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<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">USA Technologies, Inc. (the “Company”, “We”, “USAT”, or “Our”) was incorporated in the Commonwealth of Pennsylvania in January 1992. We are a provider of technology-enabled solutions and value-added services that facilitate electronic payment transactions primarily within the unattended Point of Sale (“POS”) market. We are a leading provider in the small ticket, beverage and food vending industry and are expanding our solutions and services to other unattended market segments, such as amusement, commercial laundry, kiosk and others. Since our founding, we have designed and marketed systems and solutions that facilitate electronic payment options, as well as telemetry Internet of Things (“IoT”) and machine-to-machine (“M2M”) services, which include the ability to remotely monitor, control, and report on the results of distributed assets containing our electronic payment solutions. Historically, these distributed assets have relied on cash for payment in the form of coins or bills, whereas, our systems allow them to accept cashless payments such as through the use of credit or debit cards or other emerging contactless forms, such as mobile payment.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>INTERIM FINANCIAL INFORMATION</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<div style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The accompanying unaudited consolidated financial statements of USA Technologies, Inc. have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements and therefore should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2016. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting of normal recurring adjustments, have been included. Operating results for the three-month period ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending June 30, 2017. The balance sheet at June 30, 2016 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.</div>
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<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><b>2. ACCOUNTING POLICIES</b></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i> </i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>CONSOLIDATION</i></p>
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<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i> </i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>USE OF ESTIMATES</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i> </i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>CASH</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company maintains its cash in bank deposit accounts, which may exceed federally insured limits at times.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i> </i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>ACCOUNTS RECEIVABLE AND ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Accounts receivable include amounts due to the Company for sales of equipment, other amounts due from customers, merchant service receivables, and unbilled amounts due from customers, net of the allowance for uncollectible accounts.</p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">  </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments, including from a shortfall in the customer transaction fund flow from which the Company would normally collect amounts due.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The allowance is determined through an analysis of various factors including the aging of the accounts receivable, the strength of the relationship with the customer, the capacity of the customer transaction fund flow to satisfy the amount due from the customer, an assessment of collection costs and other factors. The allowance for doubtful accounts receivable is management’s best estimate as of the respective reporting date. The Company writes off accounts receivable against the allowance when management determines the balance is uncollectible and the Company ceases collection efforts. Management believes that the allowance recorded is adequate to provide for its estimated credit losses.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>FINANCE RECEIVABLES</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company offers extended payment terms to certain customers for equipment sales under its Quick Start Program. In accordance with the Financial Accounting Standards Board Accounting Standards Codification® (“ASC”) Topic 840, “Leases”, agreements under the Quick Start Program qualify for sales-type lease accounting. Accordingly, the future minimum lease payments are classified as finance receivables in the Company’s consolidated balance sheets. Finance receivables or Quick Start leases are generally for a sixty month term. Finance receivables are carried at their contractual amount and charged off against the allowance for credit losses when management determines that recovery is unlikely and the Company ceases collection efforts. The Company recognizes a portion of the note or lease payments as interest income in the accompanying consolidated financial statements based on the effective interest rate method.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>INVENTORY, Net</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Inventory consists of finished goods and packaging materials. The Company’s inventory is stated at the lower of cost (average cost basis) or market.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i> </i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>PROPERTY AND EQUIPMENT, Net</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Property and equipment are recorded at cost. Property and equipment are depreciated on the straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized on the straight-line basis over the lesser of the estimated useful life of the asset or the respective lease term.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i> </i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>GOODWILL AND INTANGIBLE ASSETS</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company’s intangible assets include goodwill, non-compete agreements, brand, developed technology and customer relationships.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Goodwill represents the excess of cost over fair value of the net assets purchased in acquisitions. The Company accounts for goodwill in accordance with ASC 350, “Intangibles – Goodwill and Other”. Under ASC 350, goodwill is not amortized to earnings, but instead is subject to periodic testing for impairment. Testing for impairment is to be done at least annually and at other times if events or circumstances arise that indicate that impairment may have occurred. The Company has selected April 1 as its annual test date.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">  </p>
<p style="widows: 2; text-transform: none; font-style: normal; text-indent: 0px; margin: 0pt 0px; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-variant-ligatures: normal; font-variant-caps: normal;"></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>FAIR VALUE OF FINANCIAL INSTRUMENTS</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The FASB issued Accounting Standards Update (“ASU”) 2010-06, “Fair Value Measurements and Disclosures (“Topic 820”): Improving Disclosures about Fair Value Measurements.” ASU 2010-06 amends certain disclosure requirements of Subtopic 820-10. This ASU provides additional disclosures for transfers in and out of Levels 1 and 2 and for activity in Level 3. This ASU also clarifies certain other existing disclosure requirements including level of desegregation and disclosures around inputs and valuation techniques.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company’s financial assets and liabilities are accounted for in accordance with ASC 820 “Fair Value Measurement.” Under ASC 820 the Company uses inputs from the three levels of the fair value hierarchy to measure its financial assets and liabilities. The three levels are as follows:</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Level 1- Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Level 2- Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Level 3- Inputs are unobservable and reflect the Company’s assumptions that market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company’s financial instruments, principally accounts receivable, short-term finance receivables, prepaid expenses and other assets, accounts payable and accrued expenses, are carried at cost which approximates fair value due to the short-term maturity of these instruments. The fair value of the Company’s obligations under its long-term debt agreements and the long-term portion of its finance receivables approximates their carrying value as such instruments are at market rates currently available to the Company.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i> </i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>REVENUE RECOGNITION</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Revenue from the sale or QuickStart lease of equipment is recognized on the terms of freight-on-board shipping point. Activation fee revenue, if applicable, is recognized when the Company’s cashless payment device is initially activated for use on the Company network. Transaction processing revenue is recognized upon the usage of the Company’s cashless payment and control network. License fees for access to the Company’s devices and network services are recognized on a monthly basis. In all cases, revenue is only recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed and determinable, and collection of the resulting receivable is reasonably assured. The Company estimates an allowance for product returns at the date of sale and license and transaction fee refunds on a monthly basis.</p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">ePort hardware is available to customers under the QuickStart program pursuant to which the customer would enter into a five-year non-cancelable lease with either the Company or a third-party financing company for the devices. The Company utilizes its best estimate of selling price when calculating the revenue to be recorded under these leases. The leases qualify for sales type lease accounting. Accordingly, the company recognizes a portion of lease payments as interest income for leases not placed with a third-party financing Company. At the end of the lease period, the customer would have the option to purchase the device at its residual value.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">  <b> </b></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>PREFERRED STOCK</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company adopted the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-16 in determining whether the Company’s Series A Convertible Preferred Stock (“preferred stock”) is more equity-like or debt-like, and whether derivatives embedded in the preferred stock, if any, must be bifurcated and accounted for separately from its host contract. Based upon management’s review of the preferred stock features, management has determined that the preferred stock is more equity-like and that the embedded derivatives do not require bifurcation. As such, the adoption of this standard did not have a material impact on the company's financial statements.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">  </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>ACCOUNTING FOR EQUITY AWARDS</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification® (“ASC”) Topic 718, the cost of employee services received in exchange for an award of equity instruments is based on the grant-date fair value of the award and allocated over the vesting period of the award.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i> </i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>INCOME TAXES</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company follows the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification® (“ASC”) Topic 740, “Accounting for Uncertainty in Income Taxes”,<i> </i>which<i> </i>provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the consolidated financial statements. Accordingly, tax positions must meet a “more-likely-than-not” recognition threshold at the effective date to be recognized upon the adoption of ASC Topic 740 and in subsequent periods.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Income taxes are computed using the asset and liability method of accounting. Under the asset and liability method, a deferred tax asset or liability is recognized for estimated future tax effects attributable to temporary differences and carryforwards. The measurement of deferred income tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax benefits only to the extent that, based on available evidence, it is more likely than not such benefits will be realized. The Company recognizes interest and penalties, if any, related to uncertain tax positions in selling, general and administrative expenses. No interest or penalties related to uncertain tax positions were accrued or incurred during the three months ended September 30, 2016 and 2015.