~~The impacts of this misstatement on our previously issued unaudited condensed consolidated statements of operations for the three and nine months ended March 31, 2015 are presented below:~~

The impacts of this misstatement on our previously issued unaudited condensed consolidated statements of comprehensive income (loss) for the three and nine months ended March 31, 2015 are presented below:

~~The impact of this misstatement on our previously issued unaudited condensed consolidated statement of cash flows for the nine months ended March 31, 2015 is presented below:~~

~~The accompanying notes to the condensed consolidated financial statements have been corrected to give effect to the above items.~~

Certain prior year amounts in the consolidated financial statements have been reclassified to conform to the current year presentation. Specifically, we have reclassified our intangible assets, net with a balance of $323 into other long-term assets, net in our consolidated balance sheet as of June 30, 2015. Intangible assets at March 31, 2016 includes an internet domain name (www.concurrent.com) acquired during the nine months ended March 31, 2016 for $35. The domain name is considered an indefinite-lived intangible asset and is not amortizable.

~~Additionally, amortization expense related to finite-lived intangible assets was $42 and $137 for the nine months ended March 31, 2016 and 2015, respectively.~~

In April ~~2014,~~2015, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued ASU No. ~~2014-08,~~2015-05,~~Presentation of Financial Statements (Topic 205)~~Intangibles – Goodwill and ~~Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity~~Other – Internal-Use Software (Subtopic 350-40) (“(“ASU ~~2014-08”~~2015-05”). ~~ASU 2014-08 requires that~~The pronouncement was issued to provide guidance concerning accounting for fees in a disposal representing a strategic shift that has (or will have) a major effect on an entity’s financial results or a business activity classified as held for sale should be reported as discontinued operations. ASU 2014-08 also expands the disclosure requirements for discontinued operations and adds new disclosures for individually significant dispositions that do not qualify as discontinued operations. ASU 2014-08cloud computing arrangement. The pronouncement was effective for us ~~beginning~~on July 1, ~~2015~~2016, and ~~was considered in regards to~~we adopted the ~~sale~~guidance prospectively. The adoption of ASU 2015-05 did not have a significant impact on our ~~multi-screen video analytics product line in September 2015 (see Note 7 – Sale of Product Line).~~consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09,Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), as part of its ongoing efforts to assist in the convergence of U.S. GAAP and International Financial Reporting Standards, the FASB issued a new standard related to revenue recognition. Under ASU 2014-09, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In July 2015, the FASB issued ASU No. 2015-14,Revenue from Contracts with Customers (Topic 606):Deferral of the EffectiveDate and deferred the original effective date of ASU 2014-09 by one year. As a result, ASU 2014-09 will be effective for us beginning July 1, 2018. Early adoption is not permitted. Additionally, in March 2016, the FASB issued ASU No. 2016-08,Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”); in April 2016, the FASB issued ASU No. 2016-10,Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”); and in May 2016, the FASB issued ASU No. 2016-12,Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), all of which provide additional clarification on certain topics addressed in ASU 2014-09. ASU 2016-08, ASU 2016-10 and ASU 2016-12 follow the same implementation guidelines as ASU 2014-09 and ASU 2015-14. We anticipate that ASU 2014-09 and its related standards may have a material impact, and we are currently evaluating the impact ~~this standard~~these standards will have on our consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15,Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”), which provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. ASU 2014-15 requires management to perform interim period and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if “conditions or events raise substantial doubt about the entity’s ability to continue as a going concern.” ASU 2014-15 applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. We do not expect ASU 2014-15 to have a material impact on our consolidated financial statements or disclosures.

In July 2015, the FASB issued ASU No. 2015-11,Inventory (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”). This amendment requires that an entity measure its inventory at the “lower of cost and net realizable value.” Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Current literature requires measurement of inventory at “lower of cost or market.” Market could be replacement cost, net realizable value, or net realizable value less an approximate normal profit margin. ASU 2015-11 applies to all entities and is effective for annual periods beginning after December 15, 2016, and interim periods thereafter, with early adoption permitted. We do not expect ASU 2015-11 to have a material impact on our consolidated financial statements or disclosures.

In ~~November 2015, the FASB issued ASU No. 2015-17,~~~~Income Taxes (Topic 740) - Balance Sheet Classification of Deferred Taxes~~ (“ASU 2015-17”). ASU 2015-17 was issued by the FASB as part of its initiative to reduce complexity in accounting standards (the Simplification Initiative). Current GAAP requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. To simplify the presentation of deferred income taxes, the amendments in ASU 2015-17 require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments of ASU 2015-17. ASU 2015-17 applies to all entities that have a classified statement of financial position and is effective for financial statements issued for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption as of the beginning of an interim or annual reporting period is permitted. We do not expect ASU 2015-17 to have a material impact on our consolidated financial statements or disclosures.

In February 2016, the FASB issued ASU No. 2016-02,Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 requires a lessee to recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the effect that ASU 2016-02 will have on our consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU No. ~~2016-08,~~~~Revenue From Contracts With Customers (Topic 606): Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net)~~ (“ASU 2016-08”). ASU 2016-08 amends the principal-versus-agent implementation guidance in ASU 2014-09. ASU 2016-08 clarifies the principal-versus-agent guidance in Topic 606 and requires an entity to determine whether the nature of its promise to provide goods or services to a customer is performed in a principal or agent capacity and to recognize revenue in a gross or net manner based on its principal/agent designation. The effective date of ASU 2016-08 will coincide with ASU 2014-09 and, as described above, ASU 2014-09 will be effective for us beginning July 1, 2018. We do not expect ASU 2016-08 to have a material impact on our consolidated financial statements or disclosures.

~~In March 2016, the FASB issued ASU No.~~ 2016-09,Compensation – Stock Compensation (Topic 718):Improvements to Employee Share-Based Payment Accounting(“ (“ASU 2016-09”). ASU 2016-09 provides for simplification of certain aspects of employee share-based payment accounting including income taxes, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Early adoption is permitted, including adoption in an interim period. We do not expect ASU 2016-09 to have a material impact on our consolidated financial statements or disclosures.

~~(Amounts~~In August 2016, the FASB issued ASU 2016-15,Clarification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which eliminates the diversity in ~~thousands, except~~practice related to the classification of certain cash receipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. ASU 2016-15 is effective for ~~share and per share data)~~fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The amendments in this update should be applied retrospectively to all periods presented, unless deemed impracticable, in which case, prospective application is permitted. We do not expect ASU 2016-15 to have a material impact on our consolidated financial statements or disclosures.

As previously disclosed in our Form 8-K filed on March 1, 2016, we entered into a Tax Asset Preservation Plan (the “TAPP”) with American Stock Transfer & Trust Company, LLC, as rights agent. Our Board of Directors adopted the TAPP in an effort to deter acquisitions of the Company’s common stock, par value $0.01 per share (“Common Stock”), that would potentially limit the Company’s ability to use its net loss carryforwards and certain other tax attributes (collectively, “NOLs”) to reduce its potential future federal income tax obligations. If we experience an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986 (the “Code”), our ability to use the NOLs could be substantially limited, and the timing of the usage of the NOLs could be substantially delayed, which could adversely affect the value of the NOLs.

The TAPP has a 4.9% “trigger” threshold which is intended to act as a deterrent to any person acquiring 4.9% or more of the outstanding Common Stock without the approval of our Board of Directors. This would protect the Company’s NOLs because changes in ownership by persons owning less than 4.9% of the outstanding Common Stock are not included in the calculation of whether the Company has experienced an ownership change under Section 382 of the Code. There is no guarantee, however, that the TAPP will prevent the Company from experiencing an ownership change.

In connection with the adoption of the TAPP, our Board of Directors declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of Common Stock as of the close of business on March 16, 2016. Each Right will allow its holder to purchase from the Company one one-thousandth of a share of Series B Junior Participating Preferred Stock for $30.00, subject to adjustment. Prior to exercise, the Right does not give its holder any dividend, voting or liquidation rights. The Rights will not be exercisable until 10 days after the public announcement that a person or group has become an “Acquiring Person” by obtaining beneficial ownership of 4.9% or more of the outstanding Common Stock (or if already the beneficial owner of at least 4.9% of the outstanding Common Stock, by acquiring additional shares of Common Stock representing 0.001% or more of the shares of Common Stock then outstanding).

The Rights will expire on the earlier of (i) close of business on the fifth business day after the Company files with the SEC a Current Report on Form 8-K reporting the results of the 2016 annual meeting of stockholders of the Company (including any postponement or adjournment thereof) and (ii) the time at which the Board of Directors determines that the NOLs are fully utilized or no longer available under Section 382 of the Code. If, however, any person becomes an Acquiring Person, the Plan will not expire until March 1, 2026.

The Board of Directors may direct the Company to redeem the Rights for $0.001 per Right at any time before any person or group becomes an Acquiring Person. If the Board of Directors directs the Company to redeem any Rights, it must redeem all of the Rights. Once the Rights are redeemed, the only right of the holders of Rights will be to receive the redemption price of $0.001 per Right. The redemption price will be adjusted if the Company has a stock split or stock dividends of the Common Stock. The value of the Rights is de minimis.

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during each year. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares including dilutive common share equivalents. Under the treasury stock method, incremental shares representing the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued are included in the computation. Common share equivalents of ~~207,586~~342,361 and ~~128,159~~127,190 for the three months ended ~~March 31, 2016 and 2015, respectively, were excluded from the calculation as their effect was anti-dilutive. Common share equivalents of 86,359 and 99,703 for the nine months ended March 31,~~September 30, 2016 and 2015, respectively, were excluded from the calculation as their effect was anti-dilutive.

The following table presents a reconciliation of the numerators and denominators of basic and diluted net income per share for the periods indicated:

	Three Months Ended September 30,
	2016			2015

Basic and diluted EPS calculation:
Net income (loss)	$	(2,928	)	$	3,207

Basic weighted average number of shares outstanding		9,189,343			9,112,891
Effect of dilutive securities:
Employee stock options		-			-
Restricted shares		-			63,821

Diluted weighted average number of shares outstanding		9,189,343			9,176,712
Basic EPS	$	(0.32	)	$	0.35
Diluted EPS	$	(0.32	)	$	0.35

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

(Amounts in thousands, except for share and per share data)

~~The following table presents a reconciliation of the numerators and denominators of basic and diluted net income per share for the periods indicated:~~

Three Months Ended
March 31, Nine Months Ended
March 31,
2016 2015 2016 2015

Basic and diluted EPS calculation:
Net income (loss) $ (1,176 ) $ 848 $ 1,748 $ 692

Basic weighted average number of shares outstanding 9,168,978 9,096,255 9,147,681 9,057,710
Effect of dilutive securities:
Employee stock options - 1,729 - 3,528
Restricted shares - 34,274 80,285 73,915
Diluted weighted average number of shares outstanding 9,168,978 9,132,258 9,227,966 9,135,153

Basic EPS $ (0.13 ) $ 0.09 $ 0.19 $ 0.08

Diluted EPS $ (0.13 ) $ 0.09 $ 0.19 $ 0.08

6.4.

Fair Value Measurements

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly fashion between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, we consider the most advantageous market in which it would transact and assumptions that market participants would use when pricing the asset ofor liability.

The Accounting Standards Codification requires certain disclosures around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

·	Level 1	Quoted prices (unadjusted) in active markets for identical assets or liabilities;
·	Level 2	Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and
·	Level 3	Assets or liabilities for which fair value is based on valuation models with significant unobservable pricing inputs and which result in the use of management estimates.

We have money market funds that are highly liquid and have a maturity of three months or less, and as such, are considered cash equivalents and fall within Level 1 of the fair value hierarchy. We have no financial assets that are measured on a recurring basis that fall within Level 2 or Level 3 of the fair value hierarchy.

Our financial assets that are measured at fair value on a recurring basis as of ~~March 31,~~September 30, 2016 are as follows:

Total
Fair Value Quoted
Prices in
Active Markets
(Level 1) Observable
Inputs
(Level 2) Unobservable
Inputs
(Level 3)

Cash $ 8,678 $ 8,678 $ - $ -
Money market funds 10,053 10,053 - -
Cash and cash equivalents $ 18,731 $ 18,731 $ - $ -

~~Concurrent Computer Corporation~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued~~

~~(Amounts in thousands, except for share and per share data)~~

	Total Fair Value		Quoted Prices in Active Markets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Cash	$	9,206	$	9,206	$	-	$	-
Money market funds		10,063		10,063		-		-
Cash and cash equivalents	$	19,269	$	19,269	$	-	$	-

Our financial assets that are measured at fair value on a recurring basis as of June 30, ~~2015~~2016 are as follows:

Total
Fair Value Quoted
Prices in
Active Markets
(Level 1) Observable
Inputs
(Level 2) Unobservable
Inputs
(Level 3)

Cash $ 15,406 $ 15,406 $ - $ -
Money market funds 10,045 10,045 - -
Cash and cash equivalents $ 25,451 $ 25,451 $ - $ -

~~Sale of Product Line~~

On September 9, 2015, we sold the customer contracts and intellectual property related to our multi-screen video analytics product line for $3,500 pursuant to an Asset Purchase Agreement (“APA”) dated August 31, 2015 with Verimatrix, Inc. (“Verimatrix”), a privately-held video revenue security company based in San Diego, California. The APA includes customary terms and conditions, including provisions that require the Company to indemnify Verimatrix for certain losses that it incurs as a result of a breach by the Company of its representations and warranties in the APA and certain other matters. Proceeds from the sale are payable to the Company as follows: (1) a $2,750 payment to the Company in cash (received on September 10, 2015), (2) a $375 deferred payment which will be paid to the Company by Verimatrix on or before June 30, 2016 (less any portion used to make indemnification payments, if necessary) and (3) $375 placed in escrow which amount will be released to the Company on or before June 30, 2016 (less any portion used to make indemnification payments to Verimatrix after exhaustion of the deferred payment).

The customer contracts and intellectual property sold had a net book value of $188 (which was included in intangible assets, net in our consolidated balance sheet). As a result of the sale, we also included $1,016 (net liability, consisting primarily of unearned deferred revenue) of related assets and liabilities not sold or transferred in the transaction in the calculation of the recorded gain. Additionally, we incurred $212 in legal, accounting and other expenses that would not have been incurred otherwise. As a result, we recorded a net gain of $4,116 in our condensed consolidated statement of operations for the nine months ended March 31, 2016.

