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 September 30, 2016 are as follows:

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

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

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

Our investment portfolio consists of money market funds, U.S. Treasury bills, repurchase agreements and commercial paper. Our investment portfolio has an average maturity of three months or less and no investments within the portfolio have an original maturity of one year or more. All highly liquid investments with an original maturity of three months or less when purchased are considered to be cash equivalents. All cash equivalents are carried at cost less any unamortized premium or discount, which approximates fair value. All investments with original maturities of more than three months are classified as short-term investments. Our marketable securities are classified as available-for-sale and are reported at fair value with unrealized gains and losses, net of tax, reported in stockholders’ equity as a component of accumulated other comprehensive income or loss. Interest on securities is recorded in interest income. Any realized gains or losses would be shown in the accompanying consolidated statements of operations in other income or expense. We provide fair value measurements disclosures of our available-for-sale securities in accordance with one of the three levels of fair value measurement. We have no financial assets that are measured on a recurring basis that fall within Level 3 of the fair value hierarchy.

Our financial assets measured at fair value on a recurring basis as of September 30, 2017 are as follows:

Our financial assets measured at fair value on a recurring basis as of June 30, 2017 are as follows:

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

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

The following is a summary of available-for-sale securities as of September 30, 2017:

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:

We recorded income tax expense for our domestic and foreign subsidiaries of $128 and an income tax benefit of $117$122 and $31 during the three months ended September 30, 20162017 and 2015,2016, respectively. The components of the provision (benefit) for income taxes are as follows:

For the three months ended September 30, 2016,2017, 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 Japanstate taxes and (2) a reduction in the statutoryinterest and penalties on uncertain tax rate in Japanpositions for the three months ended September 30, 2016,2017, as compared to the same period from the prior year. The international tax benefit is higher as compared to the prior year, primarily due to lower pre-tax income in both Japan and the U.K. for the three months ended September 30, 2017, as compared to the same period from the prior year.

Net Operating Losses

As of June 30, 2016,2017, we had U.S. federal net operating loss carryforwards (“NOLs”) of approximately $89,937$71,953 for income tax purposes, of which none expire in fiscal year 2017,2018, and the remainder expire at various dates through fiscal year 2035.2036. We recently completed an evaluation of the potential effect of Section 382 of the Internal Revenue Code (the “Code”“IRC”) 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 June 30, 2016.2017. If we experience an ownership change as defined in Section 382 of the Code,IRC, 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 TaxSee section below entitled “Tax Asset Preservation Plan (“TAPP”) in orderPlan” for details regarding steps we have taken to protect the value of our 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

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

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

We also have state NOLs that expire according to the TAPP. The TAPP terminated in accordance with its terms on November 3, 2016 concurrent with the effectivenessrules of the amendment to our certificate of incorporation.

As of June 30, 2016, we hadeach state NOLs of $51,346and expiration will occur between fiscal year 2018 and fiscal year 2036 and foreign NOLs of $28,208. The state NOLs expire between fiscal year 2017 and fiscal year 2035. The foreign NOLsthat expire according to the rules of each country. Currently, none of the jurisdictions in which the Company haswe have foreign NOLs are subject to expiration due to indefinite carryforward periods.

Deferred Tax Assets and Related Valuation Allowances

In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. In determining whether or not a valuation allowance for tax assets is needed, we evaluate all available evidence, both positive and negative, including: trends in operating income or losses; currently available information about future years; future reversals of existing taxable temporary differences; future taxable income exclusive of reversing temporary differences and carryforwards; taxable income in prior carryback years if carryback is permitted under the tax law; and tax planning strategies that would accelerate taxable amounts to utilize expiring carryforwards, change the character of taxable and deductible amounts from ordinary income or loss to capital gain or loss, or switch from tax-exempt to taxable investments. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. As of September 30, 2017, we maintain a full valuation allowance on our net deferred tax assets in all jurisdictions except Japan and the U.K. In Japan and the U.K., we believe that it is more likely than not that we will realize our entire deferred tax inventory, and no valuation allowance is needed.

In all other jurisdictions, we do not have sufficient evidence of future income to conclude that it is more likely than not that we will realize our entire deferred tax inventory. Therefore, we have placed a full valuation allowance on the deferred tax inventory. These jurisdictions include the U.S., Germany, Spain, Hong Kong, and Australia. We re-evaluate our conclusions quarterly regarding the valuation allowance and we will make appropriate adjustments as necessary in the period in which significant changes occur.

Unrecognized Tax Benefits

We have evaluated our unrecognized tax benefits and determined that there has not been a material change in the amount of such benefits for the three months ended September 30, 2017.

