SITO MOBILE LTD.ir.sitomobile.com/all-sec-filings/content/0001213900-16-010704/...☒ Yes ☐ No Indicate by check mark whether the ... Condensed Consolidated Balance Sheets as of

UNITED STATES

SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2015

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission file number: 000-53744

SITO MOBILE LTD.(Exact name of small business issuer as specified in its charter)

Delaware 13-4122844

(State or other jurisdiction ofincorporation or organization)

(IRS EmployerIdentification No.)

100 Town Square Place, Suite 204

Jersey City, NJ 07310(Address of principal executive offices)

(201) 275-0555

(Registrants telephone number, including area code)

n/a (Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities ExchangeAct of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every InteractiveData File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reportingcompany. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the ExchangeAct.

☐ Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of shares outstanding of each of the issuer's classes of common stock as of February 9, 2016: 17,157,520 shares of commonstock.

Contents

Page Number PART I FINANCIAL INFORMATION Item 1 Financial Statements 1 Condensed Consolidated Balance Sheets as of December 31, 2015 (unaudited) and September 30, 2015 1 Condensed Consolidated Statement of Operations for the Three Months Ended December 31, 2015 and 2014

(unaudited) 3 Condensed Consolidated Statement of Stockholder's Equity for the Three Months Ended December 31, 2015

(unaudited) and September 30, 2015 4 Condensed Consolidated Statement of Cash Flows for the Three Months Ended December 31, 2015 and 2014

(unaudited) 5 Notes to Condensed Consolidated Unaudited Financial Statements December 31, 2015 7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 30 Item 4 Controls and Procedures 35 PART II OTHER INFORMATION 36 Item 1 Legal Proceedings 36 Item 1A Risk Factors 36 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 36 Item 3 Defaults Upon Senior Securities

36 Item 4 Mine Safety Disclosures 36 Item 5 Other Information 36 Item 6 Exhibits 37 SIGNATURES 38

PART I - FINANCIAL INFORMATION Item 1 – Financial Statements SITO Mobile, Ltd.CONDENSED CONSOLIDATED BALANCE SHEETS

December

31, September 30, 2015 2015 (Unaudited) Assets

Current assets Cash and cash equivalents $ 2,615,184 $ 2,004,139 Accounts receivable, net - current portion 6,273,838 4,265,481 Other prepaid expenses 123,692 312,606

Total current assets 9,012,714 6,582,226

Property and equipment, net 585,356 610,161

Other assets

Accounts receivable, net - 225,000 Capitalized software development costs, net 1,600,813 1,403,397 Intangible assets:

Patents 445,473 493,952 Patent applications cost 897,087 826,074 Other intangible assets, net 1,714,477 1,837,227

Goodwill 6,444,225 6,444,225 Deferred loan costs, net 78,116 92,842 Other assets including security deposits 84,829 83,576

Total other assets 11,265,020 11,406,293

Total assets $ 20,863,090 $ 18,598,680

See accompanying notes.

1

SITO Mobile, Ltd.CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, September 30, 2015 2015 (Unaudited) Liabilities and Stockholders' Equity

Current liabilities Accounts payable $ 4,885,600 $ 2,339,189 Accrued expenses 1,181,373 809,081 Accrued compensation - related party 96,523 253,016 Deferred revenue 532,909 595,669 Current obligation under capital lease 11,699 15,858 Note payable, net - current portion 3,984,219 3,575,024

Total current liabilities 10,692,323 7,587,837

Long-term liabilities

Obligations under capital lease 6,201 7,023 Note payable 4,934,966 5,690,124

Total long-term liabilities 4,941,167 5,697,147

Total liabilities 15,633,490 13,284,984

Commitments and contingencies - See notes 17 - -

Stockholders' Equity

Preferred stock, $.0001 par value, 5,000,000 shares authorized; none outstanding - - Common stock, $.001 par value; 300,000,000 shares authorized, 17,155,478 shares issued and

outstanding as of December 31, 2015 and as of September 30, 2015, respectively 17,156 17,156 Additional paid-in capital 144,538,247 144,234,264 Accumulated deficit (139,325,803) (138,937,724)

Total stockholders' equity 5,229,600 5,313,696

Total liabilities and stockholders' equity $ 20,863,090 $ 18,598,680


2

SITO Mobile, Ltd.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months

Ended December 31, 2015 2014 Revenue

Wireless applications $ 1,622,325 $ 2,424,766 Licensing and royalties 245,328 133,581 Media placement 5,345,470 1,289,089

Total Revenue 7,213,123 3,847,436 Costs and Expenses

Cost of revenue 3,449,256 1,848,187 Sales and marketing 1,877,339 672,071 General and administrative 1,583,583 1,380,854 Depreciation and amortization 219,225 65,197

Total costs and expenses 7,129,403 3,966,309

Income (Loss) from operations 83,720 (118,873) Other Income (Expenses)

Interest expense (471,799) (417,378)

Net loss before income taxes (388,079) (536,251)

Provision for income taxes - -

Net loss $ (388,079) $ (536,251)

Basic and diluted loss per share $ (0.02) $ (0.03)

Weighted average shares outstanding 17,155,478 15,326,275


3

SITO Mobile, Ltd.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITYFOR THE THREE MONTHS ENDED DECEMBER 31, 2015 AND FOR THE YEAR ENDED SEPTEMBER 30, 2015

Common Stock Additional

Paid-in Accumulated Shares Amount Capital Deficit Total

Balance - September 30, 2014 15,072,863 $ 15,073 $137,051,172 $(134,409,531) $ 2,656,714

Shares issued on exercise of stock warrants 833,700 834 2,108,221 - 2,109,055 Shares issued for payment of services 70,000 70 209,930 - 210,000 Sale of shares in connection with debt 261,954 262 999,738 - 1,000,000 Additional shares issued in acquisition of DoubleVision 296,401 296 1,066,748 - 1,067,044 Additional shares issued in acquisition of intangible assets 620,560 621 2,543,676 - 2,544,297 Compensation recognized on option and warrant grants - - 479,834 - 479,834 Stock issuance costs - - (75,000) - (75,000)Warrant receivable - - (150,055) - (150,055)Net loss for the year ended September 30, 2015 - - - (4,528,193) (4,528,193)

Balance - September 30, 2015 17,155,478 17,156 144,234,264 (138,937,724) 5,313,696

Compensation recognized on option and warrant grants - - 153,928 - 153,928 Warrant receivable - - 150,055 - 150,055 Net loss for the three months ended December 31, 2015 - - - (388,079) (388,079)

Balance - December 31, 2015 17,155,478 $ 17,156 $144,538,247 $(139,325,803) $ 5,229,600


4

SITO Mobile, Ltd.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


Ended December 31, 2015 2014 Cash Flows from Operating Activities

Net loss $ (388,079) $ (536,251)Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation expense 47,996 24,174 Amortization expense - software development costs 219,776 123,547 Amortization expense - patents 48,479 41,023 Amortization expense - discount of debt 168,516 128,897 Amortization expense - deferred costs 14,726 11,264 Amortization expense - intangible assets 122,750 - Loss on disposition of assets - 2,950 Stock based compensation 153,928 180,814

Changes in operating assets and liabilities: (Increase) in accounts receivable, net (1,783,357) (715,649)Decrease in prepaid expenses 188,914 67,078 (Increase) in other assets (1,253) (50,655)Increase in accounts payable 2,546,411 737,907 Increase (decrease) in accrued expenses 215,799 (119,839)(Decrease) Increase in deferred revenue (62,760) 374,067 Increase (decrease) in accrued interest 152,189 (506,031)

Net cash provided by (used in) operating activities 1,644,035 (236,704)

Cash Flows from Investing Activities

Patents and patent applications costs (71,013) (119,067)Purchase of property and equipment (23,191) (21,843)Capitalized software development costs (417,192) (246,791)

Net cash used in investing activities $ (511,396) $ (387,701)


5

SITO Mobile, Ltd.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


Ended December 31, 2015 2014 Cash Flows from Financing Activities

Proceeds from issuance of common stock $ 150,055 $ 1,000,000 Proceeds from issuance of note payable - 8,205,816 Principal reduction on obligation under capital lease (4,981) (4,924)Principal reduction on repayment of debt (666,668) - Principal reduction on convertible debt - (3,708,000)

Net cash (used in) provided by financing activities (521,594) 5,492,892 Net increase in cash and cash equivalents 611,045 4,868,487

Cash and cash equivalents – Beginning of period 2,004,139 620,185

Cash and cash equivalents – Ending of period $ 2,615,184 $ 5,488,672

Supplemental Information:

Interest expense paid $ 136,369 $ 781,143 Income taxes paid $ - $ -

Non-cash investing and financing activities:

For the three months ended December 31, 2014

On October 21, 2014, the Company entered into a capital lease agreement to purchase a copy machine in the amount of $13,160 payableover a 48-month term.

During the three months ended December 31, 2014, the Company accrued an additional $1,000,000 in purchase price consideration inconnection with the acquisition of DoubleVision Networks Inc. ("DoubleVision"). Under the terms of the Purchase and Sale Agreement,the earn-out provision could cause the Company to issue additional shares of the Company’s common stock equal to $1,000,000 (valuedat the average closing price for the ninety days ending July 31, 2015) to the former DoubleVision shareholders if the Company’s mediaplacement revenues for the twelve-month period from August 1, 2014 to July 31, 2015 are at least $3,000,000, subject to certainconditions such as receipt of customer payments and achievement of a gross margin threshold. In anticipation of meeting this threshold,an additional $1,000,000 was accrued.

During the three months ended December 31, 2014, the Company recognized stock-based compensation expense totaling $180,814, ofwhich $99,267 was recognized through the vesting of 125,000 common stock options, and $81,547 from the amortization of prepaidconsulting fees compensated through the granting of 575,000 options.


6

SITO Mobile, Ltd.Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization, History and Business

SITO Mobile, Ltd. (“the Company”) was incorporated in Delaware on May 31, 2000, under its original name, Hosting Site Network,Inc. On May 12, 2008, the Company changed its name to Single Touch Systems, Inc. and on September 26, 2014, it changed its nameto SITO Mobile, Ltd.

The Company provides a mobile engagement platform that enables brands to increase awareness, loyalty, and ultimately sales.

Reverse Stock Split

On July 29, 2015, the Company filed an amendment to its Restated Certificate of Incorporation to effect a 1-for-10 reverse split of itsissued and outstanding common stock. The reverse split became effective in the market on July 30, 2015. Unless otherwise noted, allreferences herein to the number of common shares, price per common share or weighted average number of common sharesoutstanding have been adjusted to reflect this reverse stock split on a retroactive basis.

2. Summary of Significant Accounting Policies

Reclassification

Certain reclassifications have been made to conform the 2014 amounts to the 2015 classifications for comparative purposes.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of SITO Mobile, Ltd. and it’s wholly-owned subsidiaries,SITO Mobile Solutions Inc., SITO Mobile R&D IP, LLC, SITO Mobile Media Inc. and DoubleVision Networks Inc.(“DoubleVision”). Intercompany transactions and balances have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers cash and cash equivalents to include all stable, highly liquid investments with maturities of three months orless.

Accounts Receivable, net Accounts receivable are reported at the customers’ outstanding balances, less any allowance for doubtful accounts. Interest is notaccrued on overdue accounts receivable. Allowance for Doubtful Accounts

An allowance for doubtful accounts on accounts receivable is charged to operations in amounts sufficient to maintain the allowancefor uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines theadequacy of the allowance based on historical write-off percentages and information collected from individual customers. Accountsreceivable are charged off against the allowance when collectability is determined to be permanently impaired.

7


Property and Equipment, net

Property and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts while replacements,maintenance and repairs that do not improve or extend the lives of the respective assets are expensed. At the time property andequipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicableamounts. Gains or losses from retirements or sales are credited or charged to income.

Depreciation is computed on the straight-line and accelerated methods for financial reporting and income tax reporting purposes basedupon the following estimated useful lives:

Software development 2- 3 years Equipment and computer hardware 5 years Office furniture 7 years Leasehold Improvements 5 years

Long-Lived Assets

The Company accounts for its long-lived assets in accordance with Accounting Standards Codification (“ASC”) Topic 360-10-05,“Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewedfor impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longerbe appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expectedto result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, animpairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value.

Capitalized Software Development Costs

The Company accounts for costs incurred to develop or purchase computer software for internal use in accordance with ASC Topic350-40 “Internal-Use Software.” As required by ASC 350-40, the Company capitalizes the costs incurred during the applicationdevelopment stage, which include costs to design the software configuration and interfaces, coding, installation, and testing.

Costs incurred during the preliminary project stage along with post-implementation stages of internal use computer software areexpensed as incurred. Capitalized development costs are amortized over a period of two to three years. Costs incurred to maintainexisting product offerings are expensed as incurred. The capitalization and ongoing assessment of recoverability of development costsrequires considerable judgment by management with respect to certain external factors, including, but not limited to, technological andeconomic feasibility, and estimated economic life.

Capital Leases

Assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fairvalue of the leased assets. The assets are depreciated over the lower of their related lease terms or their estimated productive lives.Depreciation of the assets under capital leases is included in depreciation expense.

8


Debt issuance costs

Deferred debt issuance costs are amortized using the effective interest method over the related term of the debt and are included inother assets. The amortization of deferred debt issuance costs is included in interest expense.

Income Taxes

The Company accounts for its income taxes under the provisions of ASC Topic 740, “Income Taxes.” The method of accounting forincome taxes under ASC 740 is an asset and liability method. The asset and liability method requires the recognition of deferred taxliabilities and assets for the expected future tax consequences of temporary differences between tax bases and financial reporting basesof other assets and liabilities. The Company had no material unrecognized income tax assets or liabilities for the three months endedDecember 31, 2015 or for the three months ended December 31, 2014. The Company recognizes income tax interest and penalties as aseparately identified component of general and administrative expense. During the three months ended December 31, 2015 and 2014,there were no income taxes, or related interest and penalty items in the statements of operations, or liabilities on the balance sheets.

Issuances Involving Non-cash Consideration

All issuances of the Company’s stock for non-cash consideration have been assigned a dollar amount equaling the market value of theshares issued on the date the shares were issued for such services and property. The non-cash consideration paid pertains to consultingservices, the acquisition of a software license, the acquisition of DoubleVision Networks Inc. and assets purchased from Hipcricket,Inc. (See Notes 5 and 7).

Revenue Recognition

The Company recognizes media placement revenue based on the activity of mobile users viewing ads through developer applicationsand mobile websites. Media placement revenues are recognized when the Company’s advertising services are delivered based on thespecific terms of the advertising contract, which are commonly based on the number of ads delivered, or views, clicks or actions byusers on mobile advertisements. At such time, the Company’s services have been provided, the fees charged are fixed or determinable,persuasive evidence of an arrangement exists, and collectability is reasonably assured. The Company evaluates whether it is appropriate to recognize media placement revenue based on the gross amount billed to thecustomers or the net amount earned as revenue. When the Company is primarily obligated in a transaction, has latitude in establishingprices, is responsible for fulfillment of the transaction, has credit risk, or has several but not all of these indicators, revenue is recordedon a gross basis. While none of the factors individually are considered presumptive or determinative, in reaching conclusions on grossversus net revenue recognition, the Company places the most weight on the analysis of whether or not it is the primary obligor in thearrangement. The Company records the net amounts as media placement revenue earned if it is not primarily obligated or does nothave latitude in establishing prices or credit risk. The Company recognizes wireless applications revenue based on the delivery of Short Message Service (SMS) text messages andvoice messages and messaging program management services. Wireless applications revenues are recognized when the Company’sservices are delivered based on the specific terms of the Company’s contracts with customers, which are commonly based on thenumber of messages delivered. At such time, the Company’s services have been provided, the fees charged are fixed or determinable,persuasive evidence of an arrangement exists, and collectability is reasonably assured.

9


In general, licensing and royalty revenue arrangements provide for the payment of contractually determined fees in consideration forthe patented technologies owned by or controlled by the Company’s operating subsidiary. The intellectual property rights granted maybe perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined, relatively short period oftime, with the licensee possessing the right to renew the agreement at the end of each contractual term for an additional minimumupfront payment. Pursuant to the terms of these agreements, the Company’s operating subsidiary may have no further obligation withrespect to the grant of the non-exclusive retroactive and future licenses, covenants-not-to-sue, releases, and other deliverables,including no express or implied obligation on the Company’s operating subsidiary’s part to maintain or upgrade the technology, orprovide future support or services Generally, the agreements provide for the grant of licenses, covenants-not-to-sue, releases, andother significant deliverables upon the execution of the agreement, or upon the receipt off the minimum upfront payment for termagreement renewals. As such, when the Company has no further obligation under the agreement, the earnings process is complete andrevenue is recognized upon the execution of the agreement, when collectability is reasonably assured, or upon receipt of the minimumupfront fee for term agreement renewals, and when all the other revenue recognition criteria have been met, otherwise the Companyrecognizes revenue on a straight-line basis over the life of the agreement based on the contractually determined fees. Deferred revenue arises as a result of differences between the timing of revenue recognition and receipt of cash from the Company’scustomers. Stock Based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment topic of ASC Topic 718 whichrequires recognition in the financial statements of the cost of employee and director services received in exchange for an award ofequity instruments over the period the employee or director is required to perform the services in exchange for the award(presumptively, the vesting period). The Financial Accounting Standards Board (“FASB”) also requires measurement of the cost ofemployee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determinedat the “measurement date.” The expense is recognized over the vesting period of the award. The Company records compensationexpense based on the fair value of the award at the reporting date.

The value of the stock-based award is determined using the Binomial or Black-Scholes option-pricing models, whereby compensationcost is the excess of the fair value of the award as determined by the pricing model at the grant date or other measurement date overthe amount that must be paid to acquire the stock. The resulting amount is charged to expense on the straight-line basis over the periodin which the Company expects to receive the benefit, which is generally the vesting period.

10


Loss per Share

The Company reports earnings (loss) per share in accordance with ASC Topic 260-10, "Earnings per Share." Basic earnings (loss) pershare are computed by dividing income (loss) available to common shareholders by the weighted average number of common sharesavailable. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator isincreased to include the number of additional common shares that would have been outstanding if the potential common shares hadbeen issued and if the additional common shares were dilutive. Diluted loss per share has not been presented since the effect of theassumed conversion of warrants and debt to purchase common shares would have an anti-dilutive effect. Potential common shares asof December 31, 2015 that have been excluded from the computation of diluted net loss per share amounted to 2,524,257 shares andinclude 2,524,257 options. Potential common shares as of December 31, 2014 that have been excluded from the computation of dilutednet loss per share amounted to 3,140,400 shares and included 988,950 warrants, and 2,151,450 options.

On July 29, 2015, the Company filed an amendment to the Certificate of Incorporation to effect a 1-for-10 reverse split of its issuedand outstanding common stock the reverse split became effective in the market on July 30, 2015. Following the reverse split, every tenshares of the Company's issued and outstanding common stock were automatically combined and converted into one issued andoutstanding share of common stock with a par value of $0.001 per share. No fractional shares are to be issued. As a result, all prior pershare calculations reflect the effects of this reverse stock split.

Concentrations of Credit Risk

The Company primarily transacts its business with one financial institution. The amount on deposit in that one institution may fromtime to time exceed the federally-insured limit.

Of the Company’s revenue earned during the three months ended December 31, 2015, approximately 21% was generated fromcontracts with five customers covered under the Company’s master services agreement with AT&T. Of the Company’s revenue earnedduring the three months ended December 31, 2014, approximately 64% was generated from contracts with five customers coveredunder the Company’s master services agreement with AT&T.

The Company’s accounts receivable is typically unsecured and are derived from U.S. customers in different industries. The Companyperforms ongoing credit evaluations of its customers and maintains allowances for potential credit losses. Historically, such losseshave been within management’s expectations. As of December 31, 2015 and 2014, two customers accounted for 41% and 51%,respectively, of the Company’s net accounts receivable balance, respectively.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of Americarequires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during thereporting period. Actual results could differ from those estimates.

11


Business Combinations The Company accounts for all business combinations using the acquisition method of accounting. Under this method, assets andliabilities are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired,net of liabilities assumed is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities madesubsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments togoodwill. Any adjustments subsequent to the measurement period are recorded in income. Results of operations of the acquired entityare included in the Company’s results from the date of the acquisition onward and include amortization expense arising from acquiredtangible and intangible assets. The Company expenses all costs as incurred related to an acquisition under general and administrativein the consolidated statements of operations.

Recent Accounting Pronouncements

In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Income Taxes (Topic 740): Balance SheetClassification of Deferred Taxes (ASU 2015-17), which simplifies the presentation of deferred income taxes by requiring deferred taxassets and liabilities be classified as noncurrent on the balance sheet. The updated standard is effective for the Company beginning onOctober 1, 2017 with early application permitted as of the beginning of any interim or annual reporting period. The Company does notexpect that the adoption of this standard will have a material effect on its consolidated financial statements.

3. Accounts Receivable, net

Accounts receivable consist of the following:

December 31,

2015 September 30,

2015 Accounts receivable $ 6,316,966 $ 4,738,859 Less allowance for bad debts (43,128) (248,378) 6,273,838 4,490,481 Less current portion (6,273,838) (4,265,481) Long-term portion $ - $ 225,000

12


On November 12, 2013, the Company entered into an agreement with an unrelated third party regarding its usage since October 2010of certain Company patented intellectual property. Under the agreement, the Company receives a total of $750,000 and grantedextended payment terms that consist of a $100,000 payment received in November 2013, a $200,000 payment received in November2014, a $225,000 payment to be received in November 2015 and a $225,000 payment to be received in November 2016. The Companyhas no obligations under the agreement. An amendment to the patent license agreement was signed on December 4, 2015 in which theCompany received the November 2015 and November 2016 payments plus an additional $100,000 in exchange for SITO relinquishingcertain rights under the agreement.

4. Property and Equipment, net

The following is a summary of property and equipment:

December 31,

2015 September 30,

2015 Equipment and computer hardware $ 727,289 $ 723,844 Office furniture 233,219 213,473 Leasehold Improvements 186,902 186,902 Equipment held under capital lease 66,272 66,272 1,213,682 1,190,491 Less: accumulated depreciation (628,326) (580,330) $ 585,356 $ 610,161

Depreciation expense for the three months ended December 31, 2015 and 2014 was $47,996 and $24,174, respectively.

13

SITO Mobile, Ltd.Notes to Unaudited Condensed Consolidated Financial Statements 5. Capitalized Software Development Costs, net

The following is a summary of capitalized software development costs:

December 31,

2015 September 30,

2015 Beginning balance $ 1,403,397 $ 639,416 Additions 417,192 1,444,629 Amortization (219,776) (680,648) Ending balance $ 1,600,813 $ 1,403,397

Amortization expense for the three months ended December 31, 2015 and 2014 was $219,776 and $123,547, respectively. As of December 31, 2015, amortization expense for the remaining estimated lives of these costs is as follows:

Year Ending December 31, 2016 $ 769,649 2017 570,179 2018 260,985 $ 1,600,813

14


6. Intangible Assets

Patents

The following is a summary of capitalized patent costs:

December 31,

2015 September 30,

2015 Patent costs $ 1,357,407 $ 1,357,407 Amortization (911,934) (863,455) $ 445,473 $ 493,952

Amortization expenses for the three months ended December 31, 2015 and 2014 was $48,479 and $41,023, respectively. A schedule of amortization expense over the estimated remaining lives of the patents is as follows:

Year Ending December 31, 2016 $ 186,753 2017 80,836 2018 45,423 2019 41,881 2020 41,880 Thereafter 48,700 $ 445,473

15


Other Intangible Assets, net

The following is a summary of other intangible asset costs:

December 31,

2015 September 30,

2015 Technology $ 970,000 $ 970,000 Customer relationships 870,000 870,000 Backlog 110,000 110,000 Amortization (235,523) (112,773) $ 1,714,477 $ 1,837,227

Amortization expenses for the three months ended December 31, 2015 and 2014 was $122,750 and $0, respectively. A schedule of amortization expense over the estimated remaining lives of the patents is as follows:

Year Ending December 31, 2016 $ 275,470 2017 271,000 2018 271,000 2019 271,000 2020 187,536 Thereafter 438,471 $ 1,714,477

16


Goodwill

On July 24, 2014, the Company and DoubleVision and the shareholders of DoubleVision entered into a Share Purchase Agreementpursuant to which the Company acquired all of the shares of DoubleVision. The Company paid a purchase price of $3,680,000 byissuing 800,000 shares of the Company’s common stock to DoubleVision’s shareholders and paid $400,000 to one of DoubleVision’screditors. In connection with the acquisition the Company recognized $3,482,884 in goodwill. The Share Purchase Agreementincluded an earn-out provision that contemplated the issuance of additional shares of the Company’s common stock equal to$1,000,000 (valued at the average closing price for the ninety days ending July 31, 2015) as additional purchase price consideration ifthe Company’s media placement revenues for the twelve-month period from August 1, 2014 to July 31, 2015 were at least $3,000,000,subject to certain conditions such as receipt of customer payments and achievement of a gross margin threshold. In anticipation ofachieving the earn-out provision, the Company accrued $1,000,000 in purchase price payable and increased goodwill to $4,482,884 asof March 31, 2015. During the quarter ended June 30, 2015, the Company issued 296,401 shares of its common stock at $3.60 pershare for an aggregate amount of $1,067,044 in satisfaction of the earn-out and recognized an increase to goodwill of $67,044.

