was filed in the federal district court for the District of New Jersey against Straight Path Communications Inc., and Davidi Jonas and Jonathan Rand (the “individual defendants”). The case is captioned <i>Zacharia v. Straight Path Communications, Inc. et al.</i>, No. 2:15-cv-08051-JMV-MF, and is purportedly brought on behalf of all those who purchased or otherwise acquired the Company’s common stock between October 29, 2013, and November 5, 2015. The complaint alleges violations of (i) Section 10(b) of the Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 of the Exchange Act against the Company for materially false and misleading statements that were designed to influence the market relating to the Company’s finances
and business prospects; and (ii) Section 20(a) of the Exchange Act against the individual defendants for wrongful acts by controlling persons. The allegations center on the claim that the Company made materially false and misleading statements in its public filings and conference calls during the relevant class period concerning the Company’s spectrum licenses and the prospects for its spectrum business. The complaint seeks certification of a class, unspecified damages, fees, and costs. The case was reassigned to Judge John Michael Vasquez on March 3, 2016. On April 11, 2016, the court entered an order appointing Charles Frischer as lead plaintiff and approving lead plaintiff’s selection of Glancy Prongay & Murray LLP as lead counsel and Schnader Harrison Segal & Lewis LLP as liaison counsel. On June 17, 2016, lead plaintiff filed his amended class action complaint, which alleges the same claims described above. The defendants filed a joint motion to dismiss the complaint on August 17, 2016; the plaintiff opposed that motion on September 30, 2016, and the defendants filed their reply brief in further support of their motion to dismiss on October 31, 2016.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">On January 29, 2016, a shareholder derivative action captioned <i>Hofer v. Jonas et al.</i>, No. 2:16-cv-00541-JMV-MF, was filed in the federal district court for the District of New Jersey against Howard Jonas, Davidi Jonas, Jonathan Rand, and the Company’s current independent directors William F. Weld, K. Chris Todd, and Fred S. Zeidman. Although the Company is named as a nominal defendant, the Company’s bylaws generally require the Company to indemnify its current and former directors and officers who are named as defendants in these types of lawsuits. The allegations are substantially similar to those set forth in the <i>Zacharia</i> complaint discussed above. The complaint alleges that the defendants engaged in (i) breach of fiduciary duties owed to the Company by making misrepresentations and omissions about the Company and failing to correct the Company’s public statements; (ii) abuse of control of the Company; (iii) gross mismanagement of the Company; and (iv) unjust enrichment. The complaint seeks unspecified damages, fees, and costs, as well as injunctive relief. On April 26, 2016, the case was reassigned to Judge John Michael Vasquez. On June 9, 2016, the court entered a stipulation previously agreed to by the parties that, among other things, stays the case on terms specified therein.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">The Company is aware of press reports regarding the filing of additional complaints for putative class actions revolving around the same alleged facts and circumstances as the <i>Zacharia</i> and <i>Hofer</i> complaints, but the Company is not aware of any other complaint that was filed or served.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">The Company intends to vigorously defend against all of these claims.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"><i>Sipnet Appeal and Related IPRs</i></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">On April 11, 2013, Sipnet EU S.R.O.
