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(“Straight Path”) and its subsidiaries 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 and nine months ended April 30, 2017 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 combined and 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”).</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Straight Path, 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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Straight Path was formerly a subsidiary of IDT Corporation (“IDT”). On July 31, 2013, Straight Path was spun-off by IDT to its stockholders and became an independent public company (the “Spin-Off”). Straight Path authorized the issuance of two classes of its common stock, Class A (“Class A common stock”) and Class B (“Class B common stock”).</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">On May 11, 2017, the Company entered into a merger agreement with Verizon Communications, Inc. (“Verizon”) and a Verizon subsidiary (see Note 2).</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font
style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">On January 11, 2017, the Company entered into a consent decree with the Federal Communications Commission (the “FCC”) settling the FCC’s investigation regarding Straight Path Spectrum’s spectrum licenses (the “Consent Decree”). The Company agreed to pay an initial civil penalty of $15 million (the “Initial Civil Penalty”). For further discussion, see Note 14 – <i>Regulatory Enforcement</i>.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">On March 7, 2017, the Company and lead plaintiff in <i>Zacharia v. Straight Path Communications Inc. et al.</i>, No. 2:15-cv-08051-JMV-MF (D.N.J.), entered into a binding memorandum of understanding to settle the putative shareholder class action and dismiss the claims that were filed against the Defendants in that action.  Under the agreed terms, the Company will provide for a $2.25 million initial payment (the “Initial Payment”) which will be fully covered by insurance policies maintained by the Company and a $7.2 million additional payment (the “Additional Payment”). For a further discussion, see Note 14 – <i>Putative Class Action and Shareholder Derivative Action</i>.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">On April 9, 2017, the Company and IDT entered into a binding term sheet to settle potential claims related to certain claims under agreements related to the Spin-Off, and to sell the Company’s interest in Straight Path IP Group to IDT. See Note 3 – Settlement of Claims With IDT and Sale of Straight Path IP Group.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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).</font></p>
<div>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><b>Note 2 — Verizon Merger Agreement</b></font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">On May 11, 2017, the Company entered into an Agreement and Plan of Merger (the “Verizon Merger Agreement”) with Verizon, a Delaware corporation, and Waves Merger Sub I, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Verizon (“Merger Sub”). Pursuant to the Verizon Merger Agreement, among other things, Merger Sub will be merged with and into the Company (the “Merger”) with the Company being the surviving corporation of the Merger.</font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">At the effective time of the Merger (the “Effective Time”), each share of Class A common stock, par value $0.01 per share, of the Company and each share of Class B common stock, par value $0.01 per share, of the Company (collectively, the “Shares”) issued and outstanding immediately prior to the Effective Time (other than Shares owned by Verizon, Merger Sub or any other direct or indirect subsidiary of Verizon, and Shares owned by the Company or any direct or indirect subsidiary of the Company, and in each case not held on behalf of third parties) will be converted into the right to receive a number of validly issued, fully paid in and nonassessable shares of common stock of Verizon (“Verizon Shares”) equal to the quotient determined by dividing $184.00 by the five (5)-day volume-weighted average per share price ending on the second full trading day prior to the Effective Time, rounded to two decimal points, of Verizon Shares on the New York Stock Exchange (the “Verizon Share Value”) and rounded to the nearest ten-thousandth of a share (collectively and in the aggregate, the “Merger Consideration”). It is the Company’s intention that (i) the Merger shall qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, and the Treasury regulations promulgated thereunder, and (ii) the Verizon Merger Agreement shall constitute a plan of reorganization within the meaning of Treasury Regulation Section 1.368-2(g), as noted in the Verizon Merger Agreement.</font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The board of directors (the “Board”) of the Company has unanimously approved the Verizon Merger Agreement and determined that the Verizon Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to, and in the best interests of, the Company and its stockholders, and has resolved to recommend that the Company’s stockholders adopt the Verizon Merger Agreement.</font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The Company has agreed, subject to certain exceptions with respect to unsolicited proposals, not to directly or indirectly solicit competing acquisition proposals or to participate in any discussions concerning, or provide non-public information in connection with, any unsolicited acquisition proposals. However, the Board may, subject to certain conditions, change its recommendation in favor of approval of the Verizon Merger Agreement if, in connection with receipt of a superior proposal or an event occurring after the date of the Verizon
Merger Agreement with respect to the Company, it determines in good faith, after consultation with its financial advisors and outside legal counsel, that the failure to take such action would be inconsistent with its fiduciary duties to the Company’s stockholders under applicable law.</font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The completion of the Merger is subject to the satisfaction or waiver of customary closing conditions, including: (i) adoption of the Verizon Merger Agreement by the Company’s stockholders; (ii) receipt of regulatory approvals, including receipt of consent to the Merger from the FCC and the expiration or termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR”); (iii) there being no law or injunction prohibiting consummation of the transactions contemplated under the Verizon Merger Agreement; (iv) the effectiveness of a registration statement on Form S-4 relating to the Merger; (v) subject to specified materiality standards, the continuing accuracy of certain representations and warranties of each party; (vi) continued compliance by each party in all material respects with its covenants; (vii) no event having occurred that has had, or would reasonably be likely to have, a Material Adverse Effect (as defined in the Verizon Merger Agreement) on the Company; (viii) receipt by the Company of an opinion from its tax counsel to the effect that the Merger will qualify as a “reorganization” for United States federal income tax purposes within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended; (ix) receipt of approval for listing the Verizon Shares on the New York Stock Exchange and the NASDAQ Global Select Market, subject to official notice of issuance; and (x) the FCC consent referred to in clause (ii) of this paragraph having become a Final Order (as defined in the Verizon Merger Agreement).</font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">The Company has made customary representations and warranties in the Verizon Merger Agreement. The Verizon Merger Agreement also contains customary covenants and agreements, including covenants and agreements relating to the conduct of the Company’s business between the date of the signing of the Verizon Merger Agreement and the closing of the transactions contemplated under the Verizon Merger Agreement. The representations and warranties made by the Company are qualified by disclosures made in its disclosure schedules and SEC filings. None of the representations and warranties in the Verizon Merger Agreement survive the closing of the transactions contemplated by the Verizon Merger Agreement. </p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"> </p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The Verizon Merger Agreement contains certain termination rights for both the Company and Verizon including upon (i) an uncured breach by the other party which results in the failure of a closing condition, (ii) the failure to receive the approval of the Verizon Merger Agreement by the Company’s stockholders, and (iii) the Company’s Board changing its recommendation in favor of the Verizon Merger Agreement. The Verizon Merger Agreement further provides that, upon termination of the Verizon Merger Agreement, under certain circumstances following a change in recommendation by the Company in connection with its receipt of a superior proposal or due to an Intervening Event (as defined in the Verizon Merger Agreement), the Company may be required to pay Verizon a termination fee equal to $38 million. Either the Company or Verizon may terminate the Verizon Merger Agreement if the completion of the Merger has not occurred on or before February 12, 2018 (as it may be extended as provided below, the “Termination Date”); provided, however, that if regulatory approvals have not been obtained and all other conditions to closing have been satisfied or waived, the Termination Date will automatically be extended for an additional one hundred and eighty days. In addition, Verizon is required to pay the Company an aggregate amount equal to $85 million (the “Parent Termination Fee”) in the event that the Merger has not closed by the extended Termination Date, and all conditions to closing other than receipt of FCC consent or HSR approval (or expiration of the waiting period under the HSR) have been satisfied or waived. In the event that the Verizon Merger Agreement is terminated other than as a result of Verizon’s breach or under circumstances in which Verizon is required to pay the Parent Termination Fee, the Company will be required to pay Verizon an amount equal to the AT&T