On July 8, 2015, the Company and Hipcricket, Inc. entered into an Asset Purchase Agreement pursuant to which the Companyacquired assets of Hipcricket’s mobile advertising platform. The Company paid $3,844,297 for the assets by issuing to Hipcricket620,560 shares of the Company’s common stock at an agreed-upon valuation of $2,544,297, and $1,300,000 in cash. The Companyexpensed additional legal and professional fees in conjunction with the asset acquisition totaling $95,000. The acquisition resulted inthe Company recognizing $1,894,297 in goodwill. The Company does not amortize goodwill, but reduces the carrying amount ofgoodwill if management determines that its implied fair value has been impaired.

7. Accrued Expenses

The following is a summary of accrued expenses:

December 31,

2015 September 30,

2015 Accrued cost of revenues $ 544,809 $ 359,753 Accrued payroll and related expenses - unrelated parties 570,016 339,451 Accrued professional fees 62,225 109,077 Other accrued expenses 4,323 800 $ 1,181,373 $ 809,081

17

SITO Mobile, Ltd.Notes to Unaudited Condensed Consolidated Financial Statements 8. Capital Leases

The Company leases various office equipment under multiple capital leases that expire in 2016 and 2018. The equipment has a cost of$66,272.

Minimum future lease payments under the capital leases at December 31, 2015 for each of the next four years and in the aggregate areas follows:

Year Ending December 31, 2016 $ 12,340 2017 3,790 2018 2,842 2019 - Total minimum lease payments 18,972 Less amount representing interest (1,072) Present value of net minimum lease payments $ 17,900

The effective interest rate charged on the capital leases range from approximately 2.25% to 7.428% per annum. The leases provide fora $1 purchase option. Interest charged to operations for the three months ended December 31, 2015 and 2014 was $241 and $298,respectively. Depreciation charged to operations for the three months ended December 31, 2015 and 2014 was $3,314 and $3,165,respectively.

9. Income Taxes

As of December 31, 2015, the Company has a net operating loss carryover of approximately $39,600,000 available to offset futureincome for income tax reporting purposes, which will expire in various years through 2035, if not previously utilized. However, theCompany’s ability to use the carryover net operating loss may be substantially limited or eliminated pursuant to Internal RevenueCode Section 382. We adopted the provisions of ASC 740-10-50. We had no material unrecognized income tax assets or liabilities forthe three months ended December 31, 2015 or for the three months ended December 31, 2014. Our policy regarding income tax interest and penalties is to expense those items as general and administrative expense but to identifythem for tax purposes. During the three months ended December 31, 2015 and 2014, there were no federal income tax, or relatedinterest and penalty items in the income statement, or liability on the balance sheet. We file income tax returns in the U.S. federaljurisdiction and various state jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by taxauthorities for years ending on or before September 30, 2012 or California state income tax examination by tax authorities for yearsending on or before September 30, 2011. We are not currently involved in any income tax examinations.

18

SITO Mobile, Ltd.Notes to Unaudited Condensed Consolidated Financial Statements 10. Note Payable

December 31,

2015 September 30,

2015 Notes Payable: Principal outstanding $ 9,333,332 $ 10,000,000 Accrued Interest 319,418 202,975 Accrued Termination Fee 160,376 124,630 9,813,126 10,327,605 Less: discount on note payable (893,941) (1,062,457) 8,919,185 9,265,148 Less: current portion, net (3,984,219) (3,575,024) Long-term portion, net $ 4,934,966 $ 5,690,124

Scheduled maturities on long term debt are as follows:

Years ending December 31 Principal Discount

Amortization AccruedInterest

AccruedTermination

Fee Total 2016 $ 4,333,334 $ (415,044) $ 65,929 $ - $ 3,984,219 2017 4,000,000 (383,118) - - 3,616,882 2018 999,998 (95,779) 253,489 160,376 1,318,084 $ 9,333,332 $ (893,941) $ 319,418 $ 160,376 $ 8,919,185

On October 3, 2014, the Company and its wholly owned subsidiaries, SITO Mobile Solutions Inc. and SITO Mobile R&D IP, LLC,entered into a Revenue Sharing and Note Purchase Agreement (the “Agreement”) with Fortress Credit Co LLC, as collateral agent (the“Collateral Agent”), and CF DB EZ LLC (the “Revenue Participant”) and Fortress Credit Co LLC (the “Note Purchaser” and togetherwith the Revenue Participant, the “Investors”).

At the closing of the Agreement, the Company issued and sold a senior secured note (the “Note”) with an aggregate original principalamount of $10,000,000 (the “Original Principal Amount”) and issued, pursuant to a Subscription Agreement, 261,954 new shares ofcommon stock to Fortress at $3.817 per share (which represents the trailing 30-day average closing price) for an aggregate amount of$1,000,000. After deducting original issue discount of 10% on the Notes and a structuring fee to the Investors, the Company received$8,850,000 before paying legal and due diligence expenses.

19


The principal amount of the Note bears interest at a rate equal to LIBOR plus 9% per annum. Such interest is payable in cash exceptthat 2% per annum of the interest shall be paid-in-kind, by increasing the principal amount of the Note by the amount of such interest.The term of the Note is 42 months and the Company must make, beginning in October 2015, monthly amortization payments on theNote, each in a principal amount equal to $333,334 until the Note is paid in full. The Company shall also apply 85% of MonetizationRevenues (as defined in the Agreement) from the Company’s patents to the payment of accrued and unpaid interest on, and then torepay outstanding principal (at par) of, the Note until all amounts due with respect to the Note have been paid in full. After therepayment of the Note, in addition to the interest, the Company shall pay the Revenue Participants up to 50% of MonetizationRevenues totaling (i) $5,000,000, if paid in full prior to March 31, 2018 and (ii) $7,500,000 thereafter (the “Revenue Stream”). TheCompany must also pay $350,000 to the Note Purchaser upon repayment of the Note. The Company may prepay the Note in whole or in part, without penalty or premium, except that any optional prepayments of the Noteprior to the first anniversary of the Effective Date shall be accompanied by a prepayment premium equal to 5% of the principal amountprepaid.

The Agreement contains certain standard Events of Default. The Company granted to the Collateral Agent, for the benefit of theSecured Parties, a non-exclusive, royalty free, license (including the right to grant sublicenses) with respect to the Patents, which shallbe evidenced by, and reflected in, the Patent License Agreement. The Collateral Agent and the Investors agree that the CollateralAgent shall only use such license following an Event of Default. Pursuant to a Security Agreement among the parties, the Companygranted the Investors a first priority senior security interest in all of the Company’s assets. The Company and the Investors assigned avalue of $500,000 to the revenue sharing terms of the Agreement and in accordance with ASC 470-10-25 “Debt Recognition”, theCompany recognized $500,000 as deferred revenue and a discount on the Note that is amortized over the 42-month term of the Noteusing the effective interest method. For the three months ended December 31, 2015 and 2014, the Company recognized $51,066 and$39,060, respectively, in licensing revenue and interest expense from amortization of the deferred revenue.

Interest expense on the Note for the three months ended December 31, 2015 and 2014 was $252,571 and $247,629, respectively.Amortization of the discounts for the three months ended December 31, 2015 and 2014 totaled $168,516 and $128,897, respectively,which was charged to interest expense. Accrual of termination fees for the three months ended December 31, 2015 and 2014 was$35,746 and $27,342, respectively, which was charged to interest expense.

11. Stock Based Compensation

During the three months ended December 31, 2015, the Company recognized stock-based compensation expense totaling $153,928,through the vesting of 32,836 common stock options. Of the $153,928 in stock compensation expense, $86,409 is included in generaland administrative expense and $67,519 is included in sales and marketing expense. During the three months ended December 31,2014, the Company recognized stock-based compensation expense totaling $180,814, of which $99,267 was recognized through thevesting of 125,000 common stock options, and $81,547 from the amortization of prepaid consulting fees compensated through thegranting of 575,000 common stock options. Of the $180,814 in stock compensation expense, $172,729 is included in general andadministrative expense and $8,085 is included in sales and marketing expense.

20

SITO Mobile, Ltd.Notes to Unaudited Condensed Consolidated Financial Statements 12. Related Party Transactions

On April 21, 2014 (the “Effective Date”), SITO Mobile R&D IP, LLC, the Company’s wholly-owned subsidiary, through a jointventure arrangement organized as a limited liability company (the “JV”) with Personalized Media Communications, LLC (“PMC”),entered into a Joint Licensing Program Agreement (the “Agreement”) with a national broadcasting entity (“Licensee”) pursuant towhich the JV granted the Licensee a term-limited license ( the “License”) to all patents licensable by the JV (“Patents”), including anexclusive license to assert the Patents against certain infringing parties in the media distribution industry. In exchange for the License,the Licensee will pay an annual fee of $1,250,000 for a minimum of three years (“Annual Fee”). Commencing three years from theEffective Date, the Licensee may each year, at its sole option, pay a $1,250,000 license fee to renew the License for every year forfour additional years. Once the Licensee has paid a total of $8,750,000 in license fees, either in one lump sum or after paying$1,250,000 annually for seven years, the License is deemed to be perpetual. For Patents infringement actions provided for under theLicense, the Licensee will pay 20% of the gross proceeds from settlements received less any Annual Fee amounts paid and litigationcosts incurred (“Share of Proceeds”). SITO Mobile R&D IP, LLC and its joint venture partner will serve as co-plaintiffs with theLicensee in infringement actions under the License and the Licensee will be responsible for any out-of-pocket costs of the JVassociated with being a co-plaintiff in supporting Licensee in such litigation, including attorneys’ fees. The Licensee will pay theAnnual Fee and any Share of Proceeds to the JV. Proceeds received by the JV are shared by SITO Mobile R&D IP, LLC and PMC ona 30% and 70% basis, respectively. In the event that the Licensee does not assert any infringement actions under its rights in theLicense within five years of the Effective Date, the JV may, at its sole option, choose to terminate Licensee’s exclusive right to assertinfringement claims with no reduction or adjustment to the Annual Fee. For the three months ended December 31, 2015 and 2014, theCompany amortized $94,262 and $94,521, respectively, in revenue. As of December 31, 2015, the Company has $114,754 in deferredrevenue under the Licensing Agreement.

The Company entered into a Separation and General Release Agreement (the “Separation Agreement”) with its former ChiefExecutive Officer, James Orsini, which confirmed his removal from all positions held with the Company, including its subsidiaries,divisions, affiliates, partnerships, joint ventures and related business entities, effective September 19, 2014. Pursuant to the terms ofthe Separation Agreement and in accordance with the terms of his employment agreement, the Company agreed to pay Mr. Orsini, oneyear of his base salary, accrued but unused vacation time and provide continued medical coverage for a period of one year. In addition,the Company reimbursed Mr. Orsini $10,000 for his attorneys’ fees in connection with his Separation Agreement. In exchange forthese payments, and other provisions, Mr. Orsini agreed to a general release in favor of the Company. The Separation Agreementbecame effective September 19, 2014. For the three months ended December 31, 2015 and 2014, the Company paid $0 and $107,410under terms of the Separation Agreement and has accrued $10,000 in remaining obligations.

21


13. Fair Value

The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilitiesapproximate their fair values because of the relatively short period of time between the origination of these instruments and theirexpected realization. The Company determines the fair value of obligations under capital lease, notes payable and convertibledebentures based on the effective yields of similar obligations (Level 2). ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transactionbetween market participants at the measurement date. ASC 820-10 establishes a fair value hierarchy that distinguishes between (1)market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) anentity’s own assumptions, about market participant assumptions, which are developed based on the best information available in thecircumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority tounadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs(Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below:

Level 1. Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.

Level 2. Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in marketsthat are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of theassets or liabilities.

Level 3. Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of theassets or liabilities.

The Company did not identify any assets and liabilities that are required to be presented on the consolidated balance sheets at fairvalue. The Company does not have any assets or liabilities measured at fair value on a recurring basis at December 31, 2015. TheCompany did not have any fair value adjustments for assets and liabilities measured at fair value on a nonrecurring basis during theyear ended December 31, 2015.

14. Stockholders’ Equity

Common Stock

The holders of the Company's common stock are entitled to one vote per share of common stock held.

During the three months ended December 31, 2015, the Company did not issue any shares of its common stock. During the three months ended December 31, 2014, the Company issued 261,954 shares of common stock for which the Companyreceived $1,000,000 in gross proceeds.

Warrants

During the three months ended December 31, 2015, no warrants were granted or exercised, and 250 warrants expired. During the three months ended December 31, 2014, no warrants were granted or exercised, and 360,000 warrants expired.

22


Options

During the three months ended December 31, 2015, the Company granted options to its Directors and employees as follows:

Grant Date OptionsGranted

ExercisePrice Expiration Vesting

TotalValue

Risk FreeInterest

Rate Volatility November 17, 2015 20,000 $ 3.58 November 17, 2020 3-years $ 47,180 1.70% 102.67% November 17, 2015 4,548 $ 3.58 November 17, 2020 Immediate $ 10,729 1.70% 102.67% November 17, 2015 3,288 $ 3.58 November 17, 2020 Immediate $ 7,756 1.70% 102.67% November 18, 2015 150,000 $ 3.51 November 18, 2020 3-years $ 338,100 1.72% 102.63% November 18, 2015 70,000 $ 3.51 November 18, 2020 3-years $ 157,780 1.72% 102.63% November 18, 2015 28,000 $ 3.51 November 18, 2020 3-years $ 63,112 1.72% 102.63% November 18, 2015 28,000 $ 3.51 November 18, 2020 3-years $ 63,112 1.72% 102.63% November 18, 2015 28,000 $ 3.51 November 18, 2020 3-years $ 63,112 1.72% 102.63% 331,836

The Company values options under the Binomial Option Model. The full value of option grants is charged to operations over thevesting period with option grants that vest immediately being fully charged on the date of grant. During the three months ended December 31, 2015, the Company recognized stock-based compensation expense totaling $153,928,through the vesting of 32,836 common stock options. During the three months ended December 31, 2014, the Company recognizedstock-based compensation expense totaling $180,814, of which $99,267 was recognized through the vesting of 125,000 common stockoptions, and $81,547 from the amortization of prepaid consulting fees compensated through the granting of 575,000 common stockoptions.

23


A summary of outstanding stock warrants and common stock options is as follows:

Number of

Shares

WeightedAverageExercise

Price Outstanding – September 30, 2014 3,983,900 $ 4.80 Granted 352,271 $ 3.20 Exercised (833,700) $ (2.50) Cancelled (1,240,800) $ (5.40) Outstanding – September 30, 2015 2,261,671 $ 5.00 Granted 331,836 $ 3.50 Exercised (-) $ (-) Cancelled (250) $ (1.20) Outstanding – December 31, 2015 2,593,257 $ 4.80

Of the 2,593,257 common stock options and warrants outstanding, 1,972,931 are fully vested and currently available for exercise.

15. Commitments and Contingency

Operating Leases

The Company leases office space in Rogers, Arkansas; Jersey City, New Jersey; Boise, Idaho; and Royal Oak, Michigan. The Rogersoffice is leased for a term of five years, effective January 1, 2012. The Company’s Boise office space is subject to a 38-month leasethat commenced on May 1, 2014. The Jersey City office lease, amended on November 6, 2014, expires on November 30, 2018 and theCompany has the option to extend the term for an additional five years. In addition to paying rent, under the terms of the Jersey Cityoffice lease the Company is also required to pay its pro rata share of the property’s operating expenses. The Company entered into asub-lease agreement on May 22, 2015 for an office in Michigan. The term for the office space is month to month. Rent expense for thethree months ended December 31, 2015 and 2014 was $98,150 and $56,616, respectively. Minimum future rental payments under non-cancellable operating leases with terms in excess of one year as of December 31, 2015 for the next five years and in the aggregate are:

2016 $ 329,360 2017 269,982 2018 235,224 2019 - $ 834,566

24


Incentive Compensation

On November 21, 2014, the Company approved a compensation plan for the executive officers of the Company which provides forthe payment of a cash bonus and an equity grant of performance options to the Company’s Chief Executive Officer and its ChiefFinancial Officer (the “Executives”). Each Executive is eligible for an annual cash bonus, based upon net revenue, gross margins, andindividual key performance indicators, set annually by the Company’s Compensation Committee (the “Target Performance”). For thefiscal year ended September 30, 2015, the target bonus for the Chief Executive Officer was 50% of his base salary and for the ChiefFinancial Officer, the target bonus was 40% of his base salary. Eighty percent of the cash bonus is based upon the target net revenuesand gross margins of the Company with 20% of the cash bonus based upon individual key performance indicators. Fifty percent of thetarget cash bonus will be paid if threshold performance of 80% of the Target Performance is achieved, 100% of the target cash bonuswill be paid if the Target Performance is reached, with 150% of the cash bonus paid if 120% of the Target Performance is achieved. Asof December 31, 2015, the Company has paid $172,437 in compensation expense for the incentive cash bonuses. The equity grantcomponent of the compensation plan provided for the grant of 105,000 performance options to purchase shares of common stock tothe Chief Executive Officer and 42,000 performance options to purchase shares of common stock to the Chief Financial Officer, withthe number of performance options to be received by each of the Executives based upon the achievement by the Company of certainnet revenues and gross margins targets. The performance options vest in three year increments commencing on the grant date and areexercisable at a price of $2.805. Based upon the Target Performance for the fiscal year ended September 30, 2105, our ChiefExecutive Officer earned 63,090 options and our Chief Financial Officer earned 25,236 options. During the three months endedDecember 31, 2015, the company recognized $19,682 in stock compensation expense for the performance options.

For the fiscal year ending September 30, 2016, the target bonus for the Chief Executive Officer is 50% of his base salary, and for theChief Financial Officer the target bonus is 40% of his base salary. Seventy percent of the target cash bonus will be paid if thresholdperformance of 70% of the Target Performance is achieved, 100% of the target cash bonus will be paid if the Target Performance isreached, with 120% of the cash bonus paid if 120% of the Target Performance is achieved. As of December 31, 2015, the Companyhas accrued $52,080 in compensation expense for the potential incentive cash bonuses. The equity grant component of thecompensation plan provides for the grant of 150,000 performance options to purchase shares of Company common stock to the ChiefExecutive Officer and 70,000 performance options to purchase shares of Company common stock to the Chief Financial Officer, withthe number of performance options to be received by each of the Executives based upon the achievement of the Target Performance.The performance options will vest in three year increments commencing on the grant date and are exercisable at a price of $3.51.During the three months ended December 31, 2015, the Company recognized $26,324 in stock compensation expense for theperformance options.

25


16. DoubleVision Acquisition

On July 24, 2014, the Company acquired all of the outstanding capital stock of DoubleVision, a provider of mobile media for clientslooking to place advertisements in mobile devices based on real-time data. With this acquisition, the Company integratedDoubleVision’s ability to provide real-time advertising in its mobile media market with our product offerings. The contractual pricefor the acquisition was $3,680,000, which was paid by issuing 800,000 shares of the Company’s common stock to DoubleVision’sshareholders at an agreed-upon valuation of $4.10 per share, plus a cash payment of $400,000 to one of DoubleVision’s creditors. In addition to the initial purchase price, the agreement called for $1,000,000 in contingent consideration based on the Companyachieving $3,000,000 in media placement revenue in the twelve months ended July 31, 2015. At March 31, 2015, the Companyrecorded the additional $1,000,000 purchase price payable in anticipation of achieving the revenue milestone and increased thegoodwill to $4,482,884. During the year ended September 30, 2015, the Company issued 296,402 of its common stock at $3.60 pershare for an aggregate amount of $1,067,044 in satisfaction of the purchase price payable and increased goodwill by $67,044.

As of December 31, 2015, the allocation of the purchase price to the assets acquired and liabilities assumed on the acquisition date wasas follows:

Cash and cash equivalents $ 10,102 Accounts receivable 43,574 Note receivable 10,000 Machinery and equipment 21,764 Software development costs 260,524 Security deposit 6,150 Goodwill 3,482,884 Accounts payable (154,998) Total purchase price $ 3,680,000

26


The following table summarizes the fair value of identifiable intangible assets acquired: Software development costs $ 260,524 Total intangible assets acquired, excluding goodwill $ 260,524

The excess of the fair value of the total consideration over the estimated fair value of the net assets was recorded as goodwill, whichwas primarily attributable to the synergies expected from combining the technologies, including complementary products that willenhance the Company’s overall product portfolio, and the value of the workforce that became our employees following the closing ofthe acquisition. The goodwill recognized is not deductible for income tax purposes.

Pro forma Information

The following unaudited pro forma information presents the consolidated results of operation of the Company as if the acquisitioncompleted during the year ended September 30, 2014 had occurred at the beginning of the applicable annual reporting period, with proforma adjustments to give effect to intercompany transactions to be eliminated, amortization of intangible assets, share-basedcompensation, and transaction costs directly associated with the acquisition:

Net revenue $10,681,740 Net loss (4,046,089) Net loss per share (0.30) Net loss per share-diluted (0.30)

These unaudited pro forma condensed consolidated financial results have been prepared for illustrative purposes only and do notpurport to be indicative of the results of operations that actually would have resulted had the acquisition occurred on the first day of theearliest period presented, or of the future results of the consolidated entities. The unaudited pro forma consolidated financialinformation does not reflect any operating efficiencies and cost savings that may be realized from the integration of the acquisition.

27


17. Hipcricket Acquisition

On July 8, 2015, the Company, Hipcricket, Inc. and, solely as a guarantor of Hipcricket’s indemnity obligations, ESW Capital LLCentered into an Asset Purchase Agreement pursuant to which the Company acquired assets of Hipcricket’s mobile advertising business.The Company paid a consideration of $1,300,000 in cash and issued to Hipcricket 620,560 shares of the Company’s common stockthat the parties agreed to value at $2,544,297. The Company acquired all rights in, to contracts with Hipcricket’s mobile advertisingcustomers, customer lists and records as well as certain intellectual assets and properties used in Hipcricket’s mobile advertisingbusiness. The Company hired certain employees of Hipcricket to service the Hipcricket customers which we acquired.

As of December 31, 2015, the allocation of the purchase price to the assets acquired and liabilities assumed on the acquisition date wasas follows:

Technology $ 970,000 Customer relationships 870,000 Backlog 110,000 Goodwill 1,894,297 Total purchase price $ 3,844,297

The following table summarizes the fair value of identifiable intangible assets acquired: Technology $ 970,000 Customer relationships 870,000 Backlog 110,000 Total intangible assets acquired, excluding goodwill $ 1,950,000

The excess of the fair value of the total consideration over the estimated fair value of the net assets was recorded as goodwill, whichwas primarily attributable to the synergies expected from combining the technologies, including complementary products that willenhance the Company’s overall product portfolio, and the value of the workforce that became our employees following the closing ofthe acquisition. The goodwill recognized is deductible for income tax purposes.