As noted above, on July 1, 2015, we adopted ASU 2014-08 regarding discontinued operations. As a result, we evaluated the sale of our multi-screen video analytics product line in light of this new standard. We concluded that the sale of our multi-screen video analytics product line in September 2015 was not a “material shift” (as defined in ASU 2014-08) for us and therefore, is not considered a discontinued operation. In accordance with ASU 2014-08, the following information is being provided:

Three Months Ended
March 31, Nine Months Ended
March 31,
2016 2015 2016 2015

Operating profit (loss) related to multi-screen video analytics product line $ - $ (43 ) $ 178 ¹ $ (134 )

¹Through date of sale on September 9, 2015

	Total Fair Value		Quoted Prices in Active Markets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Cash	$	10,213	$	10,213	$	-	$	-
Money market funds		10,055		10,055		-		-
Cash and cash equivalents	$	20,268	$	20,268	$	-	$	-

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

(Amounts in thousands, except for share and per share data)

8.5.

Income Taxes

Components of Provision (Benefit) for Income Taxes

The domestic and foreign components of income (loss) before the provision (benefit) for income taxes are as follows:

Three Months Ended
March 31, Nine Months Ended
March 31,
2016 2015 2016 2015

United States $ (2,025 ) $ 1,267 $ 298 $ 920
Foreign 407 297 846 559
Income (loss) before income taxes $ (1,618 ) $ 1,564 $ 1,144 $ 1,479

	Three Months Ended September 30,
	2016			2015
United States	$	(3,314	)	$	2,755
Foreign		514			335
Income (loss) before income taxes	$	(2,800	)	$	3,090

We recorded an income tax ~~benefit~~expense for our domestic and foreign subsidiaries of ~~$442 and income tax expense of $716 during the three months ended March 31, 2016 and 2015, respectively,~~$128 and an income tax benefit of ~~$604 and income tax expense of $787~~$117 during the ~~nine~~three months ended ~~March 31,~~September 30, 2016 and 2015, respectively. The components of the provision (benefit) for income taxes are as follows:

Three Months Ended
March 31, Nine Months Ended
March 31,
2016 2015 2016 2015

United States $ (750 ) $ 508 $ (1,161 ) $ 370
Foreign 308 208 557 417
Provision (benefit) for income taxes $ (442 ) $ 716 $ (604 ) $ 787

	Three Months Ended September 30,
	2016		2015
United States	$	8	$	(251	)
Foreign		120		134
Provision (benefit) for income taxes	$	128	$	(117	)

For the three months ended ~~March 31,~~September 30, 2016, the domestic tax expense is higher than the prior year due to the full valuation allowance that is now being applied to any tax benefit generated from operating losses. The domestic expense is primarily attributable to interest and penalties on uncertain tax positions and minimum state taxes in a number of jurisdictions for the three months ended September 30, 2016. The foreign tax expense is lower than the prior year primarily due to (1) lower pretax book income in ~~the U.S.~~Japan and (2) a lower annual estimated tax rate on domestic operations in the current fiscal year compared to the prior year. The foreign tax expense is higher than the prior year primarily due to (1) higher pretax book income in Japan offset by (2) a reduction in the statutory tax rate in Japan ~~and (3) lower pretax book income in~~for the ~~U.K.~~

~~For the nine~~three months ended ~~March 31,~~September 30, 2016, compared to the ~~domestic tax expense is lower than~~same period from the prior year primarily due to (1) the release of valuation allowance attributable to the tax impact of the gain on sale of our multi-screen video analytics product line and (2) lower pretax book income in the U.S. Any other domestic differences are due to differences in projected pretax book income and permanent book/tax differences between the two periods. The foreign tax expense is higher than the prior year primarily due to (1) higher pretax book income in Japan offset by (2) a reduction in the statutory tax rate in Japan and (3) lower pretax book income in the U.K.year.

Net Operating Losses

As of June 30, ~~2015,~~2016, we had U.S. federal net operating loss carryforwards (“NOLs”) of approximately ~~$92,943~~$89,937 for income tax purposes, of which none expire in fiscal year ~~2016,~~2017, and the remainder expire at various dates through fiscal year 2035. We recently completed an evaluation of the potential effect of Section 382 of the Internal Revenue Code (the “Code”) on our ability to utilize these net operating losses. The study concluded that we have not had an ownership change for the period from July 22, 1993 to ~~March 31,~~June 30, 2016. If we experience an ownership change as defined in Section 382 of the Code, our ability to use these NOLs will be substantially limited, which could therefore significantly impair the value of that asset. On March 1, 2016, we adopted a Tax Asset Preservation Plan (“TAPP”) in order to protect the value of our ~~NOLs (see Note 4 – Tax Asset Preservation Plan).~~NOLs. At our 2016 Annual Meeting held on October 26, 2016, our shareholders adopted a formal amendment to our certificate of incorporation with terms substantially similar to the TAPP. The TAPP terminated in accordance with its terms on November 3, 2016 concurrent with the effectiveness of the amendment to our certificate of incorporation.

As of June 30, ~~2015,~~2016, we ~~have~~had state NOLs of ~~$51,233~~$51,346 and foreign NOLs of ~~$28,153.~~$28,208. The state NOLs expire between fiscal year ~~2016~~2017 and fiscal year 2035. The foreign NOLs expire according to the rules of each country. Currently, none of the jurisdictions in which the Company has foreign NOLs are subject to expiration due to indefinite carryforward periods.

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

(Amounts in thousands, except for share and per share data)

Valuation Allowance

Realization of our deferred tax assets is dependent primarily on the generation of future taxable income. In considering the need for a valuation allowance, we consider our historical and future projected operations along with other positive and negative evidence in assessing if sufficient future taxable income will be generated to use the existing deferred tax assets. The following summarizes our conclusions on the need for a valuation allowance in each jurisdiction as of ~~March 31,~~September 30, 2016:

U.S. ~~- For the nine months ended March 31,~~– As of June 30, 2016, we ~~sold~~believed the ~~assets associated with our multi-screen video analytics product line, generating a gain~~weight of ~~$4,116. This realized gain will provide an additional source of income~~negative evidence was greater than the existing positive evidence and concluded that ~~will allow us~~it was more-likely-than-not that we would be unable to realize an additional amount of deferred tax assets. We recognized a release of $1,355 of the valuation allowance on federal and state NOLs that will be used to offset this gain. Other than this discrete item in fiscal year 2016, we do not believe that there has been a significant change in our business in the U.S. that would require a change to our conclusion at the end of fiscal year 2015 with regard to the realizability of our U.S. net deferred tax assets. As ~~of March 31, 2016, the Company continues to have~~ a three-year cumulative accounting profit in the U.S. after adjusting for permanent tax items and certain non-recurring adjustments, including the current year gain on the sale of our multi-video product line. However, we have incurred recent operating losses within the U.S. jurisdiction and there continues to be significant uncertainty in our domestic operations due to consolidation within the cable industry and the introduction of our Aquari storage system into the marketplace. Should we continue to incur operating losses in the U.S. in the near future, it is possible that, when weighing all available positive and negative evidence, we may reestablishresult, a full valuation allowance was established on our U.S. net deferred tax ~~assets. The result~~assets which continue to remain in place as of ~~this event could be material in the period~~September 30, 2016. For future periods in which ~~it occurs.~~we remain in a full valuation allowance position, we would expect our U.S. tax provision expense to be limited to the alternative minimum tax (if applicable) for federal tax purposes, which approximates 2% of earnings before income taxes, state taxes in various jurisdictions, and interest and penalties on our uncertain tax positions.

U.K. - During our fiscal year 2014, a change in U.K. tax law relative to treatment of research and development expenses allowed us to release $214 of valuation allowances against deferred tax assets that we believe are now realizable as a result of the current period tax law change. We believe that in light of this law change, we will now generate sufficient taxable income to fully utilize our net deferred tax assets in the U.K.

Japan - Our subsidiary in Japan has a long history of profitable operations, and we continue to project profitability in Japan for the foreseeable future. Therefore, we continue to believe that we will fully realize the net deferred tax assets in Japan, and no valuation allowance is needed.

Other Foreign Jurisdictions - We also evaluated the need for a continued full valuation allowance against our foreign deferred tax assets in other jurisdictions. We concluded that a full valuation allowance against our deferred tax assets for other foreign jurisdictions was warranted due to, among other reasons, (i) the realized cumulative accounting losses, (ii) our long history of taxable losses and (iii) our uncertainty with respect to generating future taxable income in the near term given our recently completed projections and other inherent uncertainties in our business. ~~However,~~

We are beginning to show greater profitability in our German ~~subsidiary,~~operations. While we ~~are projecting improved operating~~continue to have cumulative losses over a 12-quarter period, it is possible that we could become cumulatively profitable over a 12-quarter period in the next 12 to 24 months should profitable operations continue. We will continue to monitor results ~~that may cause the three year cumulative accounting profit~~in Germany to ~~become positive which may trigger~~determine if a ~~release of all or a portion of~~change in our valuation allowance ~~on our German deferred tax assets. The result of this event could be material in the period in which it occurs.~~conclusion is needed.

Each quarter, we assess the total weight of positive and negative evidence and evaluate whether release of all or any portion of the valuation allowance is appropriate. Should we come to the conclusion that a release of our valuation allowances is required, or that additional valuation allowance is required, there could be a significant increase or decrease in net income and earnings per share in the period of release, or the additional valuation allowance, due to the impact on the tax rate.

Unrecognized Tax Benefits

The Company has evaluated its unrecognized tax benefits and determined that there has not been a material change in the amount of such benefits for the ~~nine~~three months ended ~~March 31,~~September 30, 2016.

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

(Amounts in thousands, except for share and per share data)

9.6.

Share-Based Compensation

As of ~~March 31,~~September 30, 2016, we had share-based compensation plans which are described in Note 1110 of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended June 30, ~~2015.~~2016. We recognize stock compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period. As of ~~March 31,~~September 30, 2016, we had ~~83,582~~70,509 stock options outstanding and ~~488,152~~652,125 restricted shares outstanding (after giving effect to the retroactive rescission of 120,000 RSAs previously granted to our CEO as described in Note 2 - Immaterial Restatement of Previously Issued Financial Statements and Reclassification).outstanding. During the ~~nine~~three months ended ~~March 31,~~September 30, 2016, no stock options were granted or exercised; however, ~~8,097~~13,910 stock options were cancelled. We recorded share-based compensation related to the issuance of restricted stock to employees and board members as follows:

Three Months Ended
March 31, Nine Months Ended
March 31,
2016 2015 2016 2015

Share-based compensation expense included in the consolidated statement of operations:
Cost of sales $ 8 $ 13 $ 16 $ 40
Sales and marketing 40 9 113 81
Research and development 7 24 85 75
General and administrative 124 85 347 301
Total $ 179 $ 131 $ 561 $ 497

	Three Months Ended September 30,
	2016		2015

Share-based compensation expense included in the consolidated statement of operations:
Cost of sales	$	8	$	1
Sales and marketing		72		30
Research and development		8		31
General and administrative		154		105
Total	$	242	$	167

A summary of the activity of our time-based, service condition restricted shares during the ~~nine~~three months ended ~~March 31,~~September 30, 2016, is presented below:

Restricted Stock Awards	Shares			Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value

Non-vested at July 1, 2015⁽¹⁾		250,690		$	6.62
Non-vested at July 1, 2016							464,117		$	5.39
Granted		356,500			4.87		188,000			5.53
Vested		(70,050	)		6.55		(30,310	)		5.32
Forfeited		(54,375	)		5.91		(19,682	)		5.72
Non-vested at March 31, 2016		482,765		$	5.41
Non-vested at September 30, 2016							602,125		$	5.43

⁽¹⁾

~~Reflects the retroactive rescission of 120,000 restricted stock awards previously granted to the Company's president and CEO.~~

In conjunction with the resignation of one of our directors (See Note 17 – Commitments and Contingencies – Board Representation and Standstill Agreement), we accelerated the vesting of 5,400 shares of restricted stock. This acceleration of vesting resulted in stock compensation expense of $27 during the three months ended September 30, 2016.

During the three months ended September 30, 2016, we issued 50,000 performance-based restricted shares (“PSAs”) to senior and executive management. The PSAs issued in fiscal year 2016 will be released only if certain company financial performance criteria are achieved over a cumulative three-year performance period. The weighted-average grant date fair value per share for these PSAs was established on the date the cumulative three-year performance criteria was approved by our Board of Directors (“Board”).

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

(Amounts in thousands, except for share and per share data)

During the ~~nine~~three months ended ~~March 31,~~September 30, 2016, ~~20,500~~5,387 previously granted performance-based restricted shares were forfeited due to a failure to meet performance goals associated with our fiscal year ~~2015~~2016 financial results. A summary of the activity of our performance-based restricted shares during the ~~nine~~three months ended ~~March 31,~~September 30, 2016, is presented below:

Performance Stock Awards Shares Weighted-
Average
Grant Date
Fair Value

Non-vested at July 1, 2015 25,887 $ 5.84
Granted - -
Vested - -
Forfeited (20,500 ) 6.93
Non-vested at March 31, 2016 5,387 $ 6.96

Performance Stock Awards	Shares			Weighted- Average Grant Date Fair Value

Non-vested at July 1, 2016		5,387		$	5.14
Granted		50,000			5.49
Vested		-			-
Forfeited		(5,387	)		5.14
Non-vested at September 30, 2016		50,000		$	5.49

~~10.~~

~~Inventories~~

~~Inventories consist of the following:~~

March 31,
2016 June 30,
2015

Raw materials $ 1,189 $ 1,403
Work-in-process 114 271
Finished goods 2,128 1,754
$ 3,431 $ 3,428

~~11.~~

~~Property and Equipment, net~~

~~Property and equipment consists of the following:~~

March 31,
2016 June 30,
2015

Leasehold improvements $ 2,719 $ 2,723
Machinery and equipment 14,524 14,075
17,243 16,798
Less: Accumulated depreciation (14,398 ) (14,350 )
$ 2,845 $ 2,448

During the nine months ended March 31, 2016, the Company wrote-off fully-depreciated property and equipment related to the sale of its multi-screen video analytics product line with an original cost of $260.

Depreciation expense for property and equipment was $405 and $412 for the three months ended March 31, 2016 and 2015, respectively, and $1,228 and $1,180 for the nine months ended March 31, 2016 and 2015, respectively.

~~Concurrent Computer Corporation~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued~~

~~(Amounts in thousands, except for share and per share data)~~

~~12.~~

~~Accounts Payable and Accrued Expenses~~

~~Accounts payable and accrued expenses consist of the following:~~

March 31,
2016 June 30,
2015

Accounts payable, trade $ 4,869 $ 2,682
Accrued payroll, vacation and other employee expenses 2,862 2,332
Accrued income taxes 275 23
Dividend payable 72 71
Other accrued expenses 1,119 1,212
$ 9,197 $ 6,320

~~13.~~7.