Termination Fee (as defined in the Verizon Merger Agreement) paid by Verizon on the Company’s behalf. </font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The Verizon Merger Agreement was attached as Exhibit 2.1 to the Form 8-K filed by the Company with the SEC on May 11, 2017 to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the Company, Verizon or Merger Sub, or to modify or supplement any factual disclosures about the Company or Verizon in their public reports filed with the SEC. The Verizon Merger Agreement includes representations, warranties and covenants of the Company, Verizon and Merger Sub made solely for purposes of the Verizon Merger Agreement and which may be subject to important qualifications and limitations agreed to by the Company, Verizon and Merger Sub in connection with the negotiated terms of the Verizon Merger Agreement. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject to a contractual standard of materiality different from those generally applicable to the Company’s or Verizon’s SEC filings or may have been used for purposes of allocating risk among the Company, Verizon and Merger Sub rather than establishing matters as facts.</font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The foregoing summary of the Verizon Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Verizon Merger Agreement, which was attached as Exhibit 2.1 to the Form 8-K filed by the Company with the SEC on May 11, 2017.</font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">In addition, Howard Jonas, who has the right to vote a majority of the voting power of the Company’s common stock has entered into a voting agreement with Verizon concurrently with the entry into the Verizon Merger Agreement (the “Voting Agreement”). The Voting Agreement provides that Mr. Jonas (holding his Class A shares through a trust) will vote his Class A shares in the Company in favor of the Merger and the other transactions contemplated in the Verizon Merger Agreement, on the terms and subject to the conditions set forth in the Voting Agreement. The Voting Agreement will terminate automatically upon the earliest to occur of (i) the effective time of the Merger, (ii) the valid termination of the Verizon Merger Agreement pursuant to Article VII thereof, (iii) a change of recommendation by the Board in the event of a Superior Proposal or Intervening Event, (iv) any change being made to the terms of the Verizon Merger Agreement that would terminate the Trust’s or Mr. Jonas’s obligation to vote in favor of the Merger (on the terms and subject to the conditions in the Verizon Merger Agreement) or (v) February 12, 2018. The Company is not a party to the Voting Agreement. </p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The foregoing summary of the Voting Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the form of Voting Agreement, which is attached as Exhibit A to the Verizon Merger Agreement, which was attached as Exhibit 2.1 to the Form 8-K filed by the Company with the SEC on May 11, 2017.</font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family:
'times new roman', times, serif; font-size: 10pt;"> </font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">On May 11, 2017, the Agreement and Plan of Merger, dated as of April 9, 2017, by and among the Company, AT&T Inc. and Switchback Merger Sub Inc. (the “AT&T Merger Agreement”) was terminated in its entirety by the Company pursuant to the terms and conditions of the AT&T Merger Agreement. Also on May 11, 2017, Verizon paid to AT&T, on behalf of the Company, the $38 million Company Termination Fee (as defined in the AT&T Merger Agreement) concurrently with the termination of the AT&T Merger Agreement pursuant to the terms and conditions thereof.</font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The Company has incurred costs totaling approximately $2,856,000 related to the Verizon Merger Agreement. These costs will be included in the gain/loss recognized if the Merger is consummated. If the Merger is not consummated, the costs will be charged to operations in the period when such determination is made.</font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">If the Merger is consummated, the Company estimates that it will incur various fees and expenses, which will be paid by Verizon. These fees and expenses include but are not limited to the following:</font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0">
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<td style="width: 0.25in; line-height: 14.26px;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">1.</font></td>
<td style="line-height: 14.26px;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Payment to the FCC of 20% of the Proceeds (as defined in the FCC Consent Decree) (see Note 14 – <i>Regulatory Enforcement</i>)</font></td>
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<td style="line-height: 14.26px;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">2.</font></td>
<td style="line-height: 14.26px;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Financial advisor  and legal fees - $63.9 million</font></td>
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<td style="line-height: 14.26px;"> </td>
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<td style="line-height: 14.26px;"> </td>
<td style="line-height: 14.26px;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">3.</font></td>
<td style="line-height: 14.26px;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Balance owed to PTPMS Communications, LLC (“PTPMS”) (see Note 14 – <i>Other Commitments and Contingencies</i>)</font></td>
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<td style="line-height: 14.26px;"> </td>
<td style="line-height: 14.26px;"> </td>
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<td style="line-height: 14.26px;"> </td>
<td style="line-height: 14.26px;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">4.</font></td>
<td style="line-height: 14.26px;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Balance owed to Former Chief Executive Officer of Straight Path Spectrum (the “Former SPSI CEO”) - $3.0 million (see Note 14 – <i>Other Commitments and Contingencies</i>)</font></td>
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<td style="line-height: 14.26px;"> </td>
<td style="line-height: 14.26px;"> </td>
<td style="line-height: 14.26px;"> </td>
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<td style="line-height: 14.26px;"> </td>
<td style="line-height: 14.26px;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">5.</font></td>
<td
style="line-height: 14.26px;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Severance and retention payments to certain members of management – see below</font></td>
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</table>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">In connection with its entry into the AT&T Merger Agreement and then the Verizon Merger Agreement, the Company approved severance arrangements for Davidi Jonas (“Jonas”), Jonathan Rand (“Rand”), Zhouyue Pi and David Breau (“Breau”) (each an “Executive”, and collectively, the “Executives”). The severance arrangements provide that if, within two years following the consummation of the Merger, the Company terminates an Executive’s employment without “Cause” or an Executive resigns for “Good Reason” (each such term to be defined in the severance agreements to be entered into prior to the consummation of the Merger), the Executive shall be entitled to receive a lump sum payment equal to one and one-half times (1.5x) (two and one-half times (2.5x) for Jonas) the sum of the Executive’s annual base salary and target bonus, subject to the execution of a release of claims.</font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The Company also approved retention bonus payments for Jonas, Rand and Breau in the amounts of $1,800,000, $1,000,000 and $1,000,000, respectively. Subject to continued employment through the consummation of the Merger, such individuals shall be entitled to receive their retention bonus payment in a lump sum within thirty days following the consummation of the Merger.</font></p>