Research and Development Tax Credits

During the year ended June 30, 2017, we applied for both a U.S. federal and state of Georgia research and development tax credit in the amounts of (1) $719 and $675 for our fiscal year ending June 30, 2016, respectively, and (2) $575 and $540 for our fiscal year ending June 30, 2017, respectively. For U.S. federal tax purposes, the credit cannot be utilized immediately but will carryforward for a period of 20 years. As we do not expect to be able to realize the benefit of the U.S. federal tax credit carryforward before its expiration, we maintain a full valuation allowance on this item. For the state of Georgia tax credit, we have recorded the credit within both other current assets and other long-term assets with an offset in both accrued expenses and other long-term liabilities in our condendsed consolidated balance sheets as of September 30, 2017 and June 30, 2017. As future payroll tax withholdings of our Georgia-based employees become due, we are able to offset the withholding amount dollar-for-dollar against the credit. As a result, as the credit is claimed, we will (1) reduce other current assets and offset the payroll tax liability and (2) reduce accrued expenses and recognize a reduction of operating expenses.

During the three months ended September 30, 2017, we recognized $146 of the state of Georgia credit and reduced operating expenses accordingly. As of September 30, 2017, amounts due from the state of Georgia of $689 and $526 are reflected within other current assets (representing the estimated portion we expect to collect within the next twelve months) and other long-term assets, respectively, and unrecoginzed income from these credits of $510 and $386 are reflected in accrued expenses (representing the estimated portion we expect to realize within the next twelve months) and other long-term liabilities, respectively.

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

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

Valuation AllowanceTax Asset Preservation Plan

RealizationAt our 2016 Annual Meeting of Stockholders held on October 26, 2016, our stockholders adopted a formal amendment to our certificate of incorporation (the “Protective Amendment”) to deter any person acquiring 4.9% or more of the outstanding Common Stock without the approval of our deferred tax assets is dependent primarilyBoard in order to protect the value of our NOLs. The Protective Amendment was extended by our stockholders at our 2017 Annual Meeting of Stockholders held on October 25, 2017 and will expire on the generationearliest of future taxable income. In considering(i) the needBoard of Directors’ determination that the Protective Amendment is no longer necessary 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 conclusionspreservation of the Company’s NOLs because of the amendment or repeal of Section 382 or any successor statute, (ii) the close of business on the needfirst day of any taxable year of Concurrent to which the Board of Directors determines that none of our NOLs may be carried forward (iii) such date as the Board of Directors otherwise determines that the Protective Amendment is no longer necessary for the preservation of the Company’s NOLs and (iv) the date of our Annual Meeting of Stockholders to be held during calendar year 2018.

As indicated in our Form 8-K filed on October 27, 2017, the Company executed and delivered that certain Consent and Limited Waiver to the Standstill Agreement, filed therewith as Exhibit 10.1 (the “Consent and Limited Waiver”), to JDS1, LLC and Julian Singer (together with their affiliates and associates, the “Investor Group”). The Consent and Limited Waiver provides that so long as (i) the Investor Group collectively beneficially own no more than 24.9% of the outstanding shares of common stock of the Company and (ii) any acquisition of common stock of the Company by the Investor Group would not reasonably be expected to actually limit the Company’s ability to utilize the Company’s net operating loss carryforwards under applicable United States, state, or foreign tax laws, the Company shall not deem the Investor Group to have effected a valuation allowanceProhibited Transfer as that term is defined in each jurisdiction asthe Company’s Restated Certificate of Incorporation.

As of September 30, 2016:

U.S. – As2017, we had share-based compensation plans which are described in Note 10 of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended June 30, 2016, we believed2017. We recognize stock compensation expense over the weightrequisite service period of negative evidence was greater than the existing positive evidence and concluded that it was more-likely-than-not that we would be unable to realize our U.S. net deferred tax assets.individual grantees, which generally equals the vesting period. As a result, a full valuation allowance was established on our U.S. net deferred tax assets which continue to remain in place as of September 30, 2016. For future periods in which2017, 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,had 3,000 stock options outstanding and interest and penalties on our uncertain tax positions.

U.K. -489,424 restricted shares outstanding. 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.

We are beginning to show greater profitability in our German operations. While we 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 in Germany to determine if a change in our valuation allowance 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 three months ended September 30, 2016.2017, no stock options were granted or exercised; however, 27,881 stock options were cancelled. We recorded share-based compensation related to the issuance of restricted stock to employees and board members as follows:

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

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

As of September 30, 2016, we had share-based compensation plans which are described in Note 10 of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended June 30, 2016. We recognize stock compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period. As of September 30, 2016, we had 70,509 stock options outstanding and 652,125 restricted shares outstanding. During the three months ended September 30, 2016, no stock options were granted or exercised; however, 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:

A summary of the activity of our time-based, service condition restricted shares during the three months ended September 30, 2016,2017, is presented below:

In conjunction with the resignation of onethree of our independent directors (See(see Note 17 – Commitments and Contingencies – Board Representation and Standstill Agreement)Resignation of Directors), we accelerated the vesting of 5,400 shares of restricted stock.stock held by each of the resigning directors. This acceleration of vesting resulted in incremental stock compensation expense of $27$37 during the three months ended September 30, 2016.2017.

