UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~February~~August 2931, 2016

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

For the transition period from _________________ to ___________________

0-10665

Commission File Number

SOFTECH, INC.

(Exact name of the Registrant as specified in its charter)


Massachusetts		04-2453033
(State or other jurisdiction of incorporation or organization)		(I.R.S Employer Identification No.)

650 Suffolk Street, Suite 415, Lowell, MA 01854

(Address of principal executive offices and zip code)

Telephone (978) 513-2700

(Registrant’s telephone number, including area code)

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 Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ~~Yes X . No .~~

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

Yes X . No .

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


Large accelerated filer	.	Accelerated filer	.
Non-accelerated filer	. (Do not check if a smaller reporting company)	Smaller reporting company	X .

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

~~The~~Yes . ~~number~~No X ~~of shares outstanding of registrant’s common stock at April 10, 2016 was 903,724 shares~~.

The number of shares outstanding of registrant’s common stock at October 11, 2016 was 903,724 shares.

SOFTECH, INC.

INDEX

		Page Number
PART I.	Financial Information	Page Number
PART I.	Financial Information
Item 1.	Financial Statements
Item 1.	Financial Statements	3
	Consolidated Balance Sheets – August 31, 2016 (unaudited) and May 31, 2016	3
	Consolidated Balance Sheets – February 29, 2016 (unaudited) and May 31, 2015	3
	Consolidated Statements of Operations – Three Months Ended August 31, 2016 and 2015 (unaudited)	4
	Consolidated Statements of Operations – Three Months Ended February 29, 2016 and February 28, 2015 (unaudited)	4
	Consolidated Statements of Comprehensive Loss – Three Months Ended August 31, 2016 and 2015 (unaudited)	5
	Consolidated Statements of Operations – Nine Months Ended February 29, 2016 and February 28, 2015 (unaudited)	5
	Consolidated Statements of Cash Flows – Three Months Ended August 31, 2016 and 2015 (unaudited)	6
	Consolidated Statements of Comprehensive Income (Loss) – Three Months Ended February 29, 2016 and February 28, 2015 (unaudited)	6
	Notes to Consolidated Financial Statements (unaudited)	7
	Consolidated Statements of Comprehensive Income (Loss) – Nine Months Ended February 29, 2016 and February 28, 2015 (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Consolidated Statements of Cash Flows – Nine Months Ended February 29, 2016 and February 28, 2015 (unaudited)	8
Item 4.	Controls and Procedures	26
	Notes to Consolidated Financial Statements (unaudited)	9
PART II.	Other Information	27
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
1A.	Risk Factors	27
Item 3.	Controls and Procedures	32
Item 6.	Exhibits	32
PART II.	Other Information
Item 1A.	Risk Factors	32
Item 6.	Exhibits	39

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

SOFTECH, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

		(in thousands, except for share data)
		(in thousands)
		February 29, 2016 (Unaudited)		May 31, 2015
		August 31,		May 31,
ASSETS
		2016		2016
Cash	$	73	$	310
ASSETS		(UNAUDITED)
Accounts receivable (less allowance for uncollectible accounts of $18 as of February 29, 2016 and May 31, 2015)		726		587
Cash and cash equivalents	$	90	$	175
Earn-out payments from CADRA sale, current portion		200		243
Accounts receivable (less allowance for uncollectible accounts of $18 as of August 31, 2016 and May 31, 2016)		637		477
Prepaid and other assets		278		315
Earn-out payments from CADRA sale, current portion		130		130
Total current assets		1,277		1,455
Prepaid expenses and other assets		203		207
Property and equipment, net		77		57
Total current assets		1,060		989
Property and equipment, net		63		71
Goodwill		948		948
Capitalized software development costs, net		~~722~~907		~~422~~825
Capitalized patent costs		~~114~~113		~~109~~113
Earn-out payments from CADRA sale, net of current portion		146		133
Related party note receivable		134		134
Other assets		35		35
TOTAL ASSETS	$	3,~~453~~260	$	3,~~293~~115
LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ DEFICIT
Liabilities:
Accounts payable	$	223	$	178
Accounts payable	$	281	$	137
Accrued expenses		477		323
Accrued expenses		360		283
Deferred maintenance and subscription revenue		1,322		1,531
Deferred revenue		1,558		1,732
Capital leases, current portion		24		24
Capital lease, current		24		19
Current portion of long term debt – related party		1,250		900
Current maturities of long-term debt		900		446
Total current liabilities		3,296		2,956
Total current liabilities		3,123		2,617
Capital leases, net of current portion		31		39
Capital lease, net of current portion		45		30
Total liabilities		3,327		2,995
Other accrued liabilities		1		10
Total liabilities		3,169		2,657
Commitments and contingencies
Redeemable Common Stock and Shareholders Deficit:
Redeemable common stock, $0.10 par value, 180,000 shares issued and outstanding at both August 31, 2016 and May 31, 2016.		1,260		1,260
Redeemable common stock, $0.10 par value, 180,000 and 170,000 shares issued and outstanding at February 29, 2016 and May 31, 2015, respectively.		1,260		1,190
Shareholders’ deficit:
Common stock, $0.10 par value 20,000,000 shares authorized, 723,724 issued and outstanding at February 29, 2016 and May 31, 2015		73		73
Common stock, $0.10 par value 20,000,000 shares authorized, 723,724 issued and outstanding at both August 31, 2016 and May 31, 2016.
Additional paid in capital		27,114		27,056
		73		73
Accumulated deficit		(27,905)		(27,400)
Additional paid in capital		27,140		27,138
Accumulated other comprehensive loss		(258)		(283)
Accumulated deficit		(28,257)		(28,073)
Total shareholders’ deficit		(976)		(554)
Accumulated other comprehensive loss		(283)		(278)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT	$	3,453	$	3,293
Total shareholders’ deficit		(1,327)		(1,140)
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ DEFICIT	$	3,260	$	3,115

See accompanying notes to unaudited consolidated financial statements

SOFTECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

		(in thousands, except for share and per share data)
		For the Three Months Ended
		February 29,		February 28,
		August 31,		August 31,
		2016		2015
Revenue:
Products	$	6763	$	~~184~~54
Services		~~845~~866		~~741~~927
Total revenue		~~912~~929		~~925~~981
Cost of revenue:
Products		1836		3829
Services		~~335~~323		~~392~~377
Total cost of revenue		~~353~~359		~~430~~406
Gross margin		~~559~~570		~~495~~575
Research and development expenses		~~204~~131		~~183~~154
Selling, general and administrative expenses		~~668~~597		~~592~~599
Change in fair value of earn-out payments		(21)		(10)
Gain on change in fair value of earn-out payments		-		(10)
Operating loss		(~~292~~158)		(~~270~~168)
Interest expense		3026		3113
Other (income) expense		(12)		55
Other expense, net		-		(7)
Net loss	$	(~~310~~184)	$	(~~356~~174)
Basic and diluted net loss per share:	$	(0.3420)	$	(0.4019)
Weighted average common and redeemable shares outstanding-basic and diluted		903,724		893,724

See accompanying notes to unaudited consolidated financial statements

SOFTECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~OPERATIONS (UNAUDITED)~~

		(in thousands, except for share and per share data)
		For the Nine Months Ended
		February 29,		February 28,
		2016		2015
Revenue:
Products	$	475	$	454
Services		2,722		2,362
Total revenue		3,197		2,816
Cost of revenue:
Products		64		124
Services		1,138		1,183
Total cost of revenue		1,202		1,307
Gross margin		1,995		1,509
Research and development expenses		495		677
Selling, general and administrative expenses		1,900		1,953
Change in fair value of earn-out payments and holdback payment		30		(70)
Operating loss		(430)		(1,051)
Interest expense		71		158
Other expense		4		98
Net loss	$	(505)	$	(1,307)
Basic and diluted net loss per share:	$	(0.56)	$	(1.47)
Weighted average common and redeemable shares outstanding-basic and diluted		898,833		888,906

COMPREHENSIVE LOSS (UNAUDITED)


		(in thousands, except for share and per share data)
		For the Three Months Ended
		August 31,		August 31,
		2016		2015

Net loss	$	(184)	$	(174)

Other comprehensive (loss) income :
Foreign currency translation adjustment		(5)		6

Total other comprehensive (loss) income		(5)		6

Comprehensive loss	$	(189)	$	(168)

See accompanying notes to unaudited consolidated financial statements

SOFTECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

COMPREHENSIVE INCOME (LOSS) (UNAUDITED)


		(in thousands)
		For the Three Months Ended
		August 31,		August 31,
		2016		2015
Cash flows from operating activities:
Net loss	$	(184)	$	(174)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		10		26
Stock-based compensation		2		31
Non-cash gain on foreign currency transactions		-		(7)
Change in fair value of earn-out payments		-		(10)

Change in current assets and liabilities:
Accounts receivable		(160)		(80)
Prepaid expenses and other assets		4		63
Accounts payable, accrued expenses and other liabilities		199		171
Deferred maintenance revenue		(209)		(405)
Net cash used in operating activities		(338)		(385)

Cash flows from investing activities:
Capital expenditures		-		(17)
Capitalized software development costs		(84)		(118)
Capitalized patent costs		-		(2)
Net cash used in investing activities		(84)		(137)

Cash flows from financing activities:
Borrowing under debt agreements		350		250
Repayments under capital lease		(8)		(2)
Net cash provided by financing activities		342		248

Effect of exchange rates on cash		(5)		13
Decrease in cash		(85)		(261)
Cash and cash equivalents, beginning of period		175		310
Cash and cash equivalents, end of period	$	90	$	49

Supplemental disclosures of cash flow information:
Interest paid	$	23	$	11
Taxes paid	$	2	$	2

Noncash investing and financing activities:
Purchase of property and equipment under capital lease	$	-	$	32
Accretion of redeemable common stock	$	-	$	-

		(in thousands)
		For the Three Months Ended
		February 29,		February 28,
		2016		2015
Net loss	$	(310)	$	(356)
Other comprehensive income:
Foreign currency translation adjustment		(30)		113
Comprehensive loss	$	(340)	$	(243)

See accompanying notes to unaudited consolidated financial statements

SOFTECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

		(in thousands)
		For the Nine Months Ended
		February 29,		February 28,
		2016		2015
Net loss	$	(505)	$	(1,307)
Other comprehensive income:
Foreign currency translation adjustment		25		198
Comprehensive loss	$	(480)	$	(1,109)

See accompanying notes to unaudited consolidated financial statements

SOFTECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

		(in thousands)
		For the Nine Months Ended
		February 29,		February 28,
		2016		2015
Cash flows from operating activities:
Net loss	$	(505)	$	(1,307)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		64		253
Stock-based compensation		86		85
Non-cash loss on foreign currency transactions		4		98
Non-cash interest expense		-		27
Change in fair value of earn-out payments and holdback payment		30		(70)
Change in current assets and liabilities:
Accounts receivable		(139)		125
Prepaid expenses and other assets		37		(31)
Accounts payable and accrued expenses		204		(617)
Deferred revenue		(174)		228
Net cash used in operating activities		(393)		(1,209)
Cash flows from investing activities:
Capital expenditures		(17)		(2)
Proceeds from holdback agreement		-		320
Capitalized software development costs		(335)		(101)
Capitalized patent costs		(5)		(2)
Net cash provided by (used in) investing activities		(357)		215
Cash flows from financing activities:
Cost of repurchase of common stock		-		(37)
Cost of repurchase of redeemable common stock		-		(275)
Borrowing under debt agreements		578		750
Proceeds from issuance of common stock		50		820
Repayments under debt agreements		(124)		(1,020)
Repayments under capital lease		(12)		(10)
Net cash provided by financing activities		492		228
Effect of exchange rates on cash		21		95
Decrease in cash and cash equivalents		(237)		(671)
Cash and cash equivalents, beginning of period		310		1,209
Cash and cash equivalents, end of period	$	73	$	538
Supplemental disclosures of cash flow information:
Interest paid	$	47	$	105
Income taxes paid	$	2	$	2
Noncash investing and financing activities:
Accretion of redeemable common stock	$	29	$	370
Purchase of property and equipment under capital lease	$	32	$	-

See accompanying notes to unaudited consolidated financial statements

SOFTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

A. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

SofTech, Inc. (the “Company”) was formed in Massachusetts on June 10, 1969. The Company is primarily engaged in the development, marketing, distribution and support of computer software solutions that serve the Product Lifecycle Management (“PLM”) industry. In addition to the products offered to the PLM industry, in 2012, the Company filed a patent application describing an information management system for the residential property market. During fiscal years 2015 and 2016 the Company invested a substantial amount of time in, among other things, researching this market, reviewing various business models, creating specifications for the technology and developing the technology. In January 2016, the product, HomeView™, was introduced to the market and a free version of the app was made available on iTunes. The Company’s operations are organized geographically with offices in the U.S. and in Italy. The Company also has resellers in Asia and Europe.

In addition to the products offered to the PLM industry, in 2012, the Company filed a patent application describing an information management system for the residential property market. The Company established a wholly-owned subsidiary, HomeView, Inc. on April 7, 2015 in Massachusetts. HomeView™, a technology being developed by HomeView, Inc., is a secure, intelligent home asset management and maintenance system. HomeView allows homeowners to create a virtual home manual that logs, manages and tracks personal assets and attributes about the property. Home ownership is made easier by managing user manuals, warranty periods, service records, maintenance reminders and other projects with HomeView. Our plans are to offer this technology as a hosted solution wherein the software would reside on our servers.

Since fiscal year 2015, the Company has invested a substantial amount of time in, among other things, researching this market, reviewing various business models, creating specifications for the technology and developing the technology. In January 2016, the product was introduced to the market and a free version of the app was made available on iTunes.

The Company has been actively engaged in acquiring and filing new U.S. patents, evaluating alternatives for monetizing its existing patents and investigating the acquisition of specific patents already awarded that might enhance shareholder value.

The ~~unaudited~~ consolidated financial statements of the Company include the accounts of SofTech, Inc. and its wholly-owned subsidiaries, Information Decisions, Inc., Workgroup Technology Corporation, HomeView, Inc., SofTech, GmbH (inactive since 2014) and SofTech, Srl. All significant intercompany accounts and transactions have been eliminated in consolidation.

~~Our~~The ~~unaudited~~Company ~~consolidated~~has ~~financial~~sustained ~~statements~~net ~~presented~~operating ~~herein~~losses ~~have been prepared pursuant to the rules of the Securities~~ and ~~Exchange~~negative ~~Commission~~cash ~~(the~~flow ~~“SEC”)~~from operations for ~~quarterly~~fiscal ~~reports~~years on2016 ~~Form 10-Q~~ and do2015 ~~not~~as ~~include~~detailed ~~all of the information and footnote disclosures required by generally accepted accounting principles~~ in the ~~United~~table ~~States~~below ~~of America~~ (~~“GAAP”~~000’s). These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended May 31, 2015 included in our Annual Report on Form 10-K (“Annual Report”), which was filed with the SEC on August 31, 2015. In the opinion of management, the consolidated financial statements include all adjustments necessary for the fair presentation of the consolidated financial position, results of operations, and cash flows of the Company as of and for these interim periods.:

The Company has sustained net operating losses and negative cash flow from operations for fiscal year 2014, 2015 and the first nine months of fiscal 2016 as detailed in the table below (000’s):


		Fiscal Years Ended
		May 31,		May 31,
		2016		2015

Net loss	$	(673)	$	(1,319)

Net cash used in operating activities	$	(359)	$	(1,287)

		Nine Months
		Ended		Fiscal Years Ended
		February 29,		May 31,		May 31,
		2016		2015		2014
Net loss	$	(505)	$	(1,319)	$	(748)
Net cash used in operating activities	$	(393)	$	(1,287)	$	(516)

The net loss and net cash used in operating activities for the first quarter of fiscal 2017 was $(184,000) and $(338,000), respectively, as compared to $(174,000) and $(385,000) for the same period in fiscal 2016.

The majority of the net losses and net cash used in operating activities ~~during~~detailed ~~fiscal~~above ~~year~~relate ~~2015 and the first nine months of fiscal 2016 related~~ to our Italian subsidiary and expenses we have incurred in launching our HomeView technology.

Our Italian subsidiary, SofTech, Srl, was primarily focused on marketing and supporting the CADRA technology prior to the sale of that product line in fiscal 2014. Since that time, it has been offering CADRA under a Distributorship Agreement while developing new revenue streams. The losses diminished significantly in fiscal 2016 as compared to 2015 as a result of these new initiatives. In fiscal 2016, we were awarded a contract to implement a solution at our largest European customer to, among other things, automate their bill of materials using third party technologies and professional services. This project was substantially completed during the fiscal year 2016 and we are discussing expansion of that solution with this customer. We anticipate continued improvement in operating results.

With regard to HomeView, we are continuing to develop the technology and expect multiple new releases for the foreseeable future. We began introducing this product to the market ~~during~~in ~~the~~January ~~three months ended February 29,~~ 2016. The Company expects that additional capital will be required to continue to introduce HomeView into the market effectively.

~~The~~We ~~Company~~believe ~~has~~with ~~been~~additional ~~investigating various alternatives for raising this needed capital. While debt is one of those alternatives~~liquidity, the Company believes that some form of equity infusion is more appropriate given that the new product has not yet demonstrated market acceptance or proven its revenue model. There can be no assurance that we can ~~raise~~significantly ~~the~~ramp ~~necessary~~up ~~capital on reasonable terms. If~~ the ~~Company~~marketing isefforts ~~unable to raise the necessary capital, its plans for maximizing the return on the capital invested in the HomeView product~~ and ~~for establishing a~~ new ~~revenue~~account ~~source may be materially negatively impacted~~creation.

~~Another~~On ~~possible~~August ~~alternative~~24, 2016, we entered into an Asset Purchase Agreement pursuant to ~~selling~~which ~~additional~~we ~~shares~~agreed ofto ~~common~~sell ~~stock~~our orProductCenter ~~incurring~~and ~~debt~~Connector ~~may~~product belines to ~~raise~~Essig Research, Inc. (“Essig”) for a total of $3.25 million plus contingent payments based on revenue targets for the ~~necessary~~two ~~capital~~twelve-month ~~through~~periods immediately following the ~~sale~~transaction date (the “PLM Sale”). Essig is an affiliate of ~~one~~EssigPR, orInc., ~~more~~which is owned by Joseph P. Daly, a related party of the Company whose beneficial ownership was approximately 19.4% of the Company’s ~~existing~~outstanding ~~revenue~~common ~~producing~~stock as of August 24, 2016. The assets to be acquired by Essig include the properties and assets used exclusively in the Product Lifecycle Management (“PLM”) operations which is composed of the ProducCenter and Connector product lines. AtEssig ~~this~~will ~~time~~assume the contractual liabilities associated with maintenance and subscription support services. Specifically excluded from the sale and retained by SofTech are cash, webilled doaccounts receivable and all remaining assets and liabilities not ~~know~~specifically ~~what~~identified, ~~alternatives~~including ~~will~~the operations of SofTech Srl and HomeView. Approximately $1.25 million of indebtedness as of August 31, 2016 owed by the Company to Essig under existing debt agreements would be ~~available~~repaid as part of this transaction, thereby reducing the cash paid to usthe ~~and~~Company noat ~~final~~the ~~decision~~closing. ~~has~~In ~~been~~addition, ~~made~~at onthe closing of the ~~best~~transaction, ~~alternative~~the ~~available~~Company has agreed to repurchase from Mr. ~~However~~Daly 110,000 weshares of its common stock at approximately $6.50 per share. These shares are ~~continuously~~currently ~~evaluating~~subject ~~this~~to ~~situation~~a $7.00 put right that, absent such repurchase, would have been exercisable by Mr. Daly in fiscal 2018.