</div>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><b>Note 3 — Settlement of Claims with IDT and Sale of Straight Path IP Group</b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">On April 9, 2017, the Company and IDT entered into a binding term sheet (the “Term Sheet”), providing for the settlement and mutual release of potential indemnification claims asserted by each of the Company and IDT in connection with liabilities that may exist or arise relating to the subject matter of the investigation by (including but not limited to fines, fees or penalties imposed by) the FCC (the “Mutual Release”). Pursuant to the Term Sheet, in exchange for the Mutual Release, IDT will pay the Company $16 million, the Company will transfer to IDT its ownership interest in Straight Path IP Group, and stockholders of the Company will receive 22 percent of the net proceeds, if any, received by Straight Path IP Group from any license, and certain transfers or assignments of any of the patent rights held, or any settlement, award or judgment involving any of the patent rights (including any net proceeds received after the closing of the merger of the Company with Verizon). As of the date of the filing of this report, the provisions under the Term Sheet have not been consummated. As such, the assets and liabilities of Straight Path IP Group have been classified as assets held for sale and liabilities held for sale on the consolidated balance sheet.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The Company incurred costs totaling approximately $1,054,000 related to the negotiation and execution of the Term Sheet. These costs will be included in the gain/loss recognized if the transaction is consummated. If the transaction is not consummated, the costs will be charged to operations in the period when such determination is made.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">For a further discussion of the transaction, see the Form 8-K filed by the Company with the SEC on April 10, 2017.</font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><b>Note 4 — Summary of Significant Accounting Policies and Recent Pronouncements</b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The Company’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended July 31, 2016.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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, “<i>Revenue 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 beginning 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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 (year ended July 31, 2017 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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 adoption of ASU 2015-03 did not have a material impact on the Company’s consolidated financial statements.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px;
letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 (quarter ended October 31, 2018 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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 (quarter ended October 31, 2019 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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 (quarter ended October 31, 2017 for the Company), including interim periods within those fiscal years. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements but the adoption is not expected to have a significant impact as of the filing of this report.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 (quarter ended October 31, 2018 for the Company). The Company is currently evaluating the impact of ASU 2016-10 on its consolidated financial statements.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 (quarter ended October 31, 2018 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 but the adoption is not expected to have a significant impact as of the filing of this report.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 (quarter ended October 31, 2018 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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”). ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for annual periods beginning after December 15, 2017 (quarter ended October 31, 2018 for the Company), including interim periods
within those periods. The Company is currently evaluating the impact of adopting ASU 2017-01 on its consolidated financial statements but the adoption is not expected to have a significant impact as of the filing of this report.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p>
<div><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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 5 — Fair Value Measures</b></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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> </b></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;">At April 30, 2017 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: 0pt 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: 0pt 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;">At April 30, 2017 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. The carrying value of the loans payable approximated its fair value as of April 30, 2017 as the interest rate approximated market.</p></div>
<div><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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 6 — Inventory</b></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;">Inventory, consisting solely of finished goods, is valued at the lower of cost or market.</p></div>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><b>Note 7 — Loan Payable</b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><b> </b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">On February 6, 2017, the Company entered into a Loan Agreement with a syndicate of investors (the “Lenders”) pursuant to which the Company borrowed $17.5 million (the “Loan Amount”). The loan matures on December 29, 2017. Interest accrues at a rate of 5% per annum until June 30, 2017 and then increases to a rate of 10% per annum. Other significant terms of the Loan Agreement include the following:</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">1.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">$15 million of the Loan Amount was used to pay the Initial Civil Penalty provided for in the Consent Decree in accordance with the payment requirements set forth in the Consent Decree. The remainder of the Loan Amount will be used for general corporate purposes and working capital needs.</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">2.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The Lenders received warrants to purchase 252,161 shares of the Company’s Class B common stock with an aggregate exercise price equal to $7.5 million based on an exercise price of $34.70 per share. The exercise price was based on the weighted average trading price for the Class B common stock for the five trading days preceding the funding date. The warrants expire at the earlier of December 31, 2018 or a liquidation event (as defined). Warrants to purchase 147,682 shares of Class B common stock were exercised by the holders in the third quarter of Fiscal 2017 (see Note 8).</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times
new roman', times, serif; font-size: 10pt;">3.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">If any portion of the Loan Amount remains outstanding after June 30, 2017, the Lenders will receive additional warrants on a monthly basis with an aggregate exercise price equal to 10% (dropping to 7.5% in September 2017) of the then outstanding Loan Amount. The exercise price will be based on the weighted average trading price for the Class B common stock for the ten trading days preceding the warrant issue date.</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">4.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">To the extent the warrants are held by a Lender at the time of exercise, the exercise price will be paid by the reduction of the outstanding Loan Amount.  As of April 30, 2017, the Loan Amount was reduced by $5,125,000 as the result of the exercise of 147,682 warrants referred to above (see Note 8).</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The fair value of the warrants at the date of grant totaled approximately $4,040,000. The Company estimated the fair value of the warrants using the Black-Scholes option pricing model with the following assumptions: Risk-free rate – 1.16%; dividend yield – 0%; Volatility – 96.68% and expected term – 1.92 years. </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Expected volatility is based on historical volatility of the Company’s common stock; the expected term until exercise represents the weighted-average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and the Company’s historical exercise patterns; and the risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. The Company has not paid any dividends since its inception and does not anticipate paying any dividends for the foreseeable future, so the dividend yield is assumed to be zero.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The Company also incurred $80,000 of costs in connection with the loan that were paid in cash.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color:
initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The fair value of the warrants and the cash loan costs are being amortized to interest expense over the term of the Loan Agreement. Amortization amounted to $2,001,000 for the three and nine months ended April 30, 2017.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Interest expense incurred under the Loan Agreement totaled $194,000 for the three and nine months ended April 30, 2017.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">At April 30, 2017, loans payable were $10,256,000 which is net of unamortized debt discounts of $2,119,000.</font></p>
<div><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><b>Note 8 — Equity</b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><i>Issuances of Class B Common Stock: </i></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Class B common stock activity for the nine months ended April 30, 2017 was as follows:</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></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="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">1.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The Company <font style="color: #231f20;">issued 180,000 restricted shares</font> to Jonas as compensation.</font></td></tr><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td></tr><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">2.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The Company <font style="color: #231f20;">issued 108,000 restricted shares to other officers and 56,000 restricted shares to other employees as compensation</font>.</font></td></tr><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td></tr><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">3.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The Company issued 24,000 shares to directors as compensation.</font></td></tr><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt;