(“Sipnet”), a Czech company, filed a petition for an <i>inter partes</i> review (“IPR”) at the Patent Trial and Appeal Board of the United States Patent and Trademark Office (the “PTAB”) for certain claims of U.S. Patent No. 6,108,704 (the “‘704 Patent”). On October 9, 2014, the PTAB held that claims 1-7 and 32-42 of the ‘704 Patent are unpatentable. Straight Path IP Group appealed. On November 25, 2015, the U.S. Court of Appeals for the Federal Circuit (the “CAFC”) reversed the PTAB’s cancellation of all challenged claims, and remanded the matter back to the PTAB for proceedings consistent with the CAFC’s opinion. On May 23, 2016, the PTAB issued a final written decision finding that Sipnet failed to show that any of the challenged claims were unpatentable.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">As discussed in more detail below, following the CAFC’s decision in Sipnet, the PTAB denied all then-pending petitions for IPR of Straight Path IP Group’s patents, and the petitioners have appealed those denials to the CAFC.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">On August 22, 2014, Samsung Electronics Co., Ltd. (“Samsung”) filed three petitions with the PTAB for IPR of certain claims of the ‘704 Patent and U.S. Patent Nos. 6,009,469 (the “‘469 Patent”) and 6,131,121 (the “‘121 Patent”). On March 6, 2015, the PTAB instituted the requested IPR. On June 15, 2015, Cisco Systems, Inc. (“Cisco”) and Avaya, Inc. (“Avaya”) joined this instituted IPR. On March 4, 2016, the PTAB issued a final written decision holding that Samsung failed to show that any claims of the ‘704 and ‘121 Patents were unpatentable. The PTAB also held that Samsung failed to show that the majority of the claims of the ‘469 Patent were unpatentable. On May 5, 2016, Samsung filed a notice of appeal to the CAFC. On May 6, 2016, Cisco and Avaya also filed notices of appeal.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">On October 31, 2014, LG Electronics Inc. et al. (“LG”), Toshiba Corporation et al. (“Toshiba”), Vizio, Inc. (“Vizio”), and Hulu LLC (“Hulu”) filed three petitions with the PTAB for IPR of certain claims of the ‘704, ‘469, and ‘121 Patents. On May 15, 2015, the PTAB instituted the requested IPRs. On November 10, 2015, the PTAB granted petitions filed by Cisco and Avaya to join these IPRs. On November 24, 2015, the PTAB granted related petitions filed by Verizon Services Corp. and Verizon Business Network Services Inc. (the “Verizon affiliates”) to join for the ‘704 and ‘469 Patents. On May 9, 2016, the PTAB issued a final written decision holding that the petitioners failed to show that any claims of the ‘704 Patent were unpatentable. The PTAB also held that the petitioners failed to show that the majority of the claims of the ‘469 and ‘121 Patents were unpatentable. On May 20, 2016, the petitioners filed a notice of appeal to the CAFC, and this appeal was consolidated with the appeal of the Samsung IPR discussed above. On October 14, 2016, the appellants filed their opening brief. The respondents filed their opposition brief on December 7, 2016, and the appellants’ reply brief is due on December 28, 2016.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt;
font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">On September 28, 2015, Cisco, Avaya, and the Verizon affiliates filed a petition for an IPR with the PTAB for all claims of U.S. Patent No. 6,701,365 (the “‘365 Patent”). On April 6, 2016, the PTAB denied the petition, finding that the petitioners had not demonstrated a reasonable likelihood that any challenged claim was unpatentable. This decision was not appealed to the CAFC.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"><i>Patent Enforcement</i></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"><i> </i></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">Following the CAFC’s decision in Sipnet and the PTAB’s decisions in the related IPRs, Straight Path IP Group has taken steps to re-commence its patent enforcement actions in federal district court that had been stayed or dismissed without prejudice during the pendency of the Sipnet Appeal and related IPRs.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">On August 1, 2013, Straight Path IP Group filed complaints in the United States District Court for the Eastern District of Virginia against LG, Toshiba, and Vizio alleging infringement of the ‘704, ‘469, and ‘121 Patents and seeking damages related to such infringement. The actions were consolidated (the “consolidated action”) and assigned to Judge Anthony J. Trenga. In October 2014, Hulu intervened in the consolidated action as to Hulu’s streaming functionality in the accused products. In that same month, Amazon.com, Inc. (“Amazon”) moved to intervene, sever, and stay claims related to Amazon’s streaming functionality in the accused products. On October 13, 2014, Amazon filed an action in the United States District Court for the Northern District of California seeking declaratory relief of non-infringement of the ‘704, ‘469, and ‘121 Patents based in part on the allegations related to the consolidated action in Virginia (the “Amazon action”). On December 5, 2014, Straight Path IP Group filed a motion to dismiss Amazon’s complaint, or in the alternative, to transfer venue to the Eastern District of Virginia. On May 28, 2015, the California court transferred the Amazon action to Virginia, and the Virginia court later formally severed the Amazon action from the consolidated action. In November 2014, the parties jointly moved to stay the consolidated action and the Amazon action pending the completion of the Sipnet Appeal and related IPRs. On November 4, 2014, the court granted the stay. On May 23, 2016, Straight Path IP Group filed status reports with the court in both the consolidated action and the Amazon action requesting that the stay be lifted, and the defendants filed a statement and request for leave to file a motion to continue the stay. The court held oral argument, and on August 8, 2016, the court continued the stay pending the outcome of the defendants’ appeals of the PTAB’s denial of their IPRs.