28


Pro forma Information

The following unaudited pro forma information presents the consolidated results of operation of the Company as if the acquisitioncompleted during the year ended September 30, 2015 had occurred at the beginning of the applicable annual reporting period, with proforma adjustments to give effect to intercompany transactions to be eliminated, amortization of intangible assets, share-basedcompensation, and transaction costs directly associated with the acquisition:

Net revenue $ 21,373,171 Net loss (10,083,640) Net loss per share (0.65) Net loss per share-diluted (0.65)

These unaudited pro forma condensed consolidated financial results have been prepared for illustrative purposes only and do notpurport to be indicative of the results of operations that actually would have resulted had the acquisition occurred on the first day of theearliest period presented, or of the future results of the consolidated entities. The unaudited pro forma consolidated financialinformation does not reflect any operating efficiencies and cost savings that may be realized from the integration of the acquisition.

29

Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations

This report contains forward-looking statements. These forward-looking statements include, without limitation, statements containing thewords “believes,”“anticipates,”“expects,”“intends,”“projects,”“will,” and other words of similar import or the negative of those termsor expressions. Forward-looking statements in this report include, but are not limited to, expectations of future levels of research anddevelopment spending, general and administrative spending, levels of capital expenditures and operating results, sufficiency of our capitalresources, our intention to pursue and consummate strategic opportunities available to us, including sales of certain of our assets.Forward-looking statements subject to certain known and unknown risks, uncertainties and other factors that may cause our actual results,performance or achievements to be materially different from any future results, performance or achievements expressed or implied by suchforward-looking statements. These risks and uncertainties include, but are not limited to those described in “Risk Factors” of the reportsfiled with the Securities and Exchange Commission.

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included elsewhereherein.

Overview

We provide a mobile engagement platform that enables brands to increase awareness, loyalty, and ultimately sales.

Our business has focused on leveraging our solution in the areas of messaging/notifications and media placement on mobile devices. OurVerified Walk-In platform is a proprietary attribution technology that utilizes geo-fencing to reach customers within a certain radius oflocation and uses technology to push coupons, advertisements, and promotions to mobile apps and mobile websites in real-time, allowingfor a more accurate advertising approach. This technology identifies consumers who visit physical storefronts after seeing advertisementsthat we distribute. This platform allows our clients to assess mobile-to-offline attribution allowing the ability to quantify and measure theimpact of campaigns on in-store visits, leveraging real-time insights on campaign performance through key metrics such as userdemographics, psychographics, visitation rates, click-through and time of engagement.

Our portfolio of intellectual property represents our many years’ of innovation in the wireless industry through patented technology that wedeveloped, as well as patented technology we purchased from Microsoft and others. We are dedicated to the monetization of our patents,primarily through licensing agreements that allow others to use our patents in exchange for royalty income and other consideration.

As we expand operational activities and seek new opportunities to monetize our patented technology, we may from time to time experienceoperating losses and/or negative cash flows from operations and we may be required to obtain additional financing to fund operations.There can be no assurance that such financing will be available to us. We are heavily reliant on the revenue we generate from a singlecustomer relationship. Our core mobile media business operates in a relatively new and evolving industry that seeks to gain a larger share ofbusiness spending which has traditionally been directed toward older established media solutions. There can be no assurance that we willbe successful in addressing these challenges and others that we face, and the failure to do so can have a material adverse effect on ourbusiness prospects, financial condition and results of operations.

Results of Operations

Results of Operations for the Three Months Ended December 31, 2015 and 2014

During the three months ended December 31, 2015, our revenue increased by 87% over revenue generated during the three months endedDecember 31, 2014 ($7,213,123 in the three months ended December 31, 2015 compared to $3,847,436 in the three months endedDecember 31, 2014). Our revenue growth was comprised of a $4,056,381 or 315% increase in media placement revenue, a $802,441 or33% decrease in wireless application revenues and a $111,747 or 84% increase in licensing and royalty revenue. Media placement revenueincreased as a result of expanding our direct sales force and acquiring the Hipcricket, Inc. mobile advertising business in July 2015. Mediaplacement revenue has increased on a sequential quarterly basis for each quarter since we launched the business in December 2013.Wireless applications revenue declined primarily due to a decrease in the number of text and voice messages that we sent on behalf of ourlargest customer within our AT&T relationship. During the first six months of fiscal 2015, the customer transitioned its database ofcustomers who receive our messages to a new standard rate messaging program and the transition caused a decline in the number ofcustomers who elected to continue to receive messages. The increase in licensing and royalty revenue resulted from $100,000 in additionalrevenue from an amendment in December 3, 2015 to our agreement with Zoove Corporation.

30

Of our revenue earned during the three months ended December 31, 2015, approximately 21% was generated from contracts with fivecustomers covered under our agreements with AT&T. Of our revenue earned during the quarter ended December 31, 2014, approximately64% was generated from contracts with five customers covered under our agreements with AT&T.

Our cost of revenue, which represents the costs associated with wireless applications and media placement revenues, increased $1,601,069or 86% to $3,449,256 for the three months ended December 31, 2015 as compared to $1,848,187 for the three months ended December 31,2014. Our cost of revenue varies substantially in line with wireless applications and media placement revenues and includes depreciationand amortization expense of our mobile engagement technology platforms that we use to operate our wireless applications and mediaplacement business. Cost of revenue for the three months ended December 31, 2015 increased as compared to the three months December31, 2014 primarily as result of the 315% increase in media placement revenues over the same comparable periods and an $96,229 increasein software development amortization expense. For the three months ended December 31, 2015 and 2014, software development costamortization and depreciation expense included in cost of revenue was $219,776 and $123,547, respectively. General and administrative expense, excluding stock based compensation, was $1,488,309 for the three months ended December 31, 2015as compared to $1,197,809 for the three months ended December 31, 2014, an increase of $290,500 or 20%, that is primarily attributable tothe increased number of our personnel and increased expenditure for professional services. We include research and development expensein general and administrative expense, and for the three months ended December 31, 2015, the expense decreased to $8,865 from $10,316in the three months ended December 31, 2014. Our technology investment in revenue growth is focused on our mobile engagementplatform through software development efforts. We capitalize the cost of developing our mobile engagement platform and amortize ourinvestment over three years. For the three-month periods ended December 31, 2015 and 2014, we recognized $219,776 and $123,547,respectively, in amortization of software development costs, with the increased amortization attributable to the increased investment indeveloping our platform.

Sales and marketing expense, excluding stock based compensation, was $1,809,820 for the three months ended December 31, 2015 ascompared to $663,986 for the three months ended December 31, 2014, an increase of $1,145,834 or 173%, that is primarily attributable toincreased sales and marketing spending, including expansion of our direct sales force and customer management personnel in connectionwith our media placement business that we launched in December 2013 and expanded by acquiring Hipcricket’s mobile advertisingbusiness in July 2015. As a percentage of revenue, sales and marketing expense was 25% and 17% for the three-month periods endedDecember 31, 2015 and 2014, respectively, a 45% increase in the percentage of revenue. Our media placement revenues have carriedrelatively higher spending levels than our wireless application revenues. Sales and marketing expense has increased in line with mediaplacement revenue growing to 74% of total revenue in the current quarter from 34% in the comparable quarter last year.

31

For the three months ended December 31, 2015, total stock based compensation expense decreased 15% to $153,928 from $180,814 for thethree months ended December 31, 2014. The decrease is attributable to fewer stock based compensation issuances as part of our effort toreduce the number of issued and potentially issuable shares of our common stock.

Interest expense for the three months ended December 31, 2015 and 2014 was $471,799 and $417,378, respectively, an increase of $54,421or 13%. The increase in interest expense is attributable to the principal of our Note to Fortress being outstanding for the full quarter endedDecember 31, 2015 as compared to a partial quarter in the preceding year. In October 2014, we sold a secured $10,000,000 42-month notehaving an interest rate of 9% plus the greater of LIBOR, which was 0.36% as of December 31, 2015, or 1%. Included in interest expensefor the three months ended December 31, 2015 is $183,242 in amortization of discounts on the debt for a structuring fee, termination feesand the rights assigned to Fortress to share in our potential future new intellectual property monetization revenue streams. Our net loss for the three months ended December 31, 2015 was $388,079 as compared to a net loss of $536,251 for the three monthsended December 31, 2014, a decrease of $148,172 or 28% that is primarily attributable to the $4,046,381 increase in media placementrevenue that was partially offset by the $1,601,069 increase in cost of revenue, the $1,145,834 increase in sales and marketing expense, netof stock compensation expense, and $54,421 increase in interest expense. Excluding stock based compensation, our net loss for the threemonth periods ended December 31, 2015 and 2014 were $234,151 and $355,437, respectively. Our net loss on a basic and fully diluted basis was $0.02 per share the three months ended December 31, 2015 based on our weightedaverage shares outstanding of 17,155,478 as compared to a net loss of $0.03 per share for the three months ended December 31, 2014 basedon our weighted average shares outstanding of 15,326,275. The increase in the number of weighted shares outstanding primarily reflectsthe issuance of shares of common stock, of which 833,700 shares were issued for warrants which were exercised, 261,954 shares wereissued to Fortress, 70,000 shares were issued for consulting services, 296,401 were issued to DoubleVision in satisfaction of the earnoutprovision and 620,560 shares were issued for the acquisition of Hipcricket’s mobile advertising business. Liquidity and Capital Resources

At December 31, 2015, we had total assets of $20,863,090, including $9,012,714 in current assets, and total liabilities of $15,633,490,including $10,692,323 in current liabilities. At September 30, 2015, we had total assets of $18,598,680, including $6,582,226 in currentassets, and total liabilities of $13,284,984, including $7,587,837 in current liabilities. The $2,264,410 or 12% increase in assets is primarilyattributable to the increase in current assets that largely consisted of a $611,045 increase in cash attributable to net positive operating cashflows and the $1,783,357 increase in accounts receivable attributable to increased revenues. The $2,348,506 increase in liabilities isprimarily attributable to the increase in current liabilities that largely consisted of a $2,546,411 increase in accounts payable attributable tothe growth in our costs of revenue and operations that resulted from the expansion of our business. During the three months ended December 31, 2015, we generated $1,644,035 in cash for operating activities that is primarily attributable toour net loss for the period that was partially offset by noncash expenses of $622,243 in depreciation and amortization expense and$153,928 in stock compensation expense. In addition, we used $1,783,357 for growth in our accounts receivable this quarter which hasresulted from increased media placement revenue, which typically remains outstanding in accounts receivable longer than our wirelessapplications revenue.

Cash used in investing activities for the three months ended December 31, 2015 was $511,396, of which $417,192 represented capitalizedinternal costs of our software development for our core operations, $71,013 was attributable to investments in our intellectual propertywhich is designed to strengthen our intellectual property portfolio and expand our mobile communications/advertising offerings, and$23,191 was attributable to purchases of property and equipment in connection with our personnel expansion.

32

Cash used in financing activities for the three months ended December 31, 2015 totaled $521,594, which primarily consisted of $666,668 inprincipal repayments on our Note to Fortress that was partially offset by $150,055 in proceeds from investors who purchased our commonstock by exercising warrants at share prices of $2.50 and $3.05.

Our Note to Fortress bears interest at a rate equal to 9% plus the greater of LIBOR or 1%, of which 2% per annum of the interest shall bepaid through the issuance of shares of common stock at maturity. The term of the Note is 42 months and we began making monthly interestpayments in October 2014. In October 2015, we began making monthly amortization payments on the Note, each in the amount of$333,334. We agreed to apply 85% of any revenues from new licensing and royalty arrangements that we generate using our patents(“Monetization Revenues”) to the payment of accrued and unpaid interest on, and then to repay outstanding principal (at par) of, the Noteuntil all amounts due with respect to the Note has been paid in full. After the repayment of the Note, we will pay Fortress up to 50% ofMonetization Revenues totaling (i) $5,000,000, if paid in full prior to March 31, 2018 and (ii) $7,500,000 thereafter. In addition, we mustalso pay $350,000 to Fortress upon repayment of the Note. We are seeking to increase our working capital to facilitate anticipated revenue growth, invest in our technology platform, develop ourpatent portfolio for new monetization opportunities and to improve liquidity. Over the next twelve months we believe that existing capitaland anticipated funds from operations may be sufficient to sustain current level of operations and debt service. Inasmuch as the Company ispursuing the monetization of its intellectual property, which plans are subject to change, additional external financing relating to suchefforts may be required. Increased acceleration in our core business, monthly principal payments on our debt and/or other economicinfluences might also necessitate additional financing.

There can be no assurance that we will be able obtain additional financing, if at all or upon terms that will be acceptable to us or ourexisting secured lender. As a result of the recent economic recession, and the continuing economic uncertainty, it has been difficult for companies to obtain equityor debt financing. While the credit markets have improved over the last year, it remains difficult for smaller companies to obtain financingon reasonable terms.

Any additional capital raised through the sale of equity or equity-backed securities may dilute current stockholders’ ownership percentagesand could also result in a decrease in the fair market value of our equity securities. The terms of the securities issued by us in future capitaltransactions may be more favorable to new investors and may include preferences, superior voting rights and the issuance of warrants orother derivative securities which may have a further dilutive effect.

If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish somerights to our technologies or our services or grant licenses on terms that are not favorable to us.

Furthermore, any additional debt or equity or other financing that we may need may not be available on terms favorable to us, or at all. Ifwe are unable to obtain required additional capital, we may have to curtail our growth plans or cut back on existing business. Further, wemay not be able to continue operations if we do not generate sufficient revenues from operations.

We may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees,securities law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expensesin connection with certain securities we issue, such as convertible notes and warrants, which may adversely impact our reported financialresults. Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements or financing activities with special purpose entities.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, whichhave been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financialstatements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Wehave identified the following accounting policies that we believe are key to an understanding of our financial statements. These areimportant accounting policies that require management’s most difficult, subjective judgments.

Revenue Recognition and Deferred Revenue

The Company recognizes media placement revenue based on the activity of mobile users viewing ads through developer applications andmobile websites. Media placement revenues are recognized when the Company’s advertising services are delivered based on the specificterms of the advertising contract, which are commonly based on the number of ads delivered, or views, clicks or actions by users on mobileadvertisements. At such time, the Company’s services have been provided, the fees charged are fixed or determinable, persuasive evidenceof an arrangement exists, and collectability is reasonably assured.

33

The Company evaluates whether it is appropriate to recognize media placement revenue based on the gross amount billed to the customersor the net amount earned as revenue. When the Company is primarily obligated in a transaction, has latitude in establishing prices,is responsible for fulfillment of the transaction, has credit risk, or has several but not all of these indicators, revenue is recorded on a grossbasis. While none of the factors individually are considered presumptive or determinative, in reaching conclusions on gross versus netrevenue recognition, the Company places the most weight on the analysis of whether or not it is the primary obligor in the arrangement.The Company records the net amounts as media placement revenue earned if it is not primarily obligated or does not have latitude inestablishing prices or credit risk. The Company recognizes wireless applications revenue based on the delivery of Short Message Service (SMS) text messages and voicemessages and messaging program management services. Wireless applications revenues are recognized when the Company’s services aredelivered based on the specific terms of the Company’s contracts with customers, which are commonly based on the number of messagesdelivered. At such time, the Company’s services have been provided, the fees charged are fixed or determinable, persuasive evidence of anarrangement exists, and collectability is reasonably assured. In general, licensing and royalty revenue arrangements provide for the payment of contractually determined fees in consideration for thepatented technologies owned by or controlled by the Company’s operating subsidiary. The intellectual property rights granted may beperpetual in nature, extending until the expiration of the related patents, or can be granted for a defined, relatively short period of time, withthe licensee possessing the right to renew the agreement at the end of each contractual term for an additional minimum upfront payment.Pursuant to the terms of these agreements, the Company’s operating subsidiary may have no further obligation with respect to the grant ofthe non-exclusive retroactive and future licenses, covenants-not-to-sue, releases, and other deliverables, including no express or impliedobligation on the Company’s operating subsidiary’s part to maintain or upgrade the technology, or provide future support or services.Generally, the agreements provide for the grant of licenses, covenants-not-to-sue, releases, and other significant deliverables upon theexecution of the agreement, or upon the receipt off the minimum upfront payment for term agreement renewals. As such, when theCompany has no further obligation under the agreement, the earnings process is complete and revenue is recognized upon the execution ofthe agreement, when collectability is reasonably assured, or upon receipt of the minimum upfront fee for term agreement renewals, andwhen all the other revenue recognition criteria have been met, otherwise the Company recognizes revenue on a straight-line basis over thelife of the agreement based on the contractually determined fees. Deferred revenue arises as a result of differences between the timing of revenue recognition and receipt of cash from the Company’scustomers. Software Development Costs

The Company accounts for costs incurred to develop or purchase computer software for internal use in accordance with ASC Topic 350-40“Internal-Use Software.” As required by ASC 350-40, the Company capitalizes the costs incurred during the application developmentstage, which include costs to design the software configuration and interfaces, coding, installation, and testing.

Costs incurred during the preliminary project stage along with post-implementation stages of internal use computer software are expensedas incurred. Capitalized development costs are amortized over a period of two to three years. Costs incurred to maintain existing productofferings are expensed as incurred. The capitalization and ongoing assessment of recoverability of development costs requires considerablejudgment by management with respect to certain external factors, including, but not limited to, technological and economic feasibility, andestimated economic life.

Long-Lived Assets

We account for our long-lived assets in accordance with Accounting Standards Codification (“ASC”) Topic 360-10-05, “Accounting for theImpairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment wheneverevents or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. We assessrecoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventualdisposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the differencebetween the asset’s carrying value and fair value or disposable value.

34

Fair Value Measurement

The Company complies with the provisions of ASC No. 820-10 (ASC 820-10), “Fair Value Measurements and Disclosures .” ASC 820-10relates to financial assets and financial liabilities. ASC 820-10 defines fair value, establishes a framework for measuring fair value inaccounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements.The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to beapplied prospectively with limited exceptions.

ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transactionbetween market participants at the measurement date. ASC 820-10 establishes a fair value hierarchy that distinguishes between (1) marketparticipant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s ownassumptions about market participant assumptions that are developed based on the best information available in the circumstances(unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted pricesin active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of thefair value hierarchy under ASC 820-10 are described below:

Level 1. Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.

Level 2. Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that arenot active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets orliabilities.

Level 3. Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets orliabilities.

Item 4 - Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Principal Executive Officer and Principal Financial Officer have evaluated the effectiveness of our disclosure controls andprocedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the“Exchange Act”). Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as ofthe end of the period covered by this report, our disclosure controls and procedures are effective in ensuring that information required to bedisclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within theperiods specified in the Commission’s rules and forms, and (2) accumulated and communicated to our management, including our ChiefExecutive Officer and Chief Financial Officer or persons performing similar functions, as appropriate to allow timely decisions regardingrequired disclosure. Changes in Internal Control over Financial Reporting

We have not made a change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the ExchangeAct) during the fiscal quarter ended December 31, 2015 that has materially affected, or is reasonably likely to materially affect, our internalcontrol over financial reporting.

Internal control systems, no matter how well designed and operated, have inherent limitations. Therefore, even a system which isdetermined to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systems ofinternal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.

35

Under the oversight of the Audit Committee, Management will continue to review and make any changes it deems necessary to the overalldesign of the Company’s internal control over financial reporting, including implementing improvements in policies and procedures. Weare committed to a proper internal control environment and will continue to implement measures to improve the Company’s internal controlover financial reporting in response to our continued operational development.

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings To the best of our knowledge, we are not a party to any legal proceedings that, individually or in the aggregate, are deemed to be material toour financial condition or results of operations.

Item 1A - Risk Factors

Our Annual Report on Form 10-K for the year ended September 31, 2015, Part I –Item 1A, Risk Factors, describes important risk factorsthat could cause our business, financial condition, results of operations and growth prospects to differ materially from those indicated orsuggested by forward-looking statements made in this Form 10-Q or presented elsewhere by management from time to time.

There have been no material changes in our risk factors since the filing of our Annual Report on Form 10-K for our fiscal year endedSeptember 30, 2015.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3 - Defaults Upon Senior Securities

No disclosure required.

Item 4 - Mine Safety Disclosures


Item 5 - Other Information


36

Item 6 - Exhibits

Index to Exhibits

Exhibit No. Description10.1 Amendment 9 to Service Agreement 20071210.103.C by and between the Company and AT&T Services, Inc. dated

December 24, 2015.10.2 Amended and Restated Service Agreement 20071210.103.C by and between the Company and AT&T Services, Inc. dated

January 4, 2016.31.1* Certification of Principal Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.31.2* Certification of Principal Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.32.1* Certification of Principal 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 Principal 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 Taxonomy Extension Schema Document.101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document.101.DEF** XBRL Taxonomy Extension Definition Linkbase Document.101.LAB** XBRL Taxonomy Extension Label Linkbase Document.101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document.

* Filed herewith** Furnished herewith

37

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 bythe undersigned, thereunto duly authorized.

SITO Mobile Ltd. Date: February 9, 2016 By: /s/ Jerry Hug Jerry Hug, Chief Executive Officer (Principal Executive Officer) Date: February 9, 2016 By: /s/ Kurt Streams Kurt Streams, Chief Financial Officer (Principal Financial and Accounting Officer)

38

Exhibit 10.1

Amendment 9

to

Service Agreement 20071210.103.C

Between

SITO MOBILE SOLUTIONS, INC. (f/k/a Single Touch Interactive, Inc.)

and

AT&T Services, Inc.

Proprietary and ConfidentialThis Amendment and information contained therein is not for use or disclosure outside of AT&T, its Affiliates, and third party

representatives, and Supplier except under written agreement by the contracting Parties.

1

Amendment 9

to Agreement No. 20071210.103.C

This Amendment 009 is effective on day last Party signs (“Effective Date”), and amends and restates Agreement 20071210.A.103.C, whichis by and between SITO Mobile Solutions, Inc. (f/n/a Single Touch Interactive, Inc.), a Nevada corporation (“Supplier”) and AT&TServices, Inc., a Delaware corporation, on behalf of itself and its Affiliates (“AT&T”). AT&T and Supplier may each be referred to in thesingular as a “Party” or in the plural as the “Parties”).

WITNESSETH

WHEREAS, Supplier and AT&T entered into this Service Agreement, No. 20071210.103.C effective April 11, 2008, including subsequentamendments (the “Original Agreement”); and

WHEREAS, the Agreement expired by its terms on May 15, 2015 (“Expiration Date”);

WHEREAS, after such Expiration Date, the Parties continued to perform under the Agreement as if it had not expired, and with theintention of extending its term;

WHEREAS, AT&T and Supplier now desire to revive the Agreement and to extend its term and to formalize the validity and continuationof the Agreement since its Effective Date; and

WHEREAS, Supplier and AT&T desire to amend the Agreement as hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained, the Parties hereto agree as follows:

1. The Parties agree to revive the Agreement and to extend its term as set forth below and agree that it shall be deemed to have beenin effect continuously since its Effective Date of April 11, 2008. The Parties further agree to ratify all past actions taken between theabove-referenced Expiration Date and the Amendment Effective Date.

2. Amend and Restate Agreement 20071210.103.C as attached herein.

The terms and conditions of the Agreement in all other respects remain unmodified and in full force and effect. Original signaturestransmitted and received via facsimile or other electronic transmission of a scanned document, (e.g., .pdf or similar format) are true andvalid signatures for all purposes hereunder and shall bind the Parties to the same extent as that of an original signature. This Amendmentmay be executed in multiple counterparts, each of which shall be deemed to constitute an original but all of which together shall constituteonly one document.