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>EARNINGS (LOSS) PER COMMON SHARE</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Basic earnings (loss) per share are calculated by dividing income (loss) applicable to common shares by the weighted average common shares outstanding for the period. Diluted earnings per share are calculated by dividing income (loss) applicable to common shares by the weighted average common shares outstanding for the period plus the effect of potential common shares unless such effect is anti-dilutive.</p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i> </i></p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>SOFTWARE DEVELOPMENT COSTS</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company follows the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification® (“ASC”) Topic 350-40, “Accounting for the Cost of Computer Software Developed or obtained for Internal Use”, which provides for guidance for what costs can be capitalized for internal use.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Capitalized costs for internal-use software are included in fixed assets in the consolidated balance sheet and are amortized over three years. Costs incurred during the preliminary project along with post-implementation stages of internal use computer software development and costs incurred to maintain existing product offerings are expensed as incurred. The capitalization and ongoing assessment of recoverability of development costs require considerable judgment by management with respect to certain external factors, including, but not limited to, technological and economic feasibility and estimated economic life.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">  </p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>RECLASSIFICATION</i></p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i> </i></p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Commencing with the June 30, 2016 financial statements, the Company changed the manner in which it presents certain unfunded finance receivables in its consolidated balance sheets and the related statements of cash flows. These finance receivables which have yet to be and are expected to be funded by a third-party funding source. The previous accounting classification recorded these constitute amounts as accounts receivable in the consolidated balance sheets and the related statements of cash flows. The impact of this change on the Statement of Cash Flows is as follows:</p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>   </i></p>
<table align="center" style="widows: 2; text-transform: none; text-indent: 0px; width: 75%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Accounts<br />Receivable</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Finance<br />Receivables</td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-indent: 0in; padding-left: 0.125in; width: 916px;">Per Original Statement of Cash Flows- Three months ended September 30, 2015</td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;">$</td>
<td style="text-align: right; width: 126px;">(713</td>
<td style="text-align: left; width: 12px;">)</td>
<td style="width: 12px;"> </td>
<td style="text-align: left; width: 12px;">$</td>
<td style="text-align: right; width: 125px;">168</td>
<td style="text-align: left; width: 12px;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; padding-bottom: 2px; padding-left: 0.25in;">Impact from the reclassification</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">751</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">(751</td>
<td style="text-align: left; padding-bottom: 2px;">)</td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="padding-left: 0.125in;"> </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="background-color: azure; vertical-align: bottom;">
<td style="text-indent: 0in; padding-left: 0.125in;">Adjusted Statement of Cash Flows- Three months ended September 30, 2015</td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">38</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">(583</td>
<td style="text-align: left; padding-bottom: 4px;">)</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;"><b>3. EARNINGS PER SHARE CALCULATION</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; orphans: 2; widows: 2; 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; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">The calculation of basic earnings per share (“eps”) and diluted earnings per share are presented below:</p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: center; 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;"> </p>
<table style="font: 10pt/normal 'times new roman', times, serif; width: 85%; 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;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="6" nowrap="nowrap">Three months ended</td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="text-align: center; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;" colspan="6" nowrap="nowrap">September 30,</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td style="padding-bottom: 2px;">($ in thousands, except per share data)</td>
<td style="padding-bottom: 2px;"> </td>
<td style="text-align: center; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;" colspan="2">2016</td>
<td style="padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="text-align: center; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;" colspan="2">2015</td>
<td style="padding-bottom: 2px;"> </td>
</tr>
<tr style="vertical-align: bottom;">
<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: azure;">
<td style="width: 1044px; text-align: left; font-style: normal; font-weight: normal;"><b>Numerator for basic earnings per share </b>- Net loss available to common shareholders</td>
<td style="width: 14px;"> </td>
<td style="width: 14px; text-align: left;">$</td>
<td style="width: 141px; text-align: right;">(2,798</td>
<td style="width: 14px; text-align: left;">)</td>
<td style="width: 14px;"> </td>
<td style="width: 14px; text-align: left;">$</td>
<td style="width: 141px; text-align: right;">26</td>
<td style="width: 14px; text-align: left;"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: white;">
<td style="text-align: left; padding-bottom: 2px;">Gain recorded for reduction in fair value of warrants*</td>
<td style="padding-bottom: 2px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;">-</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;">(343</td>
<td style="text-align: left; padding-bottom: 2px;">)</td>
</tr>
<tr style="vertical-align: bottom; background-color: azure;">
<td style="text-align: left; padding-bottom: 4px; font-style: normal; font-weight: normal;"><b>Numerator for diluted earnings per share</b> - Net loss available to common shareholders</td>
<td style="padding-bottom: 4px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">(2,798</td>
<td style="text-align: left; padding-bottom: 4px;">)</td>
<td style="padding-bottom: 4px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">(317</td>
<td style="text-align: left; padding-bottom: 4px;">)</td>
</tr>
<tr style="vertical-align: bottom; background-color: white;">
<td> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: azure;">
<td style="font-style: normal; font-weight: normal;"><b>Denominator for basic earnings per share</b> - Weighted average shares outstanding</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">38,488,005</td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">35,848,395</td>
<td style="text-align: left;"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: white;">
<td style="text-align: left; padding-bottom: 2px;">Effect of dilutive potential common shares*</td>
<td style="padding-bottom: 2px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;">-</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;">639,484</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: azure;">
<td style="padding-bottom: 4px; font-style: normal; font-weight: normal;"><b>Denominator for diluted earnings per share</b> - Adjusted weighted average shares outstanding</td>
<td style="padding-bottom: 4px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;"> </td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">38,488,005</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;"> </td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">36,487,879</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: white;">
<td> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: azure;">
<td>Basic earnings (loss) per share</td>
<td> </td>
<td style="text-align: left;">$</td>
<td style="text-align: right;">(0.07</td>
<td style="text-align: left;">)</td>
<td> </td>
<td style="text-align: left;">$</td>
<td style="text-align: right;">-</td>
<td style="text-align: left;"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: white;">
<td>Diluted loss per share</td>
<td> </td>
<td style="text-align: left;">$</td>
<td style="text-align: right;">(0.07</td>
<td style="text-align: left;">)</td>
<td> </td>
<td style="text-align: left;">$</td>
<td style="text-align: right;">(0.01</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: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px 0pt 0.35in; 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;">  * No adjustment necessary for the three months ended September 30, 2016 as the effects would be anti-dilutive.</p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><b>4. FINANCE RECEIVABLES</b></p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Finance receivables consist of the following:</p>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<table align="center" style="widows: 2; text-transform: none; text-indent: 0px; width: 75%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td> </td>
<td> </td>
<td style="text-align: center;" colspan="2">September 30,</td>
<td> </td>
<td> </td>
<td style="text-align: center;" colspan="2">June 30,</td>
<td> </td>
</tr>
<tr style="vertical-align: bottom;">
<td style="padding-bottom: 2px;">($ in thousands)</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2016</td>
<td style="padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2016</td>
<td style="padding-bottom: 2px;"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td> </td>
<td> </td>
<td style="text-align: center;" colspan="2">(unaudited)</td>
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td> </td>
</tr>
<tr style="vertical-align: bottom;">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; width: 753px;">Total finance receivables</td>
<td style="width: 12px;"> </td>
<td style="text-align: left; width: 12px;">$</td>
<td style="text-align: right; width: 177px;">7,311</td>
<td style="text-align: left; width: 12px;"> </td>
<td style="width: 11px;"> </td>
<td style="text-align: left; width: 11px;">$</td>
<td style="text-align: right; width: 176px;">7,306</td>
<td style="text-align: left; width: 11px;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="text-align: left; padding-bottom: 2px;">Less current portion</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">3,349</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">3,588</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; padding-bottom: 4px;">Non-current portion of finance receivables</td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">3,962</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">3,718</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
</tr>
</table>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><b> </b></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company collects monthly payments of its finance receivables from the customers’ transaction fund flow. Accordingly, as the fund flow from these customers’ transactions is generally sufficient to satisfy the amount due to the Company, the risk of loss is considered remote and the Company has not provided for an allowance for credit losses for finance receivables as of September 30, 2016 and June 30, 2016.</p>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Credit Quality Indicators</p>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<table align="center" style="widows: 2; text-transform: none; text-indent: 0px; width: 75%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td>Credit risk profile based on payment activity:</td>
<td> </td>
<td style="text-align: center;" colspan="2">September 30,</td>
<td> </td>
<td> </td>
<td style="text-align: center;" colspan="2">June
30,</td>
<td> </td>
</tr>
<tr style="vertical-align: bottom;">
<td> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2016</td>
<td style="padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2016</td>
<td style="padding-bottom: 2px;"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td>($ in thousands)</td>
<td> </td>
<td style="text-align: center;" colspan="2">(unaudited)</td>
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="width: 753px;">Performing</td>
<td style="width: 12px;"> </td>
<td style="text-align: left; width: 12px;">$</td>
<td style="text-align: right; width: 177px;">7,254</td>
<td style="text-align: left; width: 12px;"> </td>
<td style="width: 11px;"> </td>
<td style="text-align: left; width: 11px;">$</td>
<td style="text-align: right; width: 176px;">7,174</td>
<td style="text-align: left; width: 11px;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="padding-bottom: 2px;">Nonperforming</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">57</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">132</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="padding-bottom: 4px;">Total</td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">7,311</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">7,306</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