font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td></tr><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">4.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="color: #231f20; font-family: 'times new roman', times, serif; font-size: 10pt;">The Company issued 1,250 restricted shares to a consultant as compensation.</font></td></tr><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td></tr><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">5.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="color: #231f20; font-family: 'times new roman', times, serif; font-size: 10pt;">The Company issued 1,440 shares upon the exercise of stock options and received proceeds of approximately $8,000.</font></td></tr><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td></tr><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">6.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="color: #231f20; font-family: 'times new roman', times, serif; font-size: 10pt;">The Company issued 147,682 shares to various Lenders upon the exercise of warrants and reduced the Loan Amount by $5,125,000.</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"><font style="color: #231f20; font-family: 'times new roman', times, serif; font-size: 10pt;">In the period from May 1, 2017 to the filing of this report, the Company issued 1,865 shares for the exercise of stock options and received proceeds of approximately $11,000</font><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">See Note 9 - Stock-Based Compensation below for a further discussion.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><i>Issuances of Warrants: </i></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><i> </i></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">As discussed in Note 7, the Company issued warrants to purchase 252,161 shares of the Company’s Class B common stock as part of the Loan Agreement. <font style="color: #231f20;">The Company issued 147,682 shares to various Lenders for the exercise of certain of these warrants</font>. At April 30, 2017, 104,479 warrants are still outstanding.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><i>Treasury Stock for Payroll Tax Withholding:</i></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Treasury stock consists of shares of Class B common stock that were tendered by employees of ours to satisfy the employees’ tax withholding obligations in connection with the lapsing of restrictions on awards of restricted stock. The fair market value 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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">At both April 30, 2017 and July 31, 2016, there were 39,693 shares of treasury stock totaling approximately $428,000.</font></p></div>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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 9 — Stock-Based Compensation</b></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"><i> </i></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"><i>Stock Options: </i></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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: 0pt 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;">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 April 30, 2017, 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="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;">No stock options were issued in the nine months ended April 30, 2017.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;">Stock-based compensation is included in selling, general and administrative and, with respect to stock options granted, amounted to approximately $97,000 and $0 for the three months ended April 30, 2017 and 2016, respectively, and approximately $290,000 and $0 for the nine months ended April 30, 2017 and 2016, respectively.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"><i> </i>Issuances of unrestricted and restricted shares of Class B common stock included in stock-based compensation for the nine months ended April 30, 2017 are as follows:</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; background-color: white; -webkit-text-stroke-width: 0px;"><font style="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</font>.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; background-color: white; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; background-color: white; -webkit-text-stroke-width: 0px;"><font style="color: #231f20;">In addition, in October 2016, the Company issued 120,000 restricted shares of Class B common stock</font> to Jonas as compensation as follows:</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"> </p><div> </div><table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; font-size: 10pt; word-spacing: 0px; border-collapse: collapse; widows: 1; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: top;"><td style="width: 46.93px; padding-right: 0.8pt;"> </td><td style="width: 45.93px; padding-right: 0.8pt;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">1.</font></td><td style="width: 1470.93px; padding-right: 0.8pt;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">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></font></td></tr><tr style="vertical-align: top;"><td style="padding-right: 0.8pt;"> </td><td style="padding-right: 0.8pt;"> </td></tr><tr
style="vertical-align: top;"><td style="padding-right: 0.8pt;"> </td><td style="padding-right: 0.8pt;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">2.</font></td><td style="padding-right: 0.8pt;"><font style="font: 10pt/normal 'times new roman', times, serif; color: #231f20; font-stretch: normal;">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="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"><font style="color: #231f20;">On September 9, 2016, 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="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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: 0pt 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;">On January 5, 2017, the Company granted three of its directors an aggregate of 24,000 restricted shares of Class B common stock. These grants are the annual grants to non-employee directors provided for in the Plan. The shares vested immediately. The aggregate fair value of the grant was approximately $886,000.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; background-color: white; -webkit-text-stroke-width: 0px;"><font style="color: #231f20;">On April 10, 2017, the Company granted Jonas 60,000 restricted shares of Class B common stock. The shares will vest over a three-year period. The aggregate fair value of the grant was approximately $2,144,000 which is being charged to expense on a straight-line basis over the vesting periods</font>.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 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;">Stock-based compensation is included in selling, general and administrative expense and, with respect to restricted stock granted, amounted to approximately $901,000 and $605,000 for the three months ended April 30, 2017 and 2016, respectively, and approximately $5,188,000 and $2,191,000 for the nine months ended April 30, 2017 and 2016, respectively. As of April 30, 2017, there was approximately $8,357,000 of total unrecognized compensation cost related to non-vested restricted shares. The Company expects to recognize the unrecognized compensation cost as follows: Fiscal 2017 - $973,000, Fiscal 2018 - $3,496,000, Fiscal 2019 - $2,704,000, Fiscal 2020 - $1,121,000 and Fiscal 2021 - $63,000.</p>
<div><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><b>Note 10 — Earnings (Loss) Per Share</b></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">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: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">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 (loss) earnings 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: 0pt 0px; color: #000000; text-transform: none; text-indent: 27pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"> </p><table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; orphans: 2; widows: 2; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="6">Three Months Ended<br />April 30,</td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="6">Nine Months Ended<br />April 30,</td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">2017</td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">2016</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">2017</td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">2016</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: center; font-stretch: normal;" colspan="14">(in thousands)</td><td style="font: bold 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom;
background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 815px; text-align: left; font-stretch: normal;">Stock options</td><td style="font: bold 10pt/normal 'times new roman', times, serif; width: 16px; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; width: 142px; text-align: right; font-stretch: normal;">45</td><td style="font: bold 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 142px; text-align: right; font-stretch: normal;">3</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; width: 15px; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; width: 141px; text-align: right; font-stretch: normal;">22</td><td style="font: bold 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 141px; text-align: right; font-stretch: normal;">4</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">Warrants</td><td style="font: bold 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">61</td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">-</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">43</td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">-</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-stretch: normal;">Non-vested restricted Class B common stock</td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;">265</td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;">179</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;">225</td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;">175</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr><tr