~~The~~A ~~consolidated~~special ~~financial~~meeting ~~statements~~of ~~have~~the ~~been~~Company’s ~~prepared~~shareholders on(the a“Special ~~basis~~Meeting”) ~~that~~was ~~contemplates~~held ~~the~~on ~~realization~~October of5, ~~assets~~2016 ~~and~~to ~~the~~consider ~~satisfaction~~and ofvote ~~liabilities~~on ~~and~~the ~~commitments~~proposal into approve the ~~normal~~sale ~~course~~ of ~~business.~~substantially ~~The~~all ~~Company’s~~of ~~long-term~~the ~~viability~~assets isused ~~dependent~~in on its ~~ability~~ProductCenter ~~to generate sufficient product revenue, net income~~ and ~~cash~~Connector ~~flows~~technologies. ~~from~~At ~~operations~~the toSpecial ~~support~~Meeting ~~its~~79.7% ~~business~~the asshareholders ~~well~~voted asin ~~its~~favor ~~ability~~of tothe ~~obtain~~PLM ~~additional capital~~Sale.

The ~~Company~~closing ~~had a cash balance~~ of ~~approximately $73,000 as of February 29, 2016. Management’s plans also include reducing operating costs and delaying certain expenditures, if necessary, to maintain~~ the ~~Company’s~~PLM ~~liquidity. Management~~Sale ~~believes~~was ~~that~~completed with its available cash and current operating plan that projects cash generation from future operations it will have sufficient cash to meet the Company’s working capital and capital expenditure requirements through at least the next twelve months. There can be no assurance, however, that the Company will not require additional financing in the future if funds from future operations or estimated expenses differ materially from those amounts estimated by management. If we were required to obtain additional financing in the future, there can be no assurance that sources of capital would be available on ~~terms~~October ~~favorable to us~~14, ~~if at all~~2016.

~~HOMEVIEW,~~The ~~INC~~sale of the ProductCenter and Connector technologies will provide the Company with the liquidity it needs to meet its existing obligations as well as increase the marketing efforts for the HomeView technology.

~~The~~Management ~~Company~~believes ~~established~~that awith ~~wholly-owned~~its ~~subsidiary,~~available ~~HomeView,~~cash ~~Inc.~~and onthe ~~April~~proceeds 7,from ~~2015~~the insale ~~Massachusetts.~~of ~~HomeView™,~~the atechnologies ~~technology~~described ~~being~~above ~~developed~~it bywill ~~HomeView,~~have ~~Inc.,~~sufficient iscash ~~a secure, intelligent home asset management and maintenance system. HomeView allows homeowners~~ to ~~create~~meet athe ~~virtual~~Company’s ~~home~~working ~~manual~~capital ~~that logs, manages~~ and ~~tracks~~capital ~~personal~~expenditure ~~assets~~requirements ~~and~~through ~~attributes~~at ~~about~~least the ~~property.~~next ~~Home~~twelve ~~ownership~~months. isThere ~~made~~can ~~easier~~be byno ~~managing user manuals~~assurance, ~~warranty periods~~however, ~~service~~that ~~records, maintenance reminders and other projects with HomeView. We are currently offering this technology to consumers as a hosted solution, with~~ the ~~software~~sale ~~residing~~will onbe ~~our servers~~completed.

CADRA SALE

On October 18, 2013, the Company sold substantially all of the assets of its CADRA product line, including all intellectual property related to that technology but specifically excluding cash, billed accounts receivable and liabilities other than the deferred maintenance liability associated with CADRA customer maintenance contracts for support services (the “CADRA Sale”), to Mentor Graphics Corporation (“Mentor”), pursuant to an Asset Purchase Agreement dated August 30, 2013 (the “Asset Purchase Agreement”). The aggregate consideration for the CADRA Sale is up to $3.95 million. Through ~~February~~May 2931, 2016 the Company has received a total of approximately $3.57 million from Mentor. ~~On April 1, 2016, the Company received an additional payment of approximately $200,000 in contingent payments~~ and could receive up to an additional $223,000 based upon the CADRA revenue generated by Mentor for the period from February 1, 2016 through October 31, 2016. In accordance with the terms of the Asset Purchase Agreement the final payment would be received on or before April 1, 2017. During fiscal year 2016 and 2015 the Company received earn out payments of $200,000 and $283,000, respectively, under the terms of the Asset Purchase Agreement.

In conjunction with completing the CADRA Sale, the Company entered into a one-year, exclusive Distributorship Agreement with Mentor allowing us to market and support the CADRA technology as a reseller throughout Europe (except Germany) at a thirty percent (30%) gross margin. In March 2016 that arrangement was extended through March 24, 2017 on a non-exclusive basis. Under the new arrangement, gross margin on software remained at 30% and the gross margin on support contracts iswere increased to 35%.

RECLASSIFICATIONS

Certain accounts in the financial statements for the three and nine month period ended February 28, 2015 have been reclassified for presentation purposes and had no impact on net loss.

B. SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates included in the financial statements pertain to revenue recognition, the allowance for doubtful accounts receivable, the fair value estimate of the ~~Holdback Payment and~~ Earn-Out Payments due from Mentor related to the sale of the CADRA business and the valuation of long term assets including goodwill, capitalized patent costs, capitalized software development costs, the note receivable and deferred tax assets. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company maintains cash at certain financial institutions in amounts that at times, exceed Federal Deposit Insurance Corporation limits. Cash held in foreign bank accounts at August 31, 2016 totaled approximately $41,000. The Company does not believe it is exposed to significant credit risk related to cash and cash equivalents.

ACCOUNTS RECEIVABLE

Accounts receivable are stated at the amount management expects to collect from outstanding balances. An allowance for doubtful accounts is provided for those accounts receivable considered to be uncollectible based upon management's assessment of the collectability of accounts receivable, which considers historical writeoff experience and any specific risks identified in customer collection matters. Bad debts are written off against the allowance when identified. The Company’s allowance for uncollectible accounts was approximately $18,000 at August 31 and May 31, 2016.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and equivalents and accounts receivable. The Company maintains its cash and equivalents with high credit quality financial institutions. The Company believes it is not exposed to any significant losses due to credit risk on cash and cash equivalents. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Consequently, the Company believes that its exposure to losses due to credit risk on net accounts receivable are limited.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost. The Company provides for depreciation on a straight-line basis over the following estimated useful lives:


Data Processing Equipment		2-5 years
Office furniture		5-10 years
Automobiles		4-6 years
Leasehold improvements		Lesser of the life of the lease or the estimated lease term

Property and equipment was composed of the following (000’s):


		August 31, 2016		May 31, 2016
Computer Software	$	506	$	506
Equipment		502		502
Office Furniture		116		116
Leasehold Improvements		31		31
		1,155		1,155
Less Accumulated Depreciation		(1,092)		(1,084)

	$	63	$	71

Depreciation expense, including amortization of assets under capital lease, was approximately $8,000 and $10,000 for the three month periods ended August 31, 2016 and 2015, respectively.

Maintenance and repairs are charged to expense as incurred; betterments are capitalized. At the time property and equipment are retired, sold, or otherwise disposed of, the related costs and accumulated depreciation are removed from the accounts. Any resulting gain or loss on disposal is credited or charged to income.

SOFTWARE DEVELOPMENT COSTS

The Company accounts for its software development costs in accordance with Accounting Standards Codification (“ASC”) 985-20, Software-Costs of Computer Software to Be Sold, Leased or Marketed and ASC 350-40, Intangibles-Goodwill and Other- Internal Use-Software. ASC 985-20 is applicable to costs incurred to develop or purchase software to be sold, leased or otherwise marketed as a separate product or as part of a product or process. ASC 350-40 is applicable to costs incurred to develop or obtain software solely to meet an entity’s internal needs and for which no substantive plan exists or is being developed to externally market the software. ASC 350-40 also covers technology that would be offered as a hosted solution.

Under ASC 985-20, costs that are incurred in researching and developing a computer software product are charged to expense until technological feasibility has been established for the product. Once technological feasibility is established, software development costs are capitalized until the product is available for general release to customers.

Under ASC 350-40 there are three distinct stages associated with development software which include 1) preliminary project; 2) application development; and 3) post implementation-operation. Costs should be capitalized after each of the following has occurred:

The preliminary project stage has been completed;

Management with the relevant authority authorizes the project;

Management with the relevant authority commits to fund the project;

It is probable that the project will be completed; and

It is probable that the software will be used for the intended purpose.

Capitalization stops after the software is substantially complete.

Capitalized costs are amortized using the straight-line method over the estimated economic life of the product, generally three years. The Company evaluates the realizability of the assets and the related periods of amortization on a regular basis. Judgment is required in determining when costs should begin to be capitalized under both standards as well as the technology’s economic life.

During ~~both~~ the three ~~and nine~~ months ended ~~February~~August 2831, ~~2015,~~2016 ~~the Company capitalized software development costs of approximately $101,000. During the three~~ and ~~nine months ended February 29~~2015, ~~2016,~~ the Company capitalized approximately $~~104~~84,000 and $~~335~~118,000, respectively, of ~~its~~ software development costs~~, respectively~~. Amortization expense related to capitalized software development costs for the three ~~and nine~~ months ended ~~February~~August 2931, 2016 ~~was approximately $7,000~~ and ~~$35,000,~~2015 ~~respectively,~~was ~~as compared to~~ approximately $282,000 and $8416,000, ~~for the comparable periods in the prior fiscal year~~respectively.

INCOME TAXES

The provision for income taxes is based on the earnings or losses reported in the consolidated financial statements. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The Company provides a valuation allowance against deferred tax assets if it is more likely than not that some or all of the deferred tax assets will not be realized.

REVENUE RECOGNITION

The Company follows the provisions of ASC 985-605, Software – Revenue Recognition, for transactions involving the licensing of software and software support services. Revenue from software license sales is recognized when persuasive evidence of an arrangement exists, delivery of the product has been made, there is a fixed fee and collectability is reasonably assured. The Company does not provide for a right of return. For multiple element arrangements, total fees are allocated to each of the undelivered elements based upon vendor specific objective evidence (“VSOE”) of their fair values, with the residual amount recognized as revenue for the delivered elements, using the residual method set forth in ASC 985-605. Revenue from customer maintenance and subscription support agreements is deferred and recognized ratably over the term of the agreements, typically one year. Revenue from engineering, consulting and training services is recognized as those services are rendered using a proportional performance model. Deferred revenue represents billings and payments received for which the aforementioned revenue recognition criteria have not been met.

CAPITALIZED PATENT COSTS

Costs related to patent applications are capitalized as incurred and are amortized once the patent application is accepted or are expensed if the application is finally rejected. Patent costs are amortized over their estimated economic lives under the straight-line method, and are evaluated for impairment when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable through the estimated undiscounted future cash flows from the use of the associated patent. Capitalized patent costs totaled approximately $2,000 for the three month period ended August 31, 2015. No patent costs were capitalized in the three month period ended August 31, 2016.

ACCOUNTING FOR GOODWILL

The Company accounts for goodwill pursuant to ASC 350, Intangibles – Goodwill and Other. This requires that goodwill be reviewed annually, or more frequently as a result of an event or change in circumstances, for possible impairment with impaired assets written down to fair value. Additionally, existing goodwill and intangible assets must be assessed and classified within the standard’s criteria.

As of May 31, ~~2015~~2016, the Company conducted its annual impairment test of goodwill by comparing the fair value of the reporting unit to the carrying amount of the underlying assets and liabilities of its single reporting unit. The Company determined that the fair value of the reporting unit exceeded the carrying amount of the assets and liabilities, therefore no impairment existed as of the testing date. The Company concluded that no facts or circumstances arose during the three ~~and~~month ~~nine~~period ~~months~~ ended ~~February~~August 2931, 2016 to warrant an interim impairment test.

CAPITALIZED PATENT COSTS

Costs related to patent applications are capitalized as incurred and are amortized once the patent application is accepted or are expensed if the application is finally rejected. Patent costs are amortized over their estimated economic lives under the straight-line method, and are evaluated for impairment when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable through the estimated undiscounted future cash flows from the use of the associated patent. Capitalized patent costs totaled approximately $5,000 for both the three and nine month periods ended February 29, 2016, respectively, as compared to $2,000 for both the three and nine month periods ended February 28, 2015.

LONG-LIVED ASSETS

The Company periodically reviews the carrying value of all intangible and other long-lived assets. If indicators of impairment exist, the Company compares the undiscounted cash flows estimated to be generated by those assets over their estimated economic life to the related carrying value of those assets to determine if the assets are impaired. If the carrying value of the asset is greater than the estimated undiscounted cash flows, the carrying value of the assets would be decreased to their fair value through a charge to operations. As of ~~February~~August 2931, 2016, the Company does not have any long-lived assets it considers to be impaired.

FINANCIAL INSTRUMENTS

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, Earn-Out Payments, related party notes receivable, accounts payable, accrued expenses, deferred maintenance and subscription revenue, long-term debt and capital lease obligations. The Company’s estimate of the fair value of these financial instruments approximates their carrying ~~value~~amounts ~~due to the short term maturity of the assets and liabilities~~ at ~~February~~August 2931, 2016.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, the Company is required to classify certain assets based on the fair value hierarchy, which groups fair value-measured assets based upon the following levels of inputs:

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).

13The assets maintained by the Company that are required to be measured at fair value on a recurring basis are the Earn-Out Payments associated with the Company’s sale of the CADRA product line. As of August 31, 2016, the maximum amount that could be received by the Company under the Asset Purchase Agreement totaled $223,000. The final Earn-Out Payment will be based on the CADRA revenue generated for the nine month period ended October 31, 2016. The average quarterly CADRA revenue for Mentor’s most recent fiscal year was approximately $500,000.

The assets maintained by the Company that are required to be measured at fair value on a recurring basis are the Earn-Out Payments associated with the Company’s sale of the CADRA product line. As of February 29, 2016, the maximum amount that could be received by the Company under the Asset Purchase Agreement totaled $423,000. On April 1, 2016, the Company received an Earn-Out Payment of approximately $200,000 for the CADRA revenue generated by Mentor for the twelve month period ended January 31, 2016 thereby reducing the maximum amount that could be collected in the final Earn-Out Payment due on April 1, 2017 to $223,000. The final Earn-Out Payment will be based on the CADRA revenue generated for the nine month period ended October 31, 2016. The average quarterly CADRA revenue for Mentor’s most recent fiscal year was approximately $500,000. 11

The following table summarizes the valuation of the Company's assets and liabilities measured at fair value on a recurring basis as of ~~February~~August 2931, 2016:

		(in thousands)
		Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets:
Earn-Out Payments	$	~~346~~130	$	-	$	-	$	~~346~~130
Total assets at fair value	$	~~346~~130	$	-	$	-	$	~~346~~130

The following table summarizes the valuation of the Company's assets and liabilities measured at fair value on a recurring basis as of May 31, ~~2015~~2016:

		(in thousands)
		Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets:
Earn-Out Payments	$	~~376~~130	$	-	$	-	$	~~376~~130
Total assets at fair value	$	~~376~~130	$	-	$	-	$	~~376~~130

The table below provides a summary of the changes in fair value of the Level 3 classified Holdback Payment and Earn-Out Payments asset for the period from May 31, 2014 through ~~February~~August 2931, 2016.:

		(in thousands)
Fair value at May 31, 2014	$	895
Payments received		(604)
Change in fair value		85
Fair value at May 31, 2015		376
Change in fair value		(3046)
Fair value at February 29, 2016	$	346
Payments received		(200)
Fair value at May 31, 2016		130
Change in fair value		-
Payments received		-
Fair value at August 31, 2016	$	130

The fair value of the Earn-Out Payments expected to be collected within twelve months of the balance sheet date have been classified as current assets and the remainder as non-current assets in the accompanying consolidated balance sheets. The Company has estimated the fair value of the Earn-Out Payments using a discounted cash flow approach. This valuation is based upon several factors including; i) management’s estimate of the amount and timing of future CADRA revenues, ii) the timing of receipt of payments from Mentor, and iii) a discount rate of 7%.

A change in any of these unobservable inputs can significantly change the fair value of the asset. The change in fair value of the Earn-Out Payments recognized in the Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~February~~August 2931, 2016 ~~resulted in a gain (loss) of approximately $21,000~~ and ~~($30,000), respectively. The change in fair value of the Earn-Out Payments recognized in the Consolidated Statements of Operations for the three and nine months ended February 28,~~ 2015 ~~resulted~~was ~~in income of~~ approximately $~~10,000~~0 and $70(10,000), respectively.

FOREIGN CURRENCY TRANSLATION

The functional currency of the Company’s foreign operations (Germany, and Italy) is the Euro. As a result, assets and liabilities are translated at period-end exchange rates and revenues and expenses are translated at the average exchange rates. Adjustments resulting from translation of such financial statements are classified in accumulated other comprehensive income (loss). ~~Foreign~~The foreign currency ~~gains~~gain ~~and~~(loss) ~~losses~~ arising from transactions were included in ~~the statements of~~ operations. ~~For~~(Other ~~the three and nine month periods ended February 29~~expense, ~~2016,~~net in the ~~Company~~Consolidated ~~recorded~~Statement aof ~~net (gain~~Operations) ~~loss~~in ~~from~~three ~~foreign~~months ~~currency~~ended ~~related~~August ~~transactions~~31, of2016 ~~approximately~~and ~~($12,000),~~2015 and ~~$4,000,~~totaled ~~respectively, as compared to~~ approximately $~~55,000~~0 and $98(7,000), respectively~~, for the comparable periods in the prior fiscal year, to Other (income) expense in the unaudited Consolidated Statements of Operations~~.

~~NET (LOSS) INCOME PER COMMON SHARE~~12

~~For~~COMPREHENSIVE ~~the~~INCOME three and nine month periods ended February 29, 2016, 3,989 and 3,192, respectively, options to purchase shares of common stock were anti-dilutive and were excluded from the basic and diluted earnings per share calculation. For the three and nine month periods ended February 28, 2015, 1,991 and 995, respectively, options to purchase shares of common stock were anti-dilutive and were excluded from the basic and diluted earnings per share calculation.(LOSS)

Comprehensive income (loss) is a more inclusive reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income (loss). To date, the Company’s comprehensive income and expense items include only foreign translation adjustments. Comprehensive income (loss) has been included in the Consolidated Statements of Comprehensive Loss for all periods.

RESEARCH AND DEVELOPMENT COSTS

The Company expenses all research and development costs as incurred.

NET INCOME (LOSS) PER COMMON SHARE

In each of the three month periods ended August 31, 2016 and 2015, 3,448 options to purchase shares of common stock were anti-dilutive and were excluded from the basic and diluted earnings per share calculation.

STOCK-BASED COMPENSATION

Stock-based compensation expense for all stock-based payment awards made to employees and directors is measured based on the grant-date fair value of the award. The Company estimated the fair value of each share-based award using the Black-Scholes option valuation model. The Black-Scholes option valuation model incorporates assumptions as to stock price volatility, the expected life of options, a risk-free interest rate and dividend yield. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period of the award.

In May 2011, the 2011 Equity Incentive Plan (the “2011 Plan”) was approved by the Company’s shareholders, pursuant to which 150,000 shares of our common ~~stocks~~shares are reserved for issuance. Any shares subject to any award under the 2011 Plan that expires, is terminated unexercised or is forfeited will be available for awards under the 2011 Plan. The Company may grant stock options, restricted stock, restricted stock units, stock equivalents and awards of shares of common stock that are not subject to restrictions or forfeiture under the 2011 Plan. As of ~~February~~August 2931, 2016, 149,500 options were outstanding.