</tr>
</table>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Age Analysis of Past Due Finance Receivables</p>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">As of September 30, 2016</p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<table align="center" style="widows: 2; text-transform: none; text-indent: 0px; width: 75%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">31 – 60</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">61 – 90</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Greater than</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Total</td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td style="padding-bottom: 2px;" nowrap="nowrap">($ in thousands)</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Days Past<br />Due</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Days Past<br />Due</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">90 Days Past<br />Due</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Total Past<br />Due</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Current</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Finance<br />Receivables</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="width: 453px;"> </td>
<td style="width: 14px;"> </td>
<td style="text-align: left; width: 14px;"> </td>
<td style="text-align: right; width: 107px;"> </td>
<td style="text-align: left; width: 14px;"> </td>
<td style="width: 14px;"> </td>
<td style="text-align: left; width: 14px;"> </td>
<td style="text-align: right; width: 107px;"> </td>
<td style="text-align: left; width: 14px;"> </td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td
style="text-align: right; width: 106px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="text-align: right; width: 106px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="text-align: right; width: 106px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="text-align: right; width: 106px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; padding-bottom: 2px;">QuickStart Leases</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">2</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">10</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">45</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">57</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">7,254</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">7,311</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
</tr>
</table>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Age Analysis of Past Due Finance Receivables</p>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">As of June 30, 2016</p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<table align="center" style="widows: 2; text-transform: none; text-indent: 0px; width: 75%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">31 – 60</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">61 – 90</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Greater than</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Total</td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td style="padding-bottom: 2px;" nowrap="nowrap">($ in thousands)</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Days Past<br />Due</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Days Past<br />Due</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">90 Days Past<br />Due</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Total Past<br />Due</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Current</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Finance<br />Receivables</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="width: 453px;"> </td>
<td style="width: 14px;"> </td>
<td style="text-align: left; width: 14px;"> </td>
<td style="text-align: right; width: 107px;"> </td>
<td style="text-align: left; width: 14px;"> </td>
<td style="width: 14px;"> </td>
<td style="text-align: left; width: 14px;"> </td>
<td style="text-align: right; width: 107px;"> </td>
<td style="text-align: left; width: 14px;"> </td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="text-align: right; width: 106px;"> </td>
<td style="text-align:
left; width: 13px;"> </td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="text-align: right; width: 106px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="text-align: right; width: 106px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="text-align: right; width: 106px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; padding-bottom: 2px;">QuickStart Leases</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">98</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">31</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">3</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">132</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">7,174</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">7,306</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
</tr>
</table>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<div>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><b>5. GOODWILL AND INTANGIBLES</b></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">There was $44 thousand of amortization expense relating to acquired intangible assets during the three months ended September 30, 2016. There was no amortization expense relating to acquired intangible assets during the three months ended September 30, 2015. Intangible asset balances consisted of the following:</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<table align="center" style="widows: 2; text-transform: none; text-indent: 0px; width: 90%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td nowrap="nowrap">($ in thousands)</td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Balance</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Additions/</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Balance</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Amortization</td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">June 30, 2016</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Adjustments</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Amortization</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">September 30, 2016</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Period</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="text-align: left;">Intangible 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>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; padding-left: 9pt; width: 595px;">Non-compete agreements</td>
<td style="width: 15px;"> </td>
<td style="text-align: left; width: 15px;">$</td>
<td style="text-align: right; width: 113px;">1</td>
<td style="text-align: left; width: 15px;"> </td>
<td style="width: 14px;"> </td>
<td style="text-align: left; width: 14px;">$</td>
<td style="text-align: right; width: 112px;">-</td>
<td style="text-align: left; width: 14px;"> </td>
<td style="width: 14px;"> </td>
<td style="text-align: left; width: 14px;">$</td>
<td style="text-align: right; width: 112px;">-</td>
<td style="text-align: left; width: 14px;"> </td>
<td style="width: 14px;"> </td>
<td style="text-align: left; width: 14px;">$</td>
<td style="text-align: right; width: 112px;">1</td>
<td style="text-align: left; width: 14px;"> </td>
<td style="width: 14px;"> </td>
<td style="text-align: left; width: 14px;"> </td>
<td style="text-align: right; width: 141px;"><font style="font-size: 10pt;"> 2 years</font></td>
<td style="text-align: left; width: 14px;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="padding-left: 9pt;">Brand</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">79</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;">(8</td>
<td style="text-align: left;">)</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">71</td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"><font style="font-size: 10pt;"> 3 years</font></td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; padding-left: 9pt;">Developed technology</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">576</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;">(32</td>
<td style="text-align: left;">)</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">544</td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"><font style="font-size: 10pt;"> 5 years</font></td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="text-align: left; padding-bottom: 2px; padding-left: 9pt;">Customer relationships</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">142</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">-</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">(4</td>
<td style="text-align: left; padding-bottom: 2px;">)</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">138</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="text-align: right; padding-bottom: 2px;"><font style="font-size: 10pt;"> 10 years</font></td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; padding-bottom: 4px;">Total Intangible Assets</td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">798</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">-</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">(44</td>
<td style="text-align: left; padding-bottom: 4px;">)</td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">754</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="text-align: right; padding-bottom: 4px;"> </td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="padding-bottom: 4px;">Goodwill</td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">11,703</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">-</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">-</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">11,703</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="text-align: right; padding-bottom: 4px;"><font style="font-size: 10pt;"> Indefinite</font></td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
</tr>
</table>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
</div>
<div>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><b>6. LINE OF CREDIT</b></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">During the fiscal year ended June 30, 2016, the Company entered into a Loan and Security Agreement and other ancillary documents (the “Heritage Loan Documents”) with Heritage Bank of Commerce (“Heritage Bank”), providing for a secured asset-based revolving line of credit in an amount of up to $12.0 million (the “Heritage Line of Credit”) at an interest rate calculated based on the Federal Reserves’ Prime plus 2.25%. The Heritage Line of Credit and the Company’s obligations under the Heritage Loan Documents are secured by substantially all of the Company’s assets, including its intellectual property. The maturity date of the Heritage Line of Credit is March 29, 2017. At the time of maturity, all outstanding advances under the Heritage Line of Credit as well as any unpaid interest are due and payable. Prior to maturity of the Heritage Line of Credit, the Company may prepay amounts due under the Heritage Line of Credit without penalty, and subject to the terms of the Heritage Loan Documents, may re-borrow any such amounts.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Heritage Loan Documents contain customary representations and warranties and affirmative and negative covenants applicable to the Company. The Heritage Loan Documents also require the Company to achieve a minimum Adjusted EBITDA, as defined in the Heritage Loan Documents, measured on a quarterly basis. The Heritage Loan Documents also require that the number of the Company’s connections as of the end of each fiscal quarter shall not decrease by more than five percent as compared to the number of the Company’s connections as of the end of the immediately prior fiscal quarter. As of September 30, 2016, the Company was not in compliance with the minimum Adjusted EBITDA provision of the debt covenant. The Company received a waiver from its bank for the covenant default.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<div style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The balance due on the Heritage line of credit was $7.3 million and $7.2 million at September 30, 2016 and June 30, 2016, respectively. As of September 30, 2016, $4.7 million was available under our line of credit. Interest expense on the line of credit was approximately $107 thousand for the three months ended September 30, 2016.</div>
</div>
<div>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><b>7. LONG-TERM DEBT</b></p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i> </i></p>
<div style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company periodically enters into capital lease obligations to finance certain office, network equipment and related support for use in its daily operations. During the three-month period ended September 30, 2016 the Company commenced capital lease obligations of $308 thousand. The obligations are due in 12 and 8 quarterly installments of $15 thousand and $21 thousand, respectively. The value of the acquired equipment is included in property and equipment and amortized accordingly.</div>
</div>