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">On August 23, 2013, Straight Path IP Group filed a complaint in the United States District Court for the Eastern District of Texas against Samsung alleging infringement of the ‘704, ‘469, and ‘121 Patents and seeking damages related to such infringement. In September 2014, Straight Path IP Group and Samsung jointly filed a motion to stay the action. On October 29, 2014, the court granted the motion and stayed the action pending the outcome of the Sipnet Appeal and the Samsung IPR petitions. On May 31, 2016, Straight Path IP Group filed a notice informing the court of the results of the Samsung IPR and the Sipnet Appeal and requesting that the stay be lifted. On June 2, 2016, the defendants filed a
notice asserting that the stay should remain pending their appeal of the PTAB’s decision in the Samsung IPR.  The court has not ruled on Straight Path IP Group’s request.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">On September 24, 2014, Straight Path IP Group filed complaints against each of Apple, Inc. (“Apple”), Avaya, and Cisco in the United States District Court for the Northern District of California. Straight Path IP Group claims that (a) Apple’s telecommunications products, including FaceTime software, infringe four of Straight Path IP Group’s patents (the ‘704, ‘469, and ’121 Patents and U.S. Patent No. 7,149,208); (b) Avaya’s IP telephony, video conference, and telepresence products such as its Aura Platform infringe four of the Straight Path IP Group’s patents (the ‘704, ‘469, ‘121, and ‘365 Patents); and (c) Cisco’s IP telephony, video conference, and telepresence products such as the Unified Communications Solutions infringe four of Straight Path IP Group’s patents (the ‘704, ‘469, ‘121, and ‘365 Patents). On December 24, 2014, Straight Path IP Group dismissed the complaints against Avaya and Cisco without prejudice. On January 5, 2015, Straight Path IP Group dismissed the complaint against Apple without prejudice. On June 21, 2016, Straight Path IP Group filed new complaints against Avaya and Cisco alleging that certain of their products infringe four of Straight Path IP Group’s patents. On August 5, 2016, Avaya filed its answer, affirmative defenses, and counterclaims for declaratory judgments of noninfringement and invalidity of Straight Path IP Group’s patents, and the parties have commenced discovery. Also on August 5, 2016, Cisco filed its answer and affirmative defenses, and the parties have commenced discovery. On June 24, 2016, Straight Path IP Group filed a new complaint against Apple alleging that its FaceTime product infringes five of Straight Path IP Group’s patents. On August 5, 2016, Apple filed a partial motion to dismiss as well as its answer, affirmative defenses, and counterclaims for declaratory judgments of noninfringement and invalidity of Straight Path IP Group’s patents, and the parties have commenced discovery. Following oral argument, on October 21, 2016, the court granted in part and denied in part Apple’s motion. The court dismissed one claim as to the ‘469 Patent but denied Apple’s motion with respect to the other four patents at issue in the litigation.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">On September 26, 2014, Straight Path IP Group filed a complaint against the Verizon affiliates and Verizon Communications in the United States District Court for the Southern District of New York. Straight Path IP Group claims the defendants’ telephony products such as its Advanced Communications Products, including Unified Communications and Collaboration and VOIP infringe on the ‘704, ‘469, and ‘365 Patents. On November 24, 2014, Straight Path IP Group dismissed the complaint without prejudice subject to a confidential standstill agreement with the defendants. On June 7, 2016, Straight Path IP Group filed a new complaint in the United States District Court for the Southern District of New York against the original Verizon parties as well as Verizon affiliate Cellco Partnership d/b/a Verizon Wireless, alleging that defendants’ IP telephony products such as FIOS Digital Voice, Unified Communications and Collaboration, Verizon Enterprise Solutions VoIP, Virtual Communications Express, Voice over LTE, and related hardware and software infringe the ‘704, ‘469 and ‘365 Patents. On August 5, 2016, Verizon filed its answer and affirmative defenses, and the parties commenced discovery. On September 13, 2016, Verizon filed a motion to stay the litigation pending a decision from the CAFC in the appeal of the Samsung IPR. On October 18, 2016, the court granted Verizon’s motion and stayed the litigation.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">Straight Path IP Group generally pays law firms that represent it in litigation against alleged infringers of its intellectual property rights a percentage of the amounts recovered ranging from 0% to 40% depending on several factors.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px;
-webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"><i>Other Legal</i></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">In addition to the foregoing, the Company may from time to time be subject to other legal proceedings that arise in the ordinary course of business. </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"><i>Federal Communications Commission (“FCC”) License Renewal</i></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">Our spectrum licenses in the local multipoint distribution service (“LMDS”) and 39 GHz bands have historically been granted for ten-year terms. On April 20, 2016, the FCC granted our application to renew our LMDS BTA license for the LMDS A1 band (27.5 – 28.35 GHz) that covers parts of the New York City BTA for a ten-year period, until February 1, 2026. We have 15 other LMDS A1 licenses; nine of these licenses currently have a renewal date of August 10, 2018, and six of these licenses have a renewal date of September 21, 2018. However, following the adoption of the Upper Microwave Flexible Use (“UMFU”) Report and Order, the next build-out date for these 16 LMDS A1 licenses is June 1, 2024, not at the renewal deadline.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">It is likely that the FCC will separate the renewal and build-out deadlines for licenses that contain both A1 spectrum (for which mobile capabilities were adopted in the UMFU Report and Order) and A2 and A3 spectrum (for which mobile capabilities were not added). Of the 15 BTAs in which we hold LMDS A2 band (29.1 – 29.25 GHz) and A3 band (31.075 – 31.225 GHz) spectrum, nine licenses currently have a renewal and possible build-out date of August 10, 2018 and six of these licenses currently have a renewal and possible build-out date of September 21, 2018. The UMFU Report and Order does not affect the LMDS B band spectrum. Of our 117 LMDS B band (31.0 – 31.075 GHz and 31.225 – 31.300 GHz) spectrum, five licenses currently have a renewal and build-out date of August 10, 2018 and 112 licenses currently have a renewal and build-out date of September 21, 2018.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px;
text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">The UMFU Report and Order build-out date of June 1, 2024 also applies to our 828 39 GHz licenses, which currently have a renewal date of October 18, 2020.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">For further discussion, please see “<i>Regulatory Enforcement</i>” above in this Note 11 to the Consolidated Financial Statements. </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"><i>Other Commitments and Contingencies</i>  </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">The former Chief Executive Officer of Straight Path Spectrum (the “Former SPSI CEO”) is entitled to receive payments from future revenues generated from the leasing, licensing or sale of rights in certain of Straight Path Spectrum’s wireless spectrum licenses. Those payments are to be made out of 50% of the covered revenue and are in a maximum aggregate amount of $3.25 million. The payments arise under the June 2013 settlement of certain claims and disputes with the Former SPSI CEO and parties related to the Former SPSI CEO.</p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"> </p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"></p>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;">Approximately $71,000 and $3,000 was incurred to the Former SPSI CEO for this obligation for Fiscal 2017 and Fiscal 2016, respectively.</p>
<p style="font: 10pt times new roman, times, serif; margin: 0px;">The Company’s significant accounting policies are described in Note 1 of the Notes to Combined and Consolidated Financial Statements in the Annual Report on Form 10-K for the year <font style="background-color: white;">ended July 31, 2016.</font></p><p style="font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In May 2014, ASU No. 2014-09, “<i>Revenue from Contracts with Customers</i>” (“ASU 2014-09”) was issued. The comprehensive new standard will supersede existing revenue recognition guidance and require revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. The guidance will also require that certain contract costs incurred to obtain or fulfill a contract, such as sales commissions, be capitalized as an asset and amortized as revenue is recognized. Adoption of the new rules could affect the timing of both revenue recognition and the incurrence of contract costs for certain transactions. The guidance permits two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years and one requiring prospective application of the new standard with disclosure of results under old standards.</p><p style="font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">ASU 2014-09 was scheduled to be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. In August 2015, the FASB issued ASU 2015-14, “R<i>evenue from Contracts with Customers (Topic 606): Deferral of Effective Date</i>” (“ASU 2015-14”) which defers the effective date of ASU 2014-09 by one year. ASU 2014-09 is now effective for annual reporting periods after December 15, 2017 including interim periods within that reporting period.  Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company will adopt the new standard effective August 1, 2018. The Company is currently evaluating the impact of adoption and the implementation approach to be used.</p><p style="font: 10pt times new roman, times, serif; margin: 0px;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In June 2014, ASU 2014-15, “<i>Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern</i>” (“ASU 2014-15”) was issued.  Before the issuance of ASU 2014-15, there was no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. This guidance is expected to reduce the diversity in the timing and content of footnote disclosures. ASU 2014-15 requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards as specified in the guidance. ASU 2014-15 becomes effective for the annual period ending after December 15, 2016 (Fiscal 2018 for the Company) and for annual and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the effects of adopting ASU 2014-15 on its consolidated financial statements but the adoption is not expected to have a significant impact on the Company’s consolidated financial statements.</p><p style="font: 10pt times new roman, times, serif; margin: 0px;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">Effective August 1, 2016, the Company adopted ASU 2015-01, “<i>Income Statement – Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items</i>” (“ASU 2015-01”). ASU 2015-01 eliminates from GAAP the concept of extraordinary items. ASU 2015-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. The adoption of ASU 2015-01 did not have a significant impact on the Company’s consolidated financial statements.</p><p style="text-align: justify; font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">Effective August 1, 2016, the Company adopted ASU 2015-02, “<i>Consolidation (Topic 810): Amendments to the Consolidation Analysis</i>” (“ASU 2015-02”). The amendments in ASU 2015-02 change the analysis that reporting entity must perform to determine whether it should consolidate certain types of legal entities. The amendments in ASU 2015-02 are effective for fiscal years beginning after December 15, 2015. A reporting entity may apply the amendments in ASU 2015-02 using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. A reporting entity also may apply the amendments retrospectively. The adoption of ASU 2015-02 did not have a material impact on the Company’s consolidated financial statements.</p><p style="font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">Effective August 1, 2016, the Company adopted ASU 2015-03, “<i>Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs</i>” (“ASU 2015-03”) as part of its initiative to reduce complexity in accounting standards (the Simplification Initiative). The Board received feedback that having different balance sheet presentation requirements for debt issuance costs and debt discount and premium creates unnecessary complexity. Recognizing debt issuance costs as a deferred charge (that is, an asset) also is different from the guidance in International Financial Reporting Standards, which requires that transaction costs be deducted from the carrying value of the financial liability and not recorded as separate assets. Additionally, the requirement to recognize debt issuance costs as deferred charges
conflicts with the guidance in FASB Concepts Statement No. 6, “Elements of Financial Statements,” which states that debt issuance costs are similar to debt discounts and in effect reduce the proceeds of borrowing, thereby increasing the effective interest rate. FASB Concepts Statement No. 6 further states that debt issuance costs cannot be an asset because they provide no future economic benefit. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. The amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The adoption of ASU 2015-03 did not have a material impact on the Company’s consolidated financial statements.</p><p style="font: 10pt times new roman, times, serif; margin: 0px;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In January 2016, the FASB issued ASU 2016-01, “<i>Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities</i>” (“ASU 2016-01”). The amendments require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). The amendments also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the amendments eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities and the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities. This guidance is effective for fiscal years beginning after December 15, 2017 (Fiscal 2019 for the Company), including interim periods within those fiscal years. The Company will evaluate the effects of adopting ASU 2016-01 if and when it is deemed to be applicable.</p><p style="font: 10pt times new roman, times, serif; margin: 0px;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In February 2016, the FASB issued ASU 2016-02, “<i>Leases (Topic 842)</i>” (“ASU 2016-02”) which supersedes existing guidance on accounting for leases in “<i>Leases (Topic 840)</i>.”  The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet.  A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term.  