2

IN WITNESS WHEREOF, the Parties have caused this Amendment to the Agreement to be executed, as of the Effective Date. SITO MOBILE SOLUTIONS, INC AT&T Services, Inc. By: /s/ Kurt Streams By: /s/ Laurie Szczepanek Printed Name: Kurt Streams Printed Name: Senior Contract Manager Title: CFO Title: Senior Contract Manager Date: 12/23/2015 Date: 12/24/2015


representatives, and Supplier except under written agreement by the contracting Parties. 3

Exhibit 10.2

Amended and Restated Service Agreement

20071210.103.C

Between

SITO MOBILE SOLUTIONS, INC. (f/k/a Single Touch Interactive, Inc.)

and

AT&T Services, Inc.



1

20071210.103.C

TABLE OF CONTENTS 1.0 Preamble 5 1.1 Preamble and Effective Date 5 1.2 Scope of Agreement 5 2.0 Definitions 5 2.1 Accept or Acceptance 5 2.2 Acceptance Date 5 2.3 Affiliate 5 2.4 Agreement 6 2.5 Cancel or Cancellation 6 2.6 Deliver or Delivery 6 2.7 Delivery Date 6 2.8 Documentation or Program Material 6 2.9 End User 6 2.10 Information 6 2.11 Material 6 2.12 Order 7 2.13 Service(s) 7 2.14 Specifications 7 2.15 Terminate or Termination 7 2.16 Work 7 2.17 Customer Information 7 2.18 Software 7 2.19 Harmful Code 8 2.20 Special Terms and Conditions 8 2.21 Vulnerability 8 3.0 General Terms 8 3.1 Affiliate 8 3.2 Amendments and Waivers 8 3.3 Anticipated Delays in Delivery and Performance 9 3.4 Assignment and Delegation 9 3.5 Cancellation and Termination 10 3.6 Compliance with Laws 11 3.7 Conflict of Interest 11 3.8 Construction and Interpretation 12 3.9 Cumulative Remedies 12 3.10 Delivery, Performance and Acceptance 12 3.11 Duration of Agreement 12 3.12 Entire Agreement 13 3.13 Force Majeure 13 3.14 Governing Law 14 3.15 Government Contract Provisions 14 3.16 Indemnity 15 3.17 Information 16 3.18 Infringement 18 3.19 Insurance 20

2

3.20 Invoicing and Payment 22 3.21 Licenses and Patents 23 3.22 Limitation of Damages 23 3.23 Most Favored Customer 23 3.24 Non-Exclusive Market 23 3.25 Notices 24 3.26 Order of Precedence 25 3.27 Orders 25 3.28 Price 25 3.29 Publicity 26 3.30 Quality Assurance 26 3.31 Records and Audits 28 3.32 Severability. 30 3.33 Survival of Obligations 30 3.34 Third Party Administrative Services 30 3.35 Transaction Costs 30 3.36 Utilization of, Minority, Women, and Disabled Veteran Owned Business Enterprises 31 3.37 Warranty 31 3.38 Work Done By Others 32 3.39 Ethical Business Practice 32 3.40 Incidental Development ownership and Use of Rights and Items 33 3.41 Labor Disputes 35 3.42 Offshore Work Prohibited 35 3.43 Taxes 35 4.0 Special Terms 36 4.1 Access 36 4.2 Background Checks 37 4.3 Customer - Information 38 4.4 Electronic Data Interchange (EDI) 40 4.5 Entry on AT&T Property 40 4.6 Independent Contractor 41 4.7 Reimbursable Expenses 42 4.8 Technical Support 42 4.9 Payment Card Industry 43 4.10 AT&T Data and AT&T Derived Data (Big Data) 43 4.11 Supplier Assessment 45 4.12 Citizenship and Sustainability 46 4.13 Supplier’s Material Warranty 46

3

5.0 AT&T Supplier Information Security Requirements (SISR) 47 6.0 Execution of Agreement 47 6.1 Transmission of Original Signatures and Executing Multiple Counterparts 47 Appendices Appendix A - Description of Services & Deliverables Appendix B – Pricing Methodology Appendix C – Service Level Agreement Appendix J - Order/Statement of Work Appendix O - AT&T Supplier Information Security Requirements (SISR) Appendix Z - Vendor Expense Policy

4

1.0 Preamble

1.1 Preamble and Effective Date This Agreement, effective on the date when signed by the last Party (“Effective Date”), is between SITO Mobile Solutions, Inc. (f/k/aSingle Touch Interactive, Inc.), a Nevada corporation (hereinafter referred to as “Supplier”), and AT&T Services, Inc., a DelawareCorporation (hereinafter referred to as “AT&T”), each of which may be referred to in the singular as “Party” or in the plural as “Parties.”

1.2 Scope of Agreement

a. Supplier shall provide to AT&T the Material and Services described in Appendix A, subject to the terms and conditions of thisAgreement and pursuant to and in conformance with Orders, Change Orders and Vendor Statements of Work (“VSOW”)(hereinafter referred to as “Orders”)submitted by AT&T and approved by the Parties. The applicable price for the Material andServices is specified in Appendix B or in an Order. Supplier shall not reject any Order for material or Services described inAppendix A unless the Order includes:

1. Delivery Dates to which Supplier has not agreed, prior to the placement of the Order, and which supplier is unable to meet;

2. Special Terms and conditions to which Supplier has not agreed, prior to placement of the Order, and which are

objectionable to Supplier; or

3. prices to which Supplier has not agreed, prior to placement of the Order, and which are objectionable to Supplier.

b. If Supplier rejects an Order, Supplier shall give AT&T written notice stating Supplier’s reasons for rejecting the Order and themodifications, if any, that would make the Order acceptable to Supplier. Supplier shall furnish Materials that conform strictly tothe Specifications established under this Agreement. If Supplier is unable to tender conforming Material, Supplier shall nottender non-conforming Material; the parties agree non-conforming tenders are not an accommodation to AT&T. All DeliveryDates are firm, and time is of the essence.

2.0 Definitions

2.1 Accept or Acceptance “Accept” or “Acceptance” means AT&T's acceptance of the Material or Services ordered by AT&T and provided by Supplier asspecified in Section, Delivery, Performance, and Acceptance. AT&T's Acceptance shall occur no earlier than Supplier's Delivery ofMaterial and/or Services in strict compliance with the Specifications.

2.2 Acceptance Date “Acceptance Date” means the date on which AT&T Accepts Material or Services.

2.3 Affiliate “Affiliate” means a business association that has legal capacity to contract on its own behalf, to sue in its own name, and to be sued, if andonly if either (a) such business association owns, directly or indirectly, a majority interest in AT&T (its "parent company"), or (b) a thirtypercent (30%) or greater interest in such business association is owned, either directly or indirectly, by AT&T or its parent company.



5

2.4 Agreement

“Agreement” means the written agreement between the Parties as set forth in this document and the attached appendices and shall includethe terms of such other documents as they are incorporated by express reference in this document and the attached appendices.

2.5 Cancel or Cancellation “Cancel” means to put an end to this Agreement or any Order for breach by the other Party. “Cancellation” means an exercise of a remedy of a Party entitled to Cancel.

2.6 Deliver or Delivery “Deliver” or “Delivery” occurs (a) for Material, upon (1) AT&T's possession of Material at the destination specified in the Order, ifSupplier is not required to provide additional Services (such as installation, configuration, or modification, for example) at the destination,in connection with providing Material, or (2) Supplier’s completion of such additional Services, if Supplier is required to provide suchadditional Services at the destination in connection with providing Material, and (b) for Services, upon complete provision of the Services.

2.7 Delivery Date “Delivery Date” means the date on which Supplier is scheduled to complete its Delivery, as established in an Order or this Agreement.

2.8 Documentation or Program Material “Documentation” or “Program Material” means all documentation, including, but not limited to, user instructions, and trainingmaterials.

2.9 End User “End User” means the individual(s) utilizing the Materials and Services provided by the Supplier.

2.10 Information “Information”, with respect to a Party, means all confidential, proprietary or trade secret information, including discoveries, ideas,concepts, know-how, techniques, processes, procedures, designs, specifications, strategic information, proposals, requests for proposals,proposed products, drawings, blueprints, tracings, diagrams, models, samples, flow charts, data, computer programs, marketing plans,Customer Information (including, Internet activities, history, and/or patterns of use), employee personal information, health or financialinformation, authentication credentials, and other technical, financial or business information, whether disclosed in writing, orally, visually,in tangible or intangible form, including in electronic mail or by other electronic communication.

2.11 Material “Material” means a unit of equipment, apparatus, components, tools, supplies, material, Documentation, Hardware, or firmware thereto, orSoftware purchased or licensed hereunder by AT&T from Supplier and includes third party Material provided or furnished by Supplier.Material shall be deemed to include any replacement parts.



6

2.12 Order

“Order” means such paper or electronic records as AT&T may send to Supplier for the purpose of ordering Material and Serviceshereunder; including change orders and vendor statements of work.

2.13 Service(s) “Services” means any labor or service provided in connection with this Agreement or any Order, including, Supplier’s (a) consultation,professional, technical, and engineering services, creation or development of Software, installation and removal services, maintenance,training, technical support, repair, programming, and on-site support ancillary to the acquisition of Material, and (b) provision of anyServices-related Material, including any Documentation.

2.14 Specifications “Specifications” means (i) Supplier's applicable specifications and descriptions, including any warranty statements, and (ii) AT&T'srequirements, specifications, and descriptions specified in, or attached to, this Agreement or an applicable Order, which shall control overan inconsistency with Supplier's specifications and descriptions.

2.15 Terminate or Termination “Terminate” means to put an end to this Agreement or any Order, either (a) by one Party, pursuant to law or a provision of this Agreement,otherwise than for a breach of the other Party, or (b) by both Parties, by mutual consent. “Termination” means an exercise of a power toTerminate

2.16 Work “Work” means all Material and Services, collectively, that Supplier is supplying pursuant to Orders placed under this Agreement.

2.17 Customer Information “Customer Information” includes, but is not limited to, customer name, address, phone number, any customer or employee personalinformation, credit card and credit related information, health or financial information, authentication credentials, information concerning acustomer’s calling patterns, unlisted customer numbers, any other information associated with a customer or with persons in the householdof a customer, and any information available to AT&T and/or its suppliers by virtue of AT&T’s relationship with its customers as aprovider of telecommunications, Internet, information or other services, including, but not limited to, the quantity, technical configuration,location, type, destination, amount of use of telecommunications or other services subscribed to, and information contained on thetelephone bills of AT&T’s customers pertaining to telephone exchange service, telephone toll service or other services received by acustomer of AT&T.

2.18 Software “Software” means any and all software in any form (including source code and object code), as well as any Documentation and ProgramMaterials, licensed or otherwise provided by or on behalf of Supplier



7

2.19 Harmful Code

“Harmful Code” means computer viruses, worms, trap doors, time bombs, undocumented passwords, disabling code (which rendersMaterial unusable until a patch or new password is provided), or any similar mechanism or device. Notwithstanding the above, enablingkeys which are provided by Supplier to ensure conformance to product licensing restrictions shall be permitted, however, these enablingkeys may not interfere with the proper use of the Material at any time after initial installation.

2.20 Special Terms and Conditions “Special Terms and Conditions” means written terms and conditions that are (a) different from or additional to the terms and conditionsset forth in this Agreement, (b) specially negotiated by the Parties in reference to an Order, (c) expressed in an Order or incorporated byreference to a document attached to an Order, such as a scope of work or statement of work, and (d) executed by both Parties.

2.21 Vulnerability “Vulnerability” means a condition in the instructions of the Software, whether consistent with its Specifications or not, that renders thecomputer on which the Software is operating susceptible to unauthorized access and use. 3.0 General Terms

3.1 Affiliate Supplier agrees that an Affiliate may transact business under this Agreement and place Orders with Supplier that incorporate the terms andconditions of this Agreement, and that the name “AT&T” is deemed to refer to an Affiliate, when an Affiliate places such an Order withSupplier under this Agreement, or when AT&T places an Order on behalf of an Affiliate, or when an Affiliate otherwise transacts businesswith Supplier under this Agreement. An Affiliate is solely responsible for its own obligations, including, but not limited to, all chargesincurred in connection with such an Order or transaction. Nothing in this Agreement is to be construed to require AT&T to indemnifySupplier, or otherwise assume responsibility, for any acts or omissions of an Affiliate, nor is anything in this Agreement to be construed torequire any Affiliate to indemnify Supplier, or to otherwise assume any responsibility for the acts or omissions of AT&T or any otherAffiliate.

3.2 Amendments and Waivers

a. The Parties may not amend this Agreement or an Order except by a written agreement of the Parties that identifies itself as anamendment to this Agreement or such Order and is signed by both Parties, or as otherwise expressly provided below in thisSection. No waiver of any right or condition for the benefit of a Party is effective unless given in writing and signed by the Partywaiving such right or condition for its benefit. No failure or delay in exercising any right or remedy under this Agreement or anOrder operates as a waiver or estoppel of any right or remedy; no failure or delay in requiring the satisfaction of any conditionunder this Agreement or an Order operates as a waiver or estoppel of any condition; and no course of dealing between the Partiesoperates as a waiver or estoppel of any right, remedy, or condition. A waiver on one occasion is effective only in that instance,and only for the purpose for which it is given, and is not to be construed as a waiver on any future occasion or against anyAffiliate other than the Affiliate that makes such waiver.



8

b. AT&T’s project manager may, at any time, make requested changes to the scope of Work, which shall be delivered in writing,

and Supplier shall not unreasonably withhold or condition its consent. An equitable adjustment, as reasonably determined bySupplier and mutually agreed to by AT&T, shall be made to the charges and schedule if such change to the scope substantiallyaffects the time of performance or the cost of the Work to be performed under this Agreement. Such cost adjustment shall bemade on the basis of the actual cost of the Work, unless otherwise agreed in writing.

3.3 Anticipated Delays in Delivery and Performance

If Supplier becomes aware of any event or circumstance that causes Supplier to anticipate a reasonably certain delay in its performance ofits obligations beyond the Delivery Date scheduled in the Order, Supplier shall immediately notify AT&T of the event or circumstance andthe length of the anticipated delay. If the events or circumstances causing the anticipated delay are not attributable to any failure of AT&T,then AT&T may Cancel the Order after receipt of such notification. If the events or circumstances may be attributable to the fault ofAT&T, to any extent, and the notice required by this Section fails to so attribute them, or if Supplier fails to give such notice, then suchfailure bars any claim or defense of Supplier based on the fault of AT&T known to Supplier at the time such notice was required. If for anyreason AT&T does not Cancel such Order after receipt of a notice under this Section, then AT&T and Supplier shall negotiate in good faithto modify the Order so as to extend the Delivery Date. If the Parties fail to reach agreement on an extended Delivery Date after negotiatingfor a reasonable time, or if Supplier fails to meet an extended Delivery Date, AT&T may Cancel the Order.

3.4 Assignment and Delegation Neither Party may assign, delegate, or otherwise transfer its rights or obligations under this Agreement, voluntarily or involuntarily,whether by merger, consolidation, dissolution, operation of law, or any other manner, without the prior written consent of the other Party,except as follows: Without securing the consent of the other Party, a Party may assign its rights, or delegate its duties, or both, in whole orin part, to any present or future Affiliate of the Party; or to any third party that assumes the operation of or otherwise acquires anysubstantial portion of the business of the Party affected by this Agreement or an Order; and, subject to the written approval of AT&T,Supplier may subcontract its performance in accordance with any subcontracting plan incorporated into this Agreement or any Order; and,both Parties may assign their respective right to receive money due hereunder, but any assignment of money will be void if (i) the assignorfails to give the non- assigning Party at least thirty (30) days prior written notice, or (ii) the assignment purports to impose upon the non-assigning Party additional costs or obligations in addition to the payment of such money, or (iii) the assignment purports to preclude AT&Tfrom dealing solely and directly with Supplier in all matters pertaining to this Agreement. Any assignment, delegation or transfer for whichconsent is required hereby and which is made without such consent given in writing will be void. This Agreement binds and benefits bothParties and their permitted successors and assigns.



9

3.5 Cancellation and Termination

a. Cancellation

Neither Party shall Cancel this Agreement nor any Order until such Party has first given the other Party a written notice specifying thebreach that justifies Cancellation. If the breach is one that by its nature could be cured by the Party receiving such notice (no matter howlong it might take), neither Party shall Cancel unless such notice includes a written demand for cure of such breach and gives the receivingParty a reasonable period (which need never exceed thirty (30) days) in which to cure such breach. AT&T is not liable to Supplier fordetriment resulting from AT&T’s Cancellation of any Order.

b. Termination

1. AT&T may Terminate this Agreement or any Order at any time on thirty (30) days prior written notice to Supplier.

2. Transition Support: Upon Termination of this Agreement or any Order and for an agreed upon charge, Supplier willprovide AT&T with transition support to support transitioning to alternative or replacement services. The Parties will agreein writing to any transition support and related charges via a mutually executed change order to an existing Order. Thetransition period may be for a period not to exceed six (6) months. In the event AT&T is still procuring other servicesduring the transition period, AT&T will pay for such Services in addition to any mutually agreed to charges for theTransition Support.

3. Outstanding Orders will continue in effect according to 3.11 (b) Duration of the Agreement.

c. Termination Charges

1. If AT&T’s breach or unilateral Termination of any Order precludes Supplier from completing Delivery of Materials orServices or post Delivery of Materials of Services, then AT&T shall discharge any and all liability to Supplier fordetriment resulting from such breach or unilateral Termination by payment of an amount that does not exceed the greaterof:

i the price of such Materials and Services, as derived from the Order, or

ii the positive difference obtained by subtracting (A) the salvage value of the Materials and Services from (B) the actual

costs Supplier incurred to prepare the Materials or perform the Services up to the date of Termination or breach, asdetermined under Supplier’s normal cost accounting methods for inventory and work in process. For purposes of thisSection, “salvage value” includes the proceeds of the sale of the Material and Services to another customer and thecosts that Supplier avoids as a result of re-applying Materials and Services to meet other needs of AT&T, the needs ofother customers or Supplier’s own internal needs within ninety (90) days following the Delivery Date scheduled inthe Order. Supplier shall make reasonable efforts to maximize salvage value. All such costs, avoided costs, and valuesare subject to substantiation by proof satisfactory to AT&T before any payment may become due.



10

2. AT&T is not liable to Supplier for any detriment resulting from AT&T’s unilateral Termination of an Order for Materials

not specially manufactured for AT&T when AT&T’s Termination of such Order occurs more than thirty (30) days beforethe Delivery Date. If AT&T incurs a Termination charge as provided in this Section, and AT&T or an Affiliate places anOrder for Materials or Services equivalent to those for which such Termination charge is incurred, within sixty (60) daysafter AT&T incurs such Termination charge, then Supplier shall refund such Termination charge to AT&T. TheTermination charge provided in this Section constitutes Supplier’s sole and exclusive remedy for detriment resulting fromAT&T’s unilateral Termination of, or breach preventing Delivery under, an Order. AT&T is not liable for any TerminationCharges in any case when Termination results from the mutual agreement of the Parties.

b. Partial Termination and Partial Cancellation

Whenever law or a provision of this Agreement permits AT&T to Terminate or Cancel any Order, AT&T may, at its option, Terminate orCancel such Order either in whole or in part. If AT&T Terminates or Cancels an Order in part, AT&T shall pay only for such Materials andServices as AT&T Accepts at prices established under this Agreement or, if there are none, at prices calculated on the basis of suchpartially Terminated or Canceled Order, and, unless a Termination Charge applies, AT&T has no obligation to pay for such Materials orServices as AT&T does not Accept.

c. Cancellation of Related Orders Whenever law or a provision of this Agreement permits AT&T to Cancel any Order, AT&T may also Cancel such other Orders as related tothe same transaction or series of transactions as the Order in question and subject to Transition support by Supplier.

d. Further Remedies and Obligations upon Cancellation Upon Cancellation of an Order by AT&T, Supplier shall: (1) refund any amounts AT&T may have previously paid for Material orServices rejected or returned by AT&T; and (2) reimburse AT&T for any cost incurred in (a) returning such Materials to Supplier; and (b)restoring AT&T’s site to its previous condition. If AT&T returns or rejects any Material to which title has already passed, title in suchMaterial shall revert to Supplier when Supplier satisfies its refund and reimbursement obligations under the preceding sentences.

3.6 Compliance with Laws Each Party shall comply with all laws (including all statutes, ordinances, regulations, orders and codes, whether specifically mentionedelsewhere in this Agreement or not) attendant upon that Party’s performance under this Agreement and utilization of the Materials andServices, in every jurisdiction where Supplier performs or AT&T utilizes the Materials or receives the Services. Supplier shall procure allapprovals, bonds, certificates, insurance, inspections, licenses, and permits that such laws require for the performance of this Agreement.

3.7 Conflict of Interest Supplier represents and warrants that no officer, director, employee or agent of AT&T has been or will be employed, retained or paid a fee,or otherwise has received or will receive, any personal compensation or consideration, by or from Supplier or any of Supplier’s officers,directors, employees or agents in connection with the obtaining, arranging or negotiation of this Agreement or other documents entered intoor executed in connection with this Agreement.



11

3.8 Construction and Interpretation

a. This Agreement has been prepared jointly and has been the subject of arm’s length and careful negotiation. Each Party has been

given the opportunity to independently review this Agreement with legal counsel and other consultants, and each Party has therequisite experience and sophistication to understand, interpret and agree to the particular language of its provisions.Accordingly, the drafting of this Agreement is not to be attributed to either Party.

b. Article, Section and paragraph headings contained in this Agreement are for reference purposes only and are not to affect the

meaning or interpretation of this Agreement. The word “include” in every form means to include without limitation by virtue ofenumeration. Whenever this Agreement refers to a consent or approval to be given by either Party, such consent or approval iseffective only if given in writing and signed by the Party giving approval or consent. The singular use of words includes theplural and vice versa.

3.9 Cumulative Remedies

The rights and remedies of the Parties set forth in this Agreement are not exclusive of, but are cumulative to, any rights or remedies now orsubsequently existing at law, in equity, by statute or otherwise, except in those cases where this Agreement or an Order specifies that aparticular remedy is sole or exclusive, but neither Party may retain the benefit of inconsistent remedies. No single or partial exercise of anyright or remedy with respect to one breach of this Agreement or any Order precludes the simultaneous or subsequent exercise of any otherright or remedy with respect to the same or a different breach.

3.10 Delivery, Performance and Acceptance Services performed by Supplier shall be deemed to be Accepted by AT&T when Services are performed to AT&T’s satisfaction. Payments,including progress payments, if any, shall not be construed as Acceptance of Services performed up to the time of such payments. AT&Tshall notify Supplier of any Services considered to be unsatisfactory. Supplier shall, at no charge to AT&T, take prompt action to correctsuch unsatisfactory Services. If such unsatisfactory Services have not been corrected within a reasonable time (not to exceed twenty (20)working days from date of notification), AT&T may, in addition to all other rights and remedies provided by law or this Agreement, Cancelthis Agreement and/or any affected Order.

3.11 Duration of Agreement

a. This Agreement will continue in effect for a term expiring September 30, 2017, unless it is Cancelled or Terminated before thatdate. The parties may extend the term of this Agreement beyond that date by mutual written agreement.

b. Any Order in effect on the date when this Agreement expires or is Terminated or Cancelled will continue in effect until such

Order either (i) expires by its own terms or (ii) is separately Terminated or Cancelled, prior to its own expiration, as provided inthis Agreement. The terms and conditions of this Agreement shall continue to apply to such Order as if this Agreement were stillin effect.



12

3.12 Entire Agreement

This Agreement constitutes the final, complete, and exclusive expression of the Parties’ agreement on the matters contained in thisAgreement. All prior written and oral negotiations and agreements, and all contemporaneous oral negotiations and agreements, between theParties on the matters contained in this Agreement are expressly merged into and superseded by this Agreement. The Parties do not intendthat the provisions of this Agreement be explained, supplemented, or qualified through evidence of trade usage or any prior course ofdealings or any course of performance under any prior agreement. In entering into this Agreement, neither Party has relied upon anystatement, estimate, forecast, projection, representation, warranty, action or agreement of the other Party except for those expresslycontained in this Agreement. There are no conditions precedent to the effectiveness of this Agreement other than any expressly stated inthis Agreement.