Pensions and Other Postretirement Benefits

Defined Contribution Plans

We maintain a retirement savings plan available to U.S. employees that qualifies as a defined contribution plan under Section 401(k) of the Internal Revenue Code. We match 50% of the first 5% of the participants’ compensation invested by the employee in the 401(k) plan. We made matching contributions of ~~$120~~$133 and ~~$118 for~~$124 during the three months ended ~~March 31, 2016 and 2015, respectively, and $332 and $339 for the nine months ended March 31,~~September 30, 2016 and 2015, respectively.

We also maintain a defined contribution plan (the “Stakeholder Plan”) for our U.K. based employees. The Stakeholder Plan provides for discretionary matching contributions of between 4% and 7% of the employee’s salary. We contributed $9$13 and ~~$15~~$14 to the Stakeholder Plan for the three months ended ~~March 31, 2016 and 2015, respectively, and $35 and $44 for the nine months ended March 31,~~September 30, 2016 and 2015, respectively.

Defined Benefit Plans

The following table provides the components of net periodic pension cost of our German defined benefit pension plans recognized in earnings for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2016 and 2015:

Three Months Ended
March 31, Nine Months Ended
March 31,
2016 2015 2016 2015

Net Periodic Benefit Cost
Interest cost $ 24 $ 30 $ 72 $ 97
Expected return on plan assets (5 ) (13 ) (16 ) (44 )
Recognized actuarial (gain) loss 12 9 (37 ) 31
Net periodic benefit cost $ 31 $ 26 $ 19 $ 84

	Three Months Ended September 30,
	2016			2015

Net Periodic Benefit Cost
Interest cost	$	13		$	24
Expected return on plan assets		(4	)		(5	)
Recognized actuarial loss		20			12
Net periodic benefit cost	$	29		$	31

We contributed $4 ~~and $5~~ to our German defined benefit pension plans for each of the three months ended ~~March 31, 2016 and 2015, respectively, and $12 and $16 for the nine months ended March 31,~~September 30, 2016 and 2015, respectively. We expect to make additional, similar, quarterly contributions during the remaining ~~quarter~~quarters of our fiscal year ~~2016.~~

2017.

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

(Amounts in thousands, except for share and per share data)

~~14.~~8.

Inventories

Inventories consist of the following:

	September 30, 2016		June 30, 2016

Raw materials	$	1,188	$	1,233
Work-in-process		86		133
Finished goods		1,425		2,129
	$	2,699	$	3,495

Property and Equipment, net

Property and equipment consists of the following:

	September 30, 2016			June 30, 2016

Leasehold improvements	$	2,766		$	2,750
Machinery and equipment		15,413			15,000
		18,179			17,750
Less: Accumulated depreciation		(15,122	)		(14,689	)
	$	3,057		$	3,061

Depreciation expense for property and equipment was $455 and $395 for the three months ended September 30, 2016 and 2015, respectively.

10.

Intangible Assets, net

Intangible assets, net of $140 and $143 at September 30, 2016 and June 30, 2016, respectively, consist of patents and an internet domain name (www.concurrent.com). The domain name is considered an indefinite lived intangible asset and is not amortizable. Intangible assets are included in other long-term assets, net in our consolidated balance sheets.

Amortization expense related to finite-lived intangible assets was $3 and $36 for the three months ended September 30, 2016 and 2015, respectively.

11.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:

	September 30, 2016		June 30, 2016

Accounts payable, trade	$	3,646	$	4,767
Accrued payroll, vacation and other employee expenses		2,634		2,757
Accrued income taxes		77		389
Dividend payable		95		95
Other accrued expenses		908		1,183
	$	7,360	$	9,191

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

(Amounts in thousands, except for share and per share data)

12.

Sale of Product Line

On September 9, 2015, we sold the customer contracts and intellectual property related to our multi-screen video analytics product line for $3,500 pursuant to an Asset Purchase Agreement (“APA”) dated August 31, 2015 with Verimatrix, Inc. (“Verimatrix”), a privately-held video revenue security company based in San Diego, California. The APA included customary terms and conditions, including provisions that require the Company to indemnify Verimatrix for certain losses that it incurs as a result of a breach by the Company of its representations and warranties in the APA and certain other matters. Proceeds from the sale were payable to the Company as follows: (1) a $2,750 payment to the Company in cash (received on September 10, 2015) , (2) a $375 deferred payment (received in full on June 30, 2016) and (3) $375 placed in escrow (released and received in full on June 30, 2016). No amounts were held back pusuant to indemnification provisions in the APA.

The customer contracts and intellectual property sold had a net book value of $188 (which was included in intangible assets, net in our consolidated balance sheet). As a result of the sale, we also included $1,016 (net liability, consisting primarily of unearned deferred revenue) of related assets and liabilities not sold or transferred in the transaction in the calculation of the recorded gain. Additionally, through September 30, 2015, we incurred $212 in legal, accounting and other expenses that would not have been incurred otherwise. As a result, we recorded a net gain of $4,116 in our consolidated statement of operations for the three months ended September 30, 2015.

On July 1, 2015, we had adopted ASU No. 2014-08,Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). As a result, we evaluated the sale of our multi-screen video analytics product line in light of this new standard. We concluded that the sale of our multi-screen video analytics product line in September 2015 was not a “material shift” (as defined in ASU 2014-08) for us and therefore, was not considered a discontinued operation. The operating profit related to the multi-screen video analytics product line for the three months ended September 30, 2015 (through the date of sale) was $179.

13.

Segment Information

~~We operate~~Reportable Operating Segments

The “management approach” has been used to present the following segment information. This approach is based upon the way the management organizes segments within the Company for making operating decisions and assessing performance. Financial information is reported on the basis that it is used internally by the chief operating decision maker (“CODM”) for evaluating segment performance and deciding how to allocate resources to segments. The Company’s chief executive officer has been identified as the CODM.

Effective July 1, 2016, we changed the way our CODM views our operating results by providing more discrete segment financial information. As a result, our reportable operating segments now consist of Content Delivery and Real-Time.

Content Delivery - Our content delivery solutions product line consists of software, hardware and services for intelligently streaming video content to a variety of consumer devices and storing and managing content in the network. Our streaming video and storage products and services are deployed by service providers to support consumer-facing video services including live broadcast video, video-on-demand and time-shifted video applications such as cloud based digital video recording. The Content Delivery segment also includes Aquari, our unified scale-out storage solutions product line currently marketed to our content delivery and other third-party customers. Additionally, the Content Delivery segment for the three months ended September 30, 2015 includes the results of our multi-screen data analytics product line sold on September 9, 2015 (through the date of sale)

Real-Time - Our real-time solutions product line consist of real-time Linux operating system versions, development and performance optimization tools, simulation software and other system software combined, in many cases, with computer platforms and services. These real-time products are sold to a wide variety of companies seeking high performance, real-time computer solutions in the defense, aerospace, financial and automotive markets around the world.

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

(Amounts in ~~two~~thousands, except for share and per share data)

These operating segments were determined based on the nature of the products and services ~~as disclosed within our consolidated statements~~offered and the nature and industry of ~~operations. We evaluate segment results using revenues and~~customers serviced. The measures that are used to assess the reportable segment’s operating performance are revenue, gross margin and operating income. Operating income for reportable segments is defined as gross margin less selling and marketing, research and development expenses, and certain general and administrative expenses. Any transactions between operating segments are eliminated in consolidation.

Additionally, corporate and unallocated costs include certain corporate sales and marketing and corporate general and administrative expenses (executive, finance, legal, risk management and human resources). These expenses are not included in the measure of segment operating income but are included in the reconciliation to income (loss) before income taxes.

Segment assets may be either directly attributable or allocated to the operating segment depending on their nature. However, segment assets are not regularly reviewed by the CODM for evaluating performance ~~measures. Such~~or allocating resources and therefore, are not presented. We recast our segment footnote to conform the presentation with our current reportable segments.

The table below represents information ~~is shown on~~about the ~~face of~~Company’s reportable operating segments for the ~~accompanying consolidated statements of operations. We do not identify assets on a segment basis.~~ three months ended September 30, 2016 and 2015:

	Three Months Ended September 30,
	2016									2015
	Content Delivery			Real-Time			Total			Content Delivery			Real-Time			Total
Product	$	2,440		$	5,419		$	7,859		$	3,949		$	4,545		$	8,494
Services		2,679			2,578			5,257			2,497			2,360			4,857
Revenue from external customers	$	5,119		$	7,997		$	13,116		$	6,446		$	6,905		$	13,351

Gross margin	$	2,525		$	4,658		$	7,183		$	3,726		$	4,131		$	7,857

Sales and marketing		(2,616	)		(1,460	)		(4,076	)		(1,910	)		(1,329	)		(3,239	)
Research and development		(2,225	)		(1,082	)		(3,307	)		(2,871	)		(966	)		(3,837	)
General and administrative		(73	)		(133	)		(206	)		(57	)		(118	)		(175	)
Operating income (loss) for reportable segments	$	(2,389	)	$	1,983			(406	)	$	(1,112	)	$	1,718			606

Corporate and unallocated costs:
Sales and marketing								(399	)								(155	)
General and administrative								(2,138	)								(1,603	)
Gain on sale of product line, net								-									4,116
								(2,537	)								2,358

Operating income (loss)								(2,943	)								2,964

Interest income								27									3
Interest expense								(3	)								-
Other income, net								119									123
Income (loss) before income taxes							$	(2,800	)							$	3,090

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

(Amounts in thousands, except for share and per share data)

Geographic Information

We attribute revenues to individual countries and geographic areas based upon location of our customers.

A summary of our revenue by geographic area is as follows:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2016		2015		2016		2015		Three Months Ended September 30,
									2016		2015
United States	$	7,863	$	9,396	$	24,593	$	28,645	$	6,781	$	8,607
Canada		1,203		1,544		4,774		3,485		901		1,116
Total North America		9,066		10,940		29,367		32,130		7,682		9,723

Japan		4,462		4,622		8,597		9,887		2,635		2,097
Other Asia-Pacific		643		285		1,334		1,230		1,346		301
Total Asia-Pacific		5,105		4,907		9,931		11,117		3,981		2,398

Europe		1,282		1,260		4,396		7,390		1,453		1,224

South America		3		3		12		9		-		6
Total revenue	$	15,456	$	17,110	$	43,706	$	50,646	$	13,116	$	13,351

~~15.~~14.

Concentration of Risk

The following table summarizes revenues by significant customer where such revenue accounted for 10% or more of total revenues for any one of the indicated periods:

Three Months Ended Nine Months Ended
March 31, March 31,
2016 2015 2016 2015

Customer A 13 % 16 % <10 % 10 %
Customer B 10 % <10 % <10 % 10 %
Customer C <10 % <10 % 14 % <10 %

	Three Months Ended
	September 30,
	2016			2015

Customer A⁽¹⁾		<10	%		25	%

⁽¹⁾Data for all periods reflects the merger of two customers consummated in the year ended June 30, 2016.

We assess credit risk through ongoing credit evaluations of customers’ financial condition, and collateral is generally not required. The following summarizes accounts receivable by significant customers for whom accounts receivable were 10% or more of total accounts receivables for any one of the indicated periods:

March 31, June 30,
2016 2015

Customer C 10 % <10 %
Customer D 10 % <10 %
Customer E 10 % <10 %
Customer G <10 % 37 %

	September 30,			June 30,
	2016			2016

Customer B		14	%		<10	%
Customer A⁽¹⁾		<10	%		37	%

⁽¹⁾Data for all periods reflects the merger of two customers consummated in the year ended June 30, 2016.

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

(Amounts in thousands, except for share and per share data)

As of March 31, 2016, Customer E (a state government) owes us a total of $1,475 for maintenance contracts billed earlier in the current fiscal year. Since the state government has yet to approve a formal budget for its current fiscal year, the Company (as well as certain other vendors and suppliers to Customer E) have yet to receive payment of amounts owed. We believe that all amounts owed are fully collectible and have not placed any reserve against this account receivable. Other than those customers reflected in the table above, there were no other customers representing 10% or more of our trade receivables at March 31, 2016 and June 30, 2015.

The following summarizes purchases from significant vendors where such purchases accounted for 10% or more of total purchases for any one of the indicated periods:

Three Months Ended Nine Months Ended
March 31, March 31,
2016 2015 2016 2015

Vendor A 20 % 23 % 20 % 20 %
Vendor B <10 % 26 % 13 % 21 %
Vendor C 16 % <10 % <10 % <10 %
Vendor D 13 % <10 % 12 % <10 %
Vendor E 10 % <10 % <10 % <10 %
Vendor F <10 % 21 % <10 % 17 %

	Three Months Ended
	September 30,
	2016			2015

Vendor A		20	%		<10	%
Vendor B		18	%		13	%
Vendor C		10	%		15	%
Vendor D		<10	%		19	%

~~16.~~15.

Dividends

During the ~~nine~~three months ended ~~March 31,~~September 30, 2016, our Board ~~of Directors~~ approved quarterly cash dividends as follows:

Dividends Declared
Record Date Payment Date Type Per Share Total

September 15, 2015 September 29, 2015 Quarterly $ 0.12 $ 1,146
December 15, 2015 December 29, 2015 Quarterly $ 0.12 $ 1,157
March 15, 2016 March 29, 2016 Quarterly $ 0.12 $ 1,159

Total $ 3,462

Dividends Declared

Record Date

Payment Date

Type

Per Share

Total

September 13, 2016

September 27, 2016

Quarterly

0.12

1,182

As of ~~March 31,~~September 30, 2016, we recorded ~~$228~~$287 of dividends payable to holders of restricted common stock who held restricted shares at the time of the dividend record dates and still hold those restricted shares as of ~~March 31,~~September 30, 2016. Such dividends will be paid when the restrictions on a holder’s restricted common shares lapse. This dividend payable is divided between current payable and non-current payable in the amounts of ~~$72~~$95 and ~~$156,~~$192, respectively, based upon the expected vesting date of the underlying shares. These holders of restricted common stock will receive the dividend payments as long as they remain eligible at the vesting date of the shares. ~~Dividends payable at March 31, 2016 reflect the rescission of 120,000 RSAs as described in Note 2 – Immaterial Restatement of Previously Issued Financial Statements and Reclassification.~~ For the ~~nine~~three months ended ~~March 31,~~September 30, 2016, ~~$59~~$25 of dividends payable were forfeited and returned to capital for restricted shares that were forfeited prior to meeting vesting requirements. Because the participants are not entitled to these dividends unless they complete the requisite service period for the shares to vest, they are not “participating dividends” as defined under ASC Topic 260-10,Earnings per Share.

16.