The following table summarizes option activity under the 2011 Stock Option Plan:

	Number of Options		Weighted Average Exercise Price Per Share	Weighted-Average Remaining Life (in years)		Aggregate Intrinsic Value
Outstanding options at May 31, 2014	129,500		1.88	9.74		20,825
Granted	30,000		1.84	10.00		-
Exercised	-		-	-		-
Forfeited or expired	(12,500)		1.11	-		-
Outstanding options at May 31, 2015	147,000		1.77	8.54		2,625
Granted	2,500		1.00	10.00		-
Exercised	-		-	-		-
Forfeited or expired	-		-	-		-
Outstanding options at February 29, 2016	149,500	$	1.75	7.82	$	4,975
Outstanding options at May 31, 2016	149,500		1.75	7.56		4,325
Exercisable at February 29, 2016	131,598	$	1.77	7.74	$	4,722
Granted	-		-	-		-
Exercised	-		-	-		-
Forfeited or expired	-		-	-		-
Outstanding options at August 31, 2016	149,500	$	1.75	7.56	$	4,325
Exercisable at August 31, 2016	149,500	$	1.75	7.56	$	4,325

The Company determined the volatility for options granted during the fiscal year ended May 31, 2016 using the historical volatility of the Company’s common stock. The expected life of options has been determined utilizing the “simplified” method as prescribed in ASC 718, Compensation, Stock Compensation. The expected life represents an estimate of the time options are expected to remain outstanding. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options. The Company has not paid, and does not anticipate paying, cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero.

1513

~~For~~The ~~the~~weighted-average ~~three~~fair ~~and~~value ~~nine~~of ~~month~~each ~~periods~~option ~~ended~~granted ~~February~~in ~~29, 2016,~~ the ~~Company~~fiscal ~~expensed~~year ~~approximately~~ended ~~$28~~May 31,~~000~~ ~~and~~2016 ~~$86,000~~was ofestimated ~~stock-based~~to ~~compensation,~~be ~~respectively,~~$1.10 ason ~~compared~~the todate ~~approximately~~of ~~$25,000~~grant ~~and~~using ~~$85,000~~the inBlack-Scholes model with the ~~comparable~~following ~~prior~~weighted ~~periods.~~average assumptions:

Expected life 5.00 years

Assumed annual dividend growth rate 0%

Expected volatility 133%

Risk free interest rate 1.63%

For the three month period ended August 31, 2016 and 2015, the Company expensed approximately $2,000 and $31,000, respectively, of stock-based compensation. Unamortized stock based compensation as of August 31, 2016 was approximately $5,000.

REDEEMABLE COMMON STOCK

During the year ended May 31, 2013, the Company issued 50,000 shares of common stock, $0.10 par value (the “Common Stock”), at a purchase price of $5.00 per share to accredited investors (collectively, the “Investors”) in separate private placement transactions for total proceeds of $250,000. These transactions were completed pursuant to a Securities Purchase Agreement (the “Agreement”) which the Company entered into with each of the respective Investors. In lieu of registration rights, each $25,000 investment entitled the Investors to a fee of $6,000 (the “Fee”) to be paid in six equal quarterly installments during the eighteen month period following the investment. The Agreement also provided the Investors with the right to require the Company to redeem the Common Stock held by such Investors (the “Put Option”) for $5.50 per share in cash for a 30 day period ending between June 1, 2014 and June 30, 2014. Each of the Investors exercised their Put Option and the Common Stock was repurchased by the Company at the agreed upon Put Option price of $5.50 per share for a total of $275,000 during the first quarter of fiscal 2015.

During the fiscal quarter ended August 31, 2014, in a transaction structured in a similar fashion to the above described Agreement, the Company issued 110,000 shares of the Common Stock at a purchase price of $5.00 per share to Joseph P. Daly, an accredited investor and existing Company shareholder, in a private placement transaction for total proceeds of $550,000. This transaction was completed pursuant to a securities purchase agreement whereby Mr. Daly shall have the right to require the Company to repurchase some or all of the shares at $7.00 per share during the ninety (90) day period immediately following the three-year anniversary of the transaction. Upon completion of the transaction, the 110,000 shares of Common Stock issued pursuant to the security purchase agreement were recorded as redeemable common stock at its redemption value of $770,000 and accretion of $220,000 was recorded to additional paid in capital. In the event whereby the Company is unable to honor the agreement to repurchase the shares, in whole or in-part, the unpaid portion would revert into a loan obligation secured by all of the Company’s assets and bearing an annual interest rate of 20%.

During the fiscal quarter ended November 30, 2014, the Company issued an additional 60,000 shares of the Common Stock at a purchase price of $5.00 per share to four accredited investors (collectively, the “New Investors”) in private placement transactions for total proceeds of $300,000. These transactions were completed pursuant to Securities Purchase Agreements (the “New Agreements”) entered into with each of the respective New Investors. In lieu of registration rights, each $50,000 investment entitles the New Investors to a fee (the “New Investors’ Fees”) of $5,000 to be paid in eight equal quarterly installments during the twenty-four month period (the “Payment Period”) following the investment. The New Agreements also provide the New Investors with the right to require the Company to redeem the Common Stock held by such New Investors for $7.00 per share in cash for a 30 day period following the Payment Period. Upon completion of these transactions, the 60,000 shares of Common Stock issued pursuant to the New Agreements were recorded as redeemable common stock at its redemption value of $420,000 and accretion of $120,000 was recorded to additional paid in capital.

During the fiscal quarter ended November 30, 2015, the Company issued an additional 10,000 shares of the Common Stock at a purchase price of $5.00 per share to an accredited investor in private placement transactions for total proceeds of $50,000. This transaction was completed pursuant to a Securities Purchase Agreement entered into with the investor. In lieu of registration rights, the investor is entitled to a fee of $5,000 to be paid in eight equal quarterly installments during the twenty-four month period (the “Payment Period”) following the investment. The Securities Purchase Agreement also provides the investor with the right to require the Company to redeem the Common Stock held by such investor for $7.00 per share in cash for a 30 day period following the Payment Period. Upon completion of this transaction, the 10,000 shares of Common Stock issued pursuant to the Securities Purchase Agreement was recorded as redeemable common stock at its redemption value of $70,000 and accretion of $20,000 was recorded to additional paid in capital.

As of ~~February~~August 2931, 2016, the redeemable common stockholders of the Company have the right to redeem shares with an aggregate redemption value of $420,000 within twelve months of the balance sheet date.

The Company first assessed the redeemable Common Stock to determine whether each of these instruments should be accounted for as a liability in accordance with ASC 480, Distinguishing Liabilities from Equity. In that the put option is optionally redeemable by the holder, the Common Stock was not required to be accounted for as a liability. Next, the Company assessed each put option within the redeemable Common Stock as a potential embedded derivative pursuant to the provisions of ASC 815, Derivatives and Hedging, and concluded that the put option did not meet the net settlement criteria within the definition of a derivative. Therefore, the Company has accounted for the redeemable Common Stock in accordance with ASC 480-10-S99, Classification and Measurement of Redeemable Securities, which provides that securities that are optionally redeemable by the holder for cash or other assets are classified outside of permanent equity in temporary equity.

RECENT ACCOUNTING PRONOUNCEMENTS

In February 2016, the FASB issued ASU No. 2016-02, “Leases”. This ASU requires entities to recognize right-to-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. We are currently evaluating the potential impact this standard will have on our financial statements and related disclosure.

In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting”, This ASU simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The new guidance is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. We are currently evaluating the method of adoption and the potential impact this standard will have on our financial statements and related disclosure.

In May 2015, the FASB issued ASU No. 2015-08, "Business Combinations (Topic 805): Pushdown Accounting – Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 115." The amendments in this ASU amend various SEC paragraphs pursuant to the issuance of Staff Accounting Bulletin No. 115, Topic 5: Miscellaneous Accounting, regarding various pushdown accounting issues, and did not have a material impact on the Company's consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-05, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement." The amendments in this ASU provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments do not change the accounting for a customer's accounting for service contracts. As a result of the amendments, all software licenses within the scope of Subtopic 350-40 will be accounted for consistent with other licenses of intangible assets. The amendments in this ASU are effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. An entity can elect to adopt the amendments either: (1) prospectively to all arrangements entered into or materially modified after the effective date; or (2) retrospectively. The Company is currently assessing the impact that ASU 2015-05 will have on its consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, "Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs." The amendments in this ASU are intended to simplify the presentation of debt issuance costs. These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in this ASU are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. The Company does not expect the adoption of ASU 2015-03 to have a material impact on its consolidated financial statements.

In February 2015, the FASB issued ASU No. 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis." The amendments in this ASU are intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). In addition to reducing the number of consolidation models from four to two, the new standard simplifies the FASB Accounting Standards Codification and improves current GAAP by placing more emphasis on risk of loss when determining a controlling financial interest, reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity ("VIE"), and changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or VIEs. The amendments in this ASU are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. ASU 2015-02 may be applied retrospectively in previously issued financial statements for one or more years with a cumulative-effect adjustment to retained earnings as of the beginning of the first year restated. The Company does not expect the adoption of ASU 2015-02 to have a material impact on its consolidated financial statements.

Accounting Standards Update (ASU) 2014-16, “Derivatives and Hedging (Topic 815) – Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity” was issued by the FASB in November 2014. The primary purpose of the ASU is to eliminate the use of different methods in practice and thereby reduce existing diversity under GAAP in the accounting for hybrid financial instruments issued in the form of a share. ASU 2014-16 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The Company does not believe that this guidance will have a material impact on its consolidated results of operations or financial position or disclosures.

Accounting Standards Update (ASU) 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to ‘Continue as a Going Concern” was issued by the FASB in August 2014. The primary purpose of the ASU is to provide guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The amendments should reduce diversity in the timing and content of footnote disclosure. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for the annual periods and interim periods thereafter. Early adoption is permitted. The Company is in the process of evaluating if this guidance will have a material impact on its consolidated results of operations or financial position or disclosures.

ASU 2014-12, “Compensation-Stock Compensation (Topic 718) – Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period” was issued by the FASB in June 2014. ASU 2014-12 requires that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. ASU 2014-12 is effective for public business entities for annual periods and interim periods within the annual periods beginning after December 15, 2015. Early adoption is permitted. The Company does not believe this guidance will have a material impact on its consolidated results of operations or financial position.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, (Topic 606). The ASU is the result of a joint project by the FASB and the International Accounting Standards Board (“IASB”) to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards (“IFRS”) that would: remove inconsistencies and weaknesses, provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices across entities, jurisdictions, industries, and capital markets, improve disclosure requirements and resulting financial statements, and simplify the presentation of financial statements. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU is effective for annual and interim reporting periods beginning after December 15, 2017, based on ASU 2015-14. Early application is permitted but not before the original effective date of December 15, 2016. The Company is currently assessing the impact of this guidance.

In March 2016, the FASB issued ASU 2016-08, amending the new revenue recognition standard that it issued jointly with the IASB in 2014 - Revenue from Contracts with Customers, (Topic 606). The amendments in this ASU provide more detailed guidance to clarify certain aspects of the principal-versus-agent guidance in the original ASU. The ASU is effective for annual and interim reporting periods beginning after December 15, 2017, based on ASU 2015-14. Early application is permitted but not before the original effective date of December 15, 2016. The Company is currently assessing the impact of this guidance.

In April 2016, the FASB issued ASU 2016-10, amending the new revenue recognition standard that it issued jointly with the IASB in 2014 - Revenue from Contracts with Customers, (Topic 606). The amendments in this ASU provide more detailed guidance, including additional implementation guidance and examples in the key areas of 1) identifying performance obligations and 2) licenses of intellectual property. The ASU is effective for annual and interim reporting periods beginning after December 15, 2017, based on ASU 2015-14. Early application is permitted but not before the original effective date of December 15, 2016. The Company is currently assessing the impact of this guidance.

C. GEOGRAPHICAL INFORMATION

The Company operates in one reportable segment and is engaged in the development, marketing, distribution and support of computer aided design and product data management and collaboration computer solutions. The Company’s operations are organized geographically with offices in the U.S. and Italy. Components of revenue and long- lived assets (consisting primarily of intangible assets, capitalized software and property, plant and equipment) by geographic location, are as follows (in thousands):

		Three Month Periods Ended
Revenue:		~~February~~August 2931, 2016		~~February~~August 2831, 2015
North America	$	~~746~~661	$	~~809~~775
Europe		~~193~~273		~~146~~208
Asia		3-		-3
Eliminations		(305)		(305)
Consolidated Total	$	~~912~~929	$	~~925~~981

		Nine Month Periods Ended
Long Lived Assets:		As of August 31, 2016		As of May 31, 2016
Revenue:		February 29, 2016		February 28, 2015
North America	$	2,160	$	2,086
North America	$	2,564	$	2,350
Europe		40		40
Europe		675		512
Consolidated Total	$	2,200	$	2,126
Asia		9		-
Eliminations		(51)		(46)
Consolidated Total	$	3,197	$	2,816

Long Lived Assets:		As of February 29, 2016		As of May 31, 2015
North America	$	2,136	$	1,797
Europe		40		41
Consolidated Total	$	2,176	$	1,838

D. DEBT

ESSIGPR

On June 20, 2014, the Company entered into a promissory note agreement (the “Note”) with EssigPR, Inc. (“EssigPR”), a Puerto Rico corporation and related party of the Company. The Note is a three (3) year borrowing arrangement with EssigPR as the lender. The Note is a $750,000 term loan maturing on April 1, 2017, that accrues interest at a 9.5% interest rate, paid quarterly in arrears. The principal on the Note was to be paid from the deferred payments (Holdback Payment and Earn-Out Payments) due over the next three years from Mentor in connection with their purchase of the CADRA product line.

On October 1, 2014, the Company entered into an additional short term borrowing arrangement with EssigPR (“Short Term Note”) whereby it was agreed that the Company would retain $300,000 of the Holdback Payment due from Mentor in October 2014 rather than utilize those monies to pay down the above described Note. The interest rate on the Short Term Note is 9.5%, payable quarterly in arrears. The Short Term Note can be repaid at any time without penalty and was due in full on April 10, 2015. EssigPR was awarded 5,000 fully vested stock options to purchase SofTech common stock at $1.00 per share. The stock options will expire on October 1, 2024 if not exercised. The Short Term Note arrangement did not increase the total principal amount of debt owed to EssigPR. Rather, the arrangement had the effect of establishing new payoff terms for that portion of the debt owed to EssigPR under the Note.

On April 2, 2015, the Short Term Note was amended to extend the due date by three months from April 10, 2015 to July 10, 2015. EssigPR was awarded 2,500 fully vested stock options to purchase SofTech common stock at $1.00 per share. The stock options will expire on April 2, 2025 if not exercised.

During the three months ended August 31, 2015, the Short Term Note was amended to extend the due date to October 10, 2015 and to increase the borrowings by $200,000 in exchange for 2,500 fully vested stock options to purchase SofTech common stock at $1.00 per share. The stock options will expire on July 15, 2025 if not exercised.

During the three months ended November 30, 2015, the Short Term Note was amended to extend the due date to January 10, 2016 and to increase the borrowings by $254,000.

On January 8, 2016, the Short Term Note was amended to extend the due date to April 10, 2016.

On April 11, 2016, the Short Term Note was amended to extend the due date to July 10, 2016.

On August 12, 2016, the Short Term Note was amended to increase the borrowings by $250,000, to extend the due date to October 10, 2016 and to increase the collateral to include the PLM product lines.

On August 30, 2016, the Short term Note was amended to increase the borrowings by $100,000.

The following summary details the changes in principal amount owed under each of the debt agreements with Essig (in thousands):


		Note		Short Term Note		Total
Balance at May 31, 2014	$	-	$	-	$	-
Borrowings		750		300		1,050
Repayments		(604)		-		(604)
Balance at May 31, 2015		146		300		446
Borrowing		-		578		578
Repayments		-		(124)		(124)
Balance at May 31, 2016		146		754		900
Borrowing		-		350		350
Repayments		-		-		-
Balance at August 31, 2016		146		1,104		1,250

On the occurrence and continuance of an event of default under the Note that is not cured after written notice from EssigPR, all or any part of the indebtedness under the Note may become immediately due at the option of EssigPR. Under the Note, events of default are (1) a default in the payment of any money owed by the Company to EssigPR under the Note or in any other transaction or (2) a default in the Company’s performance of any obligation to EssigPR under the Note or any other agreement between the two parties, whether such agreement is presently existing or entered into in the future. If the Company dissolves, becomes insolvent, or makes an assignment for the benefit of creditors, all such indebtedness under the Note shall become automatically due and payable.

EssigPR is owned by Joseph P. Daly, a related party of the Company whose beneficial ownership was approximately 19.64% of the Company’s outstanding common stock as of ~~February~~August 2931, 2016.

SHORT TERM ~~ADVANCES~~NOTE ~~FROM~~WITH RELATED PARTIES

Robert Anthonyson, an Officer, Director and beneficial owner of 19.59% of ~~the~~ Company’s ~~outstanding~~ common ~~stock~~shares as of ~~February~~August 2924, 2016, loaned the Company $50,000 on July 29, 2015 which was repaid to Mr. Anthonyson ~~during~~in the second quarter of fiscal ~~year~~ 2016. Joseph Mullaney, an Officer, Director and beneficial owner of 11.27% of ~~the~~ Company’s ~~outstanding~~ common ~~stock~~shares as of ~~February~~August 2924, 2016, loaned the Company $19,300 on September 1, 2015 of which was repaid ~~during~~to Mr. Mullaney in the second quarter of fiscal year 2016. There was no interest charged on these short term advances.

BLUEVINE

In September 2015, the Company arranged for a credit line of up to $80,000 with BlueVine Capital, Inc. (“BlueVine”). The borrowing arrangement with BlueVine as the lender allows the Company to receive an advance of 85% of the total value of specified invoices. During the three and nine month periods ended February 29, 2016, the Company received advances totaling approximately $23,000 and $55,000 against seven invoices from one customer. As of February 29, 2016 there were no outstanding borrowings under this debt facility.

E. NOTE RECEIVABLE, RELATED PARTY

Joseph Mullaney, the Company’s CEO, was extended a non-interest bearing note in the amount of $134,000 related to a stock transaction in May, 1998. The note is partially secured by the Company stock acquired in that transaction. ~~The Company does not expect repayment within the next twelve months.~~

~~F. STOCK PURCHASE AGREEMENT~~17

~~In June 2013, the Company purchased 170,000 shares of common stock from Greenleaf, The Ronda E~~F. ~~Stryker~~SUBSEQUENT and William D. Johnston Foundation, and The L. Lee Stryker 1974 Irrevocable Trust fbo Ronda E. Stryker, for a purchase price of $62,900 or $0.37 per share as detailed in Note K to the consolidated financial statements as of May 31, 2013. On August 8, 2014 the Company repurchased Greenleaf’s remaining 101,411 shares at $0.37 per share for a total of approximately $37,000.EVENTS

G.The ~~SUBSEQUENT~~Company ~~EVENTS~~has evaluated all events and transactions that occurred after the balance sheet and through the date that the financial statements were available to be issued.

~~The~~On ~~Company~~October ~~has~~5, ~~evaluated~~2016, ~~all~~a ~~events~~Special Meeting of the SofTech shareholders was held to consider and ~~transactions~~vote ~~that~~on ~~occurred~~the ~~after~~proposal to approve the ~~balance~~sale ~~sheet~~by SofTech of substantially all of the assets used in its ProductCenter and ~~through~~Connector technologies pursuant to the ~~date~~Asset ~~that~~Purchase Agreement dated August 24, 2016 described herein. The shareholders voted to approve the ~~financial~~sale ~~statements~~with ~~were~~79.7% ~~issued~~voting in favor of the proposal and less than .1% voting against.