3.13 Force Majeure

a. A Party is excused from performing its obligations under this Agreement or any Order if, to the extent that, and for so long as:

i. such Party’s performance is prevented or delayed by an act or event (other than economic hardship, changes in marketconditions, insufficiency of funds, or unavailability of equipment and supplies) that is beyond its reasonable control andcould not have been prevented or avoided by its exercise of due diligence; and

ii. such Party gives written notice to the other Party, as soon as practicable under the circumstances, of the act or event that so

prevents such Party from performing its obligations.

b. By way of illustration, and not by limitation, acts or events that may prevent or delay performance (as contemplated by thisSection) include: acts of God or the public enemy, acts of civil or military authority, terrorists acts, embargoes, epidemics, war,riots, insurrections, fires, explosions, earthquakes, floods, and labor disputes (even if AT&T is involved in the labor dispute).

c. If Supplier is the Party whose performance is prevented or delayed for more than three (3) weeks, AT&T may elect to with prior

written notice:

i. Terminate, in whole or in part, this Agreement and the affected Order, without any liability to Supplier, or

ii. suspend this Agreement and the affected Order or any part thereof for the duration of the delay; and (at AT&T’s option)obtain Material and Services elsewhere and deduct from any commitment, under this Agreement or such Order, thequantity of the Material and Services obtained elsewhere or for which commitments have been made elsewhere; andresume performance under this Agreement or such Order when Supplier resumes its performance; and (at AT&T’s option)extend any affected Delivery Date or performance date up to the length of time Supplier’s performance was delayed orprevented. If AT&T does not give any written notice, within thirty (30) days after receiving notice under this Section thatSupplier’s performance has been delayed or prevented, this option (ii) will be deemed to have been selected.



13

3.14 Governing Law

The laws of the State of Texas (excluding any laws that direct the application of another jurisdiction’s law) govern all matters arising out ofor relating to this Agreement and all of the transactions it contemplates, including its validity, interpretation, construction, performance, andenforcement.

3.15 Government Contract Provisions

a. To the extent that Supplier’s performance is subject to certain executive orders (including E.O. 11246 and E.O. 13201) andstatutes (including Section 503 of the Rehabilitation Act of 1973, as amended; the Vietnam Era Veteran’s ReadjustmentAssistance Act of 1974; Section 8116 of the Defense Appropriations Act for Fiscal Year 2010 (Pub. L. 111-118); and the Jobsfor Veterans Act) pertaining to government contractors, Supplier shall:

1. comply with such executive orders and statutes, and their implementing regulations, as amended from time to time; and

2. fulfill the obligations of a contractor under the clauses incorporated by this Section.

b. This Section incorporates the following clauses:

1. “Affirmative Action For Workers With Disabilities” (at 48 CFR §52.222-36);

2. “Employment Reports On Special Disabled Veterans, Veterans Of The Vietnam Era, and Other Eligible Veterans” (at 48

CFR §52.222-37);

3. “Equal Employment Opportunity” (at 48 CFR §52.222-26);

4. “Equal Employment Opportunity Clause” (at 41 CFR §60-1.4(a));

5. “Equal Opportunity For Special Disabled Veterans And Veterans of the Vietnam Era” (at 41 CFR §60-250.5);

6. “Equal Opportunity for Disabled Veterans, Recently Separated Veterans, Other Protected Veterans, and Armed ForcesService Medal Veterans” (at 41 CFR Sec. 60-300.5);

7. “Equal Opportunity For Workers With Disabilities” (at 41 CFR §60-741.5);

8. “Notice Of Employee Rights Concerning Payment Of Union Dues Or Fees” (at 29 CFR § 470.2);

9. “Notification Of Employee Rights Concerning Payment Of Union Dues Or Fees” (at 48 CFR §52.222-39);

10. “Prohibition of Segregated Facilities” (at 48 CFR §52.222-21);

11. “Small Business Subcontracting Plan” (at 48 CFR §52.219-9);

12. “Utilization Of Small Business Concerns” (at 48 CFR §52.219-8);

13. "Whistleblower Protections Under the American Recovery and Reinvestment Act of 2009") (FAR 52.203-15;

14. “American Recovery and Reinvestment Act - Reporting Requirements” (FAR 52.204-11);

15. “GAO/IG Access” (FAR 52.212-5(d) (Alt. II), FAR 52.214-26(c) (Alt. I), FAR 52.215-2(d) (Alt. I));

16. “Davis-Bacon Act” (FAR 52.222-6);

17. “Buy American Act” (FAR 52.225-21, FAR 52.225-22, FAR 52.225-23, & FAR 52.225-24)

18. “Whistleblower Protections” (Pub. L. No. 111-5, Section 1553);

19. “Award term—Reporting and registration requirements under section 1512 of the Recovery Act” (2 CFR 176.50);

20. “GAO/IG Access” (Pub. L. No. 111-5, Section 902, 1514 and 1515);



14

21. “Award term—Wage Rate Requirements under Section 1606 of the Recovery Act” (2 CFR 176.190); and

22. Buy American Requirements (2 CFR 176.140, 2 CFR 176.150, 2 CFR 176.160, & 2 CFR 176.170).

c. If an Order includes a statement that performance is intended for a government contract and incorporates additional government

contracting provisions, Supplier shall also fulfill the obligations of a contractor or offeror under those additional provisions.

3.16 Indemnity

a. Supplier shall indemnify, hold harmless, and defend AT&T, its Affiliates, and their agents and employees, in accordance withthis Section, against any Loss arising from or in connection with, or resulting from, the Materials or Services furnished bySupplier or Supplier’s acts or omissions with respect to this Agreement. Supplier’s duty to indemnify, hold harmless, and defendagainst Loss does not extend to Loss to the extent caused by the negligence of AT&T and other persons indemnified under thisAgreement, to the fullest extent that such indemnification is permitted by applicable law.

b. “Loss” includes any liability, loss, claim, demand, suit, cause of action, settlement payment, cost and expense, interest, award,

judgment, damages (including punitive damages), diminution in value, liens, fines, fees, penalties, and Litigation Expense.“Litigation Expense” means any court filing fee, court cost, arbitration fee, and each other fee and cost of investigating ordefending an indemnified claim or asserting any claim for indemnification or defense under this Agreement, includingAttorney’s Fees, other professionals’ fees, and disbursements. “Attorney’s Fees” include a charge for the service of in-housecounsel at the market rate for independent counsel of similar experience.

c. AT&T shall notify Supplier in writing, and with reasonable promptness, of any claim, demand, suit, cause of action or legal

proceeding that may give rise to a claim against Supplier for defense. If AT&T fails to give notice, Supplier is still obligated toindemnify, hold harmless and defend AT&T, except to the extent Supplier is materially prejudiced by such failure to notify.

d. At the request of AT&T, Supplier shall conduct AT&T’s defense (employing counsel acceptable to AT&T which shall not be

unreasonably withheld), at Supplier’s expense, against any claim, demand, suit or cause of action within the scope of paragraph(a) above, whether or not litigation is actually commenced or the allegations are meritorious. At its own option, AT&T mayemploy separate counsel, including in-house counsel, to conduct AT&T’s defense against such a claim. AT&T and Suppliershall cooperate in the defense of any such claim. Supplier may control the defense and settlement of such a claim, but if thesettlement of a claim may have an adverse effect on AT&T, then Supplier shall not settle such claim without the consent ofAT&T, and AT&T shall not unreasonably withhold or delay its consent.

e. AT&T has no duty to indemnify, hold harmless or defend Supplier against any Loss arising from or in connection with, resulting

from, or relating to this Agreement or the performance of any Party to this Agreement.



15

f. Supplier shall bring no claim or action for indemnification, contribution, or subrogation against AT&T, its Affiliates, or their

agents or employees, nor shall Supplier implead any of them in any action brought by another, based on injury to the person ordeath arising out or relating to Supplier’s performance under this Agreement. If, through any such action, Supplier ever acquiresa lien on a judgment against AT&T, its Affiliates, or their agents or employees, then Supplier shall assign such lien to AT&T.Supplier waives any immunity from indemnification that Supplier may hold, by virtue of Supplier’s compliance with itsworkers’ compensation obligations in any jurisdiction, even if such immunity arises under the constitution or statutes of suchjurisdiction (such as, for example, Section 35, Article II, of the Ohio Constitution and Sections 4123.74 and 4123.741 of theOhio Revised Code).

3.17 Information

a. I n connection with this Agreement, including Supplier’s performance of its obligations hereunder and AT&T’s receipt of

Material and Services, either Party may find it beneficial to disclose to the other Party (which may include permitting or enablingthe other Party’s access to) certain of its Information. For the purpose of this clause, AT&T’s disclosure of Information toSupplier includes any Information that Supplier receives, observes, collects, handles, stores, or accesses, in any way, inconnection with this Agreement. Likewise, Supplier’s disclosure of Information to AT&T includes any Information that AT&Treceives, observes, collects, handles, stores, or accesses, in any way, in connection with this Agreement. Information of adisclosing Party shall be deemed to be confidential or proprietary only if it is clearly marked or otherwise identified by thedisclosing Party as being confidential or proprietary, provided that if it is orally or visually disclosed (including Informationconveyed to an answering machine, voice mail box or similar medium), the disclosing Party shall designate it as confidential orproprietary at the time of such disclosure. Not withstanding the foregoing, a disclosing Party shall not have any such obligationto so mark or identify, or to so designate, Information that the disclosing Party discloses to or is otherwise obtained by the otherParty’s employees, contractors, or representatives (i) who are located on the disclosing Party’s premises; (ii) who access thedisclosing Party’s systems; or (iii) who otherwise obtain AT&T and/or AT&T Customer Information in connection with thisAgreement, any such Information so disclosed shall automatically be deemed to be confidential and proprietary. Additionally,the failure to mark or designate information as being confidential or proprietary will not waive the confidentiality where it isreasonably obvious, under the circumstances surrounding disclosure, that the Information is confidential or proprietary; any suchInformation so disclosed or obtained shall automatically be deemed to be confidential and proprietary. For greater certainty,Information provided by either Party to the other Party prior to the Effective Date of this Agreement in connection with thesubject matter hereof, including any such Information provided under a separate non-disclosure agreement (howsoeverdenominated) is also subject to the terms of this Agreement. Neither Party shall disclose Information under this Agreement thatincludes, in any form, any of the following: customer or employee personal information, credit card and credit relatedinformation, financial information, and/or authentication credentials.

b. With respect to the Information of the disclosing Party, the receiving Party shall:

1. hold all such Information in confidence with the same degree of care with which it protects its own confidential or

proprietary Information, but with no less than reasonably prudent care;

2. restrict disclosure of such Information solely to its employees, contractors, and agents with a need to know suchInformation, advise such persons of their confidentiality obligations hereunder with respect thereto, and ensure that suchpersons are bound by obligations of confidentiality reasonably comparable to those imposed in this Agreement;



16

3. use such Information only as needed to perform its obligations (and, if AT&T is the receiving Party, to receive the benefits

of the Material and Services provided) under this Agreement;

4. except as necessary under clause (3), not copy, distribute, or otherwise use any such Information or allow anyone else tocopy, distribute, or otherwise use such Information; and ensure that any and all copies bear the same notices or legends, ifany, as the originals; and

5. upon the disclosing Party’s request, promptly return, or destroy all or any requested portion of the Information, including

tangible and electronic copies, notes, summaries, extracts, mail or other communications, and provide written certificationwithin fifteen (15) business days to the disclosing Party that such Information has been returned or destroyed, provided thatwith respect to archival or back-up copies of Information that reside on the receiving Party’s systems, the receiving Partyshall be deemed to have complied with its obligations under this clause (5) if it makes reasonable efforts to expunge fromsuch systems, or to permanently render irretrievable, such copies or retains such archival back-up copies for legal purposeswhich shall be permissible until such applicable statutes of limitations have expired.

c. Neither Party shall have any obligation to the other Party with respect to Information which:

1. a t the time of disclosure was already known to the receiving Party free of any obligation to keep it confidential (as

evidenced by the receiving Party’s written records prepared prior to such disclosure);

2. is or becomes publicly known through no wrongful act of the receiving Party (such obligations ceasing at the time suchInformation becomes publicly known);

3. is lawfully received from a third party, free of any obligation to keep it confidential;

4. is independently developed by the receiving Party or a third party, as evidenced by the receiving Party’s written records,

and wherein such development occurred without any direct or indirect use of or access to the Information received from thedisclosing Party, or

5. the disclosing Party consents in writing to be free of restriction.

d. If a receiving Party is required to provide Information of a disclosing Party to any court or government agency pursuant to a

written court order, subpoena, regulatory requirement, or process of law, the receiving Party must, unless prohibited byapplicable law, first provide the disclosing Party with prompt written notice of such requirement and reasonable cooperation tothe disclosing Party should it seek reasonable protective arrangements for the production of such Information. The receivingParty will (i) take reasonable steps to limit any such provision of Information to the specific Information required by such courtor agency, and (ii) continue to otherwise protect all Information disclosed in response to such order, subpoena, regulation, orprocess of law.

e. A receiving Party’s obligations with respect to any particular Information of a disclosing Party shall remain in effect, including

after the expiration, Termination or Cancellation of this Agreement, until such time as it qualifies under one of the exceptions setforth in clause (3) above.



17

3.18 Infringement

a. Definitions. For purposes of this section:

i. “Indemnified Parties” shall mean AT&T and its Affiliates, as well as their agents, distributors and customers, individually

or collectively, as the case may be.

ii. “Loss” shall mean any liability, loss, claim, demand, suit, cause of action, settlement payment, cost and expense, interest,award, judgment, damages (including punitive damages and increased damages for willful infringement), diminution invalue, liens, fines, fees, penalties, and Litigation Expense. “Litigation Expense” means any court filing fee, court cost,arbitration fee, and each other fee and cost of investigating or defending an indemnified claim or asserting any claim forindemnification or defense under this Agreement, including Attorney’s Fees, other professionals’ fees, and disbursements.“Attorney’s Fees” include a charge for the expenses and time of in-house counsel at the market rate for attorneys in privatepractice who have similar experience.

iii. For avoidance of doubt, the term “Materials and Services” shall include any portion or functionality of any Material(s) or

Service(s).

b. Obligations.

i. Supplier shall indemnify, hold harmless, and defend the Indemnified Parties against any Loss resulting from, arising out ofor relating to any allegation, threat, demand, claim or lawsuit (“Claim”) of:

1. infringement of any patent, copyright, trade mark, service mark, trade secret, or other intellectual property right

(including, for avoidance of doubt, direct, contributory and active inducement infringement) in connection with theMaterials or Services, including, for example, any Claim of infringement based on:

a. making, repair, receipt, use, importing, sale or disposal (and offers to do any of the foregoing) of Materials and

Services, or

b. u s e of Materials and Services in combination with products, systems, services, processes or methods notfurnished by Supplier, including, for example, use in the form of the making or using of an apparatus or system,or the making or practicing of a process or method (a “Combination Claim”).

2. misappropriation of any trade secret, proprietary or non-public information in connection with the Materials and

Services;

(any such Loss referenced in sections 1 or 2 of this paragraph b.i, a “Covered Loss” regardless of whether such Claim ismeritorious).

ii. In the event (and only in the event) that Supplier’s obligations under paragraph b.i result from, arise out of, or relate to a

Combination Claim, the following provisions shall apply:

1. Supplier shall be liable to pay only its Proportionate Share of the Covered Loss associated with such CombinationClaim. The “Proportionate Share” payable by Supplier shall be a portion of the Covered Loss determined on a fairand equitable basis to be attributable to Supplier based on the materiality of the applicable Materials and Services tothe Combination Claim.

2. Supplier shall be liable to the Indemnified Parties (or to a third party claimant directly, if applicable) for its duly

determined Proportionate Share of the Covered Loss with respect to a particular Combination Claim, regardless ofwhether any other interested party compensates the Indemnified Parties as part of an indemnification obligation, ifany, relating to the Combination Claim.



18

3. Supplier shall make payments in satisfaction of its Proportionate Share obligation (“Proportionate Share Payments”)

whenever those Proportionate Share Payments become due (for example, Supplier shall make Proportionate SharePayments for indemnified defense costs when payment is due to be paid to outside counsel; and Supplier will makeProportionate Share Payments for court awards (such as damages) when payment is required by the court; andSupplier will make Proportionate Share Payments for settlement when payment is due to be paid according to theterms of a settlement agreement). Supplier shall be liable to the Indemnified Parties for any monies owed (such as aProportionate Share) by any of Supplier’s affiliates should such affiliates fail to pay in accordance with itsindemnification obligation to the Indemnified Parties.

4. The Indemnified Parties shall select a single lead counsel to defend such Combination Claim and Supplier agrees to

share authority and control over the defense of any such Combination Claim with the Indemnified Parties and otherinterested parties.

iii. In the event (and only in the event) that Supplier’s obligations under paragraph b.i result from, arise out of, or relate to

other than a Combination Claim, and the Claim against the Indemnified Parties concerns products or services (includingthe Materials or Services) provided by more than one Supplier, the following provisions shall apply:

1. Supplier agrees that it will cooperate reasonably with the Indemnified Parties and other Suppliers who have provided

products or services to the Indemnified Parties, each of which products or services is also subject to the Claim (“OtherSuppliers”) in order to defend the Indemnified Parties in a coordinated effort.

2. AT&T shall select a single lead counsel to defend such Claim and Supplier agrees to share authority and control over

the defense of any such Claim with the Indemnified Parties and Other Suppliers.

3. Supplier shall be liable to pay only its Associated Share of the Loss which is equal to the Loss multiplied by a fractionequal to the net amount paid by the Indemnified Parties to Supplier for the applicable Material and Services dividedby the total aggregate net amount paid by the Indemnified Parties to all Suppliers for products or services that areinvolved in the Claim.

4. Supplier shall make payments in satisfaction of its Associated Share obligation (“Associated Share Payments”)

whenever those Associated Share Payments become due (for example, Supplier shall make Associated SharePayments for indemnified defense costs when payment is due to be paid to outside counsel; and Supplier will makeAssociated Share Payments for court awards (such as damages) when payment is required by the court; and Supplierwill make Associated Share Payments for settlement when payment is due to be paid according to the terms of asettlement agreement). Supplier shall be liable to the Indemnified Parties for any monies owed (such as an AssociatedShare) by any of Supplier’s affiliates should such affiliates fail to pay in accordance with its indemnificationobligation to the Indemnified Parties.



19

c. Continued Use of Materials and Services Subject to Non-Combination Claims.

i. If, as a result of a third party claim other than an Combination Claim, (i) Indemnified Parties’ rights under this Agreement

are restricted or diminished; or (ii) an injunction is sought or is likely (in Supplier’s judgment) to be issued against theIndemnified Parties’ use of Materials and Services, or (iii) Material or Services are likely (in Supplier’s judgment) tobecome the subject of a claim of infringement, then, in addition to its other obligations set forth in this Section, Supplier, inany case at its sole expense and at no loss, cost or damage to the Indemnified Parties or their customers, shall obtain for theIndemnified Parties the right to continue using or conducting other activities with respect to (as the case may be) theMaterials or Services; provided that if Supplier is unable to obtain such right, Supplier shall, after consulting with andobtaining the written approval of the Indemnified Parties, provide modified or replacement non-infringing Materials orServices that are equally suitable and functionally equivalent while retaining the quality of the original Materials orServices.

ii. Notwithstanding any other provision of this Agreement to the contrary, should an injunction be issued against any person

(whether or not stayed or currently in effect), based on a claim other than a Combination Claim, affecting IndemnifiedParties’ ability to use or conduct other activities with respect to the Materials and Services, and not modifiable orreplaceable by Supplier, then the Indemnified Parties may seek the right to continue to use, or conduct other activities withrespect to, the Materials and Services, and Supplier shall reimburse the Indemnified Parties for the costs (includingreasonable attorney’s fees) associated with obtaining such right; provided however that Supplier shall be responsible forcosts associated with use or activities with respect to the Materials and Services only and not any other products or servicesused by the Indemnified Parties.

d. Elimination of Charges. AT&T has no obligation to pay Supplier any charges under this Agreement for the purchase, use, or

maintenance of Materials or Services after such time as the Indemnified Parties cease to use them, by reason of actual or claimedinfringement.

e. Procedures Relating to Indemnification. The Parties shall follow the procedures respecting indemnification provided in the

Section entitled “Indemnity”. In the event of any conflict between this Section 3.18 and the Section 3.16 entitled “Indemnity”,the provisions of this Section 3.18 shall prevail.

f. Forbidden Settlements. In no event shall Supplier settle any Combination Claim or other Claim in whole or in part in a manner

that would amount to Supplier paying less than its determined Proportionate Share or Associated Share, or that would otherwisenegatively impact AT&T in a material way (relative to a similar settlement by any other participating parties).

3.19 Insurance

a. With respect to Supplier’s performance under this Agreement, and in addition to Supplier’s obligation to indemnify, Supplier

shall at its sole cost and expense:

i. maintain the insurance coverages and limits required by this Section and any additional insurance and/or bonds required bylaw:

1. at all times during the term of this Agreement and until completion of all Work associated with this Agreement,

whichever is later; and

2. with respect to any coverage maintained in a “claims-made” policy, for two (2) years following the term of thisAgreement or completion of all Work associated with this Agreement, whichever is later. If a “claims-made” policy ismaintained, the retroactive date must precede the commencement of Work under this Agreement;



20

ii. require each subcontractor who may perform Work under this Agreement or enter upon the Work site to maintain

coverages, requirements, and limits at least as broad as those listed in this Section from the time when the subcontractorbegins Work, throughout the term of the subcontractor’s Work and, with respect to any coverage maintained on a “claims-made” policy,for two (2) years thereafter;

iii. procure the required insurance from an insurance company eligible to do business in the state or states where Work will be

performed and having and maintaining a Financial Strength Rating of “A-” or better and a Financial Size Category of “VII”or better, as rated in the A.M. Best Key Rating Guide for Property and Casualty Insurance Companies, except that, in thecase of Workers’ Compensation insurance, Supplier may procure insurance from the state fund of the state where Workis to be performed; and

iv. deliver to AT&T certificates of insurance stating the types of insurance and policy limits. Supplier shall provide or will

endeavor to have the issuing insurance company provide at least thirty (30) days advance written notice of cancellation,non-renewal, or reduction in coverage, terms, or limits to AT&T. Supplier shall deliver such certificates:

1. prior to execution of this Agreement and prior to commencement of any Work;

2. prior to expiration of any insurance policy required in this Section; and

3. for any coverage maintained on a “claims-made” policy, for two (2) years following the term of this Agreement or

completion of all Work associated with this Agreement, whichever is later.

b. The Parties agree that:

i. the failure of AT&T to demand such certificate of insurance or failure of AT&T to identify a deficiency will not beconstrued as a waiver of Supplier’s obligation to maintain the insurance required under this Agreement;

ii. the insurance required under this Agreement does not represent that coverage and limits will necessarily be adequate to

protect Supplier, nor be deemed as a limitation on Supplier’s liability to AT&T in this Agreement;

iii. Supplier may meet the required insurance coverages and limits with any combination of primary and Umbrella/Excessliability insurance; and

iv. Supplier is responsible for any deductible or self-insured retention.

c. The insurance coverage required by this Section includes:

i. Workers’ Compensation insurance with benefits afforded under the laws of any state in which the Work is to be

performed and Employers Liability insurance with limits of at least:$500,000 for Bodily Injury – each accident$500,000 for Bodily Injury by disease – policy limits$500,000 for Bodily Injury by disease – each employeeTo the fullest extent allowable by Law, the policy must include a waiver of subrogation in favor of AT&T, its Affiliates,and their directors, officers and employees.In states where Workers’ Compensation insurance is a monopolistic state-run system, Supplier shall add Stop GapEmployers Liability with limits not less than$500,000 each accident or disease.



