Note 9—Equity

Class A Common Stock and Class B Common Stock:

The rights of holders of shares of Class A common stock and Class B common stock are identical except for certain voting and conversion rights and restrictions on transferability. Shares of Class A common stock and Class B common stock receive identical dividends per share when and if declared by the Company’s Board. In addition, shares of Class A common stock and Class B common stock have identical and equal priority rights per share in liquidation. The Class A common stock and Class B common stock do not have any other contractual participation rights. Shares of Class A common stock are entitled to three votes per share and shares of Class B common stock are entitled to one-tenth of a vote per share. Each share of Class A common stock may be converted into one share of Class B common stock, at any time, at the option of the holder. Shares of Class A common stock are subject to certain limitations on transferability that do not apply to shares of Class B common stock.

Class B common stock activity for Fiscal 2015 was as follows:

	1.	The Company issued 264,500 shares to directors and officers as compensation.
	2.	The Company issued 12,053 shares upon the exercise of stock options and received proceeds of $68,000.
	3.	The Company issued 20,300 shares for the exercise of deferred stock units.
	4.	2,200 restricted shares issued to former employees of IDT were forfeited in accordance with the terms of the grant.

Class B common stock activity for Fiscal 2016 was as follows:

	1.	The Company issued a total of 36,000 shares to two employees as compensation.
	2.	The Company issued 60,000 shares to Jonas as compensation.
	3.	The Company issued 24,000 shares to non-employee directors as compensation.
	4.	The Company issued 1,250 shares to a consultant as compensation.
	5.	The Company issued 1,631 shares upon the exercise of stock options and received proceeds of $9,300.
	6.	131 restricted shares issued to former employees of IDT were forfeited in accordance with the terms of the grant.

Class B common stock activity for Fiscal 2017 was as follows:

	1.	The Company issued 180,000 restricted shares to Jonas as compensation.
	2.	The Company issued 108,000 restricted shares to other officers and 56,000 restricted shares to other employees as compensation.
	3.	The Company issued 24,000 shares to non-employee directors as compensation.
	4.	The Company issued 1,250 shares to a consultant as compensation.
	5.	The Company issued 41,114 shares upon the exercise of stock options and received proceeds of $1,801,600.
	6.	The Company issued 147,682 shares to various Lenders upon the exercise of warrants and reduced the Loan Amount by $5,125,000.

See Note 10 - Stock-Based Compensation below for a further discussion.

No shares of Class B common stock were issued from August 1, 2017 to the date of the filing of this report.

Preferred Stock:

The Company’s Board has the authority to fix the price, rights, preferences, privileges and restrictions, including voting rights, of shares of the Company’s Preferred Stock without any further vote or action by the stockholders.

Issuances of Warrants:

As discussed in Note 8, the Company issued warrants as part of the Loan Agreement. The following table summarizes all warrant activity during Fiscal 2017.

	Warrants			Weighted- average Exercise Price		Weighted- average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding as of August 1, 2016		—		$	—		—	$	—
Granted		259,060			38.56
Exercised		(147,682	)		34.70
Cancelled/Forfeited		—			—
Outstanding and exercisable as of July 31, 2017		111,378		$	43.68		1.4	$	15,118

The following table summarizes information about warrants outstanding and exercisable at July 31, 2017:

	Warrants Outstanding and Exercisable
	Number Outstanding		Weighted- Average Remaining Life In Years		Weighted- Average Exercise Price		Number Exercisable
Exercise prices:
$ 34.70		104,479		1.4	$	34.70		104,479
$ 179.62		6,899		1.4		179.62		6,899
		111,378		1.4	$	43.68		111,378

The total intrinsic value of warrants exercised during Fiscal 2017 was $9,005,263. The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company’s closing stock price of $179.40 as of July 31, 2017, which would have been received by the warrant holders had all warrant holders exercised their warrants as of that date.

For the period from August 1, 2017 to the date of the filing of this report, the Company issued warrants to purchase 17,251 shares of the Company’s Class B Common Stock (see Note 8 – Loan Payable).

Dividends:

In April 2015, Straight Path IP Group declared a dividend totaling $5,647,342. Straight Path IP Group paid $875,338 to its minority stockholders and such dividends were charged to noncontrolling interests. The dividend to Straight Path of $4,772,004 was not paid as of the filing of this report but is eliminated in producing the Company’s consolidated financial statements.

The Company does not anticipate paying any additional dividends on its common stock until it achieves sustainable profitability (after satisfying all of our operational needs, including payments to the Former SPSI CEO) and retains certain minimum cash reserves. Following that time, we will retain sufficient cash to provide for investment in growth opportunities and provide for the creation of long-term stockholder value, particularly through development of the Straight Path Spectrum and Straight Path Ventures businesses and possibly the acquisition of complementary businesses or assets. However, the Company does not intend to retain earnings beyond those needs and beyond what it believes it can effectively deploy, and the Company expects that such additional resources would be returned to stockholders via distributions or other means. The payment of dividends in any specific period will be at the sole discretion of the Company’s Board. Except for any special dividend that may be paid in connection with the transactions contemplated by the IDT Term Sheet discussed in Note 3, the Verizon Merger Agreement does not permit the Company to pay any additional dividends on its common stock.

Treasury Stock:

Treasury stock consists of shares of Class B common stock 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.

In September 2014, 35,846 shares of Class B common stock with a value of $348,051 were repurchased. In April 2015, 9,982 shares of Class B common stock with a value of $197,344 were repurchased.

On January 16, 2015, the Company sold 4,105 shares of treasury stock to one of its officers at market price and received proceeds of $65,003.

On July 11, 2016, the Company issued 2,030 shares of treasury stock to certain employees as part of its match under the Company's 401(k) plan. The value of the shares totaled $52,476.

At July 31, 2017 and 2016, there were 39,693 shares of treasury stock at a value of $427,916. At July 31, 2015, there were 41,723 shares of treasury stock at a value of $480,392.