On ~~March~~October 2514, 2016, the Company’s ~~wholly-owned~~completed ~~subsidiary~~the insale ~~Italy~~of ~~renewed~~ its ~~Distributorship~~PLM ~~Agreement~~Sale ~~with Mentor allowing us~~ to ~~market~~SofTech ~~and~~Group ~~support~~Incorporated ~~the CADRA technology~~ as adescribed ~~reseller~~in ~~throughout~~Note ~~Europe~~A ~~(except Germany) through March 24, 2017 on a non-exclusive basis~~hereto.

~~On April 11, 2016 the Short Term Note by and among SofTech, Inc., EssigPR and Joe Daly was extended for an additional three months to July 10, 2016.~~ 18

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

This report includes forward-looking statements that relate to, among other matters, our business operations and plans and strategy for the future; our future financial performance and results of operations; and demand for our products and services. These forward-looking statements are often identified by words such as “may,” “will,” “should,” “could,” “would,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential” and similar expressions. These statements are only predictions and involve estimates, assumptions and uncertainties that could cause actual results to differ materially from those expressed. You should not place any undue reliance on these forward-looking statements.

You should be aware that our actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including our ability to:

generate sufficient cash flow from our operations or other sources to fund our working capital needs and growth initiatives;

maintain good relationships with our ~~lenders~~lender;

comply with the covenant requirements ~~and~~of ~~payment terms under~~ our loan ~~agreements~~agreement;

successfully introduce and attain market acceptance of any new products and/or enhancements of existing products, including HomeView;

attract and retain qualified personnel;

prevent obsolescence of our technologies;

identify strategic initiatives and opportunities that are consistent with our strategic goals;

maintain agreements with our critical software vendors;

secure renewals of existing software maintenance contracts, as well as contracts with new maintenance customers; and

secure new business, both from existing and new customers.

These and other additional factors that may cause our actual results to differ materially from those contained in the forward-looking statements are set forth more fully under Item 1A “Risk Factors” of this report and the other reports we file from time to time with the SEC.

The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. References in this report to the “Company,” “we,” “our,” and “us” refer to the registrant, SofTech, Inc., and its wholly owned subsidiaries.

The following discussion and results of operations should be read in conjunction with the consolidated financial statements and the notes to those statements included in the previously filed Form 10-K. This discussion includes forward-looking statements that involve risk and uncertainties.

Overview

We operate in one reportable segment and are engaged in the development, marketing, distribution and support of computer software solutions that enable companies to manage the entire lifecycle of their products from conception through design and manufacture, to service and disposal, all of which is known in the industry as Product Lifecycle Management (“PLM”). These solutions include software technology offerings for Computer Aided Design (“CAD”), ~~which we describe below as the CADRA product offering and~~ Product Data Management (“PDM”) and ~~collaboration~~Collaboration technologies, ~~which~~all weof ~~describe~~which ~~below~~fit ~~as our ProductCenter and Connector technologies. The CADRA technology is marketed by the Company in Europe (other than Germany)~~ under the ~~terms~~broadly ofdefined a distribution agreement (the “Distributorship Agreement”) with Mentor Graphics Corporation (“Mentor”), which acquired that technology from us in October 2013. In addition, we offer a technology platform that allows for data exchange between various third party technology offerings which we describe as our Connector offering. We deliver these enterprise–level PLM ~~solutions, with comprehensive out-of-the-box capabilities, to meet the needs of manufacturers of all sizes quickly and cost-effectively~~industry. Our operations are organized geographically in the U.S. and Europe. We have sales and customer support offices in the U.S. and Italy. We also operate through resellers in North America, Europe and Asia. For geographical information about our operating revenues and assets, see Note E to the consolidated financial statements included in the Company’s Form 10-K for the fiscal year ended May 31, ~~2015~~2016.

~~The~~Over ~~Company~~approximately ~~has~~the ~~been~~last ~~actively~~two ~~engaged~~fiscal inyears, ~~acquiring~~the ~~and~~Company ~~filing~~developed a new ~~patent~~data ~~applications,~~management ~~evaluating~~product ~~alternatives~~ for ~~monetizing its existing patents and investigating~~ the ~~acquisition~~residential ofproperty ~~specific~~market ~~patents~~called ~~already~~HomeView™. ~~awarded~~The ~~that~~solution ~~might~~is ~~enhance~~based ~~our~~on ~~value.~~a Itpatent isfiled ~~expected~~by ~~that~~the ~~this~~Company ~~kind~~in ofDecember ~~activity~~2012. ~~will~~HomeView ~~become~~was anlaunched ~~increasing~~in ~~area~~January of2016 ~~focus~~ and ~~investment~~is ~~over~~available ~~the~~to ~~coming~~download ~~years~~on iTunes.

2119

~~Developing~~In ~~HomeView™~~March ~~Technology~~2011, the current management team (CEO and VP of Business Development) completed a transaction (the “Recapitalization Transaction”) in which a group of eight investors purchased 39% of the Company’s common stock, arranged for debt facilities of $3.2 million and negotiated for a $7.6 million debt reduction from Greenleaf Capital, Inc. (“Greenleaf”), at that time, the Company’s sole lender and largest shareholder. Subsequent to the Recapitalization Transaction the Company purchased all of Greenleaf’s 271,411 shares in Company common stock and retired them.

~~One~~A ~~such~~core ~~patent~~tenet ~~filed~~of inthe ~~2012 described an information~~ management ~~system~~team’s ~~for~~strategy following the ~~residential~~Recapitalization ~~property~~Transaction ~~market.~~has ~~During~~been ~~fiscal~~to ~~2015~~actively ~~and~~consider ~~2016~~ways weto ~~have~~monetize ~~invested~~some aor ~~substantial~~all ~~amount~~ of ~~time~~SofTech’s ~~in,~~assets ~~among~~and ~~other~~to ~~things,~~pursue ~~researching~~new ~~this~~strategic ~~market~~initiatives, ~~reviewing~~such ~~various~~as potential business ~~models~~combinations, ~~creating~~sale ~~specifications~~transactions, for the technology and developing the technology. We are marketing this technology under the name HomeView™. By the end of the second quarter of fiscal 2015 we had completed the preliminary project stage and met the other conditions for capitalizing development ~~costs under ASC 350-40. While this technology is aimed at the needs~~ of ~~the~~new ~~residential~~product ~~property market~~offerings, ~~the~~filing ~~skillsets~~ of ~~our~~new ~~PLM~~patent ~~engineers~~ideas ~~are~~and ~~very~~strategic ~~similar to the requirements for this technology~~partnerships.

InSince ~~December 2015,~~ the ~~mobile~~Recapitalization version of HomeView was approved on iTunes and is now available for download at no charge. HomeView is offered as a hosted solution wherein the software resides on our servers. We are continuing to develop the technology and expect multiple new releases for the foreseeable future. We began introducing this product to the market in the third quarter of fiscal 2016Transaction, ~~through attendance and participation at multiple trade events as well as conducting other market outreach activities. Specifically, we attended~~ the ~~Computer~~Company ~~Electronics~~has ~~Show~~taken ~~and~~ the ~~National~~following ~~Association~~actions ofconsistent ~~Home~~with Builders Show in Las Vegas, Nevada in January 2016. We also exhibited at Inman Connect, a gathering focused on Realtors and Brokers, in New York City in February 2016. In March and April 2016 we have exhibited at multiple Home Shows throughout Massachusetts. We expect this ~~market outreach to continue and possibly increase for the foreseeable future.~~ strategy:

~~ProductCenter~~·

~~From~~Sold fiscal years 2006 through 2014 our ProductCenter technology experienced year over year revenue declines. We identified multiple causes for this historical negative revenue trend including, among other things: (i) an increased number of competitive offerings in the ~~marketplace,~~AMT ~~(ii)~~product ~~elongation~~line ~~of purchase decisions by customers of a technology that already had a long sales cycle, and (iii) uncertain economic conditions. ProductCenter revenue increased~~ in ~~fiscal~~May ~~2015~~2011 ~~by 14.6% as compared to the prior fiscal year. For the first nine months of fiscal 2016, the revenue from the ProductCenter technology increased 5.8% as compared to the same period~~ in ~~fiscal~~exchange ~~2015,~~for ~~although this growth has been uneven through the fiscal quarters of fiscal 2016 as detailed herein.~~cash;

~~Connector~~·

~~The~~Sold ~~Connector~~the ~~technology~~existing isCAD ~~offered~~and ~~only~~PLM aspatents ~~an annual subscription. This product was launched~~ in ~~fiscal~~June ~~2014~~ and ~~has~~September ~~been~~2012 ~~growing~~in ~~steadily.~~exchange ~~Our revenue~~ for ~~the~~cash ~~first~~and ~~nine~~a ~~months~~percent of ~~fiscal~~future ~~2016~~funds was about $137,000 as compared to about $79,000 for the same period in fiscal 2015. During the first nine months of fiscal 2016 we had ten new subscribers compared to seven new subscribers during the same period in fiscal 2015. recovered;

~~CADRA Sale~~·

~~CADRA~~Filed isthree apatents ~~drafting~~ and ~~design~~acquired ~~software package for~~ the ~~professional~~rights ~~mechanical~~to ~~engineer.~~ another;

On October 18, 2013, the Company sold substantially all of the assets of its CADRA product line, including all intellectual property related to that technology but specifically excluding cash, billed accounts receivable and liabilities other than the deferred maintenance liability associated with CADRA customer maintenance contracts for support services (the “CADRA Sale”), to Mentor pursuant to an Asset Purchase Agreement dated August 30, 2013 (the “Asset Purchase Agreement”). The aggregate consideration for the CADRA Sale is up to $3.95 million, which is comprised of (i) $3.2 million, $2.88 million of which was paid on the closing date and $320,000 (representing a 10% holdback) payable on the one year anniversary of the closing date subject to any indemnification claims, (the “Holdback Payment”), and (ii) earn-out payments of up to an aggregate $750,000 over the three-year period subsequent to the closing date (the “Earn-Out Payments”), based on 10% of the net revenue generated by the CADRA business, subject to the terms of the Earn-Out Agreement dated August 30, 2013 (the “Earn-Out Agreement”). The Holdback Payment of $320,000 was received on October 20, 2014. No indemnification claims against the Company were made by Mentor during the period of indemnification which has now expired. As of April 1, 2016, Mentor has paid the Company $528,000 of the maximum $750,000 of Earn-Out Payments related to CADRA revenue generated by Mentor from the transaction date to January 31, 2016. The final Earn-Out Payment is due on April 1, 2017 based on CADRA revenue generated by Mentor for the nine months ended October 31, 2016. ·

InDeveloped ~~conjunction with completing the CADRA Sale, the Company entered into a one-year, exclusive Distributorship Agreement with Mentor allowing us to market~~ and ~~support~~launched the ~~CADRA~~Connector ~~technology~~product asline adescribed reseller throughout Europe (except Germany). Since then, the arrangement has been amended, extended and renewed multiple times. On March 25, 2016, the Distributorship Agreement between SofTech Srl and Mentor was renewed allowing us to market and support the CADRA technology throughout Europe (except Germany) through March 24, 2017 on a non-exclusive basis. Under this arrangement gross margin on software is 30% and the gross margin on support contracts is 35%, consistent with the prior year’s Distributorship Agreement.hereunder;

22·

WeSold ~~are in~~ the ~~process of restructuring our business subsequent to the~~ CADRA ~~Sale~~product toline ~~enable~~in usOctober to2013 ~~successfully~~in ~~operate~~exchange asfor acash ~~significantly smaller company~~ and toa ~~seek~~percent ~~new sources~~ of ~~revenue~~future ~~and~~revenues; possible new strategic initiatives. We currently contemplate pursuing the activities described below and other strategic initiatives that the board of directors may subsequently determine are in the best interests of the shareholders.

~~Activities following the CADRA Sale~~·

~~PLM~~Developed ~~Business~~a new data management product for the residential property market called HomeView; and

Subsequent to the completion of the CADRA Sale, we have continued to offer our ProductCenter and Connector technologies to design and manufacturing companies. Our ProductCenter technology manages the engineering data and electronic files of discrete parts designed in third party proprietary design technologies offered primarily by SolidWorks, PTC and Autodesk. The Connector platform is a technology that allows for a direct interface between Aras Innovator, a third-party PLM solution which features modern, web-based technology, and various well-established CAD technologies. The Aras technology is offered under a subscription revenue model as is our Connector technology. We entered into a partnership agreement with Aras in 2012, pursuant to which we provide distribution and consulting services, as further described below. For a description of the risks related to our PLM business, see “Risk Factors – Risks Related to Our Business” in our Form 10-K for fiscal year 2015.·

~~Distribution~~On ~~Activity~~August 24, 2016, entered into an agreement to sell the ProductCenter and Connector technologies in an asset sale subject to shareholder approval.

InThe ~~connection~~above ~~with~~actions have allowed the ~~CADRA~~Company ~~Sale,~~to weimprove ~~entered~~its ~~into~~liquidity aby ~~Distributorship~~reducing ~~Agreement~~its ~~with~~outstanding ~~Mentor~~debt. The proposed transaction to ~~market~~sell the ProductCenter and ~~support~~Connector technologies would allow the ~~CADRA~~Company ~~technology~~to ~~throughout~~be ~~Europe~~debt ~~(except~~free ~~Germany)~~for the first time in decades, ~~for~~provide aworking ~~minimum~~capital ofto ~~one~~meet ~~year~~its ~~following~~near term needs and the ~~sale,~~liquidity ~~through~~to ~~our~~increase ~~wholly-owned~~marketing ~~subsidiary~~efforts inrelated ~~Italy,~~to ~~SofTech,~~the ~~Srl~~HomeView technology. The ~~margin~~product toline besales ~~earned~~and bypatent ~~SofTech~~sales ~~for~~generated ~~this~~taxable ~~distribution~~income ~~activity~~that ~~pursuant~~was tosheltered ~~the~~from ~~existing~~both ~~Distributorship~~federal ~~Agreement~~and ~~was~~state ~~consistent~~income ~~with~~taxes through utilization of the ~~margin~~Company’s ~~earned~~tax byassets. ~~distributors~~We inanticipate the ~~industry.~~realized Incapital ~~addition,~~gain wefrom ~~will~~the ~~continue~~sale toof ~~market~~the ProductCenter and ~~distribute~~Connector ~~third~~technologies ~~party~~would ~~technologies~~also be substantially sheltered from ~~Aras~~both asfederal weand ~~have~~state ~~since~~income ~~2012~~taxes through utilization of tax assets.

~~Consulting~~The sale of the CADRA product line, described below, was the most significant of the above described completed events.

~~SofTech~~On ~~has~~October ~~been~~18, ~~engaged~~2013, inthe Company sold substantially all of the ~~PLM~~assets ~~market~~of ~~since~~its ~~1993.~~CADRA ~~Our~~product ~~consulting~~line, ~~group~~including isall ~~composed~~intellectual ofproperty ~~deeply~~related ~~experienced~~to that technology but specifically excluding cash, ~~long~~billed ~~tenured~~accounts ~~experts~~receivable ~~solving~~and ~~very~~liabilities ~~complex~~other ~~problems~~than ~~relating~~the todeferred ~~data~~maintenance ~~migration~~liability associated with CADRA customer maintenance contracts for support services (the “CADRA Sale”), ~~customization~~to Mentor Graphics Corporation (“Mentor”), ~~data~~pursuant ~~control~~to an Asset Purchase Agreement dated August 30, ~~access~~2013 (the “Asset Purchase Agreement”). The aggregate consideration for the CADRA Sale was up to $3.95 million, ~~version~~comprised ~~control~~of (i) $2.88 million of which was paid on the closing date; (ii) $320,000 ~~connectivity~~which ~~between~~was ~~proprietary~~paid ~~systems~~on the one year anniversary (the “Holdback Payment”) of the closing date; and a(iii) ~~myriad~~up to an aggregate $750,000 over the three-year period subsequent to the closing date, based on 10% of ~~other~~the ~~problems~~net ~~encountered~~revenue generated by ~~our~~the ~~customers~~CADRA business during the three-year period immediately following the transaction, (the “Earn-Out Payments”) subject to the terms of the Earn-Out Agreement dated August 30, 2013 (the “Earn-Out Agreement”).

~~Exploring~~The ~~Strategic~~Company ~~Initiatives~~recorded a gain on the sale of the CADRA product line of $649,000 in fiscal year 2014 which included non-cash expenses related to intangible assets of approximately $3.3 million. It also included an estimate of the market value of deferred contingent payments of $922,000 related to the Holdback Payment and the Earn-Out Payments. Through May 31, 2016 the Company collected $847,000 of deferred contingent payments from Mentor and could receive up to an additional $223,000 in April 2017 based on revenue generated by the CADRA product line for the period from February 1, 2016 to October 31, 2016.

AThe ~~core~~Company ~~tenet~~continued ofto offer the ~~management~~CADRA ~~team’s~~technology ~~strategy~~as ~~during~~a reseller throughout Europe (except Germany) on an exclusive basis until October 18, 2014 pursuant to a distribution agreement with Mentor (the ~~past~~“Distributorship ~~several~~Agreement”). ~~years~~This ~~has~~arrangement ~~been~~was extended on a non-exclusive basis through March 31, 2017 and is subject to ~~actively~~annual ~~consider~~renewals ~~ways~~by mutual agreement thereafter. Due to ~~monetize~~the ~~some~~significant orcontinued ~~all~~involvement ofin ~~SofTech’s~~the ~~assets~~sale and tosupport ~~pursue~~of ~~new~~the ~~strategic~~CADRA ~~initiatives~~product line, ~~such~~the astransaction ~~potential~~did ~~business~~not ~~combinations,~~qualify ~~sale~~for ~~transactions~~presentation oras ~~strategic~~discontinued ~~partnerships~~operations.

~~Developing~~On ~~Remaining~~August ~~Patent~~24, ~~Estate.~~2016, ~~The~~the Company ~~has~~entered ~~filed~~into ~~three~~an ~~provisional~~Asset ~~patents~~Purchase ~~and~~Agreement ~~purchased~~pursuant ~~the rights~~ to ~~one~~which ~~provisional~~it ~~patent~~agreed ~~since~~to ~~March~~sell ~~2011.~~its ~~These~~ProductCenter ~~patents remain in process at the United States Patent~~ and ~~Trademark~~Connector ~~Office,~~technologies ~~and~~(“PLM ~~the~~Business”) ~~Company intends~~ to ~~continue~~Essig toResearch, ~~pursue the resolution to these filings~~Inc. ~~These~~(“Essig”) ~~patents~~in ~~generally~~exchange ~~relate~~for toaggregate ~~methods~~consideration of ~~accumulating~~$3.25 ~~buyers’~~million ~~information~~plus incontingent apayments. ~~database~~The inCompany’s ~~ways~~indebtedness ~~that allow the information~~ to beEssig ~~shared~~($1.25 ~~with~~million ~~sellers so~~ as toof ~~allow~~August ~~the sellers to make targeted~~31, ~~relevant~~2016) ~~offers~~will tobe ~~the~~repaid ~~buyers.~~in ~~While~~this ~~these~~transaction ~~patents,~~and ~~which~~the ~~could~~Company ~~generally~~will berepurchase ~~considered eCommerce related~~110,000 ~~pertain~~shares toof ~~technologies~~its ~~that~~common ~~are~~stock ~~not~~from ~~directly~~Essig ~~related~~at toapproximately ~~our~~$6.50 ~~historical~~per ~~revenue producing business activities, we believe they may have applications in those areas~~share.