21

ii. Commercial General Liability insurance written on Insurance Services Office (ISO) Form CG 00 01 12 04 or a substitute

form providing equivalent coverage, covering liability arising from premises, operations, personal injury,products/completed operations, and liability assumed under an insured contract (including the tort liability of anotherassumed in a business contract) with limits of at least:$2,000,000 General Aggregate limit$1,000,000 each occurrence limit for all bodily injury or property damage incurred in any one (1) occurrence$1,000,000 each occurrence limit for Personal Injury and Advertising Injury$2,000,000 Products/Completed Operations Aggregate limit$1,000,000 each occurrence limit for Products/Completed Operations$1,000,000 Damage to Premises Rented to You (Fire Legal Liability)The Commercial General Liability insurance policy must:

1. include AT&T, its Affiliates, and their directors, officers, and employees as Additional Insureds. Supplier shall

provide a copy of the Additional Insured endorsement to AT&T. The Additional Insured endorsement may either bespecific to AT&T or may be “blanket” or “automatic” addressing any person or entity as required by contract. A copyof the Additional Insured endorsement must be provided within sixty (60) days of execution of this Agreement andwithin sixty (60) days of each Commercial General Liability policy renewal;

2. include a waiver of subrogation in favor of AT&T, its Affiliates, and their directors, officers and employees; and

3. be primary and non-contributory with respect to any insurance or self-insurance that is maintained by AT&T.

iii. Business Automobile Liability insurance with limits of at least $1,000,000 each accident for bodily injury and property

damage, extending to all hired and non-owned vehicles.

iv. Umbrella/Excess Liability insurance with limits of at least $1,000,000 each occurrence with terms and conditions at leastas broad as the underlying Commercial General Liability, Business Auto Liability, and Employers Liability policies.Umbrella/Excess Liability limits will be primary and non-contributory with respect to any insurance or self-insurance thatis maintained by AT&T.

3.20 Invoicing and Payment

a. Supplier shall render a correct invoice in duplicate or electronically as directed by AT&T promptly after completing Delivery of

all Work required by the Order (unless the Order or an attached Appendix specifies that Supplier may submit invoices forprogress payments prior to Acceptance, as provided below). The invoice must specify in detail, if applicable, (i) quantities ofeach ordered item, (ii) unit prices of each ordered item, (iii) whether the item is taxable and the amount of tax per item, (iv) itemand commodity codes, (v) total amounts for each item, (vi) total amount of applicable sales or use taxes, (vii) discounts, (viii)shipping charges, if any, (ix) total amount due, (x) Software right-to-use fees designated as either “initial operating systemlicense” or “other”, (xi) Agreement number, (xii) remit to address, (xiii) Order number and line item sequence, (xiv) descriptionof Material/Service, and (xv) special service charges, if any. Except as provided in the provision for progress payments, AT&Tshall pay Supplier no later than forty-five (45) after the later of Acceptance (as determined under the Section entitled “Delivery,Performance and Acceptance”) and AT&T’s receipt of Supplier’s invoice provided in accordance with this Section; provided thatif any payment is due on a Saturday, Sunday or State or Federal holiday, then AT&T may pay Supplier on the followingbusiness day. If AT&T disputes any invoice rendered or amount paid, AT&T shall so notify Supplier. The Parties shall work ingood faith to resolve invoicing and payment disputes expeditiously, and AT&T is not obligated to make any payment against adisputed or incorrect invoice until the dispute is resolved or the error corrected. Invoices received by AT&T more than one (1)year after the Delivery of Work are untimely and AT&T has no obligation to pay such invoices.



22

b. Invoices for or including freight charges must be accompanied by legible copies of prepaid freight bills, express receipts or bills

of lading supporting the invoice amounts. Such invoices must include (i) the carrier’s name, (ii) date of shipment, (iii) number ofpieces, (iv) weight, and (v) freight classification.

c. AT&T may deduct any setoff or recoupment claims that it or its Affiliates may have against Supplier from amounts due or to

become due to Supplier, whether under this Agreement or otherwise. Supplier shall pay any amount due to AT&T or itsAffiliates that is not applied against the invoiced amounts within thirty (30) days after written demand by AT&T.

d. If an Order or an Appendix specifies that Supplier may submit invoices for progress payments prior to Acceptance, Supplier is

permitted to submit invoices at the end of each month and AT&T shall make progress payments to Supplier forty five (45) afterreceipt of such invoices. Such progress payments are not to exceed ninety percent (90%) of the price of satisfactorily completedWork at the time of billing, as determined by AT&T. Supplier shall earmark and apply such progress payments to expensesincurred for services or material used in performance of the Order for AT&T.

3.21 Licenses and Patents

Except as specifically stated in an Order, neither Party grants the other Party any license, whether express or implied, under any patent,copyright, trademark, or other intellectual property, in this Agreement.

3.22 Limitation of Damages In no event is AT&T liable to Supplier for any consequential or incidental damages, however caused, based on any theory of liability.

3.23 Most Favored Customer Supplier represents and warrants that all prices, benefits, warranties and other terms and conditions in this Agreement are and, during theterm of this Agreement, will continue to be no less favorable to AT&T than those currently being offered or that will be offered by Supplierto any of its similarly situated customers for the same Materials and Services. Supplier shall review and have an officer of its companycertify its compliance with this Section to AT&T annually upon request. This certification shall be sent to AT&T’s addressee listed underthe Section, Notices.

3.24 Non-Exclusive Market This Agreement does not grant Supplier any right or privilege to provide to AT&T any Material and Services of the type described in orpurchased under this Agreement. Except for obligations arising under an Order, this Agreement does not obligate AT&T to purchase orlicense any such Material or Services. AT&T may contract with other manufacturers and vendors for the procurement or trial of Materialand Services comparable to those described in or purchased under this Agreement, and AT&T may itself perform such Services.



23

3.25 Notices

a. Each Party giving or making any notice, consent, request, demand, or other communication (each, a “Notice”) pursuant to this

Agreement must give the Notice in writing and use one of the following methods, each of which for purposes of this Agreementis a writing: in person; first class mail with postage prepaid; Express Mail, Registered Mail, or Certified Mail (in each case,return receipt requested and postage prepaid); internationally recognized overnight courier (with all fees prepaid); facsimile; oremail. If Notice is given by e-mail, it must be confirmed by a copy sent by any one of the other methods. Each Party givingNotice shall address the Notice to the appropriate person (the “Addressee”) at the receiving Party at the address listed below:

SITO Mobile Solutions, Inc.

SITO Mobile Solutions, Inc.100 Town Square Place,Suite 204Jersey City, NJ 07310Attn: Kurt Streams, CFOEmail Address: [email protected] Number: 201.320.7501

AT&T

AT&T Services, Inc.4119 BroadwayRoom 650A16San Antonio, TX 78209Attn: Notices AdministratorEmail Address: [email protected]

And

Lorraine SzczepanekAT&T Services, Inc.2000 W. AT&T Center Drive3A49EHoffman Estates, IL 60192Email address: [email protected]

b. A Notice is effective only if the Party giving notice has complied with the foregoing requirements of this Section and the

Addressee has received the notice. A Notice is deemed to have been received as follows:

1. If a Notice is delivered by first class mail, five (5) days after deposit in the mail;

2. If a Notice is furnished in person, or sent by Express Mail, Registered Mail, or Certified Mail, or internationally recognizedovernight courier, upon receipt as indicated by the date on the signed receipt;

3. I f a Notice is sent by facsimile, upon receipt, by the Party giving or making the Notice, of an acknowledgment or

transmission report generated by the machine from which the facsimile was sent, indicating that the facsimile was sent inits entirety to the Addressee’s facsimile number; and



24

4. If a Notice is sent by e-mail, upon successful transmission to the receiving machine, if such Notice is sent in time to allow it

to be accessible by the Addressee before the time allowed for giving such notice expires, and a confirmation copy is sent byone of the other methods.

c. The addresses and facsimile and telephone numbers to which notices or communications may be given to the Addressees of

either Party may be changed by written notice given by such Party to the other pursuant to this Section.

3.26 Order of Precedence The terms of this Agreement govern all Orders for Materials and Services that AT&T may place with Supplier while this Agreementremains in effect. The Parties may not vary or supplement the terms of this Agreement, in connection with any Order, except in writing bySpecial Terms and Conditions that both Parties have agreed upon contained in an Order. When Special Terms and Conditions are includedin an Order and agreed upon, such take precedence over any inconsistent term of this Agreement, but only with reference to the transactiongoverned by that Order, and Special Terms and Conditions in an Order have no other force or effect. This Agreement supersedes all otherpre-printed or standardized provisions that may otherwise appear in any other paper or electronic record of either Party (such as standardsterms on order forms, advance shipping notices, invoices, time sheets, packages, shrink wrap terms, and click wrap terms).

3.27 Orders AT&T may order Material and Services by submitting Orders in connection with this Agreement that are substantially in the form ofAppendix J or other written form approved by the Parties, specifying the following information:

1. A description of the Services and Material, including any numerical/alphabetical identification referenced in the applicableprice list;

2. The Delivery Date;

3. The applicable price(s);

4. The location at which the Material is to be Delivered, or the site where Services will be rendered;

5. The location to which invoices are to be sent for payment;

6. AT&T's Order number; and

7. The name of the Affiliate ordering Materials and Services.

3.28 Price

a. Supplier shall furnish Material and Services at the prices set forth in Appendix B or an Order. The prices for all Material and

Services are subject to increases or decrease by a writing signed by both Parties, but, if Supplier at any time makes a generalprice decrease, Supplier shall promptly notify AT&T in writing and extend such decrease to AT&T effective on the date of suchgeneral price decrease.

Proprietary and ConfidentialThis Agreement and information contained therein is not for use or disclosure outside of AT&T, its Affiliates, and

third party representatives, and Supplier except under written agreement by the contracting Parties.

25

b. Supplier shall strive to proactively reduce its costs and corresponding prices for Material and Services as charged to AT&T

through the use of improved processes, supply chain economies and other cost reduction methods.

3.29 Publicity Supplier shall not use AT&T’s or its Affiliates’ names, trademarks, service marks, designs, logos or symbols (“AT&T Marks”). In addition,Supplier shall not use any language or pictures which could in AT&T’s judgment imply AT&T’s or its Affiliates’ identities, or endorsementby AT&T, its Affiliates or any of its or their employees, in any (i) written, electronic, or oral advertising or presentation, or sales meeting,or (ii) brochure, newsletter, book, electronic database, testimonial quotation, thank you letter, reference letter or other communication ofwhatever nature, unless expressly approved by AT&T. AT&T shall be provided notice of any public disclosure required by law orgovernment regulation and shall have opportunity to seek confidential treatment with Supplier.

3.30 Quality Assurance

a. In addition to its obligations under the Section entitled “Warranty,” Supplier represents and warrants that Supplier’s applicableprocesses utilized to produce Material and provide Services under this Agreement are currently registered to TL 9000 and areadequate to Deliver consistent with Specifications and this Agreement.

b. The Parties agree that each reference to TL 9000 means the most current version of TL 9000 available.

For information purposes only, excellent Quality Management System guidance can be found in TL 9000 and ISO 9001:2000.

Copies of ISO 9001:2000 may be ordered through the American Society for Quality at 800.248.1946. Copies of TL 9000Handbooks may be ordered through the QuEST Forum web site at www.questforum.org. Select the ‘Resources’ link from theQuEST forum home page, which will direct you to the TL 9000 Handbooks purchase page.

c. Supplier shall:

1. determine which of Supplier’s subcontractors and vendors should be registered to TL 9000. Supplier and these parties will

be referred to as “Quality Parties”;

2. ensure that each of the Quality Parties timely registers to TL 9000;

3. determine that the process controls relevant to the Material and Services of each of the Quality Parties is registered to TL9000; and

4. ensure that all Material and Services are subjected to the above-mentioned process controls, including performance

measurements, testing, quality process reviews, and inspections (collectively these processes of Supplier and QualityParties are referred to as “Quality Processes”).



26

d. In addition to any other obligations in this Section, if Supplier or any of the Quality Parties is not registered to TL 9000 as of the

Effective Date, then within thirty (30) days after the Effective Date and at no additional charge to AT&T, Supplier shall:

1. provide to AT&T a quality plan for achieving the TL 9000 registration within one hundred and eighty (180) days for theQuality Parties who are not so registered. Elements to be detailed in the quality plan include (at minimum):

i. a schedule for achieving the TL 9000 registration for each of the Quality Processes;

ii. the actions that will achieve the TL 9000 registration for each of the Quality Parties;

iii. the identities of Quality Parties and any registrations held; and

iv. the designation of the quality representatives and the senior executives who will have quality responsibility.

e. At AT&T’s request Supplier shall provide AT&T evidence of registration of each of the Quality Parties.

f. Once registered, Supplier shall maintain registration throughout the term of this Agreement, and Supplier shall ensure that, once

registered, each of the Quality Parties maintains registration throughout the term of this Agreement.

g. At AT&T’s request, Supplier shall submit third party results, management goals and objectives to AT&T upon completion ofany third party review.

h. If Supplier or AT&T, at any time during the term of this Agreement, determines that any of the Quality Processes is insufficient

to meet the obligations herein, then at no additional charge to AT&T, Supplier shall provide to AT&T a quality plan to remedysuch insufficient Quality Processes, which shall include the following information, in detail:

1. a schedule for achieving compliance; and

2. the actions that will remedy and achieve compliance.

i. Should remedy efforts described above fail to address insufficiencies of any Quality Processes within thirty (30) days of

Supplier’s remedy efforts as described above or AT&T’s notification to Supplier that remedy efforts are insufficient, whicheveris earlier, or within a time period as mutually agreed, Supplier shall engage a third party consultant to perform quality control orquality assurance activities. Supplier shall provide AT&T or AT&T’s agent with notice of such engagement, including the nameof the third party consultant, and shall provide AT&T or AT&T’s agent with cooperative assistance to such consultant.

j. Supplier shall ensure that each of the Quality Parties conforms, cooperates and complies with the requirements herein.

k. Supplier shall participate in the Supplier Performance Program (hereinafter “Program”) described below.



27

l. Supplier shall:

1. collect and periodically report to AT&T (as mutually agreed) the data relating to Supplier’s performance. Supplier shall

enter the data in AT&T’s supplier website in a format designated by AT&T;

2. conduct self-evaluations of Supplier’s performance based on the analysis of the data reported; and

3. cooperate fully with AT&T’s supplier performance management team to coordinate Supplier’s activities as related to theProgram, which includes but is not limited to participation in planning meetings, audits, feedback sessions and issueresolution.

m. To assist Supplier with obligations in this section, AT&T shall:

1. assist in defining the data requirements that Supplier will report and evaluate;

2. provide Supplier with access to AT&T’s supplier website for the purposes of entering Supplier’s data; and

3. assist Supplier in resolving any internal AT&T issues that may impact Supplier’s performance.

n. Nothing contained in this Section 3.30, “Quality Assurance,” will diminish Supplier’s obligation to deliver Material and perform

Services in conformance to Supplier’s obligations in this Agreement.

3.31 Records and Audits

a. Supplier shall maintain complete and accurate records, in order for AT&T to verify via AT&T Audits:

1. the accuracy and integrity of its invoices and AT&T’s payment obligations hereunder;

2. that the Work charged for was actually performed;

3. that the Services have been and are being provided in accordance with this Agreement;

4. the integrity of the systems that process, store, support, maintain, and transmit AT&T data;

5. the performance of its Subcontractors and agents with respect to any portion of the Services; and

6. that Supplier and its Subcontractors and agents are meeting applicable regulatory and legal requirements. For purposes ofthis Section, “Subcontractors” shall include Subcontractors regardless of their tier.

b. Supplier shall provide and shall require that its Subcontractors and agents provide to AT&T, its auditors (including internal auditstaff and external auditors), and governmental authorities, access at all reasonable times and with reasonable notice to:

1. any facility at which the Services or any portion thereof are being performed;

2. systems and assets used to provide the Services or any portion thereof;

3. Supplier employees and Subcontractor and agent employees providing the Services or any portion thereof;

4. all Supplier and Subcontractor records pertaining to the Services; and

5. such financial records relating to the invoices and payment obligations and supporting documentation pertaining to theServices as may be reasonably requested by AT&T and its auditors to enable them to audit the performance of the Servicesand other matters relevant to this Agreement (collectively, "AT&T Audits"). Any external auditors utilized by AT&T forAT&T Audits shall be nationally recognized auditing firms under confidentiality obligations consistent with those stated inthis Agreement.



28

The scope of AT&T Audits shall also include:

1. practices and procedures used in performing the Services;

2. systems, communications and information technology used in performing the Services;

3. general controls and security practices and procedures;

4. supporting information and calculations regarding invoices and compliance with service requirements;

5. quality initiatives and quality assurance; and

6. compliance with the terms of this Agreement.

c. Permit AT&T and its authorized representatives (with confidentiality agreements in place with AT&T) to inspect and auditSupplier’s records related to the Material and Services, with ten (10) days notice. Should AT&T request an audit, Supplier shallmake available upon reasonable advance notice any pertinent records and files to AT&T and its authorized representative duringnormal business hours at no additional charge within no more than five (5) business days.

d. AT&T Audits may be conducted once a year (or more frequently if requested by governmental authorities who regulate AT&T's

business, if required by applicable law or if auditors require follow-up access to complete audit inquiries or if an audit uncoversany problems or deficiencies), upon at least ten (10) business days advance notice (unless otherwise mandated by law). Supplierwill cooperate, and will ensure that its Subcontractors and agents cooperate, in the AT&T Audits, will make the informationreasonably required to conduct the AT&T Audits available on a timely basis.

e. If, as a result of an AT&T Audit, AT&T determines that Supplier overcharged AT&T, then AT&T will notify Supplier of the

amount of such overcharge and Supplier will promptly pay to AT&T the amount of any undisputed overcharge along withinterest from the date of the overcharge. If Supplier disputes the findings of the AT&T Audit, Supplier shall provide AT&T withwritten notice of such dispute within five (5) business days of receipt of the AT&T Audit. The Parties agree to negotiate in goodfaith to resolve any such dispute. If any such AT&T Audit reveals an undisputed overcharge to AT&T during any 12-monthperiod exceeding five percent (5%) of all charges in the aggregate paid by AT&T hereunder during such period, then Supplierwill reimburse AT&T for the cost of such AT&T Audit. If, as a result of an AT&T Audit and following the dispute resolutionprocess set forth above, AT&T determines that Supplier has not performed or has unsatisfactorily performed any obligationunder this Agreement, then Supplier will promptly remedy the non-performance or unsatisfactory performance.

f. Supplier will maintain and retain the records set forth in Subsection (a) during the term of the Agreement and for three (3) years

thereafter (unless a discovery or legal hold request is made with respect to such records, in which case Supplier shall retain suchrecords until AT&T notifies Supplier that such discovery or legal hold request has expired). Supplier will provide AT&T, atAT&T's request, with copies of documents and information (in the format in which they are maintained by Supplier) reasonablynecessary to verify Supplier's compliance with this Agreement. Upon notification by AT&T of a discovery or legal hold request,Supplier shall fully cooperate with such request and immediately preserve any Supplier records covered by such request andpromptly provide such Supplier records requested by AT&T related to the inquiry.



29

g. Except as provided in Subsection (d), all reasonable out-of-pocket costs and expenses incurred by AT&T in connection with an

AT&T Audit shall be paid by AT&T. Supplier shall be solely responsible for all costs and expenses incurred by Supplier inconnection with its obligations under this Section.

h. Supplier shall contractually require all Subcontractors and agents who perform any part of the Services to comply with the

applicable provisions of this Section.

3.32 Severability If any provision of this Agreement or any Order is determined to be invalid, illegal, or unenforceable, the Parties agree the remainingprovisions of this Agreement or such Order shall remain in full force if both the economic and legal substance of the transactionscontemplated by this Agreement or such Order are not affected in any manner that is materially adverse to either Party by severing theprovision determined to be invalid, illegal, or unenforceable.

3.33 Survival of Obligations Obligations and rights under this Agreement or an Order, which by their nature would reasonably continue beyond the Termination,Cancellation or expiration of this Agreement or an Order (including those in the Sections entitled “Compliance with Laws,” “Information, ”“Indemnity,” “Infringement,” “Insurance,” “Publicity,” and “Warranty”) will survive the Termination, Cancellation or expiration of thisAgreement or such Order.

3.34 Third Party Administrative Services Supplier acknowledges that a third party administrator will perform certain administrative functions for AT&T in relation to thisAgreement. Such administrative functions may include:

a. Collecting and verifying certificates of insurance;

b. Providing financial analysis;

c. Verifying certifications under the Section entitled “Utilization of Minority, Women, and Disabled Veteran Owned BusinessEnterprises”; and

d. Collecting and verifying Supplier profile information.

Supplier shall cooperate with such third party administrator in its performance of such administrative functions and shall provide such dataas from time to time the third party administrator may request. Further, notwithstanding any other provision of this Agreement, Supplieragrees that AT&T may provide confidential Information regarding Supplier to such third party administrator. Supplier agrees to pay thethird party administrator an annual fee for the performance of these administrative functions, which annual fee shall not exceed threehundred dollars ($300.00) and a one time set up fee of thirty dollars ($30.00). Any third party administrator shall have confidentialityagreements no less protective than the terms of this Agreement.

3.35 Transaction Costs Except as expressly provided in this Agreement or an Order, each Party shall bear its own fees and expenses (including the fees andexpenses of its agents, representatives, attorneys, and accountants) incurred in connection with the negotiation, drafting, execution, andperformance of this Agreement and the transactions it contemplates.



30

3.36 Utilization of, Minority, Women, and Disabled Veteran Owned Business Enterprises

a. Supplier shall submit annual participation plans in the form set forth at http://www.attsuppliers.com no later than the Effective

Date and by December 31 of each calendar year thereafter, establishing Supplier’s goals for the upcoming reporting period forparticipation by minority owned business enterprises (“MBE”), women owned business enterprises (“WBE”) and disabledveteran business enterprises (“DVBE”), with “participation” expressed as a percentage of aggregate estimated annual purchasesby AT&T for the reporting period.

b. By the tenth day following the close of each calendar month, Supplier shall, in a format and manner acceptable to AT&T, report

actual results of its efforts to meet the goals set forth in the applicable participation plan during the preceding calendar month. When reporting results, Supplier shall count only expenditures with entities that are certified as MBE, WBE, or DVBE firms bythird party certifying agencies recognized by AT&T, as listed on http://www.attsuppliers.com

3.37 Warranty

a. Supplier warrants (i) that Material furnished hereunder will be new; merchantable; free from defects in design, material and

workmanship; fit and sufficient for the purposes intended by AT&T; free from all security interests, liens and encumbrances; (ii)that Supplier conveys good title to Material sold, and that transfer of title to AT&T is rightful title, and (iii) that Materialfurnished hereunder shall strictly conform to and perform in accordance with applicable Specifications, drawings, models andsamples. In addition, if Material comes subject to one or more warranties provided by third party manufacturers or vendors toSupplier (“OEM warranties”), Supplier hereby assigns, and does assign such OEM warranties to AT&T to the full extentallowed by such OEM warranties.

b. Supplier warrants that Services provided hereunder will be performed in a professional manner, in strict compliance with the

Specifications, and with the care, skill and diligence, and in accordance with the applicable standards, currently recognized inSupplier’s profession or industry.

c. Supplier warrants that neither the Material nor the Services provided by the Supplier will infringe any patent, copyright,

trademark, trade secret or other intellectual property right. The foregoing warranties are in addition to all other warranties,express, implied, or statutory. Moreover, as of the Effective Date, no third party claim has been alleged against Supplier that theMaterial or Services provided hereunder infringes upon such third party’s intellectual property rights.

d. Supplier warrants that Supplier has all necessary skills, rights, financial resources, and authority to enter into this Agreement and

related Orders, including the authority to provide or license the Material or Services if Supplier does not solely own allintellectual property rights in such Material or Services.

e. Supplier warrants that no open source, freeware, shareware or similar software is included in any Material.

f. If the Parties have identified a System on which Software will operate, Supplier warrants that Software will perform on and be

compatible with such System and operate satisfactorily in the System environment specified in the applicable Order. “System”means the Hardware, operating system and application Software, interfaces, and databases that interact with such Software.

g. Supplier warrants that all Material provided to AT&T hereunder shall be tested prior to Delivery to ensure that all Material is in

strict compliance with the Specifications, and that Material will not contain Harmful Code or Vulnerabilities at any time. Testingwill include complete regression and interaction testing and load, unit and integration testing when applicable.