<div>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><b>8. FAIR VALUE OF FINANCIAL INSTRUMENTS</b></p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">As of June 30, 2016, the fair values of the Company’s Level 3 financial instrument totaled $3.739 million for 2.2 million warrants. The Level 3 financial instrument consist of common stock warrants issued by the Company in March 2011, which include features requiring liability treatment of the warrants. The fair value of warrants issued in March 2011 to purchase shares of the Company’s common stock is based on valuations performed by an independent third-party valuation firm. The fair value was determined using proprietary valuation models using the quality of the underlying securities of the warrants, restrictions on the warrants and security underlying the warrants, time restrictions and precedent sale transactions completed in the secondary market or in other private transactions. During the three months ended September 30, 2016 all of the aforementioned warrants were exercised and the then-fair value warrant liability was reclassified as Common Stock.</p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<div style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The following table summarizes the changes in the Company’s Level 3 financial instruments for the three months ended September 30, 2016 and 2015.</div>
<table align="center" style="font: 10pt/normal 'times new roman', times, serif; width: 80%; 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;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td style="padding-left: 0px;"> </td>
<td> </td>
<td style="text-align: center;" colspan="6">Three months ended</td>
<td> </td>
</tr>
<tr style="vertical-align: bottom;">
<td style="padding-bottom: 2px; padding-left: 0px;">($ in thousands)</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="6">September 30,</td>
<td style="padding-bottom: 2px;"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td style="padding-left: 0px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2016</td>
<td style="padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2015</td>
<td style="padding-bottom: 2px;"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td style="padding-left: 0px;"> </td>
<td> </td>
<td style="text-align: center;" colspan="2"> </td>
<td> </td>
<td> </td>
<td style="text-align: center;" colspan="2"> </td>
<td> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; padding-left: 0px; width: 802px;">Beginning balance</td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;">$</td>
<td style="text-align: right; width: 188px;">(3,739</td>
<td style="text-align: left; width: 13px;">)</td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 12px;">$</td>
<td style="text-align: right; width: 187px;">(978</td>
<td style="text-align: left; width: 12px;">)</td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="text-align: left; padding-left: 0px;">Increase due to change in fair value of warrant liabilities</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">(1,490</td>
<td style="text-align: left;">)</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">343</td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; padding-bottom: 2px; padding-left: 0px;">Reclass of fair value of warranty liability to common stock upon exercise of warrants</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">5,229</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">-</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="padding-bottom: 4px; padding-left: 0px;">Ending balance</td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">-</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">(635</td>
<td style="text-align: left; padding-bottom: 4px;">)</td>
</tr>
</table>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<div style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">There were no transfers of assets or liabilities between level 1, level 2, or level 3 during the three months ended September 30, 2016 and 2015. As of September 30, 2016 and June 30, 2016, the Company held no Level 1 or Level 2 financial instruments.</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;"><b>9. INCOME TAXES</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; orphans: 2; widows: 2; 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; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;"></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;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">For the three months ended September 30, 2016, an income tax benefit of $115 thousand (substantially all deferred income taxes) was recorded based upon loss before benefit for income taxes using an estimated annual effective income tax rate of 26% for the fiscal year ending June 30, 2017 net of a provision for the tax effect of the change in the fair value of warrant liabilities which was treated discretely.</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;"><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;"><font style="font-family: 'times new roman', times, serif; font-size: 10pt;">For the three months ended September 30, 2015, an income tax provision of $27 thousand (substantially all deferred income taxes) was recorded based upon income before provision for income taxes using an estimated annual effective income tax rate of 39% for the fiscal year ending June 30, 2016 net of a benefit for the tax effect of the change in the fair value of warrant liabilities which was treated discretely.</font></p>
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<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><b>11. COMMITMENTS AND CONTINGENCIES</b></p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i> </i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">In the quarter ended September 30, 2016 the Company entered into a lease agreement for its operations in Portland, Oregon, which commenced October 1, 2016. The new location consists of 5,362 square feet and will expire in December 2019. The lease includes monthly rental payments of $11 thousand. The straight-line rent expense for this lease is $11 thousand per month.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<div style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">From time to time, the Company is involved in various legal proceedings arising during the normal course of business which, in the opinion of the management of the Company, will not have a material adverse effect on the Company’s financial position and results of operations or cash flows.</div>
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<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>CONSOLIDATION</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.</p>
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<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>USE OF ESTIMATES</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.</p>
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<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>CASH</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company maintains its cash in bank deposit accounts, which may exceed federally insured limits at times.</p>
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<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>ACCOUNTS RECEIVABLE AND ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Accounts receivable include amounts due to the Company for sales of equipment, other amounts due from customers, merchant service receivables, and unbilled amounts due from customers, net of the allowance for uncollectible accounts.</p>
<div style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </div>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments, including from a shortfall in the customer transaction fund flow from which the Company would normally collect amounts due.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<div style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The allowance is determined through an analysis of various factors including the aging of the accounts receivable, the strength of the relationship with the customer, the capacity of the customer transaction fund flow to satisfy the amount due from the customer, an assessment of collection costs and other factors. The allowance for doubtful accounts receivable is management’s best estimate as of the respective reporting date. The Company writes off accounts receivable against the allowance when management determines the balance is uncollectible and the Company ceases collection efforts. Management believes that the allowance recorded is adequate to provide for its estimated credit losses.</div>
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<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>FINANCE RECEIVABLES</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<div style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company offers extended payment terms to certain customers for equipment sales under its Quick Start Program. In accordance with the Financial Accounting Standards Board Accounting Standards Codification® (“ASC”) Topic 840, “Leases”, agreements under the Quick Start Program qualify for sales-type lease accounting. Accordingly, the future minimum lease payments are classified as finance receivables in the Company’s consolidated balance sheets. Finance receivables or Quick Start leases are generally for a sixty month term. Finance receivables are carried at their contractual amount and charged off against the allowance for credit losses when management determines that recovery is unlikely and the Company ceases collection efforts. The Company recognizes a portion of the note or lease payments as interest income in the accompanying consolidated financial statements based on the effective interest rate method.</div>
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<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>INVENTORY, Net</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Inventory consists of finished goods and packaging materials. The Company’s inventory is stated at the lower of cost (average cost basis) or market.</p>
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<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>PROPERTY AND EQUIPMENT, Net</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<div style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Property and equipment are recorded at cost. Property and equipment are depreciated on the straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized on the straight-line basis over the lesser of the estimated useful life of the asset or the respective lease term.</div>
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<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>GOODWILL AND INTANGIBLE ASSETS</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company’s intangible assets include goodwill, non-compete agreements, brand, developed technology and customer relationships.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<div style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Goodwill represents the excess of cost over fair value of the net assets purchased in acquisitions. The Company accounts for goodwill in accordance with ASC 350, “Intangibles – Goodwill and Other”. Under ASC 350, goodwill is not amortized to earnings, but instead is subject to periodic testing for impairment. Testing for impairment is to be done at least annually and at other times if events or circumstances arise that indicate that impairment may have occurred. The Company has selected April 1 as its annual test date.</div>
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<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>FAIR VALUE OF FINANCIAL INSTRUMENTS</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The FASB issued Accounting Standards Update (“ASU”) 2010-06, “Fair Value Measurements and Disclosures (“Topic 820”): Improving Disclosures about Fair Value Measurements.” ASU 2010-06 amends certain disclosure requirements of Subtopic 820-10. This ASU provides additional disclosures for transfers in and out of Levels 1 and 2 and for activity in Level 3. This ASU also clarifies certain other existing disclosure requirements including level of desegregation and disclosures around inputs and valuation techniques.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company’s financial assets and liabilities are accounted for in accordance with ASC 820 “Fair Value Measurement.” Under ASC 820 the Company uses inputs from the three levels of the fair value hierarchy to measure its financial assets and liabilities. The three levels are as follows:</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Level 1- Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Level 2- Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Level 3- Inputs are unobservable and reflect the Company’s assumptions that market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<div style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company’s financial instruments, principally accounts receivable, short-term finance receivables, prepaid expenses and other assets, accounts payable and accrued expenses, are carried at cost which approximates fair value due to the short-term maturity of these instruments. The fair value of the Company’s obligations under its long-term debt agreements and the long-term portion of its finance receivables approximates their carrying value as such instruments are at market rates currently available to the Company.</div>