Analyzing the potential of the technologies described in these patents and the business case for us to invest in efforts to commercialize any of them is part of an ongoing evaluation. While many of these businesses would be new to us, we believe that we possess underlying competencies from our existing businesses, such as strong engineering and software capabilities especially in database technologies, and other attributes, such as numerous long-term client relationships with technology companies that may be complementary to developing new businesses around these technologies. However, any investment by us to attempt to commercialize the technologies described in these patents could be costly and prove to be unsuccessful.20

AsIn ~~detailed above~~addition, ~~under~~ the ~~caption~~Company ~~“Overview—Developing~~may ~~HomeView™~~earn ~~Technology,”~~two ~~during~~additional ~~fiscal~~contingent ~~year~~payments ~~2015~~based ~~and~~on ~~2016~~revenue ~~we have invested a substantial amount~~ of ~~time~~the inPLM ~~pursuing~~Business a(“PLM ~~data~~Revenue”) ~~management offering~~ for the ~~residential~~two ~~property~~twelve ~~market.~~month ~~The~~periods ~~product~~immediately ~~idea~~following ~~was detailed in a patent filing in 2012 that has yet to be awarded. During~~ the ~~third quarter of fiscal 2016, we made the HomeView technology available on iTunes~~transaction. In addition, we attended a half dozen technology, trade and home shows to begin to introduce the offering. The feedback has been positive to date and we expect this kind of marketing outreach to continue for the foreseeable future.

23For the first 12 month period the contingent payment will be derived as follows:

Strategic Transactions. We will continue to evaluate business combinations and other sale opportunities. We believe that, in addition to our remaining businesses and prospects described above, our status as a publicly traded company and tax attributes could make us an attractive strategic partner. As of May 31, 2015, SofTech had approximately $21 million in federal tax attributes and approximately $4 million in state tax attributes. We will continue to seek strategic transactions for the benefit of our shareholders, but there can be no assurances in this regard.·

~~Other~~If PLM Revenue is less than $3.2 million then zero.

Deferred CADRA Purchase Price. The sale of the CADRA assets includes contingent Earn-Out Payments equal to 10% of Mentor’s revenue derived from the CADRA technology up to a maximum of $750,000 over the three year period following completion of the transaction (ending October 31, 2016). Therefore, SofTech has a direct financial interest in the continued success of the CADRA technology subsequent to the sale. For the period from October 16, 2013 through January 31, 2016, Mentor has reported Earn-Out Payments of approximately $528,000, all of which have been paid in accordance with the Earn-Out Agreement. The CADRA revenue over the more recent quarters has been trending down significantly, and as a result, our revenue forecast for the remaining nine months of the earn-out period has been reduced. ·

~~The~~If ~~foregoing~~PLM ~~are~~Revenue ~~the~~is ~~currently~~more ~~anticipated~~than ~~activities~~$3.2 ofmillion ~~the~~then ~~Company~~$75,000 ~~following~~plus ~~the CADRA Sale~~12.5% ~~There can be no assurances that our pursuit~~ of ~~these~~the ~~activities~~amount ~~will be successful. Furthermore, we may pursue other opportunities that we subsequently determine to be~~ in ~~the~~excess ~~best interests~~ of ~~the~~$3.275 ~~Company~~million.

For the second 12 month period the contingent payment will be derived as follows:

If PLM Revenue is less than $3.75 million then zero.

If PLM Revenue is more than $3.75 million then $75,000 plus 12.5% of the amount in excess of $3.825 million.

The revenue for the PLM Business for the twelve month period ended May 31, 2016 was approximately $3.434 million including about $218,000 of consulting revenue performed for a SofTech, Srl customer.

U.S. revenue is defined as U.S. GAAP except that no purchase accounting adjustments shall be applied. It shall include license, maintenance, subscription and consulting revenue. Essig will be required to report revenue within 30 days of the period end with payment due within 60 days of period end.

The proposed transaction has been unanimously approved by the Company’s Board of Directors. At a special meeting of the Company’s shareholders held on October 5, 2016, the PLM Sale was approved by 79.7% of the outstanding shares. On October 14, 2016 the transaction was completed.

Critical Accounting Policies and Significant Judgments and Estimates

The Securities and Exchange Commission (“SEC”) issued disclosure guidance for “critical accounting policies.” The SEC defines “critical accounting policies” as those that require the application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.

Our significant accounting policies are described in Note B to the consolidated financial statements for the fiscal year ended May 31, ~~2015~~2016 included in our previously filed Form 10-K. There have been no changes to the policies for the three ~~and nine~~ months ended ~~February~~August 2931, 2016.

Results of Operations

The table below presents the comparative statements of operations for the three month periods ended ~~February~~August 2931, 2016 and ~~February~~August 2831, 2015 along with the dollar and percentage change amounts for each revenue and expense item (expressed in thousands, except percentages):

		February 29, 2016			February 28, 2015		Change in $	Change in %
		August 31, 2016			August 31, 2015		Change in $	Change in %
Revenue:
Products	$	6763	$	~~184~~54		$	~~(117)~~9		~~(63~~16.6)7%
Services		~~845~~866		~~741~~927			~~104~~(61)		14(6.06)
Total revenue		~~912~~929		~~925~~981			(1352)		(15.43)
Cost of revenue:
Products		1836		3829			~~(20)~~7		~~(52~~24.6)1
Services		~~335~~323		~~392~~377			(5754)		(14.53)
Total cost of revenue		~~353~~359		~~430~~406			(7747)		(1711.96)
Gross margin		~~559~~570		~~495~~575			64(5)		12(.9)
Research and development expenses		~~204~~131		~~183~~154			21(23)		11(14.59)
Selling, general and administration expenses		~~668~~597		~~592~~599			76(2)		12(.83)
Change in fair value of earn-out payments		(21)		(10)			(11)		110.0
Gain on change in fair value of Earn-Out Payments		-		(10)			10		(100.0)
Operating loss		(~~292~~158)		(~~270~~168)			~~(22)~~10		8(6.10)
Interest expense		3026		3113			~~(1)~~13		(3100.2)0
Other (income) expense		(12)		55			(67)		(121.8)
Other income, net		-		(7)			7		(100.0)
Net loss	$	(~~310~~184)	$	(~~356~~174)		$	46(10)		~~(12~~5.9)7%

24The table below presents the relationship, expressed as a percentage, between income and expense items and total revenue, for the three month periods ended August 31, 2016 and August 31, 2015:

The table below presents the comparative statements of operations for the nine month periods ended February 29, 2016 and February 28, 2015 along with the dollar and percentage change amounts for each revenue and expense item (expressed in thousands, except percentages):


	Items as a percentage of revenue
	August 31,	August 31,
	2016	2015
Revenue:
Products	6.8%	5.5%
Services	93.2	94.5
Total revenue	100.0	100.0

Cost of revenue:
Products	3.9	3.0
Services	34.8	38.4
Total cost of revenue	38.6	41.4

Gross margin	61.4	58.6

Research and development expenses	14.1	15.7
Selling, general and administrative expenses	64.3	61.1
Gain on change in fair value of Earn-Out Payments	-	(1.0)

Operating loss	(17.1)	(17.1)

Interest expense	2.8	1.3
Other income, net	-	(0.7)

Net loss	(19.8)%	(17.7)%

		February 29, 2016			February 28, 2015		Change in $	Change in %
Revenue:
Products	$	475	$	454		$	21		4.6 %
Services		2,722		2,362			360		15.2
Total revenue		3,197		2,816			381		13.5
Cost of revenue:
Products		64		124			(60)		(48.4)
Services		1,138		1,183			(45)		(3.8)
Total cost of revenue		1,202		1,307			(105)		(8.0)
Gross margin		1,995		1,509			486		32.2
Research and development expenses		495		677			(182)		(26.9)
Selling, general and administration expenses		1,900		1,953			(53)		(2.7)
Change in fair value of earn-out payments		30		(70)			100		(142.9)
Operating loss		(430)		(1,051)			621		(59.1)
Interest expense		71		158			(87)		(55.1)
Other expense		4		98			(94)		(95.9)
Net loss	$	(505)	$	(1,307)		$	802		(61.4)%

The table below presents the relationship, expressed as a percentage, between income and expense items and total revenue, for the three month periods ended February 29, 2016 and February 28, 2015:

	Items as a percentage of revenue
	February 29,	February 28,
	2016	2015
Revenue:
Products	7.3%	19.9%
Services	92.7	80.1
Total revenue	100.0	100.0
Cost of revenue:
Products	2.0	4.1
Services	36.7	42.4
Total cost of revenue	38.7	46.5
Gross margin	61.3	53.5
Research and development expenses	22.4	19.8
Selling, general and administrative expenses	73.2	64.0
Change in fair value of earn-out payments	(2.3)	(1.1)
Operating loss	(32.0)	(29.2)
Interest expense	3.3	3.4
Other (income) expense	(1.3)	5.9
Net loss	(34.0)%	(38.5)%

The table below presents the relationship, expressed as a percentage, between income and expense items and total revenue, for the nine month periods ended February 29, 2016 and February 28, 2015:

	Items as a percentage of revenue
	February 29,	February 28,
	2016	2015
Revenue:
Products	14.9%	16.1%
Services	85.1	83.9
Total revenue	100.0	100.0
Cost of revenue:
Products	2.0	4.4
Services	35.6	42.0
Total cost of revenue	37.6	46.4
Gross margin	62.4	53.6
Research and development expenses	15.5	24.0
Selling, general and administrative expenses	59.4	69.4
Change in fair value of earn-out payments	0.9	(2.5)
Operating loss	(13.5)	(37.3)
Interest expense	2.2	5.6
Other expense	0.1	3.5
Net loss	(15.8)%	(46.4)%

Revenue

Total revenue for the three month periods ended August 31, 2016 and 2015 was approximately $929,000 and $981,000, respectively. The following table summarizes total revenue by product line for the three month periods ended ~~February~~August 2931, 2016 and ~~February~~August 2831, 2015 (in thousands, except percentages):

		February 29,		February 28,
		August 31,
		2016		2015		$ Change	% Change
Product Line
ProductCenter	$	~~690~~662	$	~~783~~741	$	(9379)	(1110.97)%
Connector		5964		5559		45	78.35
CADRA		82183		80115		268	259.51
Other third party products		81		7		74	1057.1
Other		20		66		(46)	(69.7)
Total	$	~~912~~929	$	~~925~~981	$	(1352)	(15.43)%

The following table summarizes total revenue by product line for the nine month periods ended February 29, 2016 and February 28, 2015 (in thousands, except percentages):

		February 29,		February 28,
		2016		2015		$ Change	% Change
Product Line
ProductCenter	$	2,434	$	2,301	$	133	5.8%
Connector		175		136		39	28.7
CADRA		318		366		(48)	(13.1)
Other third party products		270		13		257	1,976.9
Total	$	3,197	$	2,816	$	381	13.5%

The product line revenue is further broken down by revenue type hereunder with explanations for changes in the three and nine month periods ended February 29, 2016 as compared to the same periods in fiscal 2015.

Product Revenue

Product revenue for the three ~~and nine~~ months ended ~~February~~August 2931, 2016 was approximately $6763,000 ~~and $475~~,~~000,~~ as compared to approximately $~~184~~54,000 ~~and $454,000~~ for the same period in the prior fiscal year. The table below details product revenue by product line for the three month periods ended ~~February~~August 2931, 2016 and ~~February 28,~~ 2015 (in thousands, except percentages):

		February 29,			February 28,
	August 31,
		2016		2015	~~2015~~	$ Change	~~$ Change~~	% Change	~~% Change~~
Product Line
ProductCenter	$	6120	$	34	~~177~~$	$(14)	~~(116)~~	(41.2)%	~~(65.5)%~~
CADRA		643		11	4	32	2	290.9	~~50.0~~
Other third party products		-			3		(3)		(100.0)
Other		-		9		(9)		(100.0)
Total	$	6763	$	54	~~184~~$	$9	~~(117)~~	16.7%	~~(63.6)%~~

The ~~table~~product ~~below~~revenue ~~details~~in ~~product~~the ~~revenue~~current byquarter ~~product~~was ~~line~~typical for ~~the~~activity ~~nine~~levels ~~month~~for ~~periods~~the ~~ended~~first ~~February~~quarter ~~29,~~of ~~2016~~fiscal years 2015 and ~~February~~2016. 28Generally, ~~2015~~the ~~(in~~summer ~~thousands,~~months ~~except~~are ~~percentages):~~not conducive to purchasing activity.

		February 29,		February 28,
		2016		2015		$ Change	% Change
Product Line
ProductCenter	$	439	$	422	$	17	4.0%
CADRA		27		29		(2)	(6.9)
Other third party products		9		3		6	200.0
Total	$	475	$	454	$	21	4.6%

Aggregate product revenue from our ProductCenter technology in each of fiscal 2015 and the first nine months of fiscal 2016 has been more than double that of the aggregate ProductCenter technology product revenue in each of fiscal years 2013 and 2014 as we have had multiple existing customers expanding the use of the technology. However, the quarterly revenue in fiscal 2015 and 2016 has been erratic and unpredictable. The three months ended February 29, 2016, was one such quarter where we were tracking several opportunities that slipped into future periods resulting in just $61,000 in product revenue, compared with product revenues of $354,000 during the second quarter of fiscal 2016. We expect this uneven quarterly experience to continue for the foreseeable future.

Service Revenue

Our service revenue is composed of both annual software maintenance ~~and~~contracts ~~subscription~~for ~~contracts~~previously licensed technology for both of our product lines and consulting revenue generated primarily from our ProductCenter technology. The table below summarizes service revenue by product line for the three months ended ~~February~~August 2931, 2016 and ~~February 28,~~ 2015 (in thousands, except percentages):

		February 29,		February 28,
		2016		2015		$ Change	% Change
Product Line
ProductCenter	$	~~629~~642	$	~~607~~707	$	22(65)	3(9.62)%
Connector		5964		5559		45	78.35
CADRA		76140		75104		136	134.36
Other		8120		457		77(37)	~~1925~~(64.09)
Total	$	~~845~~866	$	~~741~~927	$	~~104~~(61)	14(6.06)%

27Maintenance and subscription revenue was approximately $682,000 for the three months ended August 31, 2016, as compared to $647,000 for the same period in the prior fiscal year, an increase of about 5.4%. For the three months ended August 31, 2016, ProductCenter maintenance revenue and Connector subscription revenue were essentially unchanged from the same period in fiscal 2016.

The ~~table~~CADRA ~~below~~maintenance ~~summarizes service~~ revenue bywas ~~product~~approximately ~~line~~$140,000 for the ~~nine~~three ~~months~~month period ended ~~February~~August 2931, 2016, ~~and~~an ~~February~~increase 28of 38.6% compared to the prior fiscal year. In the current quarter we received a CADRA maintenance order from our largest European customer that had been delayed for several months. This allowed us to record maintenance revenue of about $42,000 ~~2015~~for (services that had been provided in ~~thousands,~~previous ~~except~~quarters. ~~percentages):~~

		February 29,		February 28,
		2016		2015		$ Change	% Change
Product Line
ProductCenter	$	1,995	$	1,880	$	115	6.1%
Connector		175		136		39	28.7
CADRA		291		336		(45)	(13.4)
Other		261		10		251	2510.0
Total	$	2,722	$	2,362	$	360	15.2%

~~Maintenance~~Consulting ~~and~~revenue ~~subscription~~included ~~revenue~~in ~~was~~the ~~approximately~~above ~~$643,000~~summary ~~and~~totaled approximately $1184,~~947,~~000 for the three ~~and~~months ~~nine month periods~~ ended ~~February~~August 2931, 2016, asa ~~compared~~decrease toof ~~$587,000~~34.3% ~~and~~compared ~~$1,836,000~~to ~~for~~ the ~~same period in the~~ prior fiscal year,. anDuring ~~increase~~the offirst ~~approximately~~quarter ~~9.5%~~of ~~and~~fiscal ~~6.0%,~~2016 ~~respectively.~~we ~~For~~started ~~the~~a ~~three~~large ~~months~~consulting ~~ended~~project ~~February~~at 29AgustaWestland, ~~2016~~a ~~compared~~European toCADRA ~~the~~customer, ~~same~~that ~~period~~was essentially completed in the ~~prior~~fourth ~~fiscal~~quarter ~~year,~~of ~~maintenance~~fiscal ~~revenue~~2016. ~~from~~We ~~ProductCenter~~anticipate ~~and~~additional ~~CADRA~~consulting ~~were~~services ~~generally~~from ~~unchanged~~this ~~while~~customer ~~subscription~~but ~~revenue~~not ~~from~~until the ~~Connector~~second ~~and~~half ~~from~~of ~~third~~our ~~party~~fiscal ~~products~~year. In weaddition, ~~distribute~~our ~~contributed~~ProductCenter ~~equally~~consulting torevenue ~~the~~declined ~~$41,000~~by ~~increase~~28.8% ~~For~~as ~~the nine month period ended February 29, 2016~~ compared to the same period in ~~the prior~~ fiscal ~~year~~2016. ~~ProductCenter~~This ~~maintenance~~change ~~revenue~~was ~~increased~~due ~~1.8%,~~to ~~CADRA~~a ~~maintenance~~peak ~~revenue~~of ~~declined~~consulting ~~10.3%~~activity ~~primarily~~in ~~due~~Q4 tofiscal ~~the~~2015 ~~weakness~~that incarried ~~the~~over ~~Euro relative~~ to the ~~USD~~first ~~and~~quarter ~~Connector~~of ~~subscription~~fiscal ~~revenue increased 73~~2016.~~4%.~~ ~~During~~We ~~the~~consistently ~~same~~generate ~~nine~~between ~~month period~~$120,000 ~~maintenance~~ and ~~subscription~~$200,000 ~~revenue~~per ~~related~~quarter toin ~~third~~consulting ~~party~~projects ~~products~~from wethe ~~distribute~~ProductCenter ~~increased~~customer tobase. ~~$69,000~~The ~~from~~current ~~just~~quarter ~~$10,000~~activity inlevels ~~the~~were ~~same~~within ~~period~~that inexpected ~~the prior fiscal year~~range.

Our Connector technology is offered only as an annual subscription. Under these arrangements the subscriber pays upfront for the use of the technology for the subsequent twelve month period and the revenue is amortized evenly during the use period. For the three months ended February 29, 2016 our Connector subscription billings were approximately $61,000 as compared to $73,000 in the same period in the prior year. For the nine month period ended February 29, 2016 our Connector subscription billings were approximately $149,000 as compared to $122,000 in the same period in the prior fiscal year. In the first nine months of the current fiscal year we added ten new subscribers. Given the Aras Innovator installed base and what we perceive to be continuing market momentum for this technology we expect our Connector subscription business to continue to grow, although there can be no assurances that the revenue increase in the most recent quarter is sustainable.

Consulting revenue was approximately $202,000 and $775,000 for the three and nine months ended February 29, 2016, respectively, an increase of approximately 30.3% and 47.1% from the same period in the prior fiscal year. These professional services are generated primarily from our existing ProductCenter customers. However, the Connector technology and the third party PLM solutions we are distributing present us with consulting opportunities that we might not otherwise be aware of and we expect these opportunities to be a growing portion of the consulting group’s activity.

The increased consulting revenue in the current quarter and for the nine month period ended February 29, 2016 relative to the same period in the prior fiscal year was primarily due to a unique project we were awarded in May 2015 from our largest European customer. The project involves the implementation of several third party technologies in a test environment to create a central repository for engineering bill of materials for the customer’s complex products. The creation of the central repository will allow for improvement in querying parts and vastly improved viewing of finished products.