31

h. All warranties will survive inspection, Acceptance, payment and use. The warranty period for Material and Services shall be the

longer of the warranty period stated in the Order, the Specifications, the applicable OEM’s warranty, or one (1) year. Thewarranty period in all cases shall commence upon Acceptance by AT&T.

i. If at any time during the warranty period for Material or Services AT&T believes there is a breach of any warranty, AT&T will

notify Supplier setting forth the nature of such claimed breach. At AT&T’s option, Supplier shall either (i) repair or replace theMaterial or reperform the Services so as to correct the breach of warranty at no cost to AT&T, (ii) accept the return of theMaterial and provide AT&T with a full refund for the defective Materials or Services; or (iii) credit AT&T with a mutuallyagreeable reduction in the Price of the defective Materials and Services. Supplier shall bear all transportation costs provided bySupplier and risk of loss and damage in transit with respect to all Materials returned for repair, replacement, or refund, and withrespect to all repaired or replacement Materials provided to AT&T, and all repaired and replacement Materials are warranted asprovided in this Section. If AT&T elects to have Supplier repair or replace the Material or reperform the Services so as tocorrect the breach of warranty, and Supplier fails to do so, then, in addition to its other remedies under the law, this Agreementor an Order, AT&T may itself repair the Material or correct the Services, or engage a third party to do so, in either case atSupplier’s reasonable expense.

3.38 Work Done By Others

If any part of Supplier’s work is dependent upon work performed by others or subcontracted consistent with the terms herein, Suppliershall inspect and promptly report to AT&T any defect that renders such other work unsuitable for Supplier’s proper performance.Supplier’s silence shall constitute approval of such other work as fit, proper and suitable for Supplier’s performance of its work. Any useof, including any changes to the use of, a Subcontractor must be approved by AT&T in writing before commencement of the work.Supplier shall provide to AT&T, upon request, information about the Subcontractor including the identity, location, and a completedescription of the activities to be performed by such Subcontractor. Where a portion of the work is approved to be subcontracted, Supplierremains fully responsible for performance thereof and shall be responsible to AT&T for the acts and omissions of any Subcontractor.Nothing in this Agreement shall create any contractual obligation nor other liability of AT&T to any Subcontractor or its employees.Supplier agrees to bind every Subcontractor to terms consistent with the terms of this Agreement. AT&T agrees and approves wirelesscarriers and long distance carriers as subcontractors and Supplier shall not be responsible in any way for their actions or lack of action.However, Supplier is responsible to insure they are working with subcontractors to perform what they said they would do.

3.39 Ethical Business Practice Supplier hereby represents and warrants that the employees, temporary workers, agents, consultants, partners, officers, directors, membersor representatives of Supplier and its subcontractors, if any, performing Services or other activities under this Agreement (each and any ofthe foregoing individuals, for the purpose of this clause, a “Supplier Representative”) shall comply with the US Foreign Corrupt PracticesAct and all applicable anticorruption laws. Supplier Representatives shall not directly or indirectly pay, offer, give, promise to pay orauthorize the payment of, any portion of the compensation received in connection with this Agreement or any other monies or other thingsof value in connection with its performance to a Government Official, defined below, to obtain or retain business or secure any improperadvantage nor shall it permit such actions by a third party in connection with this Agreement. Government Official means (i) an officer oremployee of any government or any department, agency, or instrumentality thereof, including government-owned or government-controlledcommercial entities; (ii) an officer or employee of a public international organization; (iii) any person acting in an official capacity for or onbehalf of any government or department, agency, or instrumentality or public international organization; (iv) any political party or officialthereof; (v) any candidate for political office; or (vi) any other person, individual or entity at the suggestion, request or direction or for thebenefit of any of the above-described persons or entities.



32

3.40 Incidental Development, Ownership and Use of Rights and Items. a . Ownership and Use of Rights and Items. AT&T shall be the exclusive owner of all right, title, and interest in and to all Paid-ForDevelopment (defined below), including, without limitation, all Intellectual Property Rights therein and thereto. Supplier shall assign orhave assigned to AT&T and hereby assigns to AT&T all Intellectual Property Rights in and to the Paid-For Development. “Paid-ForDevelopment” shall mean any and all Items to the extent produced or developed by or on behalf of Supplier or its employees, agents, ordirect or indirect contractors or suppliers (and whether completed or in-progress), or forming part of any deliverable, pursuant to thisAgreement (including, without limitation, under any statement of work, exhibit, order or other document under, subordinate to, orreferencing this Agreement) (collectively “Agreements”) for the development of which AT&T has been charged monies in one or more ofthe Agreements (“Development Fees”). Payment of standard license fees or standard maintenance and support fees shall not be deemedpayment of Development Fees under this subsection. Paid-For Development shall always exclude all Excluded Materials, but shall include(without limitation) any modifications, alterations or updates of any Excluded Materials (“Enhancements”) that otherwise fall within thedefinition of Paid-For Development (“Paid-For Enhancements”). AT&T’s ownership of Paid-For Enhancements shall be subject toSupplier’s underlying rights and ownership in Supplier’s Excluded Materials.

“Items” shall mean any or all inventions, discoveries, ideas (whether patentable or not), and all works and materials, including but notlimited to products, devices, computer programs, source codes, designs, files, specifications, texts, drawings, processes, data or otherinformation or documentation in preliminary or final form, and all Intellectual Property Rights in or to any of the foregoing.

“Excluded Materials” shall mean: i) Supplier’s Pre-Existing Materials; ii) Supplier’s Independently Developed Materials; and iii)Supplier’s Mere Reconfigurations.

“Supplier’s Pre-Existing Materials” shall mean those Items owned by Supplier to the extent and in the form that they both existedprior to the date Supplier began any work under this Agreement and the creation was not dependent on the use of any AT&T Items.Supplier’s Pre-Existing Materials shall not, however, include Paid-For Enhancements thereto.

“Supplier’s Independently Developed Materials” shall mean those Items that have been developed by Supplier, or on Supplier’sbehalf, both i) where creation was not dependent on the use of any AT&T Items; and ii) independently of any work performed underany agreements with AT&T.



33

“Supplier’s Mere Reconfigurations” means those specific reconfigurations of Supplier’s pre-existing software performed bySupplier, or on Supplier’s behalf, but only to the extent that such reconfiguration is an alteration to such software which is strictlyrequired to permit Supplier’s software to function on AT&T’s or AT&T’s Customer network or service platform. In no event shallSupplier’s Mere Reconfigurations include enhancements, modifications, or updates that are not contained in Supplier’s Pre-ExistingMaterials and that add any features, functionality, or capabilities.

b . License Grant to Excluded Materials. If and to the extent that Supplier embeds any Excluded Materials in the Paid-ForDevelopment, Supplier hereby grants and promises to grant and have granted to AT&T and its Affiliates a royalty-free, nonexclusive, sub-licensable, assignable, transferable, irrevocable, perpetual, world-wide license in and to the Excluded Materials and any applicableIntellectual Property Rights of Supplier to use, copy, modify, distribute, display, perform, import, make, sell, offer to sell, and exploit (andhave others do any of the foregoing on or for AT&T’s or any of its customers’ behalf or benefit) the Excluded Materials but only asembedded in the Paid-For Development by Supplier. c . Further Acts and Obligations . Supplier will take or secure such action (including, but not limited to, the execution,acknowledgment, delivery and assistance in preparation of documents or the giving of testimony) as may be reasonably requested byAT&T to evidence, transfer, perfect, vest or confirm AT&T’s right, title and interest in any Paid-For Development. Supplier shall, in allevents and without the need of AT&T’s request, secure all Intellectual Property Rights in any Paid-For Development (and any licensesspecified above in any Excluded Materials) from each employee, agent, subcontractor or sub-supplier of Supplier who has or will have anyrights in the Paid-For Development or Excluded Materials. d . Reservation of Rights and Limited License. Notwithstanding any other provision in this Agreement, AT&T is not transferring orgranting to Supplier any right, title, or interest in or to (or granting to Supplier any license or other permissions in or to) any or all: a) Itemscreated by or on behalf of AT&T or directly or indirectly provided to Supplier (in any form, including, without limitation, verbally) by oron behalf of AT&T or its third party providers (“AT&T Provided Items”); b) Paid-For Development or c) Intellectual Property Rights,including, without limitation, any Intellectual Property Rights in or to any AT&T Provided Items or Paid-For Development. The soleexception to the foregoing reservation of rights is that AT&T hereby grants Supplier a limited, nonexclusive, non-transferable license (thatshall automatically terminate upon the termination or expiration of this Agreement), under any rights owned by AT&T, to use the AT&TProvided Items and Paid-For Development solely as instructed by AT&T and to the extent necessary for Supplier to perform its obligationsunder this Agreement, subject further to the terms and conditions of this Agreement. In no way expanding the foregoing license, saidlicense in no manner permits Supplier to (and Supplier hereby promises not to without the explicit prior written and signed consent ofAT&T Intellectual Property, Inc. (“ATTIPI Consent”)) make use of any AT&T Provided Items, Paid-For Development or AT&TIntellectual Property Rights either for the benefit of any third party or other than as instructed in writing by AT&T. (AT&T may be willing,in its sole discretion, to grant ATTIPI Consent in exchange for appropriate additional compensation). Paid-For Development and AT&TProvided Items shall constitute AT&T Information under this Agreement.



34

3.41 Labor Disputes

a. In the event of a labor dispute between AT&T and the union(s) representing AT&T’s employees, AT&T may exercise its rightto modify the Scope of Work under the Order on immediate notice, including postponing, reducing, or terminating the servicesto be provided under the Order and due to be performed after the commencement of a labor dispute. AT&T acknowledges andagrees that the exercise of such right may result in a delay in the resumption of Services when requested by AT&T.

b. The rights and obligations of the Parties under this Section are in addition to, and not a limitation of, their respective rights under

the Sections entitled “Amendments and Waivers” and “Force Majeure.” 3.42 Offshore Work Prohibited None of the Work under this Agreement shall be performed, and no Information related to this Agreement shall be collected, stored,handled or accessed at any location outside of the United States. Additionally, Supplier shall not allow any of the Work under thisAgreement to be performed by a Subcontractor unless AT&T approves such Subcontractor pursuant to Section 3.4, Assignment andDelegation and the Supplier complies with the requirements of Section 3.38, Work Done by Others. 3.43 Taxes

a. Supplier shall invoice AT&T the amount of any federal excise taxes and state and local sales taxes imposed upon the sale of

Material and provision of Services under this Agreement. All such taxes must be stated as separate items on a timely invoicelisting the taxing jurisdiction imposing the tax. Installation, labor and other non-taxable charges must be separately stated.AT&T shall pay all applicable taxes to Supplier that are stated on and at the time the Material or Services invoice is submittedby Supplier. Supplier shall remit taxes to the appropriate taxing authorities. Supplier shall honor tax exemption certificates, andother appropriate documents, which AT&T may submit, pursuant to relevant tax provisions of the taxing jurisdiction providingthe exemption.

b. Supplier shall pay any penalty, interest, additional tax, or other charge that may be levied or assessed as a result of the delay or

failure of Supplier, for any reason, to pay any tax or file any return or information required by law, rule or regulation or by thisAgreement to be paid or filed by Supplier.

c. Upon AT&T’s request, the Parties shall consult with respect to the basis and rates upon which Supplier shall pay any taxes or

fees for which AT&T is obligated to reimburse Supplier under this Agreement. If AT&T determines that in its opinion any suchtaxes or fees are not payable, or should be paid on a basis less than the full price or at rates less than the full tax rate, AT&Tshall notify Supplier in writing of such determinations, Supplier shall make payment in accordance with such determinations,and AT&T shall be responsible for such determinations. If collection is sought by the taxing authority for a greater amount oftaxes than that so determined by AT&T, Supplier shall promptly notify AT&T. If AT&T desires to contest such collection,AT&T shall promptly notify Supplier. Supplier shall cooperate with AT&T in contesting such determination, but AT&T shallbe responsible and shall reimburse Supplier for any tax, interest, or penalty in excess of AT&T’s determination.

d. If AT&T determines that in its opinion it has reimbursed Supplier for any taxes in excess of the amount that AT&T is obligated

to reimburse Supplier, AT&T and Supplier shall consult to determine the appropriate method of recovery of such excessreimbursements. Supplier shall credit any excess reimbursements against tax reimbursements or other payments due fromAT&T if and to the extent Supplier can make corresponding adjustments to its payments to the relevant tax authority. AtAT&T’s request, Supplier shall timely file any claims for refund and any other documents required to recover any other excessreimbursements, and shall promptly remit to AT&T all such refunds and interest received.



35

e. If any taxing authority advises Supplier that it intends to audit Supplier with respect to any taxes for which AT&T is obligated to

reimburse Supplier under this Agreement, Supplier shall (i) promptly so notify AT&T, (ii) afford AT&T an opportunity toparticipate on an equal basis with Supplier in such audit with respect to such taxes and (iii) keep AT&T fully informed as to theprogress of such audit. Each Party shall bear its own expenses with respect to any such audit, and the responsibility for anyadditional tax, interest or penalty resulting from such audit is to be determined in accordance with the applicable provisions ofthis Taxes Section. Supplier’s failure to comply with the notification requirements of this Taxes Section will relieve AT&T of itsresponsibility to reimburse Supplier for taxes only if Supplier’s failure materially prejudiced AT&T’s ability to contestimposition or assessment of those taxes.

f. In addition to its rights under Subsections c., d., and e. above with respect to any tax or tax controversy covered by this Taxes

Section, AT&T is entitled to contest, pursuant to applicable law and tariffs, and at its own expense, any tax previously invoicedthat it is ultimately obligated to pay. AT&T is entitled to the benefit of any refund or recovery of amounts that it has previouslypaid resulting from such a contest. Supplier shall cooperate in any such contest, but AT&T shall pay all costs and expensesincurred in obtaining a refund or credit for AT&T.

g. If either Party is audited by a taxing authority or other governmental entity in connection with taxes under this Taxes Section, the

other Party shall reasonably cooperate with the Party being audited in order to respond to any audit inquiries in an appropriateand timely manner, so that the audit and any resulting controversy may be resolved expeditiously.

AT&T and Supplier shall reasonably cooperate with each other with respect to any tax planning to minimize taxes. The degree ofcooperation contemplated by this section is to enable any resulting tax planning to be implemented and includes, but is not limited to: (i)Supplier's installing and loading all of the Software licensed by AT&T, and retaining possession and ownership of all tangible personalproperty, (ii) Supplier installing, loading and/or transferring the Software at a location selected by AT&T, and (iii) Supplier Delivering allof the Software in electronic form. AT&T shall bear all reasonable external (paid to third parties), additional expenses incurred by Supplierto comply with the provisions of this subsection, but AT&T's advance written consent is required whenever these expenses for anySoftware item or update are expected to exceed two thousand dollars ($2,000) or one percent (1%) of the cost of the item or update,whichever is less. Supplier's cooperation is not an agreement with, or guarantee of, the taxability or non-taxability of the transaction.

4.0 Special Terms

4.1 Access

a. When appropriate, Supplier shall have reasonable access to AT&T’s premises during normal business hours, and at such othertimes as may be agreed upon by the Parties to enable Supplier to perform its obligations under this Agreement. Supplier shallcoordinate such access with AT&T’s designated representative prior to visiting such premises. Supplier will ensure that onlypersons employed by Supplier or subcontracted by Supplier will be allowed to enter AT&T’s premises. If AT&T requestsSupplier or its subcontractor to discontinue furnishing any person provided by Supplier or its subcontractor from performingWork on AT&T’s premises, Supplier shall immediately comply with such request. Such person shall leave AT&T’s premisesimmediately and Supplier shall not furnish such person again to perform Work on AT&T’s premises without AT&T’s writtenconsent. The Parties agree that, where required by governmental regulations, Supplier will submit satisfactory clearance fromthe U.S. Department of Defense and/or other federal, state or local authorities.



36

b. AT&T may require Supplier or its representatives, including employees and subcontractors, to exhibit identification credentials,

which AT&T may issue to gain access to AT&T’s premises for the performance of Services. If, for any reason, any Supplierrepresentative is no longer performing such Services, Supplier shall immediately inform AT&T. Notification shall be followedby the prompt delivery to AT&T of the identification credentials, if issued by AT&T. Supplier agrees to comply with AT&T’scorporate policy requiring Supplier or its representatives, including employees and subcontractors, to exhibit their companyphoto identification in addition to the AT&T issued photo identification when on AT&T’s premises.

c. Supplier shall ensure that its representatives, including employees and subcontractors, while on or off AT&T’s premises, will

perform Work which (i) conform to the Specifications, (ii) protect AT&T’s Material, buildings and structures, (iii) does notinterfere with AT&T’s business operations, and (iv) perform such Services with care and due regard for the safety, convenienceand protection of AT&T, its employees, and property and in full conformance with the policies specified in the AT&T Code ofBusiness Conduct, which prohibits the possession of a weapon or an implement which can be used as a weapon (a copy of theAT&T Code of Business Conduct is available upon request).

d. Supplier shall ensure that all persons furnished by Supplier work harmoniously with all others when on AT&T’s premises.

4.2 Background Checks

a. Supplier, with respect to the following requirements in this Section (collectively, “Background Checks”) and subject to any

federal, state, or local laws, rules or regulations which may limit any Supplier action otherwise required by this section, (i) shallmake all reasonable and legally permitted efforts, including checking the background, verifying the personal information andconducting a Drug Screen to determine and verify all information necessary to represent and warrant to AT&T that no Supplieremployee, contractor or subcontractor and no employee or agent of any Supplier contractor or subcontractor (“Supplier Person”)who Supplier proposes to have perform any Service that permits physical, virtual or other access to AT&T 's or its customer'spremises, systems, networks, or Information (“Access”) at any time during the term of the Agreement., (a) has presented apositive Drug Screen, (b) has been convicted of any felony, or has been convicted of any misdemeanor involving violence,sexual misconduct, theft or computer crimes, fraud or financial crimes, drug distribution, or crimes involving unlawfulpossession or use of a dangerous weapon (“Conviction”) or (c) is identified on any government registry as a sex offender; and (ii)shall not permit any such Person presenting a positive Drug Screen, having a Conviction, or being a registered sex offender toperform any Service that permits such Access during the term of the Agreement, subject to any federal, state, or local restrictionson the consideration of criminal convictions in making employment decisions.

b. Supplier shall comply with the obligations of subsections (b) and (c) above through the use of a third party service which shall

perform a review of applicable records for those counties, states, and federal court districts in which a proposed Supplier Personhas identified as having resided, worked, or attended school in the previous ten (10) years, unless a shorter period is required byany federal, state, or local law.



37

c. Supplier acknowledges and agrees that it is Supplier’s sole and exclusive responsibility to determine whether a Supplier Person

with a Conviction should be denied Access during the term of the Agreement under the terms of this Agreement and incompliance with all federal, state, and local laws, unless an exception is granted by AT&T under paragraph e. of this Section.

d. Supplier represents and warrants to AT&T that, to the best of its knowledge, no Supplier Person has (i) falsified any of his or her

Identification Credentials, or (ii) failed to disclose any material information in the hiring process relevant to the performance ofany Service. Supplier shall not permit any Supplier Person who has falsified such Identification Credentials or failed to disclosesuch information to perform any Service that permits Access.

e. The following definitions apply:

1. “Identification Credentials” includes, with respect to each Supplier Person, his or her Social Security number, driver’s

license, educational credentials, employment history, home address, and citizenship indicia.

2. “Drug Screen” means the testing for the use of illicit drugs (including opiates, cocaine, cannabinoids, amphetamines, andphencyclidine (PCP)) of any Supplier Person who (i) has unsupervised (or badged) physical Access to AT&T’s or itscustomer’s premises, or (ii) has regular or recurring supervised physical Access to AT&T’s or its customer’s premises formore than thirty (30) days in the aggregate annually.

f. The failure of Supplier to comply with the requirements of this Section, and/or if any Person who fails such Background Check

or who has falsified Identification Credentials does perform any Service that permits such Access, shall each be considered amaterial breach of this Agreement. Notwithstanding any of the foregoing, exceptions for individual Supplier Persons may begranted by AT&T on a case-by-case basis.

4.3 Customer - Information

a. For the purposes of this Section, “Customer Information” includes, but is not limited to, customer name, address, e-mail address,

and/or phone number (listed or unlisted); personal information concerning a customer, including birth date, social securitynumber, drivers license, credit card information, bank account, account number or personal identification numbers; informationconcerning a customer’s calling patterns, call details, records of incoming or outgoing calls, or minutes of use or other use ofAT&T’s services; information related to payments, credit status, and transactions with AT&T; demographic information; oraggregate customer data – including aggregate data with individual identifying information deleted; and customer proprietarynetwork information (“CPNI”) (as that term is defined in Section 222 of the Communications Act of 1934, 47 U.S.C.222, asamended (“Section 222”)), which includes information available to AT&T by virtue of AT&T’s relationship with its customersas a provider of telecommunications service and may include: the quantity, technical configuration, location, type, destination,amount of use of telecommunications service subscribed to, and information contained on the telephone bills of AT&T’scustomers pertaining to telephone exchange service or telephone toll service received by a customer of AT&T. Except asprovided herein, as between Supplier and AT&T, title to all Customer Information shall be in AT&T. Except as otherwiseprovided herein, no license or rights to any Customer Information are granted to Supplier hereunder. Except as otherwise setforth in this Section, Supplier’s use of the Customer Information to provide the Services AT&T requests in an Order or to fulfillits obligations in this Agreement shall not be limited.



38

b. Supplier acknowledges that Customer Information received may be subject to certain privacy laws and regulations and

requirements, including requirements of AT&T. Supplier shall consider Customer Information to be private, sensitive andconfidential. Accordingly, with respect to Customer Information, Supplier shall comply with all applicable privacy laws andregulations and requirements, including, but not limited to, the CPNI restrictions contained in Section 222. Accordingly, Suppliershall:

1. not use any CPNI to market or otherwise sell products to AT&T’s customers, except to the extent necessary for the

performance of Services for AT&T or as otherwise approved or authorized by AT&T in this Agreement or in writing;

2. make no disclosure of Customer Information to any party other than AT&T, except to the extent necessary for theperformance of Services for AT&T or except such disclosure required under force of law; provided that Supplier shallprovide AT&T with notice immediately upon receipt of any legal request or demand by a judicial, regulatory or otherauthority or third party to disclose or produce Customer Information; Supplier shall furnish only that portion of theCustomer Information that is legally required to furnish and shall provide reasonable cooperation to AT&T should AT&Texercise efforts to obtain a protective order or other confidential treatment with respect to such Customer Information;

3. not incorporate any Customer Information into any database other than in a database maintained exclusively for the storage

of AT&T’s Customer Information;

4. not incorporate any data from any of Supplier’s other customers, including Affiliates of AT&T, into AT&T’s customerdatabase;

5. make no use whatsoever of any Customer Information for any purpose except to comply with the terms of this Agreement;

6. make no sale, license or lease of Customer Information to any other party;

7. restrict access to Customer Information to only those employees of Supplier that require access in order to perform Services

under this Agreement;

8. implement and comply with a data security plan, approved in advance in writing by AT&T such approval not to beunreasonably withheld, and other procedures as may be agreed by AT&T and Supplier relative to the security of CustomerInformation at all times in performing Services hereunder;

9. prohibit and restrict access or use of Customer Information by any of Supplier’s other customers, Supplier’s Affiliates, or

third parties except as may be agreed otherwise by AT&T;

10. promptly return all Customer Information to AT&T upon expiration, Termination or Cancellation of this Agreement orapplicable schedule or Order, unless expressly agreed or instructed otherwise by AT&T; and



39

11. immediately notify AT&T upon Supplier’s awareness of (i) any breach of the above- referenced provisions, (ii) any

disclosure (inadvertent or otherwise) of Customer Information to any third party not expressly permitted herein to receiveor have access to such Customer Information, or (iii) a breach of, or other security incident involving, Supplier’s systemsor network that could cause or permit access to Customer Information inconsistent with the above-referenced provisions,and such notice shall include the details of the breach, disclosure or security incident. Supplier shall fully cooperate withAT&T in determining, as may be necessary or appropriate, actions that need to be taken including, but not limited to, thefull scope of the breach, disclosure or security incident, corrective steps to be taken by Supplier, the nature and content ofany customer notifications, law enforcement involvement, or news/press/media contact etc., and Supplier shall notcommunicate directly with any AT&T customer without AT&T’s consent, which such consent shall not be unreasonablywithheld.