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<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>REVENUE RECOGNITION</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Revenue from the sale or QuickStart lease of equipment is recognized on the terms of freight-on-board shipping point. Activation fee revenue, if applicable, is recognized when the Company’s cashless payment device is initially activated for use on the Company network. Transaction processing revenue is recognized upon the usage of the Company’s cashless payment and control network. License fees for access to the Company’s devices and network services are recognized on a monthly basis. In all cases, revenue is only recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed and determinable, and collection of the resulting receivable is reasonably assured. The Company estimates an allowance for product returns at the date of sale and license and transaction fee refunds on a monthly basis.</p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<div style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">ePort hardware is available to customers under the QuickStart program pursuant to which the customer would enter into a five-year non-cancelable lease with either the Company or a third-party financing company for the devices. The Company utilizes its best estimate of selling price when calculating the revenue to be recorded under these leases. The leases qualify for sales type lease accounting. Accordingly, the company recognizes a portion of lease payments as interest income for leases not placed with a third-party financing Company. At the end of the lease period, the customer would have the option to purchase the device at its residual value.</div>
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<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>ACCOUNTING FOR EQUITY AWARDS</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<div style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification® (“ASC”) Topic 718, the cost of employee services received in exchange for an award of equity instruments is based on the grant-date fair value of the award and allocated over the vesting period of the award.</div>
</div>
<div>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>INCOME TAXES</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </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;">The Company follows the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification® (“ASC”) Topic 740, “Accounting for Uncertainty in Income Taxes”,<i> </i>which<i> </i>provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the consolidated financial statements. Accordingly, tax positions must meet a “more-likely-than-not” recognition threshold at the effective date to be recognized upon the adoption of ASC Topic 740 and in subsequent periods.</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;"> </p>
<div 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;">Income taxes are computed using the asset and liability method of accounting. Under the asset and liability method, a deferred tax asset or liability is recognized for estimated future tax effects attributable to temporary differences and carryforwards. The measurement of deferred income tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax benefits only to the extent that, based on available evidence, it is more likely than not such benefits will be realized. The Company recognizes interest and penalties, if any, related to uncertain tax positions in selling, general and administrative expenses. No interest or penalties related to uncertain tax positions were accrued or incurred during the three months ended September 30, 2016 and 2015.</div>
</div>
<div>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>EARNINGS (LOSS) PER COMMON SHARE</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<div style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Basic earnings (loss) per share are calculated by dividing income (loss) applicable to common shares by the weighted average common shares outstanding for the period. Diluted earnings per share are calculated by dividing income (loss) applicable to common shares by the weighted average common shares outstanding for the period plus the effect of potential common shares unless such effect is anti-dilutive.</div>
</div>
<div>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>SOFTWARE DEVELOPMENT COSTS</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company follows the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification® (“ASC”) Topic 350-40, “Accounting for the Cost of Computer Software Developed or obtained for Internal Use”, which provides for guidance for what costs can be capitalized for internal use.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<div style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Capitalized costs for internal-use software are included in fixed assets in the consolidated balance sheet and are amortized over three years. Costs incurred during the preliminary project along with post-implementation stages of internal use computer software development and costs incurred to maintain existing product offerings are expensed as incurred. The capitalization and ongoing assessment of recoverability of development costs require considerable judgment by management with respect to certain external factors, including, but not limited to, technological and economic feasibility and estimated economic life.</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;"><i>RECLASSIFICATION</i></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;"><i> </i></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;">Commencing with the June 30, 2016 financial statements, the Company changed the manner in which it presents certain unfunded finance receivables in its consolidated balance sheets and the related statements of cash flows. These finance receivables which have yet to be and are expected to be funded by a third-party funding source. The previous accounting classification recorded these constitute amounts as accounts receivable in the consolidated balance sheets and the related statements of cash flows. The impact of this change on the Statement of Cash Flows is 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; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;"><i>   </i></p>
<table style="font: 10pt/normal 'times new roman', times, serif; width: 85%; 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;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Accounts<br />Receivable</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Finance<br />Receivables</td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<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: azure;">
<td style="width: 916px; text-indent: 0in; padding-left: 0.125in;">Per Original Statement of Cash Flows- Three months ended September 30, 2015</td>
<td style="width: 13px;"> </td>
<td style="width: 13px; text-align: left;">$</td>
<td style="width: 126px; text-align: right;">(713</td>
<td style="width: 12px; text-align: left;">)</td>
<td style="width: 12px;"> </td>
<td style="width: 12px; text-align: left;">$</td>
<td style="width: 125px; text-align: right;">168</td>
<td style="width: 12px; text-align: left;"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: white;">
<td> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: azure;">
<td style="text-align: left; padding-bottom: 2px; padding-left: 0.25in;">Impact from the reclassification</td>
<td style="padding-bottom: 2px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;">751</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;">(751</td>
<td style="text-align: left; padding-bottom: 2px;">)</td>
</tr>
<tr style="vertical-align: bottom; background-color: white;">
<td style="padding-left: 0.125in;"> </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: azure;">
<td style="text-indent: 0in; padding-left: 0.125in;">Adjusted Statement of Cash Flows- Three months ended September 30, 2015</td>
<td style="padding-bottom: 4px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">38</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">(583</td>
<td style="text-align: left; padding-bottom: 4px;">)</td>
</tr>
</table>
<div> </div>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px; text-align: center; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p>
<table align="center" style="font: 10pt/normal 'times new roman', times, serif; width: 95%; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; orphans: 2; widows: 2; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"></td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="6" nowrap="nowrap">Three months ended</td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="text-align: center; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;" colspan="6" nowrap="nowrap">September 30,</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td style="padding-bottom: 2px;">($ in thousands, except per share data)</td>
<td style="padding-bottom: 2px;"> </td>
<td style="text-align: center; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;" colspan="2">2016</td>
<td style="padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="text-align: center; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;" colspan="2">2015</td>
<td style="padding-bottom: 2px;"> </td>
</tr>
<tr style="vertical-align: bottom;">
<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: azure;">
<td style="width: 1044px; text-align: left; font-style: normal; font-weight: normal;"><b>Numerator for basic earnings per share </b>- Net loss available to common shareholders</td>
<td style="width: 14px;"> </td>
<td style="width: 14px; text-align: left;">$</td>
<td style="width: 141px; text-align: right;">(2,798</td>
<td style="width: 14px; text-align: left;">)</td>
<td style="width: 14px;"> </td>
<td style="width: 14px; text-align: left;">$</td>
<td style="width: 141px; text-align: right;">26</td>
<td style="width: 14px; text-align: left;"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: white;">
<td style="text-align: left; padding-bottom: 2px;">Gain recorded for reduction in fair value of warrants*</td>
<td style="padding-bottom: 2px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;">-</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;">(343</td>
<td style="text-align: left; padding-bottom: 2px;">)</td>
</tr>
<tr style="vertical-align: bottom; background-color: azure;">
<td style="text-align: left; padding-bottom: 4px; font-style: normal; font-weight: normal;"><b>Numerator for diluted earnings per share</b> - Net loss available to common shareholders</td>
<td style="padding-bottom: 4px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">(2,798</td>
<td style="text-align: left; padding-bottom: 4px;">)</td>
<td style="padding-bottom: 4px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">$</td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">(317</td>
<td style="text-align: left; padding-bottom: 4px;">)</td>
</tr>
<tr style="vertical-align: bottom; background-color: white;">
<td> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: azure;">
<td style="font-style: normal; font-weight: normal;"><b>Denominator for basic earnings per share</b> - Weighted average shares outstanding</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">38,488,005</td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">35,848,395</td>
<td style="text-align: left;"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: white;">
<td style="text-align: left; padding-bottom: 2px;">Effect of dilutive potential common shares*</td>
<td style="padding-bottom: 2px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;">-</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;"> </td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 2px; border-bottom-style: solid;">639,484</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: azure;">
<td style="padding-bottom: 4px; font-style: normal; font-weight: normal;"><b>Denominator for diluted earnings per share</b> - Adjusted weighted average shares outstanding</td>
<td style="padding-bottom: 4px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;"> </td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">38,488,005</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="text-align: left; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;"> </td>
<td style="text-align: right; border-bottom-color: black; border-bottom-width: 4px; border-bottom-style: double;">36,487,879</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: white;">
<td> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: azure;">
<td>Basic earnings (loss) per share</td>
<td> </td>
<td style="text-align: left;">$</td>
<td style="text-align: right;">(0.07</td>
<td style="text-align: left;">)</td>
<td> </td>
<td style="text-align: left;">$</td>
<td style="text-align: right;">-</td>
<td style="text-align: left;"> </td>
</tr>
<tr style="vertical-align: bottom; background-color: white;">
<td>Diluted loss per share</td>
<td> </td>
<td style="text-align: left;">$</td>
<td style="text-align: right;">(0.07</td>
<td style="text-align: left;">)</td>
<td> </td>
<td style="text-align: left;">$</td>
<td style="text-align: right;">(0.01</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: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; orphans: 2; widows: 2; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0pt 0px 0pt 0.35in; 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;">  * No adjustment necessary for the three months ended September 30, 2016 as the effects would be anti-dilutive.</p>