style="vertical-align: bottom; background-color: white;"><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="text-align: right; font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="text-align: right; font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="text-align: right; font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="text-align: right; font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-stretch: normal;">Shares excluded from the calculation of diluted (loss) earnings per share</td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;">371</td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;">182</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;">290</td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-stretch: normal;">179</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-stretch: normal;"> </td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">There were no stock options or warrants 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></div>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><b>Note 11 — Related Party Transactions</b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><u>Legal Fees</u></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The Company retained the services of a law firm to perform legal services.  One of the partners of the firm is a non-employee director of the Company.  Legal fees incurred amounted to approximately $2,000 and $207,000 for the three and nine months ended April 30, 2017, respectively. There were no fees incurred in fiscal year 2016. At both April 30, 2017 and July 31, 2016, the Company owed the law firm $0.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><u>IDT</u></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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, to 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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">  </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 January 31, 2017. Certain potential indemnification obligations will be released in exchange for the payments provided for in, and other provisions of, the Term Sheet, as described in Note 3 above.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing:
normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 and nine months ended April 30, 2017 and 2016.</font></p>
<div><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><b>Note 12 — Income Taxes</b></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">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 April 30, 2017, 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 fully realized.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">The provision for both the three and nine months ended April 30, 2017 and 2016 represents state income taxes.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">The federal return of Straight Path for the year ended July 31, 2015 is currently under audit by the Internal Revenue Service (“IRS”). No significant issues have been raised but 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: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><b>Note 13 — Business Segment Information</b> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Prior to November 1, 2015, the Company had two reportable business segments, Straight Path Spectrum, which holds fixed and mobile 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 was designated. Straight Path Ventures, whose results were previously included in our Straight Path Spectrum segment, focuses on developing next generation wireless technology for 39 GHz at the Company’s Gigabit Mobility Lab in Plano, Texas.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 the amount of management’s time and other resources dedicated to Straight Path Ventures 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:</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width:
0.25in; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">1.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Expenses related to the Gigabit Mobility Lab are being allocated 100% to Straight Path Ventures;</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">2.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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;</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">3.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Employment expenses related to one employee are being allocated 20% to Straight Path Spectrum and 80% to Straight Path Ventures;</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">4.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Employment expenses related to several other employees are being allocated 100% to Straight Path Spectrum.</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 recognized 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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Operating results for the business segments of the Company were as follows:</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" 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="2">Straight Path Spectrum</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </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">Straight Path IP</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </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">Straight Path Ventures</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </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">Total</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td> </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="font-weight: bold;">Three Months Ended April 30, 2017</td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 815px;">Revenues</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;">167</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;">$</td><td style="width: 142px; text-align: right; font-weight: bold;">-</td><td style="width: 16px; text-align: left; font-weight: bold;"> </td><td style="width: 15px; font-weight: bold;"> </td><td style="width: 15px; text-align: left; font-weight: bold;">$</td><td style="width: 141px; 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;">$</td><td style="width: 141px; text-align: right; font-weight: bold;">167</td><td style="width: 15px; text-align: left; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left;">Loss from operations before FCC Consent Decree and stockholder settlement</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(2,683</td><td style="text-align: left; font-weight: bold;">)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(881</td><td style="text-align: left; font-weight: bold;">)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(441</td><td style="text-align: left; font-weight: bold;">)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(4,005</td><td style="text-align: left; font-weight: bold;">)</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font-weight: bold;">Three Months Ended April 30, 2016</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td>Revenues</td><td> </td><td style="text-align: left;">$</td><td
style="text-align: right;">122</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">97</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">-</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">219</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left;">Loss from operations before FCC Consent Decree and stockholder settlement</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(1,308</td><td style="text-align: left;">)</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(160</td><td style="text-align: left;">)</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(434</td><td style="text-align: left;">)</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(1,902</td><td style="text-align: left;">)</td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font-weight: bold;">Nine Months Ended April 30, 2017</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td>Revenues</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;">$</td><td style="text-align: right; font-weight: bold;">491</td><td style="text-align: left; font-weight: bold;"> </td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;">$</td><td style="text-align: right; font-weight: bold;">-</td><td style="text-align: left; font-weight: bold;"> </td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;">$</td><td style="text-align: right; font-weight: bold;">-</td><td style="text-align: left; font-weight: bold;"> </td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;">$</td><td style="text-align: right; font-weight: bold;">491</td><td style="text-align: left; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left;">Loss from operations before FCC Consent Decree and stockholder settlement</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(7,973</td><td style="text-align: left; font-weight: bold;">)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(2,612</td><td style="text-align: left; font-weight: bold;">)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(1,283</td><td style="text-align: left; font-weight: bold;">)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(11,868</td><td style="text-align: left; font-weight: bold;">)</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font-weight: bold;">Nine Months Ended April 30, 2016</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td>Revenues</td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">339</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">1,695</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;">$</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;">2,034</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left;">Loss from operations before FCC Consent Decree and stockholder settlement</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(2,484</td><td style="text-align: left;">)</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(2,173</td><td style="text-align: left;">)</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(557</td><td style="text-align: left;">)</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(5,214</td><td style="text-align: left;">)</td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Total assets for the business segments of the Company were as follows:</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal;