4.4 Electronic Data Interchange (EDI)

a. The Parties shall exchange Orders, payments, acknowledgements, invoices, remittance notices, and other records (“Data”)

electronically, in place of tangible documents, and agree to exchange such Data in accordance with the TelecommunicationsIndustry Forum EDI Guidelines for use of American National Standards Institute (ANSI) Accredited Standards Committee X12transaction sets, unless they mutually agree to a proprietary format or another standard such as Extensible Markup Language(XML).

b. The following additional conditions apply to any such exchanges:

1. Garbled Transmissions: If any Data is received in an unintelligible, electronically unreadable, or garbled form, the

receiving Party shall promptly notify the originating Party (if identifiable from the received Data) in a reasonable manner.In the absence of such notice, the originating Party's record of the contents of such Data shall control.

2. Signatures: Each Party will incorporate into each EDI transmission an electronic identification consisting of symbol(s) or

code(s) ("Signature"). Each Party agrees that any predetermined Signature of such Party included in or affixed to any EDItransmission shall be sufficient to verify such Party originated, “signed” and “executed” such transmission. No Party shalldisclose to any unauthorized person the Signatures of the Parties hereto.

3. Statute of Frauds: The Parties expressly agree that all Data transmitted pursuant to this clause shall be deemed to be a

"writing" or "in writing" for purposes of the Uniform Commercial Code (“UCC”). Any such Data containing or havingaffixed to it a Signature shall be deemed for all purposes: (i) to have been "signed" and "executed"; and (ii) to constitute an"original" when printed from electronic files or records established and maintained in the normal course of business.

4. Method of Exchange: Exchange of Data will be made by direct electronic or computer systems communication between

AT&T and Supplier or by indirect communications using a third party service provider (“Provider”) or Value AddedNetwork ("VAN") to translate, forward and/or store such Data. Each Party shall be responsible for the cost(s) andassociated cost(s) of any Provider or VAN with which it contracts.

4.5 Entry on AT&T Property

a. If the performance of the Services provided hereunder requires Supplier 's entry upon property owned or controlled by AT&T,

Supplier is hereby notified that AT&T-owned buildings constructed prior to 1981 contain asbestos containing materials(“ACM”) and/or presumed asbestos containing materials (“PACM”) and may also contain both natural and artificial conditionsand activities involving risk of harm. AT&T has not inspected such property for the purposes of this Agreement and has nottaken any efforts to discover or make safe dangerous conditions or activities for the purpose of Supplier’s performance ofServices.



40

b. Supplier shall be responsible for inspecting the Services site for unsafe conditions and taking the necessary safety precautions

for protection of Supplier, its employees, and agents and assuring a safe place for performance of the Services. As a materialcondition of this Agreement, Supplier, for itself and its employees and agents, assumes all risk of dangers associated with theproperty, including any potential asbestos exposure, and responsibility for OSHA notice requirements including:

1. contacting the appropriate AT&T Project manager responsible for the property to determine the presence, location and

quantity of ACM/PACM that Supplier's employees may reasonably be expected to work in or adjacent to;

2. informing Supplier’s employees of the presence, location and quantity of ACM/PACM present in the property thatSupplier's employees may reasonably be expected to work in or adjacent to and the precautions to be taken to ensure thatairborne ACM/PACM is confined to the identified ACM/PACM area; and

3. informing the appropriate AT&T Project manager and other employers of employees at the property, of the presence,

location and quantity of any newly discovered ACM/PACM identified by Supplier within twenty-four (24) hours ofdiscovery.

c. Should Services require the drilling of vinyl asbestos containing floor tile, Supplier agrees that its employees and subcontractors

performing such drilling shall use AT&T’s HD2 Procedure for Drilling Holes Through Vinyl Asbestos Floor Tile (“AT&T’sProcedure”) which has a Negative Exposure Assessment when drilling through such tile and that only employees andsubcontractors who have received the training required to perform AT&T’s Procedure will perform such drilling.

d. Supplier hereby releases AT&T from any and all claims or causes of action in connection with the responsibilities hereby

assumed by Supplier, and agrees to indemnify, hold harmless and defend, AT&T, its Affiliates and their agents and employeesagainst any Loss arising therefrom in accordance with the Section entitled “Indemnity.”

e. If in Supplier's judgment, the Services, other than Services requiring the drilling of asbestos containing floor tile, should not

proceed due to the presence of ACM/PACM, and/or any other unsafe condition, the correction of which may require changes oralterations in AT&T's operations or property, Supplier shall notify the AT&T Project manager immediately, and shall suspendthe Services until Supplier and AT&T agree on the corrections or alterations necessary for the safe performance of the Services.

4.6 Independent Contractor

Supplier hereby represents and warrants to AT&T that:

a. Supplier is engaged in an independent business and will perform all obligations under this Agreement as an independentcontractor and not as the agent or employee of AT&T;

b. Supplier’s personnel performing Services shall be considered solely the employees of Supplier and not employees or agents of

AT&T;



41

c. Supplier has and retains the right to exercise full control of and supervision over the performance of the Services and full control

over the employment, direction, assignment, compensation, and discharge of all personnel performing the Services;

d. Supplier is solely responsible for all matters relating to compensation and benefits for all of Supplier’s personnel who performServices. This responsibility includes (i) timely payment of compensation and benefits, including, but not limited to, overtime,medical, dental, and any other benefit, and (ii) all matters relating to compliance with all employer obligations to withholdemployee taxes, pay employee and employer taxes, and file payroll tax returns and information returns under local, state andfederal income tax laws, unemployment compensation insurance and state disability insurance tax laws, social security andMedicare tax laws, and all other payroll tax laws or similar laws with respect to all Supplier personnel providing Services;

e. Supplier shall indemnify, hold harmless and defend AT&T from all Losses related to Supplier’s failure to comply with the

immediately preceding paragraph in accordance with the Section entitled “Indemnity.”

4.7 Reimbursable Expenses

AT&T is not responsible for any travel, meal or other business related expense incurred by Supplier whether or not incurred in itsperformance of its obligations under this Agreement, unless reimbursement of expenses is expressly authorized in this Agreement or anOrder pursuant to this Agreement. If reimbursement of expenses is so authorized, in order to be reimbursable, each and every such expensemust comply with the requirements of AT&T’s Vendor Expense Policy attached hereto and incorporated herein as Appendix Z. Suppliermust provide in a timely manner receipts and other documentation as required by the Vendor Expense Policy and such additionaldocumentation or information requested by AT&T to substantiate expenses submitted by Supplier for reimbursement.

4.8 Technical Support Supplier will provide, at no additional cost to AT&T, full and complete technical assistance to qualified AT&T personnel for the Materialand Services provisioned under this Agreement, including ongoing technical support and field Service and assistance, provision of technicalbulletins and updated user manuals, and telephone assistance to assist with installation, operation, maintenance and problem resolution. Theavailability or performance of this technical support will not be construed as altering or affecting Supplier's obligations as set forth in theWarranty Section or as provided elsewhere in this Agreement. Field Service and technical support, including emergency support (serviceaffecting), will be provided on site twenty-four (24) hours a day. Supplier will provide to AT&T, and keep current, an escalation documentthat includes names, titles and telephone numbers, including after- hours telephone numbers, of Supplier personnel responsible forproviding technical support to AT&T. Supplier will maintain a streamlined escalation process to speed resolution of reported problems.



42

4.9 Payment Card Industry (PCI) Payment Card Industry Data Security Standards (PCI-DSS) and Credit Cardholder Information

The Payment Card Industry (PCI) Data Security Standards are network security and business practice guidelines developed for Visa,MasterCard, American Express and Discover Card. They were developed to establish a minimum security standard with regards to theprotection of cardholder’s account and transaction information. The PCI Security Standards Council, LLC (a non-AT&T entity) owns,develops, maintains and distributes the PCI Data Security Standard (DSS). If Supplier (or its affiliates and/or Subcontractors, if any, )processes, transmits, or stores credit cardholder data and/or related transaction status or identity information through, for, or on behalf ofAT&T (including, without limitation, for itself, or in connection with AT&T’s joint or co-branded relationships and/or its, or theircustomers, as the case may be), Supplier represents and warrants that it and its affiliates and/or Subcontractors, if any, that process,transmits, and/or stores credit cardholder data and/or related transaction status or identity information through, for, or on behalf of AT&T(including, without limitation, for itself, or in connection with AT&T’s joint or co-branded relationships and/or its, or their customers, asthe case may be) is/are, and shall remain PCI DSS compliant/certified, current, and in good standing, at no cost to AT&T, for the longer ofthe term of this Agreement or any of Supplier’s applicable obligation periods under this Agreement, in accordance with the requirements ofthe PCI DSS. Notwithstanding anything to the contrary contained within this Agreement, Supplier acknowledges that credit cardholderinformation shall be deemed, and shall be treated as Information under this Agreement irrespective of whether or not such Information isconspicuously marked as confidential or proprietary and Supplier’s obligation to treat credit cardholder related Information as confidentialshall survive the termination or expiration of this Agreement. Supplier shall indemnify and hold AT&T harmless from and against anyproved or alleged claims, demands or suits, or any losses, damages, liabilities, fines, penalties and expenses (including reasonableattorney’s fees) that arise out of, relate to or result from Supplier’s (its affiliates, and/or Subcontractor(s), if any, acting through or on behalfof Supplier) failure to comply with its obligations under this clause. Except as may be provided elsewhere in this Agreement, nothingcontained within this clause shall be construed to mean, nor means that Supplier is authorized to delegate, assign or subcontract any portionof its obligations under this clause to any third party. When applicable and annually thereafter while applicable, and/or upon AT&T’srequest, Supplier shall email to AT&T a current copy of Supplier’s executed Attestation of Compliance (AOC). At g18906.att.com Additionally, in addition to and not in limitation of its general obligations under the Agreement, Supplier shall complywill federal, state and local laws, rules and regulations relating to the processing of credit card information, the privacy of credit card andpersonal information, and the collection and remittal of credit card related payments.

4.10 AT&T Data and AT&T Derived Data (Big Data)

Definitions. For purposes of this Section:

1. “AT&T Data” means any data or information (i) of AT&T or its customers, that is disclosed or provided toSupplier by, or otherwise obtained by Supplier from, AT&T or any of its customers, including Customer Information andcustomer proprietary network information (as that term is defined in Section 222 of the Communications Act of 1934, asamended, 47 U.S.C. §222), as well as data and information with respect to the businesses, customers, operations, networks,systems, facilities, products, rates, regulatory compliance, competitors, consumer markets, assets, expenditures, mergers,acquisitions, divestitures, billings, collections, revenues and finances of AT&T; and (ii) not supplied by AT&T or any of itscustomers but created, generated, collected or harvested by Supplier either (a) in furtherance of this Agreement or an Orderhereunder or (b) as a result of Supplier’s having access to AT&T infrastructure, systems, data, hardware, software orprocesses (for example, through data processing input and output, service level measurements, or ascertainment of networkand system information).

Proprietary and Confidential

This Agreement and information contained therein is not for use or disclosure outside of AT&T, its Affiliates, andthird party representatives, and Supplier except under written agreement by the contracting Parties.

43

2. “AT&T Derived Data” means any data or information that is a result of any modification, adaption, revision,translation, abridgement, condensation, compilation, evaluation, expansion or other recasting or processing of the AT&TData, for example, as a result of Supplier’s observation, analysis, or visualization of AT&T Data arising out of theperformance of Supplier’s obligations hereunder.

b. Ownership of AT&T Data and AT&T Derived Data.

1. AT&T Data is the property of AT&T. To the extent needed to perfect AT&T’s ownership in AT&T Data, Supplierhereby assigns all right, title and interest in AT&T Data to AT&T. No transfer of title in AT&T Data to Supplier isimplied or shall occur under this Agreement. AT&T Data shall not be (a) utilized by Supplier for any purpose other than asrequired to fulfill its obligations under this Agreement, (b) sold, assigned, leased, commercially exploited or otherwiseprovided to or accessed by third parties, whether by or on behalf of Supplier, (c) withheld from AT&T by Supplier, or (d)used by Supplier to assert any lien or other right against or to it. Supplier shall promptly notify AT&T if Supplier believesthat any use of AT&T Data by Supplier contemplated under this Agreement or to be undertaken as part of the performanceof this Agreement is inconsistent with the preceding sentence. 2. AT&T shall own all right, title and interest in and to the AT&T Derived Data. To the extent needed to perfectAT&T’s ownership in AT&T Derived Data, Supplier hereby assigns all right, title and interest in AT&T Derived Data toAT&T. AT&T grants to Supplier a license to access, use, and copy the AT&T Derived Data, with no right to grantsublicenses, solely for the performance of Supplier’s obligations during the Term of this Agreement and solely incompliance with AT&T’s privacy policies, including obligations relating to Customer Information. For the avoidance ofdoubt, Supplier shall not create or develop AT&T Derived Data after the expiration or of this Agreement.

Proprietary and Confidential

This Agreement and information contained therein is not for use or disclosure outside of AT&T, its Affiliates, andthird party representatives, and Supplier except under written agreement by the contracting Parties.

44

3. Supplier shall promptly deliver AT&T Data and AT&T Derived Data to AT&T at no cost to AT&T, in the formatof which the data resides, on industry standard media and in a commercially reasonable timing (i) at AT&T’s request, (ii) atthe expiration or termination of this Agreement and the completion of any requested termination assistance services or (iii)with respect to particular AT&T Data or AT&T Derived Data, at such earlier date that such data is no longer required bySupplier to perform the Services. Thereafter, Supplier shall return or destroy, as directed by AT&T, any requested portionof the AT&T Data and AT&T Derived Data in Supplier’s possession or under Supplier’s control within fifteen (15)business days and deliver to AT&T written certification of such return or destruction signed by an officer of Supplier,provided that with respect to archival or back-up copies that reside on the Suppliers’ systems shall be deemed to havecomplied with its obligations under this clause (3) if it makes reasonable efforts to expunge from such systems, or topermanently render irretrievable, such copies, or retains such archival back-up copies to comply with the requirements ofthis agreement, or for retains such archival back-up copies for legal purposes which shall be permissible until suchapplicable statutes of limitations have expired. 4. The provisions of this Section shall apply to all AT&T Data and AT&T Derived Data, regardless of whether suchdata was first disclosed or otherwise provided to, or created, developed, modified, recast or processed by, Supplier before,on or after the Effective Date of this Agreement. Supplier shall secure AT&T Data and AT&T Derived Data pursuant tothe provisions applicable to AT&T Information under the Appendix “O” titled “AT&T Supplier Information SecurityRequirements (SISR).” Supplier’s obligation to return AT&T Data and AT&T Derived Data upon AT&T’s request shallnot apply to such data which, at the time of AT&T’s request for return, is no longer retained by or on behalf of Supplier.

4.11 Supplier Assessment

a. In the event AT&T conducts an assessment of Supplier’s Materials and Services provided pursuant to this Agreement (including,capacity to provision quantities of Materials and Services ordered, IT Integration, architecture and design of the Materials andServices, security, operations, and customer support for the Materials and Services), Supplier shall promptly cooperate with suchassessment, including (i) providing AT&T with complete and accurate information; and (ii) attending any live AT&T assessmentmeetings.

b. Within thirty (30) days of receiving notice of any deficiencies found during the assessment, Supplier shall (i) develop a

corrective action plan for any material deficiencies (the “Plan”); (ii) include any reasonable recommendations made by AT&T inthe Plan and (iii) review the Plan with AT&T.

c. Once the Plan is finalized, Supplier shall (i) promptly commence implementation; (ii) report biweekly to AT&T on the status on

its progress on implementing the Plan and (iii) report monthly to its senior executives on the status of the progress inimplementing the Plan.

d. Supplier shall fulfill its obligations in connection with this Section at no cost to AT&T.



45

4.12 Citizenship and Sustainability Supplier shall conduct business with an abiding respect for corporate citizenship, sustainability, and human rights (“Citizenship andSustainability”). As such, to the extent Supplier has an existing Citizenship and Sustainability program, such program shall be no lessstringent than AT&T’s Principles of Conduct for Suppliers available at:http://www.attsuppliers.com/misc/SupplierSustainabilityPrinciples.pdf and the AT&T Human Rights in Communication Policy available at:http://www.att.com/Common/about_us/downloads/Human_Rights_Communications_Policy.pdf (as amended from time-to-time) (“AT&TCitizenship and Sustainability Policies”). In the event that Supplier does not have a Citizenship and Sustainability program, or suchprogram does not address all areas addressed in the AT&T Citizenship and Sustainability Policies, Supplier shall conduct its businessoperations in a manner consistent with the AT&T Citizenship and Sustainability Policies. Upon AT&T’s request, Supplier shall provide to AT&T such information, reports, or survey responses as reasonably necessary toperiodically monitor Supplier’s business operations in the context of Citizenship and Sustainability. Supplier shall respond to such requestswithin timelines as reasonably set forth by AT&T. 4.13 Supplier`s Materials Warranty a. For purposes of AT&T’s distribution of Supplier’s licensed Material, Supplier agrees to provide AT&T and Customers with the

same warranties provided to AT&T. b. The licensed Materials Warranty, and the obligations related to such licensed Material of all such Supplier’s Material shall flow

directly from Supplier to AT&T’s customer. AT&T will have no obligations with respect to the licensing of Software or to thewarranting of any Materials or Services, other than as may be expressly set forth in this Section. However, AT&T and notSupplier shall invoice Customer for any payments that may become due from customer, and AT&T and not Supplier shallcollect and receive payments from AT&T’s customer on account of any such invoice.

c. Except as ATT’s customer may otherwise agree through its acceptance of the terms of Supplier’s Material (including without

limitation acceptance thereof by a Government Customer through sub-section e), Supplier’s warranty and all other rights of ATThereunder, including but not limited to, those under the Sections entitled “Infringement,” “Indemnity,” and “Warranty,” shallhereby be deemed to also be given for the benefit of ATT’s customers, and ATT may disclose the provisions of such Sections toits customers. Supplier further agrees to assume sole and complete responsibility, as between ATT and Supplier, for resolvingany claim brought by any customer against ATT which is attributable to Supplier’s failure to promptly Deliver Material orprovide Service strictly in conformance with Specifications; breach of warranty; design defect; negligence; products liability;patent, trademark, copyright or other infringement; or any other claim attributable to the Material or Services, or the acts oromission of Supplier in furnishing the Material or Services hereunder (collectively “Claims”).

d. Supplier shall indemnify, hold harmless, and defend ATT and other indemnified parties harmless from and against Loss in

connection with, arising out of, or resulting from any Claim, as provided in the Sections entitled “Indemnity” and“Infringement”.

e. ATT agrees to promptly notify Supplier of any Claim and cooperate with Supplier, upon request and at Supplier’s expense, as

provided in the Section entitled “Indemnity”.

f. Supplier acknowledges and agrees that certain of AT&T’s Customers that are State, Federal, local and municipal agencies,departments, political subdivisions and related entities purchasing pursuant to government contracts (“Government Customers”)require certain different treatment with respect to the issues dealt with in this Section. Supplier hereby agrees that the terms andconditions in this sub-section (f) apply to such Government Customers, and that all of this Section continues to apply to suchGovernment Customers except as expressly modified by this sub-section f.



46

5.0 AT&T Supplier Information Security Requirements (SISR) Supplier agrees to comply with the AT&T Supplier Information Security Requirements (SISR) set forth in Appendix O attached hereto andincorporated by reference herein. Supplier agrees to cooperate fully with AT&T, including completing checklists or similar documentation,to ensure that Software and/or computer systems Supplier develops, designs, supports and/or uses under this Agreement comply with thestandards and requirements set forth in the SISR. Supplier agrees to indemnify, defend at its expense, and hold AT&T, its Affiliates and itsand their agents, employees and customers harmless against any Loss arising from or in connection with, or resulting from, any breach ofthe terms set forth in the SISR, in accordance with the Section herein entitled “Indemnity.” 6.0 Execution of Agreements

6.1 Transmission of Original Signatures and Executing Multiple Counterparts

Original signatures transmitted and received via facsimile or other electronic transmission of a scanned document, (e.g., .pdf or similarformat) are true and valid signatures for all purposes hereunder and shall bind the parties to the same extent as that of an original signature.This Agreement may be executed in multiple counterparts, each of which shall be deemed to constitute an original but all of which togethershall constitute only one document. IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed, which may be in duplicate counterparts, each of whichwill be deemed to be an original instrument. SITO MOBILE SOLUTIONS, INC AT&T Services, Inc. By: /s/ Kurt Streams By: /s/ Laurie Szczepanek Printed Name: Kurt Streams Printed Name: Senior Contract Manager Title: CFO Title: Senior Contract Manager Date: 1/4/2016 Date: 1/4/2016



47

EXHIBIT 31.1

CERTIFICATION PURSUANT TORULE 13a-14(a) OR RULE 15d-14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934 I, Jerry Hug, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of SITO Mobile, Ltd.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to

make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to theperiod covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material

respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as

defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange ActRules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our

supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed

under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions

about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s

most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial

reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing theequivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are

reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s

internal control over financial reporting. Date: February 9, 2016 /s/ Jerry Hug Jerry Hug, Chief Executive Officer (Principal Executive Officer)

EXHIBIT 31.2

CERTIFICATION PURSUANT TORULE 13a-14(a) OR RULE 15d-14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

I, Kurt Streams, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of SITO Mobile, Ltd.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to

make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to theperiod covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material

respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as

defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange ActRules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our

supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed

under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions

about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s

most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial

reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing theequivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are

reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s

internal control over financial reporting. Date: February 9, 2016 /s/ Kurt Streams Kurt Streams, Chief Financial Officer (Principal Financial and Accounting Officer)

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICERPURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002 Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Jerry Hug, the ChiefExecutive Officer of SITO Mobile, Ltd. (the “Company”), hereby certify, that, to my knowledge:

1. The Quarterly Report on Form 10-Q for the quarter ended December 31, 2015 (the “Report”) of the Company fully complies with

the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of

the Company. Date: February 9, 2016 /s/ Jerry Hug Jerry Hug, Chief Executive Officer (Principal Executive Officer)

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICERPURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002 Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Kurt Streams, the ChiefFinancial Officer of SITO Mobile, Ltd. (the “Company”), hereby certify, that, to my knowledge:

1. The Quarterly Report on Form 10-Q for the quarter ended December 31, 2015 (the “Report”) of the Company fully complies with

the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of

the Company. Date: February 9, 2016 /s/ Kurt Streams Jerry Hug, Chief Financial Officer (Principal Financial & Accounting Officer)

Documents

SITO MOBILE LTD.ir.sitomobile.com/all-sec-filings/content/0001213900-16-010704/...☒ Yes ☐ No Indicate by check mark whether the ... Condensed Consolidated Balance Sheets as of