<div>
<table align="center" style="widows: 2; text-transform: none; text-indent: 0px; width: 85%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td> </td>
<td> </td>
<td style="text-align: center;" colspan="2">September 30,</td>
<td> </td>
<td> </td>
<td style="text-align: center;" colspan="2">June 30,</td>
<td> </td>
</tr>
<tr style="vertical-align: bottom;">
<td style="padding-bottom: 2px;">($ in thousands)</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2016</td>
<td style="padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2016</td>
<td style="padding-bottom: 2px;"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td> </td>
<td> </td>
<td style="text-align: center;" colspan="2">(unaudited)</td>
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td> </td>
</tr>
<tr style="vertical-align: bottom;">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; width: 753px;">Total finance receivables</td>
<td style="width: 12px;"> </td>
<td style="text-align: left; width: 12px;">$</td>
<td style="text-align: right; width: 177px;">7,311</td>
<td style="text-align: left; width: 12px;"> </td>
<td style="width: 11px;"> </td>
<td style="text-align: left; width: 11px;">$</td>
<td style="text-align: right; width: 176px;">7,306</td>
<td style="text-align: left; width: 11px;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="text-align: left; padding-bottom: 2px;">Less current portion</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">3,349</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">3,588</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; padding-bottom: 4px;">Non-current portion of finance receivables</td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">3,962</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">3,718</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
</tr>
</table>
</div>
<div>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Credit Quality Indicators</p>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<table align="center" style="widows: 2; text-transform: none; text-indent: 0px; width: 75%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td>Credit risk profile based on payment activity:</td>
<td> </td>
<td style="text-align: center;" colspan="2">September 30,</td>
<td> </td>
<td> </td>
<td style="text-align: center;" colspan="2">June 30,</td>
<td> </td>
</tr>
<tr style="vertical-align: bottom;">
<td> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2016</td>
<td style="padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2016</td>
<td style="padding-bottom: 2px;"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td>($ in thousands)</td>
<td> </td>
<td style="text-align: center;" colspan="2">(unaudited)</td>
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="width: 753px;">Performing</td>
<td style="width: 12px;"> </td>
<td style="text-align: left; width: 12px;">$</td>
<td style="text-align: right; width: 177px;">7,254</td>
<td style="text-align: left; width: 12px;"> </td>
<td style="width: 11px;"> </td>
<td style="text-align: left; width: 11px;">$</td>
<td style="text-align: right; width: 176px;">7,174</td>
<td style="text-align: left; width: 11px;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="padding-bottom: 2px;">Nonperforming</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">57</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">132</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="padding-bottom: 4px;">Total</td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">7,311</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">7,306</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
</tr>
</table>
</div>
<div>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Age Analysis of Past Due Finance Receivables</p>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">As of September 30, 2016</p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<table align="center" style="widows: 2; text-transform: none; text-indent: 0px; width: 80%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">31 – 60</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">61 – 90</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Greater than</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Total</td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td style="padding-bottom: 2px;" nowrap="nowrap">($ in thousands)</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Days Past<br />Due</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Days Past<br />Due</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">90 Days Past<br />Due</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Total Past<br />Due</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Current</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Finance<br />Receivables</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="width: 453px;"> </td>
<td style="width: 14px;"> </td>
<td style="text-align: left; width: 14px;"> </td>
<td style="text-align: right; width: 107px;"> </td>
<td style="text-align: left; width: 14px;"> </td>
<td style="width: 14px;"> </td>
<td style="text-align: left; width: 14px;"> </td>
<td style="text-align: right; width: 107px;"> </td>
<td style="text-align: left; width: 14px;"> </td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="text-align: right; width: 106px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="text-align: right; width: 106px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="text-align: right; width: 106px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="text-align: right; width: 106px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; padding-bottom: 2px;">QuickStart Leases</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">2</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">10</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">45</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">57</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">7,254</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">7,311</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
</tr>
</table>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: center; widows: 2; text-transform: none;
text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Age Analysis of Past Due Finance Receivables</p>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">As of June 30, 2016</p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<table align="center" style="widows: 2; text-transform: none; text-indent: 0px; width: 80%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">31 – 60</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">61 – 90</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Greater than</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Total</td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td style="padding-bottom: 2px;" nowrap="nowrap">($ in thousands)</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Days Past<br />Due</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Days Past<br />Due</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">90 Days Past<br />Due</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Total Past<br />Due</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Current</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Finance<br />Receivables</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="width: 453px;"> </td>
<td style="width: 14px;"> </td>
<td style="text-align: left; width: 14px;"> </td>
<td style="text-align: right; width: 107px;"> </td>
<td style="text-align: left; width: 14px;"> </td>
<td style="width: 14px;"> </td>
<td style="text-align: left; width: 14px;"> </td>
<td style="text-align: right; width: 107px;"> </td>
<td style="text-align: left; width: 14px;"> </td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="text-align: right; width: 106px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="text-align: right; width: 106px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="text-align: right; width: 106px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
<td style="text-align: right; width: 106px;"> </td>
<td style="text-align: left; width: 13px;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; padding-bottom: 2px;">QuickStart Leases</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">98</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">31</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">3</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">132</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">7,174</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">7,306</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
</tr>
</table>
</div>
<div>
<table align="center" style="widows: 2; text-transform: none; text-indent: 0px; width: 90%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td nowrap="nowrap">($ in thousands)</td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Balance</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Additions/</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td colspan="2" nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Balance</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Amortization</td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">June 30, 2016</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Adjustments</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Amortization</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">September 30, 2016</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">Period</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="text-align: left;">Intangible 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>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; padding-left: 9pt; width: 595px;">Non-compete agreements</td>
<td style="width: 15px;"> </td>
<td style="text-align: left; width: 15px;">$</td>
<td style="text-align: right; width: 113px;">1</td>
<td style="text-align: left; width: 15px;"> </td>
<td style="width: 14px;"> </td>
<td style="text-align: left; width: 14px;">$</td>
<td style="text-align: right; width: 112px;">-</td>
<td style="text-align: left; width: 14px;"> </td>
<td style="width: 14px;"> </td>
<td style="text-align: left; width: 14px;">$</td>
<td style="text-align: right; width: 112px;">-</td>
<td style="text-align: left; width: 14px;"> </td>
<td style="width: 14px;"> </td>
<td style="text-align: left; width: 14px;">$</td>
<td style="text-align: right; width: 112px;">1</td>
<td style="text-align: left; width: 14px;"> </td>
<td style="width: 14px;"> </td>
<td style="text-align: left; width: 14px;"> </td>
<td style="text-align: right; width: 141px;"><font style="font-size: 10pt;"> 2 years</font></td>
<td style="text-align: left; width: 14px;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="padding-left: 9pt;">Brand</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">79</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;">(8</td>
<td style="text-align: left;">)</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">71</td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"><font style="font-size: 10pt;"> 3 years</font></td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; padding-left: 9pt;">Developed technology</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">576</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;">(32</td>
<td style="text-align: left;">)</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">544</td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"><font style="font-size: 10pt;"> 5 years</font></td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="text-align: left; padding-bottom: 2px; padding-left: 9pt;">Customer relationships</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">142</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">-</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">(4</td>
<td style="text-align: left; padding-bottom: 2px;">)</td>
<td
style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">138</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="text-align: right; padding-bottom: 2px;"><font style="font-size: 10pt;"> 10 years</font></td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; padding-bottom: 4px;">Total Intangible Assets</td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">798</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">-</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">(44</td>
<td style="text-align: left; padding-bottom: 4px;">)</td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">754</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="text-align: right; padding-bottom: 4px;"> </td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="padding-bottom: 4px;">Goodwill</td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">11,703</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">-</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">-</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">11,703</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="text-align: right; padding-bottom: 4px;"><font style="font-size: 10pt;"> Indefinite</font></td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
</tr>
</table>
</div>
<div>