word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0"><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="2">Straight Path</td><td style="font-weight: bold;"> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="2">Straight Path</td><td style="font-weight: bold;"> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="2">Straight Path</td><td style="font-weight: bold;"> </td><td> </td><td style="text-align: center;" colspan="2"> </td><td> </td></tr><tr style="vertical-align: bottom;"><td style="text-align: center;"> </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">Spectrum</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </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">IP Group</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </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">Ventures</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </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">Total</td><td 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; background-color: white;"><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: 815px; font-weight: bold;">April 30, 2017</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;">4,048</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;">$</td><td style="width: 142px; text-align: right; font-weight: bold;">15,799</td><td style="width: 16px; text-align: left; font-weight: bold;"> </td><td style="width: 15px; font-weight: bold;"> </td><td style="width: 15px; text-align: left; font-weight: bold;">$</td><td style="width: 141px; 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: 141px; text-align: right; font-weight: bold;">20,947</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><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 April 30, 2017 or July 31, 2016.</font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><b>Note 14 — Commitments and Contingencies</b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><i>Legal Proceedings</i> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><i>Regulatory Enforcement</i></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 FCC in 2011 and 2012. The Company conducted an independent investigation into these allegations. We met with the FCC and shared the Company’s conclusions, and the Company subsequently provided certain additional information requested by the FCC.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">On January 11, 2017, the Company entered into the Consent Decree with the FCC settling the FCC’s investigation regarding Straight Path Spectrum’s spectrum licenses on the terms specified therein. Material terms of the Consent Decree include the following:</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px 0pt 36pt; color: #000000; text-transform: none; text-indent: -18pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">1.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The FCC agreed to terminate its investigation.</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch:
normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">2.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Straight Path Spectrum agreed to surrender 93 of its 828 39 GHz economic area spectrum licenses to the FCC, as well as 103 rectangular service area licenses that the Company does not believe were material assets of the Company.</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">3.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Straight Path Spectrum keeps all of its 28 GHz spectrum licenses.</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">4.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The Company agreed to pay the Initial Civil Penalty of $15 million in four installments as follows - $4 million on or before February 11, 2017; $4 million on or before April 11, 2017; $3.5 million on or before July 11, 2017; and $3.5 million on or before October 11, 2017. If the Company sells its remaining spectrum licenses (see below) prior to the due date of any installation payment, any remaining installation payments will become due on the date of such closing.</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">5.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The Company agreed to submit to the FCC an application for approval of a sale of its remaining 39 GHz and 28 GHz spectrum licenses on or before January 11, 2018 and pay the FCC 20% of the proceeds from such the sale(s).</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 0.25in; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">6.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; padding-right: 0.8pt; font-stretch: normal;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">If the Company does not submit to the FCC an application for approval of a sale of its remaining spectrum licenses on or before January 11, 2018, the Company will pay an additional penalty of $85 million or surrender its remaining spectrum licenses.</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The Company recorded the Initial Civil Penalty of $15 million. The liability is classified as “FCC consent decree payable” on the consolidated balance sheet and the associated expense is classified as “civil penalty – FCC consent decree” on the consolidated statement of operations. The first two installments of the Initial Civil Penalty totaling $8 million have been paid. As of April 30, 2017, FCC consent decree payable was $7 million.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">As discussed in Note 2, the Company entered into the Verizon Merger Agreement. The fee owed per Item 5 above will be paid by Verizon as part of the Merger.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt; background-color: white;">If the Merger is consummated, the Company believes that the Merger would satisfy the requirement under the Consent Decree as described in Item 5 above. However, if the Merger is not completed for any reason, including as a result of the Company’s stockholders failing to adopt the Verizon Merger Agreement, there is no guarantee that the Company will be able to otherwise sell its remaining spectrum licenses.  If the Merger is not completed for any reason and the Company does not submit applications to the FCC seeking consent to the sale of its remaining spectrum licenses to an alternative acquirer by January 12, 2018, there is no guarantee that the FCC would not seek to require the Company to pay the $85 million penalty or seek the forfeiture of the Company’s remaining spectrum licenses. If the penalty is imposed by the FCC, there is no guarantee that the Company will be able to obtain sufficient financing to pay the additional $85 million or repay the remaining amount due of the $17.5 million loan from the Lenders. A failure by the Company to comply with these requirements could lead to a default by the Company under the Consent Decree, loss of the Company’s remaining spectrum licenses, either of which will have a material adverse effect on the Company’s financial condition and results of operations.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><i>Putative Class Action and Shareholder Derivative Action</i></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2;
widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 Jonas and 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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">On March 7, 2017, the Company and lead plaintiff in <i>Zacharia v. Straight Path Communications Inc. et al.</i>, No. 2:15-cv-08051-JMV-MF (D.N.J.), entered into a binding memorandum of understanding to settle the putative shareholder class action and dismiss the claims that were filed against the defendants in that action.  Under the agreed terms, the Company will provide for a $2.25 million initial payment (the “Initial Payment”) and a $7.2 million additional payment (the “Additional Payment”). The Initial Payment will be paid into an escrow account within 15 days following preliminary court approval of the settlement, and will be fully covered by insurance policies maintained by the Company.  The Additional Payment of $7.2 million will be paid within 60 days after the closing of a transaction to sell the Company’s spectrum licenses as specified in the Consent Decree with the FCC, or, in the event that the Company pays the non-transfer penalty specified in the Consent Decree, within 60 days after that payment is paid.  In any event, the Additional Payment will be payable no later than December 31, 2018. The settlement remains subject to entering in a definitive agreement and court approval.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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, Jonas, 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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><i>Sipnet Appeal and Related IPRs</i></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">As discussed in more detail below, following the CAFC’s decision in Sipnet, the PTAB denied found that the petitioners were unable to show the unpatentability of the vast majority of the challenged claims. The petitioners have appealed the PTAB’s decisions to the CAFC. On June 5, 2017, the CAFC heard oral argument in the appeal, and a decision is pending.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 filed their reply brief on January 4, 2017. On June 5, 2017, the CAFC heard oral argument in the appeal, and a decision is pending.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><i>Patent Enforcement</i></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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. 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. Discovery is underway in the Apple and Cisco actions.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">On January 19, 2017, Avaya filed voluntary petitions under chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. On May 2, 2017, Straight Path IP Group filed a proof of claim in the Avaya bankruptcy proceeding.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal;
orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><i>FCC License Renewal</i> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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, and based on our submission of a renewal application and substantial service demonstration, 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, we are only required to submit an application for renewal at those deadlines; we are not required to submit a substantial service demonstration for these licenses until the next build-out date specified in the UFMU Report and Order, which is June 1, 2024.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">It is likely that the FCC will separate the renewal and substantial service 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 substantial service deadline of August 10, 2018 and six of these licenses currently have a renewal and possible substantial service deadline of
September 21, 2018. The UMFU Report and Order does not affect the LMDS B band spectrum – the substantial service deadlines remain the same as the renewal deadlines. 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 substantial service deadline of August 10, 2018 and 112 licenses currently have a renewal and substantial service deadline of September 21, 2018. </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The UMFU Report and Order substantial service deadline of June 1, 2024 also applies to our 735 39 GHz licenses, which currently have a renewal deadline of October 18, 2020.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">For further discussion, please see “<i>Regulatory Enforcement</i>” above in this Note 14 to the Consolidated Financial Statements.<i> </i></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><i>Other Commitments and Contingencies</i></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><u>Former SPSI CEO</u></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">Approximately $19,000 and $6,000 was incurred to the Former SPSI CEO for this obligation for the three months ended April 30, 2017 and 2016, respectively, and approximately $58,000 and $36,000 for the nine months ended April 30, 2017 and 2016, respectively.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing:
0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">For further discussion, see Note 2 above.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><u>PTPMS</u> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">On May 29, 2012, the Company acquired certain licenses from PTPMS under an asset purchase agreement. Under the terms of the agreement, PTPMS is entitled to a “profit share” of 20% of the net proceeds from any partition, sale, assignment, etc., of any or all of the licenses acquired. For further discussion, see Note 2 above.</font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"><b>Note 4 — Summary of Significant Accounting Policies and Recent Pronouncements</b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">The Company’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended July 31, 2016.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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, “<i>Revenue 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 beginning 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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 (year ended July 31, 2017 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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 adoption of ASU 2015-03 did not have a material impact on the Company’s consolidated financial statements.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px;
letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 (quarter ended October 31, 2018 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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 (quarter ended October 31, 2019 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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 (quarter ended October 31, 2017 for the Company), including interim periods within those fiscal years. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements but the adoption is not expected to have a significant impact as of the filing of this report.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 (quarter ended October 31, 2018 for the Company). The Company is currently evaluating the impact of ASU 2016-10 on its consolidated financial statements.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 (quarter ended October 31, 2018 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 but the adoption is not expected to have a significant impact as of the filing of this report.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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 (quarter ended October 31, 2018 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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”). ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for annual periods beginning after December 15, 2017 (quarter ended October 31, 2018 for the Company), including interim periods
within those periods. The Company is currently evaluating the impact of adopting ASU 2017-01 on its consolidated financial statements but the adoption is not expected to have a significant impact as of the filing of this report.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">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.</font></p>
<div><table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; orphans: 2; widows: 2; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;" colspan="6">Three Months Ended<br />April 30,</td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;" colspan="6">Nine Months Ended<br />April 30,</td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;" colspan="2">2017</td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;" colspan="2">2016</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;" colspan="2">2017</td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;" colspan="2">2016</td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: center; font-size-adjust: none; font-stretch: normal;" colspan="14">(in thousands)</td><td style="font: bold 10pt/normal 'times new roman', times, serif; font-size-adjust: none; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 815px; text-align: left; font-size-adjust: none; font-stretch: normal;">Stock options</td><td style="font: bold 10pt/normal 'times new roman', times, serif; width: 16px; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; width: 142px; text-align: right; font-size-adjust: none; font-stretch: normal;">45</td><td style="font: bold 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 142px; text-align: right; font-size-adjust: none; font-stretch: normal;">3</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 16px; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; width: 15px; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; width: 141px; text-align: right; font-size-adjust: none; font-stretch: normal;">22</td><td style="font: bold 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; width: 141px; text-align: right; font-size-adjust: none; font-stretch: normal;">4</td><td style="font: 10pt/normal 'times new roman', times, serif; width: 15px; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font: 10pt/normal 'times new roman', times, serif; font-size-adjust: none; font-stretch:
normal;">Warrants</td><td style="font: bold 10pt/normal 'times new roman', times, serif; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: right; font-size-adjust: none; font-stretch: normal;">61</td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-size-adjust: none; font-stretch: normal;">-</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: right; font-size-adjust: none; font-stretch: normal;">43</td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-size-adjust: none; font-stretch: normal;">-</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-size-adjust: none; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;">Non-vested restricted Class B common stock</td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;">265</td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;">179</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;">225</td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-size-adjust: none; font-stretch: normal;">175</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 1.5pt; font-size-adjust: none; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="text-align: right; font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="text-align: right; font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="text-align: right; font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td><td style="text-align: right; font-size: 10pt;"> </td><td style="text-align: left; font-size: 10pt;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;">Shares excluded from the calculation of diluted (loss) earnings per share</td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black;