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in accumulated other comprehensive income (loss) by component, net of taxes, for the three months ended September 30, 2016:

	Pension and Postretirement Benefit Plans			Currency Translation Adjustments			Total
Balance at June 30, 2016	$	(1,637	)	$	1,092		$	(545	)

Other comprehensive loss before reclassifications		(23	)		(75	)		(98	)
Amounts reclassified from accumulated other comprehensive income		20			-			20
Net current period other comprehensive loss		(3	)		(75	)		(78	)
Balance at September 30, 2016	$	(1,640	)	$	1,017		$	(623	)

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

(Amounts in thousands, except for share and per share data)

17.

~~Accumulated Other Comprehensive Income (Loss)~~

~~The following table summarizes the changes in accumulated other comprehensive income (loss) by component, net of taxes, for the nine months ended March 31, 2016:~~

Pension and
Postretirement
Benefit
Plans Currency
Translation
Adjustments Total
Balance at June 30, 2015 $ (1,214 ) $ 1,323 $ 109

Other comprehensive income (loss) before reclassifications - (202 ) (202 )
Amounts reclassified from accumulated other comprehensive income (loss) 10 - 10
Net current period other comprehensive income (loss) 10 (202 ) (192 )
Balance at March 31, 2016 $ (1,204 ) $ 1,121 $ (83 )

~~18.~~

Commitments and Contingencies

From time to time, we are involved in litigation incidental to the conduct of our business. We believe that such pending litigation will not have a material adverse effect on our results of operations or financial condition.

We enter into agreements in the ordinary course of business with customers that often require us to defend and/or indemnify the customer against intellectual property infringement claims brought by a third-party with respect to our products. For example, we were notified that certain of our customers have settled with or been sued by the following companies, in the noted jurisdictions, regarding the listed patents:

Asserting Party	Jurisdiction	Patents at Issue
Constellation Technologies, LLC	U.S. District Court Eastern District of Texas	U.S. Patent Nos. 6,128,649, 6,901,048, 7,154,879 and 6,845,389

Broadband iTV, Inc.	U.S. District Court ~~District~~ of Hawaii	U.S. Patent No. 7,361,336

Sprint Communications Company, L.P.	U.S. District Court Eastern District of Pennsylvania	U.S. Patent Nos. 6,754,907 and 6,757,907

FutureVision.com LLC	U.S. District Court Eastern District of Texas	U.S. Patent No. 5,877,755

~~Concurrent Computer Corporation~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued~~

~~(Amounts in thousands, except for share and per share data)~~

We continue to review our potential obligations under our indemnification agreements with these customers and the indemnity obligations to these customers from other vendors that also provided systems and services to these customers. From time to time, we also indemnify customers and business partners for damages, losses and liabilities they may suffer or incur relating to personal injury, personal property damage, product liability, orand environmental claims relating to the use of our products and services or resulting from our acts or omissions, our employees, authorized agents or subcontractors. We have not accrued any material liabilities related to such indemnifications in our financial statements and do not expect any other material costs as a result of such obligations. The maximum potential amount of future payments that we could be required to make is unlimited, and we are unable to estimate any possible loss or range of possible loss.

Severance Arrangements

Pursuant to the terms of the employment agreements with our executive officers and certain other employees, employment may be terminated by either the respective executive officer or us at any time. In the event the employee voluntarily resigns (except as described below) or is terminated for cause, compensation under the employment agreement will end. In the event an agreement is terminated by us without cause or in certain circumstances constructively by us, the terminated employee will receive severance compensation for a period from 6 to 12 months, depending on the officer, in an annualized amount equal to the respective employee's base salary then in effect. In the event our CEO resigns within three months of a change in control or the CEO’s agreement is terminated by us within one year of a change of control other than for due cause, disability or non-renewal by our CEO, our CEO will be entitled to severance compensation multiplied by two, as well as incremental medical costs. Additionally, if terminated, our CEO and ~~chief financial officer~~CFO may be entitled to bonuses during the severance period. At ~~March 31,~~September 30, 2016, the maximum contingent liability under these agreements is ~~$1,969.~~$2,272. Our employment agreements with certain of our employees contain certain offset provisions, as defined in their respective agreements.

~~Shareholder Demand Letter~~

As previously disclosed in our Form 8-K filed on October 15, 2015, on October 5, 2015, our Board of Directors received a demand letter from a law firm on behalf of a purported shareholder of the Company alleging that the grant of 120,000 RSAs pursuant to our November 18, 2014 employment agreement with our CEO exceeded the limits set forth in the Plan. In response to the demand letter, our Board of Directors formed a special committee to investigate the allegations and take corrective action should any be necessary. As more fully described in our Form 8-K filed on October 15, 2015, we also took actions to, among other things, amend the employment agreement to rescind the grant of 120,000 RSAs to our CEO.

On October 15, 2015, the Company entered into an amendment (the “Amendment”) to its initial employment agreement with its president and CEO dated November 18, 2014. Pursuant to the terms of the Amendment, the Company and its CEO agreed to rescind the 120,000 RSAs initially granted under the Plan to its CEO pursuant to the terms of the initial employment agreement. This rescission was effective as of the date the RSAs were initially granted.

In connection with the execution of the Amendment, on October 15, 2015, the Company awarded its CEO a cash bonus of $332 and granted him 45,000 RSAs under the Plan that will vest in equal installments over three years on each anniversary of the grant date, provided that the CEO remains employed by the Company on each such date.

As part of the Amendment, on February 11, 2016, the Company granted its CEO 15,000 RSAs under the Plan that will vest in substantially equal installments over three years on each anniversary of the grant date and 40,000 RSAs under the Plan that will vest on the third anniversary of the grant date, in each case such grants are subject to the terms of the Plan.

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

(Amounts in thousands, except for share and per share data)

~~Assessments of claims exposures are difficult because they involve inherently unpredictable factors, particularly for matters such as this which are at~~Board Representation and Standstill Agreement

As previously disclosed in our Form 8-K filed on August 29, 2016, the Company entered into a ~~very early stage of proceeding. As a result, we are currently unable~~Board Representation and Standstill Agreement (the “Standstill Agreement”) with an investor and its affiliated party. Pursuant to ~~estimate any reasonably possible losses which may result from this matter, but our management is currently~~the terms of the ~~opinion that it will not have~~Standstill Agreement, in consideration for certain restrictions applicable to the investor, our Board, among other things (1) agreed to appoint a ~~material effect~~nominee of the investor to serve on the Company’s Board until the 2016 Annual Meeting of stockholders of the Company (the nominee was subsequently elected as a director of the Company at the 2016 Annual Meeting held on October 26, 2016) and (2) agreed to pay up to $235 for fees and expenses incurred by the investor and its affiliated party in connection with the Standstill Agreement.

Additionally, pursuant to the Standstill Agreement, effective as of August 29, 2016, one of our ~~business, consolidated financial position, results~~directors tendered his resignation from the Board and all Board committees thereof. In connection with this resignation, the Company agreed to accelerate the vesting of ~~operations or cash flows.~~5,400 shares of restricted stock held by this director and to make a one-time payment to him of $48 (including $2 of accrued dividends released upon the acceleration of the vesting of the restricted stock).

~~19.~~18.

Subsequent Events

We have evaluated subsequent events through the date these financial statements were issued and determined that there were no other material subsequent events that require recognition or additional disclosure in our consolidated financial statements.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the condensed consolidated financial statements and the related notes thereto which appear elsewhere herein. Except for the historical financial information, many of the matters discussed in this Item 2 may be considered “forward-looking” statements that reflect our plans, estimates and beliefs. Actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section below entitled “Cautionary Note Regarding Forward-Looking Statements,” elsewhere herein and in other filings made with the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the year ended June 30, ~~2015.~~2016.

References herein to “Concurrent,” the “Company,” “we,” “our” or “us” refer to Concurrent Computer Corporation and its subsidiaries unless the context specifically indicates otherwise.

Discussions concerning revenues in the context of geographic areas are based upon the location of our customers.

References to our Form 10-K made throughout this document refer to our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2015~~2016 as filed with the SEC on August ~~26, 2015.~~30, 2016.

Overview

We provide software, hardware and professional services for the content delivery market, storage solutions market and the ~~high performance,~~high-performance, real-time market. Effective July 1, 2016, we changed the way our chief operating decision maker views our operating results by providing more discrete segment financial information. As a result, our reportable operating segments now consist of Content Delivery and Real-Time. Our ~~business is comprised of two segments for financial reporting purposes, products~~Content Delivery Segment includes both our content delivery solutions and ~~services, which we provide for each of these markets.~~Aquari storage product lines.

Our content delivery solutions consist of software, hardware and services for intelligently streaming video content to a variety of consumer devices and storing and managing content in the network. Our streaming video and storage products and services are deployed by service providers to support consumer-facing video services including live broadcast video, video-on-demand and time-shifted video applications such as cloud-based digital video recording. ~~We have recently~~In fiscal 2016, we introduced Aquari, our ~~new~~ unified scale-out storage solutions product to our content delivery ~~and other third-party~~ customers.In September 2015, we sold our multi-screen video analytics product line for collecting and analyzing data related to content delivery ~~applications.~~applications (see Note 12 – Sale of Product Line to the accompanying condensed consolidated financial statements).

Our real-time solutions consist of real-time Linux operating system versions, development and performance optimization tools, simulation software and other system software combined, in many cases, with computer platforms and services. These real-time products are sold to a wide variety of companies seeking high-performance, real-time computer solutions in the ~~military,~~defense, aerospace, financial and automotive markets around the world.

Results of Operations for the Three Months Ended ~~March 31,~~September 30, 2016 Compared to the Three Months Ended ~~March 31,~~September 30, 2015

Revenue

The following table sets forth ~~summarized consolidated financial information~~our revenue for the three months ended ~~March 31,~~September 30, 2016 and 2015 for each of our operating segments as well as comparative data showing increases and decreases between periods (dollars in thousands):

Three Months Ended
March 31, $ %
2016 2015 Change Change

Product revenue $ 10,772 $ 11,327 $ (555 ) (4.9 )%
Service revenue 4,684 5,783 (1,099 ) (19.0 )%
Total revenue 15,456 17,110 (1,654 ) (9.7 )%

Product cost of sales 5,676 4,578 1,098 24.0 %
Service cost of sales 1,821 2,447 (626 ) (25.6 )%
Total cost of sales 7,497 7,025 472 6.7 %

Product gross margin 5,096 6,749 (1,653 ) (24.5 )%
Service gross margin 2,863 3,336 (473 ) (14.2 )%
Total gross margin 7,959 10,085 (2,126 ) (21.1 )%

Operating expenses:
Sales and marketing 4,252 3,410 842 24.7 %
Research and development 3,467 3,484 (17 ) (0.5 )%
General and administrative 2,150 1,628 522 32.1 %
Total operating expenses 9,869 8,522 1,347 15.8 %
Operating income (loss) (1,910 ) 1,563 (3,473 ) (222.2 )%

Interest income, net 15 2 13 650.0 %
Other income (expense), net 277 (1 ) 278 NM ⁽¹⁾
Income (loss) before income taxes (1,618 ) 1,564 (3,182 ) (203.5 )%
Provision (benefit) for income taxes (442 ) 716 (1,158 ) (161.7 )%
Net income (loss) $ (1,176 ) $ 848 $ (2,024 ) (238.7 )%

⁽¹⁾

~~NM denotes percentage is not meaningful~~

	Three Months Ended September 30,				$			%
	2016		2015		Change			Change
Product revenue:
Content delivery	$	2,440	$	3,949	$	(1,509	)		(38.2	)%
Real-time		5,419		4,545		874			19.2	%
Total product revenue	$	7,859	$	8,494	$	(635	)		(7.5	)%
Service revenue:
Content delivery	$	2,679	$	2,497	$	182			7.3	%
Real-time		2,578		2,360		218			9.2	%
Total service revenue	$	5,257	$	4,857	$	400			8.2	%

Product Revenue. - Total product revenue for the three months ended ~~March 31,~~September 30, 2016 was ~~$10.8~~$7.9 million, a decrease of ~~$0.5~~$0.6 million, or ~~4.9%~~7.5%, from ~~$11.3~~$8.5 million for the three months ended ~~March 31,~~September 30, 2015. ~~The decrease in total product revenue was due to a decrease in our content delivery product revenue partially offset~~An analysis by ~~an increase in real-time product revenue, as~~operating segment is described below.

Content Delivery

Content delivery product revenue decreased ~~$1.7~~$1.5 million, or ~~22.2%~~38.2%, for the three months ended ~~March 31,~~September 30, 2016 compared to the prior year period. ~~The~~Additionally, the three months ended ~~March 31,~~September 30, 2016 includes ~~$1.3~~$0.2 million of revenue from our ~~new~~ Aquari storage product solution. The period-over-period decrease in content delivery product revenue resulted from the following:

North American content delivery product revenue decreased by $1.7 million, or ~~32.2%~~50.4%. The current year period includes ~~$0.9~~$0.2 million in revenue for ~~the initial~~ sales of our ~~new~~ Aquari storage systems to existing content delivery customers in North America; however, we experienced an overall decline in content delivery system revenues due to ~~a large purchase of our~~delays in purchases from existing content delivery system solution by a new customer in the prior year period that did not purchase again in the current year period. Additionally, we experienced a decline in content delivery solutions volume to another larger customer and a decrease of $0.1 million in revenues as a result of the sale of our multi-screen video analytics product line in September 2015.customers.

European content delivery product revenue ~~increased~~decreased by ~~$0.6 million.~~$0.4 million, or 81.0%. European content delivery product revenue fluctuates from period to period primarily due to the product upgrade and expansion patterns of our customers. ~~Additionally, the current year period includes $0.4 million in revenue for the initial sales of our new Aquari storage systems sale to an existing customer in Europe.~~

Asia-Pacific content delivery product revenue ~~decreased~~increased by $0.6 million, ~~or 26.2%,~~ as our largest customer in Japan purchased ~~a lower volume of~~ systems in the current period compared to no purchases in the prior year period. Included in this increase is approximately $0.1 million from favorable foreign exchange rate changes.

Fluctuation in content delivery product revenue is often due to the fact that we have a small number of customers making periodic large purchases that account for a significant percentage of revenue. Our content delivery product revenue is also subject to customers’ capital spending cycles and may be impacted in the future by consolidation of the industry in which our customers operate.

Real-Time

Real-time product revenue increased ~~$1.1~~$0.9 million, or ~~29.9%~~19.2%, for the three months ended ~~March 31,~~September 30, 2016 compared to the prior year period. The period-over-period increase in real-time product revenue resulted primarily from the following:

North American real-time product revenue ~~increased~~decreased by ~~$0.5~~$0.3 million, or ~~36.1%~~11.7%.

European real-time product revenue ~~decreased~~increased by ~~$0.2~~$0.4 million, or ~~48.0%~~136.9%.

Asia-Pacific real-time product revenue increased by $0.8 million, or ~~42.5%~~41.8%, primarily in Japan. Included in this increase is approximately $0.2 million from favorable foreign exchange rate changes.