<table align="center" style="font: 10pt/normal 'times new roman', times, serif; width: 75%; 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;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td style="padding-left: 0px;"> </td>
<td> </td>
<td style="text-align: center;" colspan="6">Three months ended</td>
<td> </td>
</tr>
<tr style="vertical-align: bottom;">
<td style="padding-bottom: 2px; padding-left: 0px;">($ in thousands)</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="6">September 30,</td>
<td style="padding-bottom: 2px;"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td style="padding-left: 0px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2016</td>
<td style="padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2015</td>
<td style="padding-bottom: 2px;"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td style="padding-left: 0px;"> </td>
<td> </td>
<td style="text-align: center;" colspan="2"> </td>
<td> </td>
<td> </td>
<td style="text-align: center;" colspan="2"> </td>
<td> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; padding-left: 0px; width: 802px;">Beginning balance</td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;">$</td>
<td style="text-align: right; width: 188px;">(3,739</td>
<td style="text-align: left; width: 13px;">)</td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 12px;">$</td>
<td style="text-align: right; width: 187px;">(978</td>
<td style="text-align: left; width: 12px;">)</td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="text-align: left; padding-left: 0px;">Increase due to change in fair value of warrant liabilities</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">(1,490</td>
<td style="text-align: left;">)</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">343</td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; padding-bottom: 2px; padding-left: 0px;">Reclass of fair value of warranty liability to common stock upon exercise of warrants</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">5,229</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;">$</td>
<td style="border-bottom: black 2px solid; text-align: right;">-</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="padding-bottom: 4px; padding-left: 0px;">Ending balance</td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">-</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">(635</td>
<td style="text-align: left; padding-bottom: 4px;">)</td>
</tr>
</table>
</div>
<div>
<table align="center" style="widows: 2; text-transform: none; text-indent: 0px; width: 60%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="6" nowrap="nowrap">Three months ended</td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="6">September 30,</td>
<td style="padding-bottom: 2px;"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2016</td>
<td style="padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2015</td>
<td style="padding-bottom: 2px;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; width: 381px;">Beginning balance</td>
<td style="width: 7px;"> </td>
<td style="text-align: left; width: 7px;"> </td>
<td style="text-align: right; width: 141px;">2,445,653</td>
<td style="text-align: left; width: 7px;"> </td>
<td style="width: 7px;"> </td>
<td style="text-align: left; width: 7px;"> </td>
<td style="text-align: right; width: 141px;">4,309,000</td>
<td style="text-align: left; width: 7px;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td>Issued</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="background-color: azure; vertical-align: bottom;">
<td>Exercised</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">(2,376,675</td>
<td style="text-align: left;">)</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">(11,000</td>
<td style="text-align: left;">)</td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="padding-bottom: 2px;">Expired</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">-</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">-</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="padding-bottom: 4px;">Ending balance</td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;"> </td>
<td style="border-bottom: black 4px double; text-align: right;">68,978</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;"> </td>
<td style="border-bottom: black 4px double; text-align: right;">4,298,000</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
</tr>
</table>
</div>
<div>
<table align="center" style="widows: 2; text-transform: none; text-indent: 0px; width: 60%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td> </td>
<td> </td>
<td style="text-align: center;" colspan="6" nowrap="nowrap">Three months ended</td>
<td> </td>
</tr>
<tr style="vertical-align: bottom;">
<td> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="6">September 30,</td>
<td style="padding-bottom: 2px;"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2016</td>
<td style="padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2015</td>
<td style="padding-bottom: 2px;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; width: 463px;">Expected volatility</td>
<td style="width: 8px;"> </td>
<td style="text-align: left; width: 8px;"> </td>
<td style="text-align: right; width: 172px;">50.37</td>
<td style="text-align: left; width: 11px;">%</td>
<td style="width: 8px;"> </td>
<td style="text-align: left; width: 8px;"> </td>
<td style="text-align: right; width: 172px;">63-66%</td>
<td style="text-align: left; width: 11px;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="text-align: left;">Expected life</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">4 years</td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> 4-4.5 years</td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left;">Expected dividends</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">0.00</td>
<td style="text-align: left;">%</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">0.00</td>
<td style="text-align: left;">%</td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="text-align: left;">Risk-free interest rate</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">1.06</td>
<td style="text-align: left;">%</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> 1.34-1.49%</td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left;">Number of options granted</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">20,080</td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">119,586</td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td>Weighted average exercise price</td>
<td> </td>
<td style="text-align: left;">$</td>
<td style="text-align: right;">4.98</td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;">$</td>
<td style="text-align: right;">3.38</td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td>Weighted average grant date fair value</td>
<td> </td>
<td style="text-align: left;">$</td>
<td style="text-align: right;">1.98</td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;">$</td>
<td style="text-align: right;">1.77</td>
<td style="text-align: left;"> </td>
</tr>
</table>
</div>
P60M
The Company offers extended payment terms to certain customers for equipment sales under its Quick Start Program.
P5Y
P3Y
7306000
7306000
7174000
132000
7311000
7311000
7254000
57000
132000
98000
31000
3000
57000
2000
10000
45000
7174000
7254000
44000
8000
32000
4000
P2Y
P3Y
P5Y
P10Y
12000000
2.6058
Federal Reserves' Prime
0.0225
4700000
254000
308000
2200000
3739000
978000
635000
3739000
343000
-1490000
proprietary valuation models
68978
4309000
4298000
2445653
11000
2376675
2376675
0.66
0.63
0.5037
P4Y6M0D
P4Y
P4Y
0.00
0.00
0.0149
0.0134
0.0106
20080
4.98
3.38
4.98
1.77
1.98
56784
78711
6254
18960
18960
18954
6533
31
115000
28000
21000
4000
49000
71000
3000
7000
21000
15000
5362
11000
11000
49000
168000
<div>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><b>10. EQUITY</b></p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><b> </b></p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>WARRANTS</i></p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">There were 2,376,675 warrants exercised during the three months ended September 30, 2016 at $2.6058 per share yielding proceeds of $6.2 million. Warrant activity for the three-month period ended September 30, 2016 and 2015 was as follows:</p>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<table align="center" style="font: 10pt/normal 'times new roman', times, serif; width: 60%; 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;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="6" nowrap="nowrap">Three months ended</td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="6">September 30,</td>
<td style="padding-bottom: 2px;"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2016</td>
<td style="padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2015</td>
<td style="padding-bottom: 2px;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; width: 381px;">Beginning balance</td>
<td style="width: 7px;"> </td>
<td style="text-align: left; width: 7px;"> </td>
<td style="text-align: right; width: 141px;">2,445,653</td>
<td style="text-align: left; width: 7px;"> </td>
<td style="width: 7px;"> </td>
<td style="text-align: left; width: 7px;"> </td>
<td style="text-align: right; width: 141px;">4,309,000</td>
<td style="text-align: left; width: 7px;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td>Issued</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="background-color: azure; vertical-align: bottom;">
<td>Exercised</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">(2,376,675</td>
<td style="text-align: left;">)</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">(11,000</td>
<td style="text-align: left;">)</td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="padding-bottom: 2px;">Expired</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">-</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">-</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="padding-bottom: 4px;">Ending balance</td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;"> </td>
<td style="border-bottom: black 4px double; text-align: right;">68,978</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;"> </td>
<td style="border-bottom: black 4px double; text-align: right;">4,298,000</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
</tr>
</table>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i> </i></p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>STOCK OPTIONS</i></p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company estimates the grant date fair value of the stock options it grants using a Black-Scholes valuation model. The Company’s assumption for expected volatility is based on its historical volatility data related to market trading of its own common stock. The Company bases its assumptions for expected life of the new stock option grants on the life of the option granted, and if relevant, its analysis of the historical exercise patterns of its stock options. The dividend yield assumption is based on dividends expected to be paid over the expected life of the stock option. The risk-free interest rate assumption is determined by using the U.S. Treasury rates of the same period as the expected option term of each stock option.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">In August 2016 stock options were awarded to purchase up to 20,080 shares of common stock at an exercise price of $4.98 per share. The options vest on August 31, 2017, and expire if not exercised prior to August 31, 2023. The options are intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended. The fair value of options granted during the three months ended September 30, 2016 and 2015 was estimated using the following weighted average assumptions:</p>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<table align="center" style="font: 10pt/normal 'times new roman', times, serif; width: 60%; 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;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td> </td>
<td> </td>
<td style="text-align: center;" colspan="6" nowrap="nowrap">Three months ended</td>
<td> </td>
</tr>
<tr style="vertical-align: bottom;">
<td> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="6">September 30,</td>
<td style="padding-bottom: 2px;"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2016</td>
<td style="padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2">2015</td>
<td style="padding-bottom: 2px;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; width: 463px;">Expected volatility</td>
<td style="width: 8px;"> </td>
<td style="text-align: left; width: 8px;"> </td>
<td style="text-align: right; width: 172px;">50.37</td>
<td style="text-align: left; width: 11px;">%</td>
<td style="width: 8px;"> </td>
<td style="text-align: left; width: 8px;"> </td>
<td style="text-align: right; width: 172px;">63-66%</td>
<td style="text-align: left; width: 11px;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="text-align: left;">Expected life</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">4 years</td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> 4-4.5 years</td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left;">Expected dividends</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">0.00</td>
<td style="text-align: left;">%</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">0.00</td>
<td style="text-align: left;">%</td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="text-align: left;">Risk-free interest rate</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">1.06</td>