Gross Margin

Gross margin as a percentage of revenue was 61.~~3% and 62.~~4% for the three ~~and nine~~ month ~~periods~~period ended ~~February~~August 2931, 2016, ~~respectively,~~ as compared to 5358.~~5% and 53.~~6% in the same ~~periods in the prior fiscal year. The overall gross margin increase for the three and nine month periods ended February 29, 2016 as compared to the same~~ period in the prior fiscal year ~~was primarily due to a significant improvement in gross margin on service revenue~~. ~~For~~Our ~~the~~non-cash ~~three~~amortization ~~month~~of ~~period~~software ~~ended February 29, 2016, service revenue increased 14.0% and service~~ costs decreased ~~by 14.5% as compared to the same period~~ in the ~~prior~~current fiscal year. ~~The~~which ~~increased~~accounted ~~service revenue~~ for ~~the~~a ~~three~~portion ~~month~~of ~~period was primarily related to~~ the ~~previously~~margin ~~announced Agusta Westland contract~~improvement. ~~For~~In ~~the nine month period ended February 29~~addition, ~~2016,~~our ~~service~~cost ~~revenue~~of ~~increased~~services ~~15.2%~~provided ~~and~~declined ~~service~~due ~~costs decreased 3.8% as compared~~ to the ~~same~~completion ~~period~~of in the ~~prior fiscal year. The increased service revenue for the nine month period was primarily from the~~ aforementioned ~~Agusta~~AgustaWestland ~~Westland~~ contract ~~but increases~~ in ~~ProductCenter~~the ~~maintenance~~fourth ~~revenue,~~quarter ~~Connector~~of ~~subscription~~fiscal ~~revenue~~year ~~and consulting revenue also contributed to the improvement~~2016.

Research and Development Expenses

Research and development expenses were approximately $~~204~~131,000 ~~and $495,000~~ for the three ~~and nine~~ month ~~periods~~period ended ~~February~~August 2931, 2016, ~~respectively,~~ as compared to approximately $~~183~~154,000 ~~and $677,000~~ in the comparable ~~periods~~period in fiscal ~~2015. During the three and nine month period ended February 29~~2016, ~~2016~~a ~~approximately~~decrease ~~$102,000~~of ~~and~~ $~~335~~23,000. ofThe capitalized software development costs ~~related~~were to$84,000 in the ~~development~~three ofmonth ~~new~~period ~~products~~ended ~~were~~August ~~capitalized~~31, 2016 as compared to ~~approximately~~ $~~101~~118,000 for ~~both~~ the ~~three~~same ~~and~~period ~~nine~~in ~~month~~the ~~periods~~prior ~~ended~~fiscal ~~February 28, 2015~~year.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses were approximately $~~668~~597,000 ~~and $1,900,000~~ for the three ~~and nine~~ month ~~periods~~period ended ~~February~~August 2931, 2016, ~~respectively,~~ as compared to approximately $~~592~~599,000 ~~and $1,953,000~~ for the comparable ~~periods~~period in fiscal year 2015~~. The increase in SG&A expenses during the three months ended February 29~~, ~~2016~~essentially ~~was primarily due to the release of HomeView in early January 2016 and the significant increase in marketing expenditures that resulted from that launch~~unchanged. These marketing activities included attendance or exhibiting at a half a dozen technology, trade and home shows. The Company expects this level of activity and expenditure to continue and increase for the foreseeable future.

HomeView Investment

In addition to the HomeView development costs capitalized during fiscal year 2016, the Company incurred expenses related to HomeView of approximately $130,000 and $304,000 for the three and nine months ended February 29, 2016, respectively. In fiscal 2015, we incurred HomeView related expenses of approximately $100,000 and $284,000, for the three and nine month periods ended February 28, 2015, respectively. The expectation is that these expenditures will continue and likely increase as we introduce this technology to the marketplace.

Gain on sale of product line

During the three month period ended ~~February~~August 2931, ~~2016~~2015, the ~~Company increased the~~ fair value of the Earn-Out Payments increased by approximately $2110,000 based on an independent valuation. ~~During~~For the ~~nine~~three ~~months~~month period ended ~~February~~August 2931, 2016 ~~the~~there ~~Company~~was ~~wrote~~no ~~down~~change in the fair value of ~~the~~ Earn-Out Payments ~~by approximately $30,000~~. The ~~write~~final ~~down~~payment ~~was~~which ~~required~~is due toon aor ~~material~~about ~~decline~~April ~~in the CADRA revenue as reported to the Company by Mentor. Under the terms of the Earn-Out Agreement~~1, ~~the~~2017 ~~Company~~ is ~~due~~based ~~10%~~on of the ~~net~~actual CADRA revenue ~~recorded~~for ~~by Mentor during~~ the ~~three~~nine ~~year~~month period ~~from~~ended October ~~19, 2013 through October~~ 31, 2016. ~~Mentor~~Based ~~has~~on ~~reported~~the toroyalty usreports ~~its~~received ~~CADRA~~from ~~revenue~~Mentor ~~from~~for ~~October~~the ~~19,~~six ~~2013~~months ~~through~~ended ~~January~~July 31, 2016, ~~which~~the ~~amounted~~Company tobelieves ~~approximately~~the ~~$5.28~~balance ~~million~~sheet ~~but~~amount ~~its~~of ~~CADRA~~$130,000 ~~revenue~~represents ~~has~~fair ~~been trending down significantly over the more recent quarters~~value.

Interest Expense

Interest expense for the three ~~and nine~~ month ~~periods~~period ended ~~February~~August 2931, 2016 was approximately $3026,000 ~~and $71~~,~~000,~~ ~~respectively,~~ as compared to approximately $3113,000 ~~and $158,000,~~ for the comparable ~~periods~~period in the prior fiscal year. The ~~average~~Company ~~debt~~increased ~~outstanding~~its ~~for~~borrowings the three and nine month periods ended February 29, 2016 was approximately $907,000 and $772,000 compared to approximately $730,000 and $1.6 million from the comparable periods in the prior fiscal year. Also during the ~~three~~first ~~and~~quarter ~~nine month periods ended February 28, 2015, the Company expensed approximately $9,000 and $27,000~~ of ~~non-cash~~fiscal ~~interest~~2016 ~~expense related~~ to ~~the~~meet ~~extinguishment of warrants issued to~~ its ~~former~~working ~~lender~~capital needs.

Net Loss

The net loss for the three ~~and nine~~ month ~~periods~~period ended ~~February~~August 2931, 2016 was approximately ($~~310~~184,000) ~~and ($505,000)~~ or ($0.3420) ~~and ($0.56)~~ per share, ~~respectively,~~ as compared to ~~net loss of~~ approximately ($~~356~~174,000) ~~and ($1,307,000)~~ or ($0.4019) ~~and ($1.47)~~ per share for the comparable ~~periods~~period in the prior fiscal year.

Liquidity and Capital Resources

During the ~~nine~~three month period ended ~~February~~August 2931, 2016 the net cash used in operating activities totaled approximately $~~393~~338,000 as compared to approximately $~~1.2~~385,000 ~~million~~ in the comparable prior period. The net loss for the ~~period~~quarter adjusted for non-cash expenditures used approximately $~~321~~172,000 as compared to approximately $~~914~~134,000 in the comparable prior period. The net change in current assets and liabilities used $72166,000 during the ~~nine~~current ~~month~~quarter ~~period~~ composed primarily of a reduction in the ~~liability~~deferred ~~associated~~maintenance ~~with~~liability, ~~deferred~~an ~~revenue~~increase ~~and~~in accounts receivable and an increase in accounts payable. The decline in the deferred maintenance liability is cyclical with the majority of the annual maintenance contracts being billed in the third and ~~accrued~~fourth ~~expenses~~quarters of the fiscal year. The ProductCenter maintenance contracts renewal rates have been stable.

29Net cash used in investing activities for the three months ended August 31, 2016 was approximately $84,000 compared to approximately $137,000 composed of capitalized software development costs related to new products.

Net cash used in investing activities for the nine months ended February 29, 2016 was approximately $357,000, primarily composed of capitalized software development costs related to the creation of new products and capital expenditures. In fiscal 2015, investing activities provided cash of $215,000 due to the deferred payment of $320,000 related to the sale of the CADRA product line which was offset by approximately $101,000 in capitalized software development costs.24

Net cash provided by financing activities ~~for the nine months ended February 29, 2016~~ totaled approximately $~~492~~342,000 composed primarily of aan ~~net~~ increase of $~~454~~350,000 in the short term borrowing arrangement with EssigPR, Inc., a Puerto Rico corporation (“EssigPR Note”) and ~~$50~~Joe Daly,~~000~~ ~~from~~its ~~the sale of common stock~~owner.

InCapital ~~September~~Resource ~~2015,~~Activity the Company issued 10,000 shares of the Company’s common stock at a purchase price of $5.00 per share to an accredited investor in a private placement transaction for total proceeds of $50,000. This transaction was completed pursuant to a Securities Purchase Agreement entered into with ~~the~~Essig investor. In lieu of registration rights, the investor is entitled to a fee of $5,000 to be paid in eight equal quarterly installments during the twenty-four month period (the “Payment Period”) following the investment. The Securities Purchase Agreement also provides the investor with the right to require the Company to redeem the Common Stock held by such investor for $7.00 per share in cash for a 30-day period following the Payment Period.

~~Capital~~EssigPR ~~Resource~~Note. ~~Activity~~On June 20, 2014, the Company entered into a three (3) year promissory note agreement (the “Note”) with EssigPR, Inc. (“EssigPR”), a Puerto Rico corporation and a related party of the Company, as the lender. The EssigPR Note is a $750,000 term loan maturing on April 1, 2017, that accrues interest at a 9.5% interest rate, paid quarterly in arrears. The principal on the EssigPR Note was to be repaid from the Holdback Payment and Earn-Out Payments in connection with Mentor’s purchase of the CADRA product line from SofTech pursuant to the Asset Purchase Agreement.

EssigPR Note. On June 20, 2014, the Company entered into a three (3) year promissory note agreement (the “Note”) with EssigPR, Inc. (“EssigPR”), a Puerto Rico corporation, as the lender. The EssigPR Note is a $750,000 term loan maturing on April 1, 2017, that accrues interest at a 9.5% interest rate, paid quarterly in arrears. The principal on the EssigPR Note was to be repaid from the Holdback Payment and Earn-Out Payments in connection with Mentor’s purchase of the CADRA product line from SofTech pursuant to the Asset Purchase Agreement.

On October 1, 2014, the Company entered into an additional short term borrowing arrangement with EssigPR (“Short Term Note”) whereby it was agreed that the Company would retain $300,000 of the Holdback Payment due from Mentor in October 2014 rather than utilize those monies to pay down the above described Note. The interest rate on the Short Term Note is 9.5%, payable quarterly in arrears. The Short Term Note could be repaid at any time without penalty and was due in full on April 10, 2015. EssigPR was awarded 5,000 fully vested stock options to purchase SofTech common stock at $1.00 per share. The stock options will expire on October 1, 2024 if not exercised. The Short Term Note arrangement did not increase the total principal amount of debt owed to EssigPR. Rather, the arrangement had the effect of establishing new payoff terms for that portion of the debt owed to EssigPR under the Note.

On July 15, 2015, the Short Term Note was amended again to extend the due date by three months from July 10, 2015 to October 10, 2015. EssigPR was awarded 2,500 fully vested stock options to purchase SofTech common stock at $1.00 per share. The stock options will expire on July 15, 2025 if not exercised.

On October 16, 2015, the Short Term Note was amended again to increase the borrowings from $300,000 to $700,000 and to extend the due date from October 10, 2015 to January 10, 2016. On November 30, 2015, the Short Term Note was again amended to increase the borrowings from $700,000 to $754,000.

On January 8, 2016, the Short Term Note was amended ~~again~~ to extend the due date ~~from January 10, 2016~~ to April 10, 2016.

On April 11, 2016, the Short Term Note was amended to extend the due date to July 10, 2016.

On August 12, 2016, the Short Term Note was amended to increase the borrowings by $250,000, to extend the due date to October 10, 2016 and to increase the collateral to include the PLM product lines.

On August 30, 2016, the Short term Note was amended to increase the borrowings by $100,000.

The Asset Purchase Agreement to sell the ProductCenter and Connector technologies anticipates a repayment of these obligations to EssigPR as part of the transaction.

EssigPR is owned by Joseph P. Daly, aan ~~related~~affiliate ~~party~~ of the Company whose beneficial ownership was approximately 19.64% of the Company’s outstanding common stock as of ~~February~~August 2924, 2016. EssigPR is an affiliate of SofTech Group Incorporated, the purchaser of our PLM Business, and each is owned by Joseph P. Daly, a related party of the Company.

3025

BlueVine Capital, Inc.

In September 2015, the Company obtained a credit line of up to $80,000 from BlueVine Capital, Inc. (“BlueVine”). This facility allows for short term advances of up to 85% of the face value of customer invoices that meet certain parameters specified and approved by BlueVine. As of ~~February~~August 2931, 2016 there were no outstanding borrowings under this debt facility.

Short term advances from related parties. Robert Anthonyson, an Officer, Director and beneficial owner of 19.5% of the Company’s outstanding common stock as of February 29, 2016, loaned the Company $50,000 on July 29, 2015 which was repaid to Mr. Anthonyson during the second quarter of fiscal year 2016. Joseph Mullaney, an Officer, Director and beneficial owner of 11.2% of the Company’s outstanding common stock as of February 29, 2016, loaned the Company $19,300 on September 1, 2015 which was repaid during the second quarter of fiscal year 2016.

Capital Requirements for Business

As detailed above, under the caption “Overview – Developing HomeView™ Technology”, the Company has made a significant investment ~~during~~since fiscal ~~years~~year 2015 ~~and 2016~~ in the development of a new technology addressing the residential property market. InWe ~~December~~launched ~~2015,~~ the ~~mobile~~solution ~~version~~in ofJanuary ~~HomeView~~2016 ~~was approved on iTunes~~ and ismade ~~now~~it available for ~~download~~downloads aton ~~no charge~~iTunes. We are continuing to develop the technology and expect multiple new releases for the foreseeable future. We began introducing this product to the market during the three months ended February 29, 2016. The Company expects that additional capital will be required to ~~continue~~fund ~~to introduce HomeView into~~ this ~~market~~launch effectively.

~~The~~As ~~Company~~detailed ~~has~~in ~~been~~the ~~investigating~~proxy ~~various~~materials ~~alternatives~~sent ~~for~~to ~~raising~~the ~~this~~SofTech ~~needed~~shareholders, ~~capital.~~the ~~While~~signing ~~debt~~of isthe ~~one~~Asset ofPurchase ~~those~~Agreement ~~alternatives~~with Essig on August 24, ~~the~~2016 ~~Company~~to ~~believes~~sell ~~that~~the ~~some~~ProductCenter ~~form~~and ofConnector ~~equity~~technologies ~~infusion~~would isprovide ~~more~~the ~~appropriate~~necessary ~~given~~capital ~~that~~to both meet the ~~new~~Company’s ~~product~~working ~~has~~capital ~~not~~needs ~~yet~~and ~~demonstrated~~to ~~market~~continue ~~acceptance~~to ordevelop ~~proven~~the ~~its~~HomeView ~~revenue~~technology ~~model.~~and to pursue the market opportunity.

~~Another~~The ~~possible~~Company ~~alternative~~had toa ~~selling~~cash ~~additional~~balance ~~shares~~ of ~~common~~approximately ~~stock~~$90,000 oras ~~incurring~~of ~~debt~~August ~~may~~31, be2016. toManagement ~~raise~~believes ~~the~~that ~~necessary~~with ~~capital~~its ~~through~~available cash and the ~~sale~~cash ofgenerated ~~one~~from orthe ~~more~~sale of the ~~Company’s~~ProductCenter ~~existing~~and ~~revenue~~Connector ~~producing product lines. At this time~~technologies, weit dowill ~~not~~have ~~know~~sufficient ~~what~~cash ~~alternatives~~to ~~will~~meet bethe ~~available~~Company’s toworking uscapital and nocapital ~~decision~~expenditure ~~has~~requirements ~~been~~through ~~made~~at onleast the ~~best~~next ~~alternative~~twelve ~~available~~months. ~~However, we are continuously evaluating this situation.~~ There can be no assurance, however, that wethe ~~can~~Company ~~raise~~will not require additional financing in the ~~necessary~~future ~~capital~~if onfunds ~~reasonable~~from ~~terms.~~future Ifoperations ~~the~~or ~~Company~~estimated isexpenses ~~unable~~differ tomaterially ~~raise~~from ~~the~~those ~~necessary~~amounts ~~capital,~~estimated ~~its~~by ~~plans~~management. ~~for~~If ~~maximizing~~we ~~the~~were ~~return~~required onto ~~the~~obtain ~~capital~~additional ~~invested~~financing in the ~~new~~future, ~~product~~there ~~and~~can ~~for~~be ~~establishing~~no aassurance ~~new~~that ~~revenue~~sources ~~source~~of ~~may~~capital would be ~~materially~~available ~~negatively~~on ~~impacted.~~terms favorable to us, if at all.

The consolidated financial statements have been prepared on a basis that contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company’s long-term viability is dependent on its ability to generate sufficient product revenue, net income and cash flows from operations to support its business as well as its ability to obtain additional capital. Management’s plans also include reducing operating costs and delaying certain expenditures, if necessary, to maintain the Company’s liquidity.

The Company had a cash balance of approximately $73,000 as of February 29, 2016. Management believes that with its available cash and current operating plan that projects cash generation from future operations it will have sufficient cash to meet the Company’s working capital and capital expenditure requirements through at least the next twelve months. There can be no assurance, however, that the Company will not require additional financing in the future if funds from future operations or estimated expenses differ materially from those amounts estimated by management. If we were required to obtain additional financing in the future, there can be no assurance that sources of capital would be available on terms favorable to us, if at all.

Capital Requirements for Redeemable Common Stock

AsFollowing ~~described~~the ~~below,~~closing ~~during~~of ~~calendar~~the ~~year~~sale ~~2016~~of the PLM Business, certain shareholders of the Company ~~has~~have ~~substantial~~a contractual right to require the Company to repurchase ~~obligations~~from ~~relating~~them up to an aggregate of 70,000 shares of common stock, ~~sold~~at inan ~~various~~aggregate ~~private~~repurchase ~~placements~~price of $490,000, ~~including~~or $~~420~~7.00 per share, upon the exercise by such shareholders of such put right. Mr. Robert Anthonyson, an executive officer and director of the Company, holds 30,000 of ~~financial~~those ~~obligations~~shares. Such put rights will be exercisable in the second quarter of fiscal years 2017 (with respect to 60,000 of such shares) and 2018 (with respect to 10,000 of ~~common~~such ~~stock~~shares). ~~that~~If ~~may~~such put rights are exercised, we will be ~~put~~required to ~~the~~use ~~Company~~a inportion ~~second~~of ~~quarter~~our cash on hand, including net proceeds from the sale of ~~fiscal~~the ~~year~~PLM ~~2017~~Business, to satisfy our repurchase obligations.