The new guidance is effective for annual reporting periods beginning after December 15, 2018 (Fiscal 2020 for the Company) and interim periods within those fiscal years. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the effects of adopting ASU 2016-02 on its consolidated financial statements.</p><p style="text-align: justify; font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In March 2016, the FASB issued ASU 2016-09, “<i>Improvements to Employee Share-Based Payment Accounting</i>” (“ASU 2016-09”). ASU 2016-09 affects entities that issue share-based payment awards to their employees. ASU 2016-09 is designed to simplify several aspects of accounting for share-based payment award transactions which include – the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows and forfeiture rate calculations. This guidance is effective for annual periods beginning after December 15, 2016 (Fiscal 2018 for the Company), including interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2016-09 on its consolidated financial statements.</p><p style="font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In April 2016, the FASB issued ASU 2016-10, “<i>Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing</i>” (“ASU 2016-10”) related to identifying performance obligations and licensing. ASU 2016-10 is meant to clarify the guidance in FASB ASU 2014-09, “<i>Revenue from Contracts with Customers</i>.” Specifically, ASU 2016-10 addresses an entity’s identification of its performance obligations in a contract, as well as an entity’s evaluation of the nature of its promise to grant a license of intellectual property and whether or not that revenue is recognized over time or at a point in time. The pronouncement has the same effective date as the new revenue standard, which is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017 (Fiscal 2019 for the Company). The Company is currently evaluating the impact of ASU 2016-10 on its consolidated financial statements.</p><p style="text-align: justify; font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In May 2016, the FASB issued ASU 2016-12, “<i>Revenue from Contracts with Customers (Topic 606): Narrow Scope Improvements and Practical Expedients</i>” (“ASU 2016-12”). The amendments in ASU 2016-12 affect the guidance in ASU 2014-09 by clarifying certain specific aspects of the guidance, including assessment of collectability, treatment of sales taxes and contract modifications, and providing certain technical corrections. ASU 2016-12 will have the same effective date and transition requirements as the ASU 2014-09. The Company is currently evaluating the impact of ASU 2016-12 on its consolidated financial
statements.</p><p style="font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In August 2016, the FASB issued ASU 2016-15, “<i>Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments</i>” (“ASU 2016-15”). ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017 (Fiscal 2019 for the Company). The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements.</p><p style="font: 10pt times new roman, times, serif; margin: 0px; text-indent: 0.5in;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">In November 2016, the FASB issued ASU 2016-18, “<i>Statement of Cash Flows (Topic 230): Restricted Cash</i>” (“ASU 2016-18”). ASU 2016-18 require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017 (Fiscal 2019 for the Company). Early adoption is permitted. The Company will evaluate the effects of adopting ASU 2016-18 if and when it is deemed to be applicable.</p><p style="font: 10pt times new roman, times, serif; margin: 0px;"> </p><p style="font: 10pt times new roman, times, serif; margin: 0px;">The Company does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying consolidated financial statements.</p>
<table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="6">Three Months Ended<br />October 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2016</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2015</td><td style="padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="6">(in thousands)</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 1191px; text-align: left;">Stock options</td><td style="width: 16px; font-weight: bold;"> </td><td style="width: 16px; text-align: left; font-weight: bold;"> </td><td style="width: 142px; text-align: right; font-weight: bold;">3</td><td style="width: 16px; text-align: left; font-weight: bold;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 141px; text-align: right;">2</td><td style="width: 15px; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; padding-bottom: 1.5pt;">Non-vested restricted Class B common stock</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: left; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">118</td><td style="text-align: left; padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">239</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left; padding-bottom: 4pt;">Shares excluded from the calculation of diluted loss per share</td><td style="padding-bottom: 4pt; font-weight: bold;"> </td><td style="text-align: left; font-weight: bold; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; font-weight: bold; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">121</td><td style="text-align: left; padding-bottom: 4pt; font-weight: bold;"> </td><td style="padding-bottom: 4pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">241</td><td style="text-align: left; padding-bottom: 4pt;"> </td></tr></table>