<td style="text-align: left;">%</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> 1.34-1.49%</td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left;">Number of options granted</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">20,080</td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">119,586</td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td>Weighted average exercise price</td>
<td> </td>
<td style="text-align: left;">$</td>
<td style="text-align: right;">4.98</td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;">$</td>
<td style="text-align: right;">3.38</td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td>Weighted average grant date fair value</td>
<td> </td>
<td style="text-align: left;">$</td>
<td style="text-align: right;">1.98</td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;">$</td>
<td style="text-align: right;">1.77</td>
<td style="text-align: left;"> </td>
</tr>
</table>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<div style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">Stock based compensation related to stock options for the three months ended September 30, 2016 and 2015 was $48 thousand and $115 thousand, respectively.</div>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times;"> </p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>COMMON STOCK</i></p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i> </i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">On July 1, 2016 $40 thousand of stock grants were awarded to each non-employee Director based on the prior 30-day average closing price of the Company’s Common Stock, for a total of 56,784 shares. The shares vest as follows: 18,960 on 07/01/2017, 18,960 on 07/01/2018 and 18,954 on 07/01/2019. The total expense recognized for these grants during the three months ended September 30, 2016 was $37 thousand.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">During the three months ended September 30, 2016, the Company awarded an aggregate of 78,711 shares to its Chief Executive Officer and Chief Services Officer under its fiscal year 2016 long term stock incentive plan and an aggregate of 6,254 shares to three non-employee Directors in satisfaction of board fees. During the three-month period, the Chief Executive Officer cancelled 6,533 shares of Common Stock awarded to him under the 2016 fiscal year long term stock incentive plan in satisfaction of $31 thousand of related payroll obligations.</p>
<div style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </div>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>LTI PLANS</i></p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Board approved the Fiscal Year 2017 Long-Term Stock Incentive Plan (the “2017 LTI Stock Plan”) which provides that executive officers would be awarded shares of common stock of the Company in the event that certain metrics relating to the Company’s 2017 fiscal year would result in specified ranges of year-over-year percentage growth. The metrics are total number of connections as of June 30, 2017 as compared to total number of connections as of June 30, 2016 (50% weighting) and adjusted EBITDA earned during the 2017 fiscal year as compared to the adjusted EBITDA earned during the 2016 fiscal year (50% weighting).</p>
<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">If none of the minimum threshold year-over-year percentage target goals are achieved, the executive officers would not be awarded any shares. If all of the year-over-year percentage target goals are achieved, the executive officers would be awarded shares having the following value: Chief Executive Officer (“CEO”) - $675,000 (150% of base salary); and Chief Services Officer (“CSO”) - $250,000 (100% of base salary). If all of the maximum distinguished year-over-year percentage target goals are achieved, the executive officers would be awarded shares having the following value: CEO - $1,012,500 (225% of base salary); and CSO - $375,000 (150% of base salary). Assuming the minimum threshold year-over-year percentage target goal would be achieved for a particular metric, the number of shares to be awarded for that metric would be determined on a pro rata basis, provided that the award would not exceed the maximum distinguished award for that metric. The shares awarded under the 2017 LTI Stock Plan would vest as follows: one-third at the time of issuance; one-third on June 30, 2018; and one-third on June 30, 2019.</p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company had long-term stock incentive plans (“LTI”) in prior fiscal years for its then executive officers. Stock based compensation related to the LTI plans was as follows in the three months ended September 2016 and 2015:</p>
<p style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<table align="center" style="font: 10pt/normal 'times new roman', times, serif; width: 60%; 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;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="6" nowrap="nowrap">Three months ended</td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="6" nowrap="nowrap">September 30,</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td style="padding-bottom: 2px;" nowrap="nowrap">($ in thousands, except per share data)</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">2016</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">2015</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td> </td>
<td> </td>
<td style="text-align: center;" colspan="2"> </td>
<td> </td>
<td> </td>
<td style="text-align: center;" colspan="2"> </td>
<td> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; width: 552px;">FY17 LTI Plan</td>
<td style="width: 9px;"> </td>
<td style="text-align: left; width: 9px;">$</td>
<td style="text-align: right; width: 130px;">71</td>
<td style="text-align: left; width: 8px;"> </td>
<td style="width: 8px;"> </td>
<td style="text-align: left; width: 8px;">$</td>
<td style="text-align: right; width: 129px;">-</td>
<td style="text-align: left; width: 8px;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="text-align: left;">FY16 LTI Plan</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">3</td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">28</td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left;">FY15 LTI Plan</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">7</td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">21</td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="text-align: left; padding-bottom: 2px;">FY14 LTI Plan</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">-</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">4</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="padding-bottom: 4px;">Total</td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">81</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">53</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
</tr>
</table>
<div style="text-align: center; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </div>
</div>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"><i>PREFERRED STOCK</i></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"> </p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;"></p>
<p style="text-align: justify; widows: 2; text-transform: none; text-indent: 0px; margin: 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;">The Company adopted the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-16 in determining whether the Company’s Series A Convertible Preferred Stock (“preferred stock”) is more equity-like or debt-like, and whether derivatives embedded in the preferred stock, if any, must be bifurcated and accounted for separately from its host contract. Based upon management’s review of the preferred stock features, management has determined that the preferred stock is more equity-like and that the embedded derivatives do not require bifurcation. As such, the adoption of this standard did not have a material impact on the company's financial statements.</p>
<table align="center" style="font: 10pt/normal 'times new roman', times, serif; width: 85%; 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;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Accounts<br />Receivable</td>
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="2" nowrap="nowrap">Finance<br />Receivables</td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-indent: 0in; padding-left: 0.125in; width: 916px;">Per Original Statement of Cash Flows- Three months ended September 30, 2015</td>
<td style="width: 13px;"> </td>
<td style="text-align: left; width: 13px;">$</td>
<td style="text-align: right; width: 126px;">(713</td>
<td style="text-align: left; width: 12px;">)</td>
<td style="width: 12px;"> </td>
<td style="text-align: left; width: 12px;">$</td>
<td style="text-align: right; width: 125px;">168</td>
<td style="text-align: left; width: 12px;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;"> </td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; padding-bottom: 2px; padding-left: 0.25in;">Impact from the reclassification</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">751</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">(751</td>
<td style="text-align: left; padding-bottom: 2px;">)</td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="padding-left: 0.125in;"> </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="background-color: azure; vertical-align: bottom;">
<td style="text-indent: 0in; padding-left: 0.125in;">Adjusted Statement of Cash Flows- Three months ended September 30, 2015</td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">38</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">(583</td>
<td style="text-align: left; padding-bottom: 4px;">)</td>
</tr>
</table>
<table align="center" style="widows: 2; text-transform: none; text-indent: 0px; width: 60%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0">
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"> </td>
<td nowrap="nowrap"> </td>
<td style="text-align: center;" colspan="6" nowrap="nowrap">Three months ended</td>
<td nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="6" nowrap="nowrap">September 30,</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td style="padding-bottom: 2px;" nowrap="nowrap">($ in thousands, except per share data)</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">2016</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
<td style="border-bottom: black 2px solid; text-align: center;" colspan="2" nowrap="nowrap">2015</td>
<td style="padding-bottom: 2px;" nowrap="nowrap"> </td>
</tr>
<tr style="vertical-align: bottom;">
<td> </td>
<td> </td>
<td style="text-align: center;" colspan="2"> </td>
<td> </td>
<td> </td>
<td style="text-align: center;" colspan="2"> </td>
<td> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left; width: 552px;">FY17 LTI Plan</td>
<td style="width: 9px;"> </td>
<td style="text-align: left; width: 9px;">$</td>
<td style="text-align: right; width: 130px;">71</td>
<td style="text-align: left; width: 8px;"> </td>
<td style="width: 8px;"> </td>
<td style="text-align: left; width: 8px;">$</td>
<td style="text-align: right; width: 129px;">-</td>
<td style="text-align: left; width: 8px;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="text-align: left;">FY16 LTI Plan</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">3</td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">28</td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="text-align: left;">FY15 LTI Plan</td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">7</td>
<td style="text-align: left;"> </td>
<td> </td>
<td style="text-align: left;"> </td>
<td style="text-align: right;">21</td>
<td style="text-align: left;"> </td>
</tr>
<tr style="background-color: white; vertical-align: bottom;">
<td style="text-align: left; padding-bottom: 2px;">FY14 LTI Plan</td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">-</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
<td style="padding-bottom: 2px;"> </td>
<td style="border-bottom: black 2px solid; text-align: left;"> </td>
<td style="border-bottom: black 2px solid; text-align: right;">4</td>
<td style="text-align: left; padding-bottom: 2px;"> </td>
</tr>
<tr style="background-color: azure; vertical-align: bottom;">
<td style="padding-bottom: 4px;">Total</td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">81</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
<td style="padding-bottom: 4px;"> </td>
<td style="border-bottom: black 4px double; text-align: left;">$</td>
<td style="border-bottom: black 4px double; text-align: right;">53</td>
<td style="text-align: left; padding-bottom: 4px;"> </td>
</tr>
</table>
Black-Scholes valuation model
The options vest on August 31, 2017, and expire if not exercised prior to August 31, 2023
40000
37000
0.50
0.50
2.25
1.5
1.5
1.0
1012500
375000
675000
250000
38000
-713000
751000
-583000
168000
-751000
straight-line basis
No adjustment necessary for the three months ended September 30, 2016 as the effects would be anti-dilutive.
119586
81000
53000
1000
1000
71000
79000
544000
576000
138000
142000
798000
11703000
-2798000
-317000
0000896429usat:LoanAndSecurityAgreementMemberusat:HeritageBankOfCommerceMemberus-gaap:RevolvingCreditFacilityMember2015-07-012016-06-30
5229000
0000896429us-gaap:EmployeeStockOptionMember2015-09-30
Indefinite
0.26
0.39