31Off-Balance Sheet Arrangements

~~Pursuant~~The toCompany ~~the~~has ~~terms~~no ofoff-balance ~~prior~~sheet ~~private~~arrangements ~~placements,~~as wedefined ~~have~~in ~~outstanding~~Item ~~180,000 shares of our common stock that were sold at~~ 303(a)(4)(ii) ~~purchase price~~ of ~~$5.00~~the ~~per share and each investor may, beginning on various dates in fiscal 2017 and fiscal 2018, require us to repurchase such investor~~SEC’s ~~shares~~Regulation ~~at $7~~S-K.~~00 per share, as indicated below:~~

Repurchase Period	No. of Shares Subject to Repurchase	Purchase Price (per share)	Repurchase Price (per share)	Aggregate Repurchase Price
9/18/16 – 10/18/16	20,000	$5.00	$7.00	$140,000
9/22/16 – 10/22/16	30,000	$5.00	$7.00	$210,000
10/9/16 – 11/8/16	10,000	$5.00	$7.00	$70,000
6/20/17 – 9/18/17	110,000	$5.00	$7.00	$770,000
9/21/17 – 10/21/17	10,000	$5.00	$7.00	$70,000
Total:	180,000			$1,260,000

Item 4. Controls and Procedures

IfEvaluation weof Disclosure Controls and Procedures. We maintain disclosure controls and procedures that are ~~unable~~designed to ~~honor~~ensure ~~the~~that ~~put~~information ~~right~~required ~~with~~to ~~respect~~be ~~110,000~~disclosed ofin ~~such~~our ~~shares~~Securities (aExchange ~~financial~~Act ~~obligation~~reports ofis ~~$770~~recorded,~~000)~~ processed, summarized and reported within the ~~unpaid~~time ~~portion~~periods ~~converts~~specified ~~into~~in athe ~~loan~~SEC’s ~~obligation~~rules ~~secured~~and byforms, ~~all~~and that such information is accumulated and communicated to our ~~assets~~management, including our Chief Executive Officer and ~~bearing~~Chief ~~interest~~Financial atOfficer, anas ~~annual~~appropriate, ~~rate~~to ofallow ~~20%~~timely decisions regarding required disclosure. If In designing and evaluating the disclosure controls and procedures, we ~~default~~recognized onthat ~~our~~any ~~obligations~~controls ~~under~~and ~~such~~procedures, ~~note~~no matter how well designed and operated, ~~the~~can ~~holder~~provide ofonly ~~such~~reasonable ~~note~~assurance ~~may~~of ~~assert~~achieving ~~any~~the ~~rights~~desired itcontrol ~~has~~objectives, as aours ~~secured~~are ~~creditor~~designed to do, ~~including~~and ~~rights~~we necessarily were required to ~~foreclose~~apply onour judgment in evaluating the cost-benefit relationship of possible changes or additions to our ~~assets~~controls and procedures.

~~Item~~As 3of the end of the period covered by this report (August 31, 2016), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. ~~Controls~~Based upon that evaluation, our Chief Executive Officer and ~~Procedures~~Chief Financial Officer concluded that our disclosure controls and procedures were effective.

~~Evaluation~~Changes ofin ~~Disclosure~~Internal ~~Controls~~Control ~~and~~Over ~~Procedures~~Financial Reporting. WeThere ~~maintain~~have ~~disclosure~~been ~~controls~~no ~~and~~changes ~~procedures that are designed to ensure that information required to be disclosed~~ in our ~~Securities~~internal ~~Exchange~~control ~~Act~~over ~~reports~~financial isreporting ~~recorded,~~that ~~processed,~~occurred ~~summarized~~during ~~and reported within~~ the ~~time~~period ~~periods~~covered ~~specified~~by inthis ~~the~~report ~~SEC’s~~that ~~rules~~have ~~and~~materially ~~forms~~affected, ~~and~~or ~~that~~are ~~such~~reasonably ~~information~~likely ~~is accumulated and communicated~~ to ~~our~~materially ~~management~~affect, ~~including~~ our ~~Chief~~internal Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control ~~objectives,~~over asfinancial ~~ours are designed to do, and we necessarily were required to apply our judgment in evaluating the cost-benefit relationship of possible changes or additions to our controls and procedures~~reporting.

As of the end of the period covered by this report (February 29, 2016), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.26

~~Changes~~PART ~~in Internal Control Over Financial Reporting~~II. ~~There~~OTHER have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.INFORMATION

~~PART~~ITEM II1A. ~~OTHER~~RISK ~~INFORMATION~~FACTORS

~~ITEM~~Our 1Abusiness is subject to numerous risks. ~~Risk~~We ~~Factors~~caution you that the following important factors, among others, could cause our actual results to differ materially from those expressed in forward-looking statements made by us or on our behalf in filings with the SEC, press releases, communications with investors and oral statements. Any or all of our forward-looking statements in this report, our Annual Report on Form 10-K and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Any factors mentioned in the discussion below will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may differ materially from those anticipated in forward-looking statements. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosure we make in our reports filed with the SEC.

~~Our~~Risks ~~business~~Related ~~is subject~~ to ~~numerous~~SofTech ~~risks.~~Following ~~We caution you that~~ the ~~following~~Sale important factors, among others, could cause our actual results to differ materially from those expressed in forward-looking statements made by us or on our behalf in filings with the SEC, press releases, communications with investors and oral statements. Any or all of our forward-looking statements in this report, our Annual Report on Form 10-K and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Any factors mentioned in the ~~discussion~~PLM below will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may differ materially from those anticipated in forward-looking statements. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosure we make in our reports filed with the SEC.Business

32Over the last two fiscal years, the PLM Business we propose to sell to Essig has been responsible for the majority of our revenue and has reduced our losses incurred in the development of HomeView and the operations of SofTech Srl.

~~Risks~~The ~~Related~~PLM Business was responsible for a majority of our consolidated revenue in fiscal 2016. This has been the case since we sold the CADRA Business in October 2013. We will retain SofTech Srl, our subsidiary in Italy that is a value added reseller of CAD and PLM technologies and services. However, that entity has incurred operating losses for three consecutive fiscal years. HomeView, our newly released data management solution for the residential property market, is a pre-revenue technology. HomeView and other new product ideas that the management team has interest in pursuing as described in the patent filings over the last few years are speculative in that the products are still in development and the management team may not have the depth of experience required to ~~Our~~be successful in those new markets. If we are unable to generate revenue from our remaining businesses or from other sources following the closing of the sale of the PLM Business (the “Asset Sale”), our financial condition will be materially adversely affected and ultimately we may be unable to maintain our operations.

~~Following~~We ~~the~~have ~~sale~~discretion ~~of the CADRA business~~ in October 2013, we have been and will continue to restructure our business to enable us to successfully operate as a significantly smaller company and to seek new sources of revenue and new strategic initiatives. SofTech operating results subsequent to the ~~sale~~use of the ~~CADRA~~net ~~business~~proceeds ~~may~~from ~~not~~the beAsset ~~profitable,~~Sale and we may benot ~~unsuccessful~~use inthem ~~developing new business opportunities~~effectively.

~~The~~If ~~CADRA~~the ~~business~~Asset ~~was~~Sale ~~responsible~~is ~~for~~consummated, ~~about~~the ~~half~~cash ofpurchase price for the ~~consolidated~~PLM ~~revenue~~Business inwill ~~fiscal~~be ~~2013~~paid ~~and~~directly to the ~~majority~~Company. ofOur ~~the~~management ~~profitability~~will ~~and~~have ~~cash~~discretion ~~flow.~~in ~~The~~the ~~importance~~application of the ~~CADRA~~net ~~business~~proceeds tofrom the ~~consolidated~~Asset ~~results~~Sale inand ~~fiscal~~could ~~2013~~spend ~~was~~the ~~similar~~proceeds in atways ~~least~~that ~~the~~do ~~two~~not ~~immediately~~improve ~~preceding~~our ~~fiscal~~results ~~years.~~of ~~The~~operations ~~remaining~~or ~~product~~enhance ~~lines following~~ the ~~CADRA~~value ~~Sale,~~of ~~namely~~our ~~ProductCenter~~common ~~and~~stock. ~~the~~The ~~Connector~~failure ~~technologies,~~by ~~are~~our ~~product~~management ~~lines~~to ~~that~~apply ~~have~~these ~~historically~~funds ~~been~~effectively ~~less~~could ~~profitable~~result ~~than~~in ~~the~~financial ~~CADRA~~losses ~~business,~~that ~~have~~could ~~fewer customers and~~ have a ~~more~~material ~~complex~~adverse ~~sales~~effect ~~cycle.~~on Itour isbusiness ~~likely~~and ~~that~~cause the ~~Company~~price ~~will~~of ~~need~~our tocommon ~~reduce~~stock ~~spending~~to indecline. ~~order~~Pending totheir ~~achieve profitability~~use, ~~and~~we ~~ultimately~~may ~~will~~invest ~~need~~the tonet ~~find~~proceeds ~~new~~in ~~strategic~~a ~~directions~~manner ~~and~~that ~~new~~does ~~sources~~not ofproduce ~~revenue~~income inor ~~order~~that toloses ~~meaningfully~~value. ~~increase~~We ~~the~~currently ~~size~~intend ofto ~~its~~utilize ~~business.~~the ~~The~~net ~~new~~proceeds ~~product~~from ~~ideas that~~ the ~~management~~sale ~~team~~of ~~has~~the ~~interest~~PLM inBusiness ~~pursuing~~to aslaunch ~~described in~~ the ~~patent~~HomeView ~~filings~~product ~~over~~and ~~the~~for ~~last~~other ~~few~~working ~~years~~capital ~~are~~purposes. ~~speculative~~The inCompany’s ~~that~~Board ~~the~~of ~~products~~Directors ~~are~~will ~~still~~also incontinue ~~development~~to ~~and~~evaluate ~~the~~other ~~management~~activities ~~team~~aimed ~~may~~at ~~not~~enhancing ~~have~~shareholder ~~the~~value, ~~depth~~including ofpotentially ~~experience~~share ~~required~~buybacks, todividends, bemerger, ~~successful~~acquisitions inand/or ~~those~~other ~~new~~targeted ~~markets~~investments.

WeAdditionally, ~~will~~following ~~need~~the ~~additional~~closing ~~capital~~of the Asset Sale, certain shareholders of the Company have a contractual right to ~~continue~~require the Company to ~~develop~~repurchase from them up to an aggregate of 70,000 shares of common stock, at an aggregate repurchase price of $490,000, or $7.00 per share, upon the exercise by such shareholders of such put right. Mr. Robert Anthonyson, an executive officer and ~~launch~~director ~~our~~of ~~HomeView™~~the ~~technology~~Company, holds 30,000 of those shares. Such put rights will be exercisable in the second quarter of fiscal years 2017 (with respect to 60,000 of such shares) and ~~product~~ 2018 (with respect to 10,000 of such shares). If such put rights are exercised, we may use a portion of the net proceeds to satisfy our repurchase obligations.

We ~~generated~~will ~~positive~~continue ~~cash flow as measured by EBITDA, a non-GAAP measure, every fiscal year from 2002 through 2014. The sale of the CADRA product line in fiscal 2014 together with the investment made in 2015 and 2016~~ to ~~develop~~incur ~~a new product for~~ the ~~residential~~expenses ~~property market has resulted in current year cash losses that have been funded by our balance sheet, sales~~ of ~~common~~complying ~~stock~~with ~~and~~public ~~limited~~company ~~additional~~reporting ~~borrowings.~~requirements Wefollowing ~~will require additional capital to support~~ the ~~ongoing~~closing ~~development and launch~~ of ~~our HomeView technology and product. There can be no assurance that~~ the ~~capital~~Asset ~~needed will be available or if the terms will be reasonable~~Sale. If the Company is unable to raise the necessary capital, its plans for maximizing the return on the capital invested in the new product and for establishing a new revenue source may be materially negatively impacted.

~~Our~~After ~~HomeView~~the ~~product~~Asset ~~may~~Sale, ~~not~~we ~~gain~~will ~~enough~~continue to be required to comply with the applicable reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), even though compliance with such reporting requirements is economically burdensome and will represent an even greater percentage of our expenses post-closing as we will be a significantly smaller company following the sale of the PLM Business. We intend to evaluate the merits of remaining a public company after evaluating the market’s ~~acceptance~~reaction to ~~warrant~~the ~~continued~~transaction, ~~investment~~the opportunities for HomeView, potential partnerships, merger and/or acquisition opportunities and other pertinent factors.

We have made a substantial investment in pursuing the HomeView product idea, which we launched commercially in January 2016. While our analysis supports the need for this kind of technology in the residential property market, there can be no assurance that HomeView will gain the number of users required to warrant continued investment in the technology. Failure to gain market acceptance may lead to the write off of the investment made in HomeView through a charge to income. 27

WeOur ~~have~~HomeView ~~substantial~~business ~~repurchase~~is ~~obligations~~somewhat ~~relating~~dependent toon ~~securities~~certain weemployees ~~sold~~who inwe ~~various~~expect ~~private~~will ~~placements, which may~~ be ~~put~~hired toby usEssig ~~starting~~ in ~~September~~connection ~~2016. If~~with ~~we are unable to meet these financial obligations, which are approximately $1,260,000 in~~ the ~~aggregate,~~Asset ~~or re-negotiate their terms, our financial condition would be materially adversely affected~~Sale.

~~Pursuant~~Certain toemployees ~~the terms~~ of ~~prior~~our ~~private~~PLM ~~placements,~~Business who we ~~have~~expect ~~outstanding~~will ~~180,000~~be ~~shares~~hired ofby ~~our~~Essig ~~common~~in ~~stock~~connection ~~that~~with ~~were~~the ~~sold~~Asset atSale ahave ~~purchase~~provided ~~price~~their expertise to the development and launch of $5HomeView.00 ~~per~~Essig ~~share~~has ~~and~~agreed ~~each~~to ~~investor~~make ~~may,~~those ~~beginning~~employees available to us on ~~various~~a ~~dates~~part-time inbasis ~~fiscal~~for ~~2017~~a ~~and~~12-month ~~fiscal~~transition ~~2018,~~period ~~require~~following usthe toclosing ~~repurchase~~of ~~such~~the ~~investor’s~~Asset ~~shares~~Sale at $7agreed-upon rates.00 ~~per~~These ~~share~~functions provided by these employees include quality assurance testing of the code, ascustomer ~~indicated~~support ~~below:~~ and marketing.

Repurchase Period	No. of Shares Subject to Repurchase	Purchase Price (per share)	Repurchase Price (per share)	Aggregate Repurchase Price
9/18/16 – 10/18/16	20,000	$5.00	$7.00	$140,000
9/22/16 – 10/22/16	30,000	$5.00	$7.00	$210,000
10/9/16 – 11/8/16	10,000	$5.00	$7.00	$70,000
6/20/17 – 9/18/17	110,000	$5.00	$7.00	$770,000
9/21/17 – 10/21/17	10,000	$5.00	$7.00	$70,000
Total:	180,000			$1,260,000

There can be no assurance that this arrangement will be satisfactory in that it is possible that employees’ loyalty gets directed primarily or exclusively to their employer or those employees either do not accept employment with Essig or leave the employ of Essig following the closing of the Asset Sale.

IfRisks weRelated ~~are unable~~ to ~~honor~~ the ~~put~~Asset ~~right~~Purchase with respect 110,000 of such shares (a financial obligation of $770,000), the unpaid portion converts into a loan obligation secured by all our assets and bearing interest at an annual rate of 20%. If we default on our obligations under such note, the holder of such note may assert any rights it has as a secured creditor, including rights to foreclose on our assets.Agreement

33The announcement and pendency of the Asset Sale, whether or not consummated, may adversely affect our business.

~~Revenue~~The ~~declines~~announcement inand ~~our~~pendency ~~product~~of ~~lines~~the Asset Sale, whether or not consummated, may ~~have~~adversely aaffect ~~material~~the ~~adverse~~trading ~~impact~~price ~~upon~~of our common stock, our business and/or ~~overall~~our ~~financial~~relationships ~~performance~~with customers, partners, suppliers and employees. In addition, pending the completion of the Asset Sale, our management’s focus and attention and employee resources may be diverted from operational matters during the pendency of the Asset Sale.

WeIn ~~have~~the ~~experienced~~event ~~consolidated~~that ~~revenue~~the ~~declines~~Asset ~~each~~Sale ~~fiscal~~is ~~year~~not ~~since~~completed, ~~2006.~~the ~~The~~announcement ~~revenue~~of ~~declines~~the ~~for~~termination ~~fiscal~~of ~~years~~the ~~2014~~Asset ~~and~~Purchase ~~2015,~~Agreement ~~however,~~may ~~were~~also ~~primarily~~adversely ~~due~~affect to the ~~CADRA~~trading ~~Sale~~price ~~that~~of ~~was~~our ~~completed~~common ~~four~~stock, ~~months~~our ~~into~~business ~~fiscal~~or ~~year~~our ~~2014~~relationships with customers, partners, suppliers and employees.

Revenue from our ProductCenter technology declined for eight straight fiscal years from fiscal year 2006 through fiscal year 2014. In fiscal year 2015, ProductCenter revenue increased by 14.6% compared to the prior fiscal year and in the first nine months of fiscal year 2016 ProductCenter revenue experienced a 5.8% increase compared to the same period in the prior fiscal year. The ~~backlog,~~Buyer ~~pipeline of active deals and contract awards indicate that the revenue growth~~ is ~~likely to continue for fiscal 2016, although there can be no assurances in that regard. The revenue declines described above were due to several factors. In July 2007, PTC informed us that it would~~ not ~~renew~~assuming ~~its~~any ~~partnership agreement with us when the agreement expired in January 2008. We had been a member~~ of the ~~PTC~~excluded ~~partnership~~liabilities ~~program~~under ~~for 12 years. The PTC partnership agreement, among other things, provided us with~~ the ~~right~~Asset toPurchase ~~distribute certain information that allowed for our technology to directly interface with PTC’s proprietary CAD tools~~Agreement. The non-renewal has essentially prevented us from marketing our ProductCenter solution to new customers that utilize PTC’s technology and has negatively impacted our product revenue from this technology offering. In addition to the PTC partnership termination, ProductCenter revenues have been negatively affected by: (i) an increased number of competitive offerings in the marketplace, (ii) elongation of purchase decisions by customers of a technology that already has a long sales cycle, and (iii) uncertain economic conditions. The recent increases in ProductCenter revenue has come from existing customers expanding their use of the technology. It is difficult for the Company to determine if the current year revenue increase is sustainable.

~~Subscription~~Under ~~revenue~~the ~~from~~Asset ~~our~~Purchase ~~Connector~~Agreement, ~~technology~~Buyer ~~increased~~is bynot ~~approximately~~assuming ~~73.4%~~all ~~in the first nine months~~ of ~~fiscal year 2016 compared to~~ the ~~same~~liabilities ~~period~~associated inwith the ~~prior~~PLM ~~year~~Business. WeCertain ~~added~~liabilities ~~nine~~will ~~new~~remain ~~customers~~with inSofTech ~~the first nine months of fiscal year 2016 and we hope to continue to build on that momentum~~post-closing. ~~This~~For ~~solution~~example, Buyer is ~~offered~~ only asassuming acustomer ~~subscription~~support ~~which~~obligations ~~makes~~and ~~revenue~~obligations ~~growth~~for aperformance ~~more~~under ~~likely~~the ~~event~~certain ~~year-over-year~~assigned ascontracts ~~compared~~that toarise after the ~~perpetual~~closing, ~~license~~and ~~model~~is ~~employed~~not ~~with~~assuming ~~our~~liability ~~ProductCenter technology. The customers~~ for ~~our~~any ~~Connector~~obligation ~~technology~~or ~~are~~breach ~~Aras~~by ~~Innovator~~SofTech (aoccurring ~~third~~or ~~party~~arising ~~PLM~~prior ~~solution)~~to ~~users~~the ~~that~~closing. ~~have~~While ~~already made~~ the ~~investment~~Company inbelieves that ~~technology~~it ~~and~~has ~~are~~adequately ~~now~~accrued ~~trying~~for tothese ~~get~~liabilities ~~more~~or ~~functionality from that investment. It~~ is ~~our~~adequately ~~understanding~~insured ~~that~~against ~~Aras~~certain ~~Innovator~~of ~~continues~~the torisks ~~grow~~associated atwith asuch ~~much~~excluded ~~faster~~liabilities, ~~rate~~there ~~than~~can ~~the~~be ~~overall~~no ~~PLM~~assurances ~~market~~that ~~which~~additional ~~provides~~expenditures uswill ~~with~~not anbe ~~opportunity~~incurred toin ~~continue~~resolving tothese ~~grow our Connector revenue~~liabilities.

~~While~~The ~~the~~Asset ~~recent~~Purchase ~~revenue~~Agreement ~~trend~~may ~~for~~expose ~~ProductCenter~~us ~~is encouraging and the market acceptance for our Connector technology is building, we do not have enough broad based momentum from either technology~~ to ~~yet~~contingent ~~be able to definitively conclude that our historical revenue declines are behind us~~liabilities.