During the three months ended September 30, 2016, we issued2017, 50,000 performance-based restricted shares (“PSAs”) to senior and executive management.management previously issued during fiscal year 2017 at a weighted-average grant date fair value of $5.49 remain outstanding. The PSAs issued in fiscal year 20162017 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 BoardBoard. As of Directors (“Board”).

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

(Amounts in thousands, exceptSeptember 30, 2017, management determined that the likelihood of achieving the specific three-year performance criteria was not probable and, as a result, no share-based compensation expense associated with these PSAs was recorded for share and per share data)

During the three months ended September 30, 2016, 5,387 previously granted performance-based restricted shares were forfeited due to a failure to meet performance goals associated with our fiscal year 2016 financial results. A summary of the activity of our performance-based restricted shares during the three months ended September 30, 2016, is presented below:2017.

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 $133$79 and $124$82 during the three months ended September 30, 20162017 and 2015,2016, 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 $13$5 and $14$13 to the Stakeholder Plan for the three months ended September 30, 2017 and 2016, respectively.

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

(Amounts in thousands, except for share and 2015, respectively.per share data)

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 months ended September 30, 20162017 and 2015:2016:

We contributed $4 to our German defined benefit pension plans for each of the three months endedending September 30, 20162017 and 2015, respectively.2016. We expect to make additional, similar, quarterly contributions during the remaining quarters of our fiscal year 2017.2018.

Inventories consist of the following:

Property and equipment consists of the following:

Depreciation expense for property and equipment was $326 and $372 for the three months ended September 30, 2017 and 2016, respectively.

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

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

Inventories consist of the following:

Property and equipment consists of the following:

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

Intangible assets, net of $140$133 and $143$134 at September 30, 20162017 and June 30, 2016,2017, 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 each of the three months ended September 30, 20162017 and 2015,2016, respectively.

Accounts payable and accrued expenses consist of the following:

Concurrent Computer Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited) - continued

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

On September 9, 2015,May 15, 2017, we soldcompleted the customer contractssale and intellectual propertytransfer of certain assets and certain liabilities primarily related to our multi-screen video analytics product line for $3,500Real-Time business segment pursuant to an Asset Purchase Agreement (“(the “RT APA”) dated August 31, 2015as of May 15, 2017 with Verimatrix,Real Time, Inc. (“Verimatrix”(the “Purchaser”), an investment company owned by Battery Ventures, a privately-held video revenue security companyprivate-equity firm based in San Diego, California.Boston, Massachusetts, for $35,000 less agreed upon adjustments for working capital. Pursuant to the terms of the RT APA, we sold and transferred certain respective equity interests in one of our subsidiaries, which constituted the European operations of the Real-Time business, upon receipt of French regulatory approval on May 30, 2017. The RT APA includedincludes customary terms and conditions, including provisions following closing that require the Companyus to indemnify Verimatrixthe Purchaser for certain losses that it incurs as a result of a breach by the Companyus of itsour representations and warranties in the RT APA and certain other matters. Proceeds

Gross proceeds from the sale were payablepaid to the Companyus as follows: (1) a $2,750$30,200 cash payment on May 15, 2017 (subject to an adjustment for estimated working capital as defined in the Company in cash (received on September 10, 2015) RT APA), (2) a $375 deferred$2,800 cash payment (received in fullmade concurrently with the transfer of the European operations of the Real Time business to the Purchaser received on JuneMay 30, 2016)2017 and (3) $375$2,000 placed in escrow (releasedas security for certain purchase price adjustments and received in fullfor our indemnification obligations to the Purchaser under the RT APA which amount will be released to us on June 30, 2016). No amounts were held back pusuantor before May 15, 2018 (less any portion of the escrow used to make indemnification provisions inor purchase price adjustment payments to the APA.Purchaser).

The customer contractsIn conjunction with the RT APA, we and intellectual property sold hadthe Purchaser entered into Transition Services Agreements (the “TSAs”) for the U.S/Europe and Japan. Under the TSAs, we have agreed to provide and receive various services to and from the Purchaser on an arms-length fee-for-service basis for a net book valueterm of $188 (which was included in intangible assets, net in our consolidated balance sheet). As a resultsix months as 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 calculationdate 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. AsTSAs, subject to a result, we recorded a net gainrenewal term of $4,116 in our consolidated statement of operationsup to eighteen months. Net amounts charged to the Purchaser under the TSAs for the three months ended September 30, 2015.2017 are $5 and are recorded within operating expenses.

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.