Revenue from defense contractors and the government tend to vary by quarter and year, and are dependent upon government initiatives and funding availability.

Service ~~Revenue.~~Revenue - Total service revenue for the three months ended ~~March 31,~~September 30, 2016 was ~~$4.7~~$5.3 million, ~~a decrease~~an increase of ~~$1.1~~$0.4 million, or ~~19.0%~~8.2%, from ~~$5.8~~$4.9 million for the three months ended ~~March 31, 2015 due~~September 30, 2015. An analysis by operating segment is described below.

Content Delivery

Content delivery services revenue increased by $0.2 million, or 7.3%, for the three months ended September 30, 2016 compared to ~~a decrease~~the prior year period despite the loss of $0.5 million in content delivery service revenue ~~of $1.1 million, or 32.2%. The decrease in content delivery service revenues reflects a decrease of $0.6 million in service revenues~~ as a result of the sale of our multi-screen video analytics product line in September ~~2015 and an additional $0.4 million decrease~~2015. The increase period-over-period is primarily due to ~~lower installation revenue.~~(1) an increase in content delivery installations and out-of-warranty repairs and (2) an increase in storage solutions installations.

~~Product~~ Real-Time

Real-time service revenue increased by $0.2 million, or 9.2%, for the three months ended September 30, 2016 compared to the prior year period. The increase is primarily due to incremental time and material service projects in Japan.

Gross ~~Margin.~~ ~~Product~~Margin

The following tables set forth our gross margins and gross margin percentage of revenues for the three months ended September 30, 2016 and 2015 for each of our operating segments as well as comparative data showing increases and decreases between periods (dollars in thousands):

	Three Months Ended September 30,									%
	2016			2015			Change			Change
Content delivery gross margin:
Gross margin dollars	$	2,525		$	3,726		$	(1,201	)		(32.2	)%
Gross margin percentage		49.3	%		57.8	%		(8.5	)%

Real-time gross margin:
Gross margin dollars	$	4,658		$	4,131		$	527			12.8	%
Gross margin percentage		58.2	%		59.8	%		(1.6	)%

Total gross margin:
Gross margin dollars	$	7,183		$	7,857		$	(674	)		(8.6	)%
Gross margin percentage		54.8	%		58.8	%		(4.0	)%

Consolidated gross margin was $7.2 million for the three months ended September 30, 2016, a decrease of $0.7 million, or 8.6%, from $7.9 million for the three months ended September 30, 2015. Consolidated gross margin percentage declined to 54.8% for the three months ended September 30, 2016 from 58.8% for the three months ended September 30, 2015. An analysis by operating segment is described below.

Total product gross margin was $4.1 million for the three months ended September 30, 2016, a decrease of $1.0 million, or 19.3%, from $5.1 million for the three months ended ~~March 31,~~September 30, 2015. Total product gross margin percentage declined to 51.8% for the three months ended September 30, 2016 ~~a decrease of $1.7 million, or 24.5%,~~ from ~~$6.8~~59.3% for the three months ended September 30, 2015.

Total service gross margin was $3.1 million for the three months ended ~~March 31, 2015. Product gross margin as a percentage~~September 30, 2016, an increase of ~~product revenue declined to 47.3%~~$0.3 million, or 10.6%, from $2.8 million for the three months ended ~~March 31, 2016 from 59.6%~~September 30, 2015. Total service gross margin percentage increased to 59.2% for the three months ended ~~March 31, 2015~~September 30, 2016 from 58.3% for the three months ended September 30, 2015.

Content Delivery

Segment gross margin dollars were $2.5 million for the three months ended September 30, 2016, a decrease of $1.2 million, or 32.2%, from $3.7 million for the three months ended September 30, 2015. The decrease in gross margin dollars is due to the decrease in content delivery product revenue. The decline in gross margin percentage of product revenue is primarily due to (1) lower gross margins on certain content delivery sales to some of our larger customers and (2) lower than average gross margins on the ~~initial~~ sales of our ~~new~~ Aquari storage product solution.

~~Service Gross Margin~~~~. Service~~An increase in gross margin ~~was $2.9 million for~~dollars on content delivery services revenue had a minimal impact on the ~~three months ended March 31, 2016, a decrease of $0.4 million, or 14.2%, from $3.3 million for the three months ended March 31, 2015. Gross~~overall change in segment gross margin ~~on service revenue increased to 61.1% of service revenue for the three months ended March 31, 2016 from 57.7% of service revenue for the three months ended March 31, 2015. The~~dollars. However, an increase in service gross margin ~~as a~~ percentage of service revenue was primarily due to higher services revenues from out-of-warranty repairs despite the ~~elimination~~loss of ~~fixed costs used to support our~~high margin service ~~organization. Additionally, the $0.6 million decrease in service cost of sales primarily resulted~~revenue from (1) a $0.3 million decrease in excess and obsolescence charges for our spare parts inventories used in warranty-related services and (2) a $0.2 million decrease in overall service cost of sales as a result of the sale of our multi-screen video analytics product line, which was sold in September ~~2015, primarily in customer service personnel costs.~~2015.

Real-Time

Segment gross margin dollars were $4.7 million for the three months ended September 30, 2016, an increase of $0.5 million, or 12.8%, from $4.1 million for the three months ended September 30, 2015. The increase in gross margin dollars is a primarily due to the increase in real-time product revenue. The slight decline in gross margin percentage is primarily due a lower volume of high margin software-only sales period-over-period.

An increase in gross margin dollars on real-time services revenue had a minimal impact on the overall change in segment gross margin dollars. Service gross margin percentage of service revenue remained stable period-over-period.

Segment Operating Expenses

Segment operating expenses include selling and marketing, research and development expenses, and certain general and administrative expenses. The following tables set forth our segment operating expenses for the three months ended September 30, 2016 and 2015 for each of our operating segments as well as comparative data showing increases and decreases between periods (dollars in thousands):

	Three Months Ended September 30,				$			%
	2016		2015		Change			Change
Sales and marketing:
Content delivery	$	2,616	$	1,910	$	706			37.0	%
Real-time		1,460		1,329		131			9.9	%
Total sales and marketing	$	4,076	$	3,239	$	837			25.8	%
Research and development:
Content delivery	$	2,225	$	2,871	$	(646	)		(22.5	)%
Real-time		1,082		966		116			12.0	%
Total research and development	$	3,307	$	3,837	$	(530	)		(13.8	)%
General and administrative:
Content delivery	$	73	$	57	$	16			28.1	%
Real-time		133		118		15			12.7	%
Total general and administrative	$	206	$	175	$	31			17.7	%

Sales and ~~Marketing.Sales~~Marketing - Total operating segment sales and marketing expenses increased approximately $0.8 million, or ~~24.7%~~25.8%, to ~~$4.3~~$4.1 million for the three months ended ~~March 31,~~September 30, 2016 from ~~$3.5~~$3.2 million for the three months ended ~~March 31,~~September 30, 2015. An analysis by operating segment is described below.

Content Delivery

Segment sales and marketing expenses were $2.6 million for the three months ended September 30, 2016, an increase of $0.7 million, or 37.0%, from $1.9 million for the three months ended September 30, 2015. This period-over-period increase primarily resulted from (1) a ~~$0.6~~$0.4 million increase in sales personnel and related costs ~~primarily in the U.S. and Japan~~ to help expand penetration of our existing products in our target markets and new markets for our Aquari storage solutions product ~~(2) a $0.2 million increase in commissions due in large part to the increase in sales headcount, partially offset by (3) a $0.1 million overall sales~~ and ~~marketing expenses decrease as a result of the sale of our multi-screen video analytics product line in September 2015, primarily related to personnel costs.~~

~~Research and Development.~~Research and development expenses were $3.5 million for each of the three months ended March 31, 2016 and 2015. While there was no overall change to research and development costs between the periods, we experienced (1)(2) a $0.3 million increase in ~~personnel costs in the U.S.~~travel and trade show expenses to ~~support our product and strategic growth initiatives, offset by (2) a $0.4 million decrease in overall research and development expenses as a result of the sale~~promote visibility of our ~~multi-screen video analytics product line in September 2015, primarily related to personnel costs.~~products.

~~General~~Real-Time

Segment sales and ~~Administrative.General and administrative~~marketing expenses ~~increased approximately $0.5 million, or 32.1%, to $2.1~~were $1.5 million for the three months ended ~~March 31,~~September 30, 2016, an increase of $0.2 million, or 9.9%, from ~~$1.6~~$1.3 million for the three months ended March 31, 2015. This increase was primarily due to (1) a $0.3 million general corporate bonus accrual, (2) $0.1 million in professional fees associated with our Tax Asset Preservation Plan and (3) $0.1 million increase in personnel costs.

~~Other Income (Expense), net~~.During the three months ended March 31, 2016, we recognized $0.3 million of realized currency translation gains compared to less than $0.1 million of realized currency translation losses in the three months ended March 31, 2015. These gains and losses result from the impact of the changes in value of the British pound, euro and Japanese yen, relative to the U.S. dollar, on foreign currency transactions related to short-term intercompany accounts which are settled in the normal course of business by our European and Japanese subsidiaries for which the British pound, euro and Japanese yen are the functional currencies.

~~Benefit for Income Taxes.~~We recorded an income tax benefit of $0.4 million for the three months ended March 31, 2016 compared to $0.7 million income tax expense for the three months ended March 31, 2015. For the three months ended March 31, 2016, the domestic tax expense component is lower than the prior year primarily due to (1) lower pretax book income in the U.S. and (2) a lower annual estimated tax rate on domestic operations in the current fiscal year compared to the prior year. The foreign tax expense component is higher than the prior year primarily due (1) higher pretax book income in Japan offset by (2) a reduction in the statutory tax rate in Japan and (3) lower pretax book income in the U.K.

In jurisdictions other than the U.S., U.K. and Japan, we either generate net operating losses or occasionally utilize some of the net operating loss carryforward amounts. However, because of the cumulative accounting losses in those jurisdictions, we maintain a full valuation allowance on those losses. This results in no net income tax provision impact in those jurisdictions as of March 31, 2016.

~~Net Income (Loss).~~Our net loss for the three months ended March 31, 2016 was $1.2 million, or a $0.13 loss per basic and diluted share, compared to net income for the three months ended March 31, 2015 of $0.8 million, or $0.09 income per basic and diluted share.

~~Results of Operations for the Nine Months Ended March 31, 2016 Compared to the Nine Months Ended March 31, 2015~~

The following table sets forth summarized consolidated financial information for the nine months ended March 31, 2016 and 2015, as well as comparative data showing increases and decreases between periods (dollars in thousands):

Nine Months Ended
March 31, $ %
2016 2015 Change Change

Product revenue $ 29,240 $ 34,881 $ (5,641 ) (16.2 )%
Service revenue 14,466 15,765 (1,299 ) (8.2 )%
Total revenue 43,706 50,646 (6,940 ) (13.7 )%

Product cost of sales 12,670 14,897 (2,227 ) (14.9 )%
Service cost of sales 5,844 7,159 (1,315 ) (18.4 )%
Total cost of sales 18,514 22,056 (3,542 ) (16.1 )%

Product gross margin 16,570 19,984 (3,414 ) (17.1 )%
Service gross margin 8,622 8,606 16 0.2 %
Total gross margin 25,192 28,590 (3,398 ) (11.9 )%

Operating expenses:
Sales and marketing 11,443 10,889 554 5.1 %
Research and development 11,066 10,164 902 8.9 %
General and administrative 6,103 6,027 76 1.3 %
Gain on sale of product line, net (4,116 ) - (4,116 ) NM ⁽¹⁾
Gain on sale of intangible assets, net - (339 ) 339 (100.0 )%
Total operating expenses 24,496 26,741 (2,245 ) (8.4 )%
Operating income 696 1,849 (1,153 ) (62.4 )%

Interest income, net 23 7 16 228.6 %
Other income (expense), net 425 (377 ) 802 (212.7 )%
Income before income taxes 1,144 1,479 (335 ) (22.7 )%
Provision (benefit) for income taxes (604 ) 787 (1,391 ) (176.7 )%
Net income $ 1,748 $ 692 $ 1,056 152.6 %

⁽¹⁾

~~NM denotes percentage is not meaningful~~

~~Product Revenue~~. Total product revenue for the nine months ended March 31, 2016 was $29.2 million, a decrease of $5.6 million, or 16.2%, from $34.9 million for the nine months ended March 31, 2015 due to a decrease in both our real-time product and content delivery product revenue, as described below.

Content delivery product revenue decreased $3.6 million, or 18.3%, for the nine months ended March 31, 2016 compared to the prior year period. The nine months ended March 31, 2016 includes $1.3 million of revenue from our new Aquari storage product solution. The period-over-period decline in content delivery product revenue resulted from the following:

North American content delivery product revenue decreased by $0.4 million, or 3.6%. The decrease in North America also is the result of a decrease of $0.4 million in revenues as a result of the sale of our multi-screen video analytics product line in September 2015. Additionally, the current year period includes $0.9 million in revenue for the initial sales of our new Aquari storage systems to existing content delivery customers in North America; however, current period North American video system sales were more evenly spread among numerous customers, but resulted in a decrease of approximately $0.9 million amongst these customers.

European content delivery product revenue decreased by $1.3 million, or 37.3%. In the prior year period, we delivered our network DVR technology as part of an existing European customer’s expansion of its existing system. The current year period includes $0.4 million in revenue for the initial sales of our new Aquari storage systems sale to an existing customer in Europe. European content delivery product revenue fluctuates from period to period primarily due to the product upgrade and expansion patterns of our customers.

~~Asia-Pacific content delivery product revenue decreased by $1.9 million, or 41.8% as our largest customer in Japan purchased a lower dollar volume of systems in the current year.~~

Real-time product revenue decreased $2.0 million, or 13.4%, for the nine months ended March 31, 2016 compared to the prior year period. The period-over-period decline in real-time product revenue resulted primarily from the following:

~~North American real-time product revenue decreased $1.8 million, or 20.5%.~~

~~European real-time product revenue decreased $0.7 million, or 47.0%.~~

~~Asia-Pacific real-time product revenue increased $0.5 million, or 11.4%.~~

~~Revenue from defense contractors and government customers tend to vary by quarter and year, and are dependent upon government initiatives and funding availability.~~

~~Service Revenue.~~Total service revenue for the nine months ended March 31, 2016 was $14.5 million, a decrease of $1.3 million, or 8.2%, from $15.8 million for the nine months ended March 31, 2015. This decrease was primarily due to a decrease in content delivery service revenue of $1.6 million, or 18.1%, partially offset by an increase in real-time service revenue of $0.3 million, or 4.1%. The decrease in content delivery service revenues is primarily due to a decrease of $1.5 million in service revenues as a result of the sale of our multi-screen video analytics product line in September 2015. The remainder of fiscal year 2016 will continue to show lower content delivery service revenues due to the sale of our multi-screen video analytics product line; however, we expect that trend to reverse beyond the current fiscal year with service and maintenance revenues associated with our new Aquari storage product.