border-bottom-width: 4pt; border-bottom-style: double; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-size-adjust: none; font-stretch: normal;">371</td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-size-adjust: none; font-stretch: normal;">182</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-size-adjust: none; font-stretch: normal;">290</td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-size-adjust: none; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double; font-size-adjust: none; font-stretch: normal;">179</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; padding-bottom: 4pt; font-size-adjust: none; font-stretch: normal;"></td></tr></table></div>
<div><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" 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="2">Straight Path Spectrum</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </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">Straight Path IP</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </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">Straight Path Ventures</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </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">Total</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td> </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="font-weight: bold;">Three Months Ended April 30, 2017</td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 815px;">Revenues</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;">167</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;">$</td><td style="width: 142px; text-align: right; font-weight: bold;">-</td><td style="width: 16px; text-align: left; font-weight: bold;"> </td><td style="width: 15px; font-weight: bold;"> </td><td style="width: 15px; text-align: left; font-weight: bold;">$</td><td style="width: 141px; 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;">$</td><td style="width: 141px; text-align: right; font-weight: bold;">167</td><td style="width: 15px; text-align: left; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left;">Loss from operations before FCC Consent Decree and stockholder settlement</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(2,683</td><td style="text-align: left; font-weight: bold;">)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(881</td><td style="text-align: left; font-weight: bold;">)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(441</td><td style="text-align: left; font-weight: bold;">)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(4,005</td><td style="text-align: left; font-weight: bold;">)</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font-weight: bold;">Three Months Ended April 30, 2016</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td>Revenues</td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">122</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">97</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">-</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">219</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left;">Loss from operations before FCC Consent Decree and stockholder settlement</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(1,308</td><td style="text-align: left;">)</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(160</td><td style="text-align: left;">)</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(434</td><td style="text-align: left;">)</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(1,902</td><td style="text-align: left;">)</td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font-weight: bold;">Nine Months Ended April 30, 2017</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td
style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td>Revenues</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;">$</td><td style="text-align: right; font-weight: bold;">491</td><td style="text-align: left; font-weight: bold;"> </td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;">$</td><td style="text-align: right; font-weight: bold;">-</td><td style="text-align: left; font-weight: bold;"> </td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;">$</td><td style="text-align: right; font-weight: bold;">-</td><td style="text-align: left; font-weight: bold;"> </td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;">$</td><td style="text-align: right; font-weight: bold;">491</td><td style="text-align: left; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left;">Loss from operations before FCC Consent Decree and stockholder settlement</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(7,973</td><td style="text-align: left; font-weight: bold;">)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(2,612</td><td style="text-align: left; font-weight: bold;">)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(1,283</td><td style="text-align: left; font-weight: bold;">)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(11,868</td><td style="text-align: left; font-weight: bold;">)</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font-weight: bold;">Nine Months Ended April 30, 2016</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td>Revenues</td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">339</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;">$</td><td style="text-align: right;">1,695</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;">$</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;">2,034</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left;">Loss from operations before FCC Consent Decree and stockholder settlement</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(2,484</td><td style="text-align: left;">)</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(2,173</td><td style="text-align: left;">)</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(557</td><td style="text-align: left;">)</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">(5,214</td><td style="text-align: left;">)</td></tr></table></div>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 36pt; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;"> </font></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; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;" cellspacing="0" cellpadding="0"><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="2">Straight Path</td><td style="font-weight: bold;"> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="2">Straight Path</td><td style="font-weight: bold;"> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="2">Straight Path</td><td style="font-weight: bold;"> </td><td> </td><td style="text-align: center;" colspan="2"> </td><td> </td></tr><tr style="vertical-align: bottom;"><td style="text-align: center;"> </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">Spectrum</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </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">IP Group</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </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">Ventures</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </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">Total</td><td 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; background-color: white;"><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: 815px; font-weight: bold;">April 30, 2017</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;">4,048</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;">$</td><td style="width: 142px; text-align: right; font-weight: bold;">15,799</td><td style="width: 16px; text-align: left; font-weight: bold;"> </td><td style="width: 15px; font-weight: bold;"> </td><td style="width: 15px; text-align: left; font-weight: bold;">$</td><td style="width: 141px; 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: 141px; text-align: right; font-weight: bold;">20,947</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
15000000
2250000
7200000
184.00
38000000
85000000
2856000
<div><p style="margin: 0in 0in 10pt;">Five (5)-day volume-weighted average per share price ending on the second full trading day prior to the Effective Time, rounded to two decimal points, of Verizon Shares on the New York Stock Exchange (the “Verizon Share Value”) and rounded to the nearest ten-thousandth of a share (collectively and in the aggregate, the “Merger Consideration”).</p></div>
0.20
3000000
63900000
1000000
1000000
1800000
16000000
0.22
1054000
0.05
0.10
2017-12-29
15000000
15000000
5125000
252161
147682
147682
34.70
2018-12-31
7500000
The Lenders will receive additional warrants on a monthly basis with an aggregate exercise price equal to 10% (dropping to 7.5% in September 2017) of the then outstanding Loan Amount.
4040000
0.0116
0.00
0.9668
P1Y11M1D
80000
2001000
2001000
194000
194000
10256000
2119000
147682
147682
5125000
252161
104479
1503532
1250
164000
120000
60000
60000
24000
60000
4392000
1866000
1866000
886000
2144000
P13M
P3Y
P2Y
P4Y
P3Y
8357000
973000
3496000
2704000
1121000
63000
3
182000
3000
179000
179000
4000
175000
371000
45000
265000
61000
290000
22000
225000
43000
2000
207000
0
0
2
0.20
0.80
0.80
0.20
1.00
0.20
0.20
0.20
0.60
0.20
0.80
1.00
4000000
4000000
3500000
3500000
4
15000000
85000000
8000000
7000000
85000000
85000000
17500000
The Company will provide for a $2.25 million initial payment (the "Initial Payment") and a $7.2 million additional payment (the "Additional Payment"). The Initial Payment will be paid into an escrow account within 15 days following preliminary court approval of the settlement, and will be fully covered by insurance policies maintained by the Company. The Additional Payment of $7.2 million will be paid within 60 days after the closing of a transaction to sell the Company's spectrum licenses as specified in the Consent Decree with the Federal Communications Commission dated January 11, 2017 (the "Consent Decree"), or, in the event that the Company pays the non-transfer penalty specified in the Consent Decree, within 60 days after that payment is paid.
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.
0.40
0.00
3250000
6000000
36000000
19000000
58000000
0.50
0.20