<table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="6">Three Months Ended<br />October 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2016</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2015</td><td style="padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="6">(in thousands)</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 1191px; text-align: left; padding-bottom: 4pt;">Stock options</td><td style="width: 16px; padding-bottom: 4pt; font-weight: bold;"> </td><td style="width: 16px; text-align: left; font-weight: bold; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="width: 142px; text-align: right; font-weight: bold; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">88</td><td style="width: 16px; text-align: left; padding-bottom: 4pt; font-weight: bold;"> </td><td style="width: 15px; padding-bottom: 4pt;"> </td><td style="width: 15px; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="width: 141px; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">—</td><td style="width: 15px; text-align: left; padding-bottom: 4pt;"> </td></tr></table>
<div><table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td nowrap="nowrap" style="padding-bottom: 1.5pt;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="6">Three Months Ended<br />October 31,</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td nowrap="nowrap" style="padding-bottom: 1.5pt;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2016</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt;"> </td><td nowrap="nowrap" style="text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2015</td><td nowrap="nowrap" style="padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="6">(in thousands)</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 1160px;">Customer 1</td><td style="width: 16px; font-weight: bold;"> </td><td style="width: 16px; text-align: left; font-weight: bold;">$</td><td style="width: 157px; text-align: right; font-weight: bold;">48</td><td style="width: 16px; text-align: left; font-weight: bold;"> </td><td style="width: 16px;"> </td><td style="width: 15px; text-align: left;">$</td><td style="width: 156px; text-align: right;">41</td><td style="width: 15px; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td>Customer 2</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">41</td><td style="text-align: left; font-weight: bold;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">21</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td>Customer 3</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">21</td><td style="text-align: left; font-weight: bold;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">15</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td>Customer 4</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">16</td><td style="text-align: left; font-weight: bold;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">*</font></td><td style="text-align: left;"> </td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">* below 10%</p></div>
<table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td nowrap="nowrap" style="text-align: center;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Straight</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Straight</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Straight</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap"> </td><td nowrap="nowrap" style="text-align: center;" colspan="2"> </td><td nowrap="nowrap"> </td></tr><tr style="vertical-align: bottom;"><td nowrap="nowrap" style="text-align: center;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Path</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Path</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Path</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap"> </td><td nowrap="nowrap" style="text-align: center;" colspan="2"> </td><td nowrap="nowrap"> </td></tr><tr style="vertical-align: bottom;"><td nowrap="nowrap" style="text-align: center; padding-bottom: 1.5pt;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Spectrum</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">IP Group</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Ventures</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Total</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td> </td><td style="text-align: center;" colspan="2"> </td><td> </td><td> </td><td style="text-align: center;" colspan="2"> </td><td> </td><td> </td><td style="text-align: center;" colspan="2"> </td><td> </td><td> </td><td style="text-align: center;" colspan="2"> </td><td> </td></tr><tr style="vertical-align: bottom;"><td style="font-weight: bold;">Three Months Ended October 31, 2016</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 753px; font-weight: bold;">Revenues</td><td style="width: 16px; font-weight: bold;"> </td><td style="width: 16px; text-align: left; font-weight: bold;">$</td><td style="width: 157px; text-align: right; font-weight: bold;">159</td><td style="width: 16px; text-align: left; font-weight: bold;"> </td><td style="width: 16px; font-weight: bold;"> </td><td style="width: 16px; text-align: left; font-weight: bold;">$</td><td style="width: 157px; text-align: right; font-weight: bold;">—</td><td style="width: 16px; text-align: left; font-weight: bold;"> </td><td style="width: 16px; font-weight: bold;"> </td><td style="width: 16px; text-align: left; font-weight: bold;">$</td><td style="width: 156px; text-align: right; font-weight: bold;">—</td><td style="width: 15px; text-align: left; font-weight: bold;"> </td><td style="width: 15px; font-weight: bold;"> </td><td style="width: 15px; text-align: left; font-weight: bold;">$</td><td style="width: 156px; text-align: right; font-weight: bold;">159</td><td style="width: 15px; text-align: left; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; font-weight: bold;">Loss from operations</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(2,985</td><td style="text-align: left; font-weight: bold;">)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(875</td><td style="text-align: left; font-weight: bold;">)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(417</td><td style="text-align: left; font-weight: bold;">)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(4,277</td><td style="text-align: left; font-weight: bold;">)</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align:
left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td>Three Months Ended October 31, 2015</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td>Revenues</td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">105</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">1,598</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">1,703</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left;">Loss from operations</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(334</td><td style="text-align: left;">)</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(357</td><td style="text-align: left;">)</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(691</td><td style="text-align: left;">)</td></tr></table>
<table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td nowrap="nowrap" style="text-align: center;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Straight</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Straight</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Straight</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap"> </td><td nowrap="nowrap" style="text-align: center;" colspan="2"> </td><td nowrap="nowrap"> </td></tr><tr style="vertical-align: bottom;"><td nowrap="nowrap" style="text-align: center;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Path</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Path</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold;" colspan="2">Path</td><td nowrap="nowrap" style="font-weight: bold;"> </td><td nowrap="nowrap"> </td><td nowrap="nowrap" style="text-align: center;" colspan="2"> </td><td nowrap="nowrap"> </td></tr><tr style="vertical-align: bottom;"><td nowrap="nowrap" style="text-align: center; padding-bottom: 1.5pt;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Spectrum</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">IP Group</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Ventures</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Total</td><td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="14">(in thousands)</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td style="text-align: left;">Total assets</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 753px; font-weight: bold;">October 31, 2016</td><td style="width: 16px; font-weight: bold;"> </td><td style="width: 16px; text-align: left; font-weight: bold;">$</td><td style="width: 157px; text-align: right; font-weight: bold;">8,583</td><td style="width: 16px; text-align: left; font-weight: bold;"> </td><td style="width: 16px; font-weight: bold;"> </td><td style="width: 16px; text-align: left; font-weight: bold;">$</td><td style="width: 157px; text-align: right; font-weight: bold;">2,029</td><td style="width: 16px; text-align: left; font-weight: bold;"> </td><td style="width: 16px; font-weight: bold;"> </td><td style="width: 16px; text-align: left; font-weight: bold;">$</td><td style="width: 156px; text-align: right; font-weight: bold;">1,100</td><td style="width: 15px; text-align: left; font-weight: bold;"> </td><td style="width: 15px; font-weight: bold;"> </td><td style="width: 15px; text-align: left; font-weight: bold;">$</td><td style="width: 156px; text-align: right; font-weight: bold;">11,712</td><td style="width: 15px; text-align: left; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td>July 31, 2016</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">10,174</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">2,223</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1,100</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">13,497</td><td style="text-align: left;"> </td></tr></table>
1.00
0.845
1503532
164000
120000
1250
60000
60000
4392000
1866000
1866000
P13M
P3Y
P2Y
P4Y
8030000
2581000
2781000
1990000
615000
63000
241000
2000
239000
121000
3000
118000
88000
41000
21000
15000
48000
41000
21000
16000
0.10
2
0.20
0.80
0.80
0.20
1.00
0.20
0.20
0.60
0.20
0.40
0.00
Straight Path IP Group generally pays law firms that represent it in litigation against alleged infringers of its intellectual property rights a percentage of the amounts recovered ranging from 0% to 40% depending on several factors.
0.50
3250000
3000
71000
below 10%