~~Product Gross Margin.~~ Product gross margin was $16.6 million for the nine months ended March 31, 2016, a decrease of $3.4 million, or 17.1%, from $20.0 million for the nine months ended March 31, 2015. Product gross margin as a percentage of product revenue declined slightly to 56.7% for the nine months ended March 31, 2016 from 57.3% for the nine months ended March 31, 2015 primarily due to lower than average gross margin recognized on the initial sales of our new Aquari products in the current year. Product gross margin decreased in terms of dollars during the nine months ended March 31, 2016, compared to the same period in the prior year, due to the lower volume of our product sales to both content delivery and real-time customers.

~~Service Gross Margin~~. Service gross margin was $8.6 million for each of the nine months ended March 31, 2016 and 2015. Gross margin on service revenue increased to 59.6% of service revenue for the nine months ended March 31, 2016 from 54.6% of service revenue for the nine months ended March 31, 2015. The increase in service margin as a percentage of service revenue was primarily due the elimination of fixed costs used to support our service organization. Additionally, the $1.3 million decrease in service cost of sales primarily resulted from (1) a $0.6 million decrease in overall service cost of sales as a result of the sale of our multi-screen video analytics product line in September 2015, primarily in customer service personnel costs, (2) a $0.2 million decrease in service personnel costs in the U.S. (excluding the personnel related to the sale of our multi-screen video analytics product line) and (3) a $0.3 million decrease in excess and obsolescence charges for our spare parts inventories used in warranty-related services.

30,

~~Sales and Marketing.~~~~Sales and marketing expenses increased approximately $0.5 million, or 5.1%, to $11.4 million for the nine months ended March 31, 2016 from $10.9 million for the nine months ended March 31,~~ 2015. This period-over-period increase primarily resulted from an increase in sales personnel and related costs.

Research and Development - Total operating segment research and development expenses decreased approximately $0.5 million, or 13.8%, to $3.3 million for the three months ended September 30, 2016 from $3.8 million for the three months ended September 30, 2015. An analysis by operating segment is described below.

Content Delivery

Segment research and development expenses were $2.2 million for the three months ended September 30, 2016, a decrease of $0.7 million, or 22.5%, from $2.9 million for the three months ended September 30, 2015. The period-over-period decrease primarily resulted from (1) a ~~$0.9~~$0.5 million ~~increase in personnel costs primarily~~decrease from a reduction of headcount in the U.S., within our development teams, (2) a $0.2 million ~~increase~~decrease in ~~recruiting fees, partially offset by~~subcontractor and outsourced development costs, (3) a ~~$0.5 million decrease in overall sales and marketing expenses as a result of the sale of our multi-screen video analytics product line in September 2015, primarily related to personnel costs.~~

~~Research and Development.~~Research and development expenses increased approximately $0.9 million, or 8.9%, to $11.1 million for the nine months ended March 31, 2016 from $10.2 million for the nine months ended March 31, 2015. This increase was primarily due to (1) a $1.6 million increase in personnel costs during the nine months ended March 31, 2016 resulting from an increase in development personnel to support our product and strategic growth initiatives, (2) a $0.3 million increase in allocations of facilities and information technology charges, partially offset by (3) a $1.0$0.2 million decrease in overall research and development expenses as a result of the sale of our multi-screen video analytics product line in September 2015, primarily related to personnel costs, ~~and~~partially offset by (4) a $0.2 ~~million decrease~~increase in ~~recruiting fees.~~severance related to the reduced headcount noted above.

Real-Time

Segment research and development expenses were $1.1 million for the three months ended September 30, 2016, an increase of $0.1 million, or 12.0%, from $1.0 million for the three months ended September 30, 2015. The period-over-period increase primarily resulted from an increase in personnel and related costs.

Segment Operating Income

Segment operating income is defined as gross margin less selling and marketing, research and development expenses, and certain general and administrative expenses. The following tables set forth our segment operating income for the three months ended September 30, 2016 and 2015 for each of our operating segments as well as comparative data showing increases and decreases between periods (dollars in thousands):

	Three Months Ended September 30,						$			%
	2016			2015			Change			Change
Segment operating income:
Content delivery	$	(2,389	)	$	(1,112	)	$	(1,277	)		114.8	%
Real-time		1,983			1,718			265			15.4	%
Total segment operating income	$	(406	)	$	606		$	(1,012	)		(167.0	)%

Total segment operating income decreased approximately $1.0 million, or 167.0%, to a loss of $0.4 million for the three months ended September 30, 2016 from $0.6 million for the three months ended September 30, 2015. An analysis by operating segment is described below.

Content Delivery

The period-over-period decrease primarily resulted from lower product revenues and gross margin dollars, as described above.

Real-Time

The period-over-period increase primarily resulted from higher product and services revenues and related gross margin dollars partially offset by slightly higher sales and marketing and research and development costs, as described above.

Corporate and Unallocated Costs

Corporate and unallocated costs include certain corporate sales and marketing and corporate general and administrative expenses (executive, finance, legal, risk management and human resources). These expenses are not included in the measure of segment operating income but are included in the reconciliation to income (loss) before income taxes. The following tables set forth our corporate and unallocated for the three months ended September 30, 2016 and 2015 as well as comparative data showing increases and decreases between periods (dollars in thousands):

	Three Months Ended September 30,					$		%
	2016		2015			Change		Change
Sales and marketing		399		155			244		157.4	%
General and administrative		2,138		1,603			535		33.4	%
Gain on sale of product line, net		-		(4,116	)		4,116		(100.0	)%
Total		2,537		(2,358	)		4,895		(207.6	)%

Sales and Marketing.Sales and marketing expenses increased approximately $0.2 million, or 157.4%, to $0.4 million for the three months ended September 30, 2016 from $0.2 million for the three months ended September 30, 2015. This increase was primarily due to (1) a $0.1 million increase related to the addition of a sales executive in Europe starting in the third quarter of the prior fiscal year and (2) a $0.1 million increase in outsourced marketing activities.

General and Administrative.General and administrative expenses increased approximately ~~$0.1~~$0.5 million, or ~~1.3%~~33.4%, to ~~$6.1~~$2.1 million for the ~~nine~~three months ended ~~March 31,~~September 30, 2016 from ~~$6.0~~$1.6 million for the ~~nine~~three months ended ~~March 31,~~September 30, 2015. This ~~slight~~ increase was primarily due to (1) a $0.3 million bonus paid to our chief executive officer in connection with the execution of an amendment to his employment agreement in October 2015, (2) a $0.3 million general corporate bonus accrual, (2) $0.2 million in professional fees, (3) a $0.1$0.4 million increase in ~~personnel~~legal and other professional fees primarily associated with our entry into a Board Representation and Standstill Agreement with an investor and affiliate of that investor and (2) a $0.2 million increase in personnel-related costs, ~~partially offset by (4) a $1.0 million decrease~~including an increase in ~~chief executive officer transition costs incurred during the nine months ended March 31, 2015.~~share-based compensation costs.

Gain on Sale of Product Line, net. During the ~~nine~~three months ended ~~March 31, 2016,~~September 30, 2015, we sold the customer contracts and intellectual property related to our multi-screen video analytics product line for $3.5 million. The recorded net gain of $4.1 million included (1) customer contracts and intellectual property with a net book value of $0.2 million, (2) related assets and liabilities not sold or transferred in the transaction of $1.0 million (net liability, consisting primarily of unearned deferred revenue) and (3) legal, accounting and other expenses of $0.2 million that would not have been incurred otherwise.

~~Gain on Sale of Intangible Assets, net.~~During the nine months ended March 31, 2015, we sold a block of IPv4 addresses to a single buyer for cash. This block of non-strategic IPv4 addresses, which was recorded at a $0 book value, had not been a material part of our ongoing operations. The $0.3 million gain on the sale of this IPv4 address is net of broker fees incurred to consummate the transaction.Other

Other Income, ~~(Expense),~~ net~~.During~~. During each of the ~~nine~~three months ended ~~March 31,~~September 30, 2016 and 2015, we recognized ~~approximately $0.4~~$0.1 million ofin net realized currency translation ~~gains compared to $0.4 million of realized currency translation losses in the nine months ended March 31, 2015.~~gains. These gains and losses result from the impact of the changes in value of the British pound, euro and Japanese yen, relative to the U.S. dollar, on foreign currency transactions related to short-term intercompany accounts which are settled in the normal course of business by our European and Japanese subsidiaries for which the British pound, euro and Japanese yen are the functional currencies.

Provision (Benefit) for Income Taxes.We recorded consolidated income tax expense of $0.1 million for the three months ended September 30, 2016 compared to a ~~$0.6~~$0.1 million consolidated income tax benefit for the ~~nine~~three months ended ~~March 31, 2016 compared to $0.8 million income tax expense for the nine months ended March 31,~~September 30, 2015. For the ~~nine~~three months ended ~~March 31,~~September 30, 2016, the domestic tax expense ~~component~~is higher than the prior year due to the full valuation allowance that is now being applied to any tax benefit generated from operating losses in the U.S. The domestic expense is primarily attributable to interest and penalties on uncertain tax positions and minimum state taxes in a number of jurisdictions for the three months ended September 30, 2016. The foreign tax expense is lower than the prior year primarily due to (1) ~~the release of valuation allowance attributable to the tax impact of the gain on sale of our multi-screen video analytics product line and (2)~~ lower pretax book income in ~~the U.S. Any other domestic differences are due to differences in projected pretax book income~~Japan and ~~permanent book/tax differences between the two periods. The foreign tax expense component is higher than the prior year primarily due to (1) higher pretax book income in Japan offset by~~ (2) a reduction in the statutory tax rate in Japan ~~and (3) lower pretax book income in~~for the ~~U.K.~~three months ended September 30, 2016, compared to the same period from the prior year.

~~The prior year domestic tax provision is comprised primarily of non-cash deferred income tax expense, as we will be able to utilize net operating losses to offset nearly all cash taxes.~~ In jurisdictions other than the ~~U.S.,~~ U.K. and Japan, we either generate net operating losses or occasionally utilize some of the net operating loss carryforward amounts. However, because of the cumulative accounting losses in those jurisdictions, we maintain a full valuation allowance on those losses. This results in no net income tax provision impact in those jurisdictions as of ~~March 31,~~September 30, 2016.

Net ~~Income.~~Income (Loss).Our consolidated net ~~income~~loss for the ~~nine~~three months ended ~~March 31,~~September 30, 2016 was ~~$1.7~~$2.9 million, or ~~$0.19 income~~a $0.32 loss per basic and diluted share, compared to consolidated net income for the ~~nine~~three months ended ~~March 31,~~September 30, 2015 of ~~$0.7~~$3.2 million, or ~~$0.08~~$0.35 income per basic and diluted share.

Liquidity and Capital Resources

Our liquidity is dependent upon many factors, including sales volume, product and service costs, operating results and the efficiency of asset use and turnover. Our future liquidity will be affected by, among other things:

our reliance on a small customer base, typically represented by a small number of large, concentrated orders (the largest three customers accounted for ~~29%~~22% and 41% of total revenue ~~in each of~~for the ~~nine~~three months ended ~~March 31,~~September 30, 2016 and ~~2015)~~2015, respectively, giving effect to recent mergers and acquisitions);

our content delivery product revenue is subject to customers’ capital spending cycles and may be impacted in the future by consolidation of the industry in which our customers operate;

the rate of growth or decline or change in market, if any, of content delivery market expansions and the pace that video service companies implement, upgrade or replace content delivery technology;

our investment strategy into the storage solutions market;

the impact of the global economic conditions on our business and our customers, including European Union austerity ~~measures;~~measures and the impact of the U.K. exiting the European Union;

our ability to renew maintenance and support service agreements with customers and retain existing customers;

the impact of U.S. ~~government~~Government sequestration on our business and our customers;

the rate of growth or decline, if any, of deployment of our real-time products;

the actual versus anticipated decline in revenue from maintenance and product sales of real-time proprietary systems;

our future access to capital;

our ability to manage expenses consistent with the rate of growth or decline in our markets;

our exploration and evaluation of strategic alternatives;

ongoing cost control actions and expenses, including capital expenditures;

the margins on our product and service sales;

timing of product shipments, which typically occur during the last month of the quarter;

the impact of delays of product acceptance from our customers;

the percentage of sales derived from outside the U.S. where there are generally longer accounts receivable collection cycles;

the number of countries in which we operate, which may require maintenance of minimum cash levels in each country and, in certain cases, may restrict the repatriation of cash, by requiring us to maintain levels of capital;

the rate of growth or decline, if any, of sales to the government and government related entities;

~~the impact of delays in payments from our customers;~~ and

the use of cash to pay quarterly and special dividends.

Uses and Sources of Cash

We ~~used $4.6~~generated $0.4 million and ~~generated $3.5~~used $2.1 million of cash from operating activities during the ~~nine~~three months ended ~~March 31,~~September 30, 2016 and 2015, respectively. Operating cash outflows during the nine months ended March 31, 2016 were primarily attributable to the increase in accounts receivable created by certain larger sales that occurred late in the current quarter due to the timing of orders and shipments. Operating cash flows during the ~~nine~~three months ended ~~March 31, 2015~~September 30, 2016 were primarily attributable to the collection of ~~advanced maintenance billings~~accounts receivable for sales shipped late in the prior quarter, offset by the current period net loss and the timing of payments made against our accounts payable to settle the previous quarter’s inventory purchase and other obligations. Operating cash outflows during the three months ended September 30, 2015 were primarily attributable to the timing of payments made against our accounts payable subsequent to the prior fiscal year end to settle that ~~were recorded as deferred revenue.~~quarter’s inventory purchase obligations.

We invested ~~$1.6~~$0.3 million and ~~$1.5~~$0.4 million in property and equipment during the ~~nine~~three months ended ~~March 31,~~September 30, 2016 and 2015, respectively. Capital additions during each of these periods were primarily related to: (1) development and test equipment for our development group, (2) demonstration systems used by our sales and marketing group and (3) facilities improvements. We expect capital additions to increase during the remainder of our current fiscal year, ~~and into our next fiscal year,~~ primarily to support our continuing investment in our ~~new~~ Aquari storage solutions ~~product.~~product line.

During the ~~nine~~three months ended ~~March 31, 2016,~~September 30, 2015, we sold the customer contracts and intellectual property related to our multi-screen video analytics product line for $3.5 million. Cash proceeds from the transaction consisted of $2.8 million paid immediately after closing. The balance of the sales price ~~is payable~~was collected in ~~cash by~~full in June ~~30, 2016, less any portion used to make indemnification payments in connection with the sale, if any.~~

During the nine months ended March 31, 2015, we sold a block of IPv4 addresses to a single buyer for cash. This block of non-strategic IPv4 addresses, which was recorded at $0 book value, had not been a material part of our ongoing operations. The proceeds of $0.3 million on the sale of these IPv4 addresses were net of broker fees incurred to consummate the transaction.2016.

We paid ~~three~~one quarterly cash ~~dividends~~dividend of $0.12 per share during each of the ~~nine~~three months ended ~~March 31,~~September, 2016 and 2015. During the three months ended September 30, 2016 and 2015, we also paid less than $0.1 million of additional dividends in each period that had been held as dividends payable from previous declarations to restricted stockholders for whom restrictions lapsed during each period. We intend to pay a regular quarterly cash dividend on shares of our common stock subject to, among other things, our results of operations, cash balances, future cash requirements, financial condition, statutory requirements of Delaware law, and other factors that the Board ~~of Directors~~ may deem relevant. We believe that a portion of our dividends may be treated as a return of capital to stockholders, rather than dividend income, as we believe dividend payments may exceed our cumulative earnings and profits.

~~Our~~Although we do not have any outstanding debt or borrowing facilities in place at September 30, 2016, we periodically review the need for credit ~~line with our bank expired on December 31, 2013. We are currently evaluating whether or not to enter into a new credit arrangement, but~~arrangements. However, based upon our existing cash balances, historical cash usage, and anticipated operating cash flow in the near term, we believe that existing cash balances will be sufficient to meet our anticipated working capital, capital expenditure requirements and any dividend payments for at least the next twelve months. ~~We are no longer subject to the covenants associated with the credit line.~~

At ~~March 31,~~September 30, 2016, we had working capital (current assets less current liabilities) of ~~$23.9~~$18.5 million including cash and cash equivalents of ~~$18.7~~$19.3 million. At June 30, ~~2015,~~2016, we had working capital of ~~$26.5~~$22.6 million, including cash and cash equivalents of ~~$25.5~~$20.3 million. At ~~March 31,~~September 30, 2016, we had no material commitments for capital expenditures.

As of ~~March 31,~~September 30, 2016, approximately ~~$2.7~~$2.1 million, or ~~14.4%~~11.0% of our cash is in foreign accounts and there is no expectation that any foreign cash would need to be transferred from these foreign accounts to cover operations in the next 12 months.Based upon our existing cash balances and short-term investments, historical cash usage and anticipated operating cash flow in the current fiscal year, we believe that existing cash balances will be sufficient to meet our anticipated working capital, dividend payments and capital expenditure requirements for at least the next 12 months.

Off-Balance Sheet Arrangements

We provide indemnifications of varying scope and size to certain customers against claims of intellectual property infringement made by third parties arising from the use of our products and certain other matters. In evaluating estimated losses on these indemnifications, we consider factors such as the degree of probability of an unfavorable outcome and our ability to make a reasonable estimate of the amount of loss. These obligations did not have a material impact on our financial statements during the periods presented. See Note 1817 – Commitments and Contingencies to the condensed consolidated financial statements for the additional disclosures regarding indemnification.

Critical Accounting Policies and Estimates

The SEC defines “critical accounting estimates” as those that require application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.Our critical accounting policies and estimates are disclosed under the section“Application of Critical Accounting Policies”in our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2015.~~2016. Our critical accounting estimates have not changed in any material respect during the three months ended ~~March 31,~~September 30, 2016.

Recent Accounting Guidance

See Note 32 – Recent Accounting Guidance to our accompanying condensed consolidated financial statements for a full description of recent accounting pronouncements including the respective expected dates of adoption and the expected effects on our consolidated results of operations and financial condition.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements made or incorporated by reference in this quarterly report may constitute “forward-looking statements” within the meaning of the federal securities laws. When used or incorporated by reference in this report, the words “believes,” “expects,” “estimates,” “anticipates,” and similar expressions, are intended to identify forward-looking statements. Statements regarding future events and developments, our future performance, market share, new market growth, payment of dividends, ability to utilize our net deferred tax assets and availability of earnings and profits with respect to dividend income, as well as our expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. Examples of our forward-looking statements in this report include, but are not limited to, the impact of our content delivery strategy on our ~~business;~~business, the impact of our new Aquari storage solution strategy on our business, the impact of any strategic initiatives we may undertake; the impact of the current reestablishment of and potential for future release of our tax valuation ~~allowance release~~allowances on future income tax provisions and income taxes ~~paid;~~paid, expected level of capital ~~additions;~~additions, our expected cash ~~position;~~position, the impact of interest rate changes and fluctuation in currency exchange ~~rates;~~rates, our sufficiency of ~~cash;~~cash, the impact of litigation and the payment of dividends. These statements are based on beliefs and assumptions of our management, which are based on currently available information. All forward-looking statements are subject to certain risks and uncertainties that could cause actual events to differ materially from those projected. The risks and uncertainties which could affect our financial condition or results of operations include, without limitation: the potential consolidation of the markets that we serve; U.S. Government sequestration; European austerity measures; the impact of the U.K. exiting the European Union; delays or cancellations of customer orders; non-renewal of maintenance and support service agreements with customers; changes in product demand; economic conditions; various inventory risks due to changes in market conditions; margins of ~~our products~~the content delivery business to capture new business; fluctuations and timing of large content delivery orders; ~~doing business~~risks associated with our operations in the People’s Republic of China; uncertainties relating to the development and ownership of intellectual property; uncertainties relating to our ability and the ability of other companies to enforce their intellectual property rights; the pricing and availability of equipment, materials and inventories; the concentration of our customers; failure to effectively manage change; delays in testing and introductions of new products; the impact of reductions in force on our operations; rapid technology changes; system errors or failures; reliance on a limited number of suppliers and failure of components provided by those suppliers; uncertainties associated with international business activities, including foreign regulations, trade controls, taxes and currency fluctuations; the impact of competition on the pricing of ~~our~~content delivery products; failure to effectively service the installed base; the entry of new, well-capitalized competitors into our markets; the success of new content delivery ~~solutions,~~products, including acceptance of our new storage solutions; the success of our relationships with technology and channel partners; capital spending patterns by a limited customer base; the current challenging macroeconomic environment; continuing unevenness of the global economic recovery; global terrorism; privacy concerns over data collection; our ability to utilize net operating losses to offset cash taxes in the event of an ownership change as defined by the Internal Revenue Service; earthquakes, tsunamis, floods and other natural disasters in areas in which our customers and suppliers operate; the process of evaluation of strategic alternatives; and the availability of debt or equity financing to support our liquidity ~~needs and the other risks and uncertainties discussed in this report.~~needs.

Other important risk factors that could cause actual results to differ from any forward-looking statements made in this report are discussed in Part I, Item 1A. of our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2015.~~2016.

Our forward-looking statements are based on current expectations and speak only as of the date of such statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of future events, new information or otherwise.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Pursuant to Item 305(e) of Regulation S-K (Section 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company” as defined by Rule 229.10(f)(1).

We are exposed to market risk from changes in interest rates and foreign currency exchange rates. We are exposed to the impact of interest rate changes on our short-term cash investments. We conduct business in the U.S. and around the world. Our most significant foreign currency transaction exposure relates to the U.K., certain European countries that use the euro as a common currency, and Japan. We do not hedge against fluctuations in exchange rates.

Item 4.

Controls and Procedures

Evaluation of Controls and Procedures

We conducted an evaluation as of ~~March 31,~~September 30, 2016, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

In connection with our evaluation of the immaterial errors in our consolidated balance sheet, consolidated statement of operations and consolidated statement of cash flows as of and for the year ended June 30, 2015 discussed in Note 2 to our condensed consolidated financial statements included herein, Our management concluded that ~~because of the material weakness identified in our internal control over financial reporting discussed below,~~ our disclosures controls and procedures were ~~not~~ effective as of ~~March 31,~~September 30, 2016.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We identified a material weakness in internal control over financial reporting during the first quarter of our fiscal year relating to the grant of 120,000 restricted stock awards to our president and chief executive officer upon his commencement of employment in November 2014. Because the grant was determined to be non-compliant under the terms of the 2011 Stock Incentive Plan under which it was granted, in October 2015, the grant was retroactively rescinded as of the date it was granted. As a result, we determined that a material weakness existed in the operation of our internal controls over financial reporting, specifically involving those controls relating to the identification of applicable limitations on equity awards issued under our stock incentive plans. A material weakness was determined to be present due to the following factors: (1) the error was identified in connection with issues raised in a third-party demand letter and (2) had the error not been identified, the potential for a material error at a point in the future was a reasonable possibility. Management has concluded that our controls were not properly operating related to the preparation and review of our consolidated balance sheet, consolidated statement of operations and consolidated statement of cash flows as of and for the year ended June 30, 2015, including interim periods within that year.

Notwithstanding the material weakness identified, management believes the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly represent in all material respects our consolidated financial condition, results of operations and cash flows as of and for the periods presented.

~~Remediation of Identified Material Weakness~~

In response to the material weakness described above, we are currently exploring remediation actions to review certain new hire and annual grants for compliance with and availability under our stock incentive plans.

Changes in Internal Control

There were no changes to our internal controls over financial reporting during the quarter ended ~~March 31,~~September 30, 2016 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Part II - Other Information

Item 1.

Legal Proceedings

We are not presently involved in any material litigation. However, we are, from time to time, party to various routine legal proceedings arising out of our business. See Note 1817 – Commitments and Contingencies to our condensed consolidated financial statements for additional information about legal proceedings.

Item 1A.

Risk Factors

We are exploring strategic alternatives and there can be no assurance that we will be successful in identifying, or completing any strategic alternative or that any such strategic alternative will yield additional value for shareholders.

Our Company has commenced a review of strategic alternatives which could result in, among other things, a sale, a merger, consolidation or business combination, asset divestiture, partnering or other collaboration agreements, or potential acquisitions or recapitalizations, in one or more transactions, or continuing to operate with our current business plan and strategy. There can be no assurance that the exploration of strategic alternatives will result in the identification or consummation of any transaction. In addition, we may incur substantial expenses associated with identifying and evaluating potential strategic alternatives. The process of exploring strategic alternatives may be time consuming and disruptive to our business operations and if we are unable to effectively manage the process, our business, financial condition and results of operations could be adversely affected. We also cannot assure that any potential transaction or other strategic alternative, if identified, evaluated and consummated, will provide greater value to our shareholders than that reflected in the current stock price. Any potential transaction would be dependent upon a number of factors that may be beyond our control, including, among other factors, market conditions, industry trends, the interest of third parties in our business and the availability of financing to potential buyers on reasonable terms.

Additional risk factors are discussed in Part I, Item 1A. of our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2015.~~2016. There have been no material changes to our risk factors as previously disclosed.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

None.

Item 6.

Exhibits

Exhibit		Description of Document

3.1		Restated Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant's Registration Statement on Form S-2 (No. 33-62440)).

3.2		Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant’s Proxy on Form DEFR14A filed on June 2, 2008).

3.3		Certificate of Amendment to its Restated Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on June 30, 2011).

3.4		Amended and Restated Bylaws of the Registrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on September 9, 2011).

3.5		Certificate of Correction to Restated Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2002).

3.6		Amended Certificate of Designations of Series A Participating Cumulative Preferred Stock (incorporated by reference to the Form 8-A/A, dated August 9, 2002).

3.7		Amendment to Amended Certificate of Designations of Series A Participating Cumulative Preferred Stock (incorporated by reference to the Form 8-A/A, dated August 9, 2002).

3.8		Certificate of Designations of Series B Participating Preferred Stock (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on March 1, 2016).

3.9		Certificate of Amendment to the Restated Certificate of Incorporation of Registrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on November 3, 2016).

3.10		Certificate of Elimination of Series B Participating Preferred Stock of Registrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on November 3, 2016).

4.1		Form of Common Stock Certificate (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the period ended March 31, 2003).

4.2		Form of Series B Participating Preferred Stock Certificate (incorporated by reference to the Registrant’s Registration Statement on Form 8-A (No. 001-37706)).

~~10.1~~4.3		~~Amendment to Employment Agreement dated October 15, 2015 between Concurrent Computer Corporation and Derek Elder~~Form of Rights Certificate (incorporated by reference to ~~Exhibit 10.1 to~~ the ~~Registrant’s~~ Current Report on Form 8-K filed on ~~October 15, 2015)~~March 1, 2016).

~~10.2~~4.4		~~Tax Asset Preservation Plan,~~Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant’s Proxy on Form DEF14A filed on September 13, 2016).

10.1		Board Representation and Standstill Agreement, dated ~~as of March 1,~~August 29, 2016, ~~between~~among Concurrent Computer Corporation, JDS1, LLC, Julian Singer and ~~American Stock Transfer & Trust Company, LLC, as Rights Agent~~Wayne Barr (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on ~~March~~August 29, 2016).

10.2^†		Amendment to Employment Agreement dated September 1, 2016 between Concurrent Computer Corporation and Derek Elder (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on September 2, 2016).

10.3		Amendment to Tax Asset Preservation Plan, dated October 13, 2016, between Registrant and American Stock Transfer & Trust Company, LLC (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on October 13, 2016).

11.1*		Statement Regarding Computation of Per Share Earnings.

31.1**		Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2**		Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS**		XBRL Instance Document.

101.SCH**		XBRL Schema Document.

101.CAL**		XBRL Calculation Linkbase Document.

101.DEF**		XBRL Definition Linkbase Document.

101.LAB**		XBRL Labels Linkbase Document.

101.PRE101. PRE*		XBRL Presentation Linkbase Document.

Required earnings per share data is provided in the Notes to the condensed consolidated financial statements in this report.

Included herewith.

^†

Indicates management agreement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: ~~May 3,~~November 14, 2016

CONCURRENT COMPUTER CORPORATION


	By:	/s/ Emory O. Berry
		Emory O. Berry
		Chief Financial Officer and
		Executive Vice President of Operations
		(Principal Financial and Accounting Officer)

Exhibit Index

Exhibit		Description of Document

3.1		Restated Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant's Registration Statement on Form S-2 (No. 33-62440)).

3.2		Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant’s Proxy on Form DEFR14A filed on June 2, 2008).

3.3		Certificate of Amendment to its Restated Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on June 30, 2011).

3.4		Amended and Restated Bylaws of the Registrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on September 9, 2011).

3.5		Certificate of Correction to Restated Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2002).

3.6		Amended Certificate of Designations of Series A Participating Cumulative Preferred Stock (incorporated by reference to the Form 8-A/A, dated August 9, 2002).

3.7		Amendment to Amended Certificate of Designations of Series A Participating Cumulative Preferred Stock (incorporated by reference to the Form 8-A/A, dated August 9, 2002).

3.8		Certificate of Designations of Series B Participating Preferred Stock (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on March 1, 2016).

3.9		Certificate of Amendment to the Restated Certificate of Incorporation of Registrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on November 3, 2016).

3.10		Certificate of Elimination of Series B Participating Preferred Stock of Registrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on November 3, 2016).

4.1		Form of Common Stock Certificate (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the period ended March 31, 2003).

4.2		Form of Series B Participating Preferred Stock Certificate (incorporated by reference to the Registrant’s Registration Statement on Form 8-A (No. 001-37706)).

~~10.1~~4.3		~~Amendment to Employment Agreement dated October 15, 2015 between Concurrent Computer Corporation and Derek Elder~~Form of Rights Certificate (incorporated by reference to ~~Exhibit 10.1 to~~ the ~~Registrant’s~~ Current Report on Form 8-K filed on ~~October 15, 2015)~~March 1, 2016).

~~10.2~~4.4		~~Tax Asset Preservation Plan,~~Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant’s Proxy on Form DEF14A filed on September 13, 2016).

10.1		Board Representation and Standstill Agreement, dated ~~as of March 1,~~August 29, 2016, ~~between~~among Concurrent Computer Corporation, JDS1, LLC, Julian Singer and ~~American Stock Transfer & Trust Company, LLC, as Rights Agent~~Wayne Barr (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on ~~March~~August 29, 2016).

10.2^†		Amendment to Employment Agreement dated September 1, 2016 between Concurrent Computer Corporation and Derek Elder (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on September 2, 2016).

10.3		Amendment to Tax Asset Preservation Plan, dated October 13, 2016, between Registrant and American Stock Transfer & Trust Company, LLC (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on October 13, 2016).

11.1*		Statement Regarding Computation of Per Share Earnings.

31.1**		Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2**		Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS**		XBRL Instance Document.

101.SCH**		XBRL Schema Document.

101.CAL**		XBRL Calculation Linkbase Document.

101.DEF**		XBRL Definition Linkbase Document.

101.LAB**		XBRL Labels Linkbase Document.

101.PRE101. PRE*		XBRL Presentation Linkbase Document.

Required earnings per share data is provided in the Notes to the condensed consolidated financial statements in this report.

Included herewith.

†

Indicates management agreement.

Delaware		04-2735766
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Large accelerated filer ¨		Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if smaller reporting company)		Smaller reporting company þ

		Page

	Part I – Financial Information

Item 1.	Condensed Consolidated Financial Statements	2

	Condensed Consolidated Balance Sheets (Unaudited)	2

	Condensed Consolidated Statements of Operations (Unaudited)	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	4

	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)	5

	Condensed Consolidated Statements of Cash Flows (Unaudited)	6

	Notes to Condensed Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2522

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3532

Item 4.	Controls and Procedures	3532

	Part II – Other Information

Item 1.	Legal Proceedings	3733

Item 1A.	Risk Factors	3733

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3733

Item 3.	Defaults Upon Senior Securities	3733

Item 4.	Mine Safety Disclosures	3733

Item 5.	Other Information	3733

Item 6.	Exhibits	3834

	March 31, 2016			June 30, 2015			September 30, 2016			June 30, 2016
	(Unaudited)						(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	18,731		$	25,451		$	19,269		$	20,268
Accounts receivable, net of allowance for doubtful accounts of $49 and $18 at March 31, 2016 and June 30, 2015, respectively		14,483			10,174
Accounts receivable, net of allowance for doubtful accounts of $56 and $55 at September 30, 2016 and June 30, 2016, respectively								10,453			15,104
Inventories		3,431			3,428			2,699			3,495
Deferred income taxes - current, net		1,469			1,422
Prepaid expenses and other current assets		1,976			738			1,421			1,061
Total current assets		40,090			41,213			33,842			39,928

Property and equipment, net		2,845			2,448			3,057			3,061
Deferred income taxes, net		13,800			12,618			941			924
Other long-term assets, net		1,327			1,501			1,374			1,323
Total assets	$	58,062		$	57,780		$	39,214		$	45,236

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	9,197		$	6,320		$	7,360		$	9,191
Deferred revenue		6,995			8,362			8,024			8,126
Total current liabilities		16,192			14,682			15,384			17,317

Long-term liabilities:
Deferred revenue		1,396			1,658			884			1,168
Pension liability		3,309			3,189			3,774			3,720
Other long-term liabilities		1,894			1,694			2,095			2,033
Total liabilities		22,791			21,223			22,137			24,238

Commitments and contingencies (Note 18)
Commitments and contingencies (Note 17)

Stockholders' equity:
Shares of series preferred stock, par value $0.01; 1,250,000 authorized; none issued		-			-			-			-
Shares of class A preferred stock, par value $100; 20,000 authorized; none issued		-			-			-			-
Shares of series B junior participating preferred stock, par value $0.01; 14,000 authorized; none issued		-			-			-			-
Shares of common stock, par value $0.01; 14,000,000 authorized; 9,206,843 and 9,136,793 issued and outstanding at March 31, 2016 and June 30, 2015, respectively		92			91
Shares of common stock, par value $0.01; 14,000,000 authorized; 9,248,403 and 9,218,093 issued and outstanding at September 30, 2016 and June 30, 2016, respectively								92			92
Capital in excess of par value		210,767			210,207			211,213			210,971
Accumulated deficit		(175,250	)		(173,595	)		(193,350	)		(189,265	)
Treasury stock, at cost; 37,788 shares		(255	)		(255	)		(255	)		(255	)
Accumulated other comprehensive income (loss)		(83	)		109			(623	)		(545	)
Total stockholders' equity		35,271			36,557			17,077			20,998
Total liabilities and stockholders' equity	$	58,062		$	57,780		$	39,214		$	45,236

	Nine Months Ended March 31,						Three Months Ended September 30,
	2016			2015			2016			2015

Cash flows provided by (used in) operating activities:
Net income	$	1,748		$	692
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)							$	(2,928	)	$	3,207
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		1,270			1,317			458			431
Share-based compensation		561			497			242			167
Deferred income taxes, net		(1,175	)		324			-			(257	)
Provision for excess and obsolete inventories		171			549			110			23
Provision for bad debts		31			10
Foreign currency exchange (gains) losses		(408	)		433
Foreign currency exchange gains								(104	)		(120	)
Gain on sale of product line, net		(4,116	)		-			-			(4,116	)
Gain on sale of intangible assets, net		-			(339	)
Decrease (increase) in assets:
Accounts receivable		(4,257	)		(1,906	)		4,676			(219	)
Inventories		106			(927	)		768			499
Prepaid expenses and other current assets		(560	)		(44	)		(354	)		(510	)
Other long-term assets		(112	)		(373	)		(105	)		(63	)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses		2,607			(287	)		(1,973	)		(667	)
Deferred revenue		(580	)		3,439			(415	)		(571	)
Pension and other long-term liabilities		150			100			55			51
Net cash provided by (used in) operating activities		(4,564	)		3,485			430			(2,145	)

Cash flows provided by (used in) investing activities:
Additions to property and equipment		(1,621	)		(1,505	)		(347	)		(448	)
Purchase of domain name		(35	)		-			-			(35	)
Proceeds from sale of product line		2,750			-			-			2,750
Proceeds from sale of intangible assets		-			339
Net cash provided (used in) by investing activities		1,094			(1,166	)
Net cash provided by (used in) investing activities								(347	)		2,267

Cash flows used in financing activities:
Dividends paid		(3,364	)		(3,404	)		(1,142	)		(1,143	)
Net cash used in financing activities		(3,364	)		(3,404	)		(1,142	)		(1,143	)

Effect of exchange rates on cash and cash equivalents		114			(163	)		60			32

Decrease in cash and cash equivalents		(6,720	)		(1,248	)		(999	)		(989	)
Cash and cash equivalents - beginning of period		25,451			28,074			20,268			25,451
Cash and cash equivalents - end of period	$	18,731		$	26,826		$	19,269		$	24,462

Cash paid during the period for:
Interest	$	2		$	6		$	1		$	1
Income taxes (net of refunds)	$	502		$	562		$	500		$	225

	Three Months Ended March 31,						Nine Months Ended March 31,						Three Months Ended September 30,
	2016			2015			2016			2015			2016			2015
Revenues:
Product	$	10,772		$	11,327		$	29,240		$	34,881		$	7,859		$	8,494
Service		4,684			5,783			14,466			15,765			5,257			4,857
Total revenues		15,456			17,110			43,706			50,646			13,116			13,351

Cost of sales:
Product		5,676			4,578			12,670			14,897			3,790			3,453
Service		1,821			2,447			5,844			7,159			2,143			2,041
Total cost of sales		7,497			7,025			18,514			22,056			5,933			5,494
Gross margin		7,959			10,085			25,192			28,590			7,183			7,857

Operating expenses:
Sales and marketing		4,252			3,410			11,443			10,889			4,475			3,394
Research and development		3,467			3,484			11,066			10,164			3,307			3,837
General and administrative		2,150			1,628			6,103			6,027			2,344			1,778
Gain on sale of product line, net		-			-			(4,116	)		-			-			(4,116	)
Gain on sale of intangible assets, net		-			-			-			(339	)
Total operating expenses		9,869			8,522			24,496			26,741			10,126			4,893
Operating income (loss)		(1,910	)		1,563			696			1,849			(2,943	)		2,964

Interest income		16			2			24			7			27			3
Interest expense		(1	)		-			(1	)		-			(3	)		-
Other income (expense), net		277			(1	)		425			(377	)
Other income, net														119			123
Income (loss) before income taxes		(1,618	)		1,564			1,144			1,479			(2,800	)		3,090

Provision (benefit) for income taxes		(442	)		716			(604	)		787			128			(117	)
Net income (loss)	$	(1,176	)	$	848		$	1,748		$	692		$	(2,928	)	$	3,207

Net income (loss) per share
Basic	$	(0.13	)	$	0.09		$	0.19		$	0.08		$	(0.32	)	$	0.35
Diluted	$	(0.13	)	$	0.09		$	0.19		$	0.08		$	(0.32	)	$	0.35
Weighted average shares outstanding - basic		9,168,978			9,096,255			9,147,681			9,057,710			9,189,343			9,112,891
Weighted average shares outstanding - diluted		9,168,978			9,132,258			9,227,966			9,135,153			9,189,343			9,176,877

Cash dividends declared per common share	$	0.12		$	0.12		$	0.36		$	0.36		$	0.12		$	0.12

											Accumulated												Common Stock				Capital In					Accumulated Other
	Common Stock				Capital In						Other														Par		Excess Of		Accumulated			Comprehensive			Treasury Stock
			Par		Excess Of			Accumulated			Comprehensive			Treasury Stock									Shares		Value		Par Value		Deficit			Income (Loss)			Shares			Cost			Total
	Shares		Value		Par Value			Deficit			Income (Loss)			Shares			Cost			Total

Balance at June 30, 2015		9,136,793	$	91	$	210,207		$	(173,595	)	$	109			(37,788	)	$	(255	)	$	36,557
Balance at June 30, 2016																								9,218,093	$	92	$	210,971	$	(189,265	)	$	(545	)		(37,788	)	$	(255	)	$	20,998
Dividends declared									(3,462	)											(3,462	)								(1,182	)											(1,182	)
Dividends forfeited with restricted stock forfeitures									59												59									25												25
Share-based compensation expense						561															561							242														242
Lapse of restriction on restricted stock		70,050		1		(1	)														-			30,310		-		-														-
Other comprehensive income (loss), net of taxes:
Net income									1,748												1,748
Net loss																														(2,928	)											(2,928	)
Foreign currency translation adjustment												(202	)								(202	)											(75	)								(75	)
Pension plan												10									10												(3	)								(3	)
Total comprehensive income																					1,556
Balance at March 31, 2016		9,206,843	$	92	$	210,767		$	(175,250	)	$	(83	)		(37,788	)	$	(255	)	$	35,271
Total comprehensive income (loss)																																										(3,006	)
Balance at September 30, 2016																								9,248,403	$	92	$	211,213	$	(193,350	)	$	(623	)		(37,788	)	$	(255	)	$	17,077

	Consolidated Balance Sheet as of June 30, 2015
	As Previously Reported			Adjustments			As Restated

Deferred income taxes, net	$	12,711		$	(93	)	$	12,618
Total assets	$	57,873		$	(93	)	$	57,780

Accounts payable and accrued expenses	$	6,342		$	(22	)	$	6,320
Total current liabilities	$	14,704		$	(22	)	$	14,682
Other long-term liabilities	$	1,716		$	(22	)	$	1,694
Total liabilities	$	21,267		$	(44	)	$	21,223

Capital in excess of par value	$	210,456		$	(249	)	$	210,207
Accumulated deficit	$	(173,795	)	$	200		$	(173,595	)
Total stockholders' equity	$	36,606		$	(49	)	$	36,557
Total liabilities and stockholders' equity	$	57,873		$	(93	)	$	57,780

	Consolidated Statement of Operations for the Three Months Ended March 31, 2015
	As Previously Reported		Adjustments			As Restated

General and administrative	$	1,729	$	(101	)	$	1,628
Total operating expenses	$	8,623	$	(101	)	$	8,522
Operating income (loss)	$	1,462	$	101		$	1,563
Income (loss) before income taxes	$	1,463	$	101		$	1,564
Provision (benefit) for income taxes	$	679	$	37		$	716
Net income (loss)	$	784	$	64		$	848

	Consolidated Statement of Comprehensive Income (Loss) for the Three Months Ended March 31, 2015
	As Previously Reported		Adjustments		As Restated

Net income (loss)	$	784	$	64	$	848
Comprehensive income (loss)	$	1,004	$	64	$	1,068

	Consolidated Statements of Comprehensive Income (Loss) for the Nine Months Ended March 31, 2015
	As Previously Reported		Adjustments		As Restated

Net income (loss)	$	600	$	92	$	692
Comprehensive income (loss)	$	941	$	92	$	1,033

	Consolidated Statement of Cash Flows for the Nine Months Ended March 31, 2015
	As Previously Reported		Adjustments			As Restated

Net income	$	600	$	92		$	692
Share-based compensation	$	643	$	(146	)	$	497
Deferred income taxes, net	$	270	$	54		$	324
Net cash provided by (used in) operating activities	$	3,485	$	-		$	3,485

	March 31, 2016		June 30, 2015

Raw materials	$	1,189	$	1,403
Work-in-process		114		271
Finished goods		2,128		1,754
	$	3,431	$	3,428

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2016			2015			2016			2015

Customer A		13	%		16	%		<10	%		10	%
Customer B		10	%		<10	%		<10	%		10	%
Customer C		<10	%		<10	%		14	%		<10	%