~~Significant~~We ~~future~~have ~~declines~~agreed to indemnify the Buyer for certain breaches of representations, warranties or covenants made by us in ~~our~~the ~~total~~Asset ~~revenues~~Purchase ~~may~~Agreement. ~~have~~Significant aindemnification ~~material~~claims ~~adverse~~by ~~impact~~the ~~upon~~Buyer could materially and adversely affect our business, financial condition and ~~overall~~results ~~financial~~of ~~performance~~operations.

WeUnder ~~compete~~the ~~against~~Asset ~~numerous~~Purchase ~~technology~~Agreement, ~~companies~~we inmay ~~the~~potentially ~~mature~~earn ~~PLM~~up ~~industry~~to ~~that~~two ~~are~~contingent ~~significantly~~payments, ~~larger~~but ~~and~~there ~~have~~can ~~vastly~~be ~~greater~~no ~~financial~~guarantee ~~resources~~we atwill ~~their~~earn ~~disposal~~such payments.

~~Many~~Under ofthe ~~our~~Asset ~~competitors~~Purchase Agreement, ~~including~~the ~~PTC,~~Company ~~SolidWorks,~~will ~~Siemens~~earn ~~and~~two ~~Autodesk,~~additional ~~have~~contingent ~~substantially~~payments ~~greater~~if ~~financial,~~the ~~technological,~~revenue ~~marketing,~~of ~~managerial~~the ~~and~~PLM ~~research~~Business ~~and~~in ~~development~~the ~~resources~~first ~~and~~12-month ~~experience~~period ~~than~~following wethe doclosing ~~and~~of ~~represent~~the ~~significant~~Asset ~~competition~~Sale ~~for~~equals usat least $3.2 ~~Our~~million ~~competitors~~and ~~may~~if ~~succeed~~the revenue in ~~developing~~the ~~competing~~second ~~technologies~~12-month orperiod ~~products~~following ~~which~~the ~~may~~closing ~~gain~~of ~~market~~the ~~acceptance~~Asset ~~more~~Sale ~~rapidly~~equals ~~than~~at ~~our~~least ~~products~~$3.75 ~~Existing~~million. orIn ~~proposed~~each ~~products~~period the additional payment would equal $75,000 plus 12.5% of ~~our~~the ~~competitors~~amount ~~may~~in ~~render~~excess ~~our~~of ~~existing~~the orminimum ~~proposed~~revenue ~~products~~threshold ~~noncompetitive~~for oreach ~~obsolete~~period plus $75,000. IfFor weexample, ~~are~~if ~~unable~~the torevenue ~~compete~~of ~~successfully~~the inPLM Business for the ~~future~~first 12-month period is $3.5 million, the ~~competitive~~contingent ~~pressures~~payment due would be $103,125 calculated as $75,000 plus 12.5% times $3.5 million less $3.275 million. There can be no assurance that wethe ~~face~~revenue ~~could~~generated ~~adversely~~by ~~affect~~the ~~our~~PLM ~~profitability~~Business will at least equal the minimum revenue threshold in each period or ~~financial~~that ~~performance~~we would earn any of the contingent payments.

3428

~~Our~~Risks ~~agreements~~Related ~~with~~to ~~certain~~Our ~~software vendors may be terminated at will by the vendors.~~ Business

We ~~utilize~~will ~~third~~need ~~party~~additional ~~vendors~~capital to ~~provide certain software and utilities which help us to~~ continue to develop and ~~support~~launch ProductCenter customers with their integrations from ProductCenter to their respective CAD solutions. These agreements are subject to termination at will by the vendors, and, if terminated, we would need to seek alternative methods of providing continuing support to our ~~existing~~HomeView™ ~~customers~~technology and ~~an alternative solution to meet the needs of prospective customers, which could have a material adverse effect on future performance~~product. For example, in July 2007, we were informed that our agreement with one such vendor, PTC, was not going to be extended beyond its renewal date of January 31, 2008. Thus the agreement with PTC has since expired. A significant number of our current ProductCenter customers utilize PTC’s proprietary CAD technology. We continue to support our current customers who are utilizing PTC’s CAD solution with a customer specific consulting solution. While this customer specific consulting solution has allowed us to retain the majority of our customers utilizing PTC’s CAD tool, it has precluded us from proposing our solution to new customers using that CAD technology. Our inability to offer our solution to new customers utilizing PTC’s technology or similar restrictions that could result from any future terminations of similar agreements with other vendors could have an adverse effect on our future revenues.

~~Our~~We ~~ability~~will require additional capital to ~~use~~support the ongoing development and launch of our ~~federal~~HomeView technology and ~~state~~product. ~~net~~There ~~operating~~can ~~loss~~be ~~carryforwards~~no ~~(“NOLs”)~~assurance that the capital needed will be available or if the terms will be reasonable. If the Company is unable to ~~reduce~~raise ~~taxable~~the ~~income~~necessary ~~generated~~capital, its plans for maximizing the return on the capital invested in the ~~future~~new ~~could~~product beand ~~substantially~~for ~~limited~~establishing ora ~~eliminated.~~new revenue source may be materially negatively impacted.

AsOur ofability ~~May 31, 2015, we had approximately $21 million of federal NOLs available~~ to ~~offset future taxable income, which expire in varying amounts beginning in 2022, if unused. We may not generate taxable income in time to~~ use ~~these~~our ~~NOLs~~federal ~~prior to their expiration,~~ and ~~the~~state ~~Internal~~net ~~Revenue~~operating ~~Service~~loss ~~may~~carryforwards ~~not agree with the amount or timing of prior losses, thereby limiting the value of our~~ (“NOLs.”) ~~Furthermore, our ability~~ to ~~use~~reduce ~~our~~taxable ~~NOLs~~income isgenerated ~~subject to an annual limitation due to ownership changes that may have occurred or that could occur~~ in the future, as determined by Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state regulations. Depending on the actual amount of any limitation on our ability to use our NOLs, our future taxable income could be ~~subject~~substantially tolimited ~~federal and/~~or ~~state income tax, creating federal and/or state income tax liabilities~~eliminated. ~~We previously maintained a tax benefits preservation plan with respect to our NOLs, which expired in February 2015.~~

~~Our~~As ~~quarterly~~of ~~results~~May 31, 2016, we had approximately $22 million of federal NOLs available to offset future taxable income, which expire in varying amounts beginning in 2022, if unused. We may ~~fluctuate~~not ~~making~~generate taxable income in time to use these NOLs prior to their expiration, and the Internal Revenue Service may not agree with the amount or timing of prior losses, thereby limiting the value of our NOLs. Furthermore, our ability to use our NOLs is subject to an annual limitation due to ownership changes that may have occurred or that could occur in the future, ~~revenue~~as determined by Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state regulations. Depending on the actual amount of any limitation on our ability to use our NOLs, our future taxable income could be subject to federal and/or ~~financial~~state ~~results~~income ~~difficult~~tax, creating federal and/or state income tax liabilities. We previously maintained a tax benefits preservation plan with respect to ~~predict~~our NOLs, which expired in February 2015.

~~Our~~We ~~quarterly revenue and operating results~~ are ~~difficult~~dependent toon ~~predict~~key ~~and~~personnel ~~may~~whose ~~fluctuate~~loss ~~significantly~~could ~~from~~impair ~~quarter to quarter. Our quarterly revenue may fluctuate significantly for several reasons including: the timing and success of introductions of any new products or product enhancements or those of~~ our competitors; uncertainty created by changes in the market; variations in the size and timing of individual orders; competition and pricing; seasonality; and customer order deferrals or cancellations as a result of general economic conditions or industry decline. Furthermoreoperations, ~~we have often recognized a substantial portion of~~ our product ~~revenues~~development ~~in the last month of a quarter, with these revenues frequently concentrated in the last weeks~~ or days of a quarter. As a result, product revenues in any quarter are substantially dependent on orders booked and shipped in the latter part of that quarter and revenues from any future quarter are not predictable with any significant degree of accuracy. We typically do not experience order backlog. For these reasons, we believe that period-to-period comparisons of our ~~results~~sales ~~of operations are not necessarily meaningful and should not be relied upon as indications of future performance~~efforts.

~~Our~~We ~~financial~~are ~~condition~~a ~~could~~small becompany ~~adversely~~especially ~~affected~~for ifone ~~significant~~that ~~errors~~is orpublicly ~~defects~~held. While we enjoy the benefit of a very experienced, long-tenured employee group, we are ~~found~~dependent inon many of those employees for the familiarity, expertise and unique insight they have developed with our ~~software~~products that would be extremely difficult and time consuming to replace. The loss of services of any of our key personnel could make it difficult for us to meet important objectives, such as timely and effective product introductions and financial goals.

~~Sophisticated~~We ~~software can sometimes contain errors, defects or other performance problems. If errors or defects are discovered in our current or future products, we~~ may ~~need~~be tosued ~~expend~~for ~~significant~~infringing ~~financial,~~on ~~technical~~the ~~and~~intellectual ~~management~~property ~~resources,~~rights ~~or divert some~~ of ~~our development resources, in order to resolve or work around those defects, and we may not be able to correct them in a timely manner or provide an adequate response to our customers~~others.

~~Errors,~~Third ~~defects~~parties ormay ~~other~~assert ~~performance~~that ~~problems~~we inare ~~our~~employing ~~products~~their ~~could~~proprietary ~~cause~~technology uswithout toauthorization. ~~delay~~There ~~new~~can ~~product~~be ~~releases~~no assurance that we do not or ~~customer~~will ~~deployments~~not infringe on the patent or proprietary rights of others. ~~Any~~Parties ~~such~~making ~~delays~~claims against us may be able to obtain injunctive or other equitable relief that could ~~negatively~~effectively ~~impact~~block our ability to ~~realize~~further ~~revenue~~develop, ~~from~~commercialize ~~the~~and ~~licensing~~sell products, and ~~shipment~~such claims could result in the award of ~~new~~substantial ordamages ~~enhanced~~against ~~products~~us. ~~and~~In ~~give~~the ~~our~~event ~~competitors~~of a ~~greater~~successful ~~opportunity~~claim of infringement against us, we may be required to ~~market~~pay ~~competing~~damages ~~products.~~and ~~Such~~obtain ~~difficulties~~one ~~could~~or ~~also~~more ~~cause~~licenses usfrom third parties. We may not be able to ~~lose~~obtain ~~customers.~~these ~~Technical~~licenses ~~problems~~at ora ~~the~~reasonable ~~loss~~cost, ofif ~~customers~~at all. In that event, we could ~~also~~encounter ~~damage~~delays ~~our~~in ~~business~~product ~~reputation~~introductions ~~and~~while ~~cause~~we usattempt to ~~lose~~develop ~~new~~alternative ~~business~~methods ~~opportunities.~~or products or be required to cease offering affected products and our operating results would be harmed.

35Our sales and operations are globally dispersed, which exposes us to additional operating and compliance risks.

We ~~are~~sell ~~dependent~~and ondeliver ~~key~~software ~~personnel~~and services, and maintain support operations in multiple countries whose ~~loss~~laws ~~could~~and ~~impair~~practices differ from one another. For the fiscal years ended May 31, 2016 and 2015, North America accounted for approximately 79% and 81%, Europe for approximately 22% and 19% and Asia for approximately zero percent of our revenue. Managing these geographically dispersed operations requires significant attention and resources to ensure compliance with laws. Accordingly, while we maintain a compliance program, we cannot guarantee that an employee, agent or business partner will not act in violation of our ~~product~~policies ~~development~~or U.S. or other applicable laws. Such violations can lead to civil and/or criminal prosecutions, substantial fines and the revocation of our ~~sales~~rights ~~efforts~~to continue certain operations and also cause business and reputation loss.

We are a small company especially for one that is publicly held. Our technologies are complex and have been developed over many years. While we enjoy the benefit of a very experienced, long-tenured employee group, we are dependent on many of those employees for the familiarity, expertise and unique insight they have developed with our products that would be extremely difficult and time consuming to replace. The loss of services of any of our key personnel could make it difficult for us to meet important objectives, such as timely and effective product introductions and financial goals.29

We are obligated to maintain proper and effective internal control over financial reporting. We may not complete our analysis of our internal control over financial reporting in a timely manner, or these internal controls may not be ~~sued~~determined ~~for~~to ~~infringing~~be oneffective, ~~the~~which ~~intellectual~~may ~~property~~adversely ~~rights~~affect investor confidence in our company and, as a result, the value of ~~others~~our common stock.

~~Our~~In ~~ProductCenter~~December ~~technology~~2011, ~~was~~we ~~launched~~filed ina ~~the~~Form ~~early~~8-A ~~1990’s.~~with ~~Over~~ the ~~decades~~SEC ~~that~~in ~~our~~connection ~~technologies~~with ~~have been in~~ the ~~marketplace,~~effectiveness ~~a significant number~~ of ~~patents~~our ~~have~~registration ~~been~~statement ~~filed~~(333-174818), bysubjecting ~~competitors.~~us Itagain isto ~~difficult~~the ifreporting ~~not~~requirements ~~impossible~~under ~~for~~the usExchange toAct. ~~monitor~~As ~~these~~a ~~patent~~public ~~awards~~company, towe ~~become~~are ~~familiar~~required, ~~with~~pursuant ~~their~~to ~~claims~~Section ~~and~~404 weof dothe ~~not~~Sarbanes-Oxley ~~attempt~~Act, to dofurnish ~~so.~~a ~~Third~~report ~~parties~~by ~~may~~management ~~assert~~on, ~~that~~among weother ~~are~~things, ~~employing~~the ~~their~~effectiveness ~~proprietary~~of ~~technology~~our ~~without~~internal ~~authorization.~~control ~~There~~over ~~can~~financial bereporting. noThis ~~assurance~~assessment ~~that~~includes wedisclosure doof ~~not~~any ormaterial ~~will~~weaknesses ~~not~~identified ~~infringe~~by onour ~~the~~management ~~patent~~in orour ~~proprietary~~internal ~~rights~~control ofover ~~others~~financial reporting. ~~Parties~~We ~~making claims against us~~ may not be able to ~~obtain~~remediate ~~injunctive~~future ormaterial ~~other~~weaknesses, ~~equitable~~or ~~relief~~to ~~that~~complete ~~could effectively block~~ our ~~ability to further develop~~evaluation, ~~commercialize~~testing and ~~sell~~any ~~products,~~required ~~and~~remediation ~~such~~in ~~claims~~a ~~could~~timely ~~result~~fashion. inDuring the ~~award~~evaluation ofand ~~substantial~~testing ~~damages~~process, ~~against~~if ~~us.~~we Inidentify ~~the~~one ~~event~~or ofmore amaterial ~~successful~~weaknesses ~~claim~~in ofour ~~infringement~~internal ~~against~~control usover financial reporting, we ~~may~~will be ~~required~~unable to ~~pay~~assert ~~damages~~that ~~and~~our ~~obtain~~internal ~~one~~controls orare ~~more licenses from third parties~~effective. WeIf ~~may~~we ~~not~~are beunable ~~able~~ to ~~obtain~~assert ~~these~~that ~~licenses~~our atinternal acontrol ~~reasonable~~over ~~cost,~~financial ifreporting atis ~~all. In that event~~effective, we could ~~encounter~~lose ~~delays~~investor confidence in ~~product~~the ~~introductions~~accuracy ~~while~~and wecompleteness ~~attempt~~of toour ~~develop~~financial ~~alternative~~reports, ~~methods~~which orwould ~~products~~have ora bematerial ~~required~~adverse toeffect ~~cease~~on ~~offering~~the ~~affected~~price ~~products~~of ~~and~~ our ~~operating~~common ~~results would be harmed~~stock.

~~Our~~Because ~~sales~~we are a relatively small company, the requirements of being a public company, including compliance with the reporting requirements of the Exchange Act and ~~operations~~the ~~are~~requirements ~~globally~~of ~~dispersed~~the Sarbanes-Oxley Act, ~~which~~may ~~exposes~~strain usour toresources, ~~additional~~increase ~~operating~~our costs and ~~compliance~~distract ~~risks~~management; and we may be unable to comply with these requirements in a timely or cost-effective manner.

WeAs ~~sell~~a ~~and~~public ~~deliver software and services~~company, ~~and~~we ~~maintain~~need ~~support~~to ~~operations~~comply inwith ~~multiple~~certain ~~countries whose~~ laws, regulations and ~~practices~~requirements, ~~differ~~certain ~~from~~corporate ~~one~~governance ~~another.~~provisions ~~For~~of the ~~three~~Sarbanes-Oxley ~~month~~Act ~~periods~~and ~~ended~~related ~~February~~regulations ~~29,~~of ~~2016~~the ~~and~~SEC. ~~February~~If ~~28,~~we ~~2015,~~list ~~North~~our ~~America~~securities ~~accounted~~on ~~for~~an ~~approximately~~exchange, ~~78.5%~~the ~~and~~exchange ~~84.2%,~~will ~~Europe~~impose ~~for~~additional ~~approximately~~requirements ~~21.1%~~on ~~and~~listed ~~15.8%~~companies, ~~and~~including ~~Asia~~enhanced ~~for~~corporate ~~approximately~~governance 0practices.3% ~~and~~For ~~zero~~example, ofthe ~~our~~NASDAQ ~~revenue.~~listing ~~Managing~~requirements ~~these~~require ~~geographically~~that ~~dispersed~~listed ~~operations~~companies ~~requires~~satisfy ~~significant~~certain ~~attention~~corporate ~~and~~governance ~~resources~~requirements relating to ~~ensure~~independent ~~compliance~~directors, ~~with~~audit ~~laws. Accordingly~~committees, ~~while~~distribution weof ~~maintain~~annual aand ~~compliance~~interim ~~program~~reports, weshareholder ~~cannot~~meetings, ~~guarantee~~shareholder ~~that~~approvals, ansolicitation ~~employee~~of proxies, ~~agent~~conflicts orof ~~business~~interest, ~~partner~~shareholder ~~will~~voting ~~not~~rights ~~act~~and incodes ~~violation~~ of ~~our~~business ~~policies or U~~conduct.S. orComplying ~~other~~with ~~applicable~~the ~~laws.~~SEC ~~Such~~statutes, ~~violations~~regulations ~~can lead to civil~~ and~~/or~~ ~~criminal~~requirements ~~prosecutions,~~will ~~substantial~~occupy ~~fines~~a ~~and~~significant ~~the~~amount ~~revocation~~of time of our ~~rights~~board toof ~~continue~~directors ~~certain~~and ~~operations~~management and ~~also~~could ~~cause~~increase ~~business~~our costs and ~~reputation loss~~expenses.

WeFrom ~~are~~time ~~obligated~~ to ~~maintain~~time ~~proper~~we ~~and~~may ~~effective~~make ~~internal control over financial reporting~~acquisitions. WeThe ~~may~~failure ~~not complete our analysis of our internal control over financial reporting in a timely manner, or these internal controls may not be determined~~ to besuccessfully ~~effective,~~integrate ~~which~~future ~~may~~acquisitions ~~adversely~~could ~~affect~~harm ~~investor confidence in~~ our ~~company and~~business, asfinancial acondition ~~result,~~and ~~the~~operating ~~value of our common stock~~results.

InAs ~~December 2011, we filed~~ a ~~Form~~part ~~8-A with the SEC in connection with the effectiveness~~ of our ~~registration~~business ~~statement (333-174818)~~strategy, ~~subjecting us again to the reporting requirements under the Exchange Act. As a public company,~~ we ~~are~~have ~~required,~~in ~~pursuant to Section 404 of~~ the ~~Sarbanes-Oxley~~past ~~Act,~~and tomay ~~furnish~~make aacquisitions ~~report~~in ~~by management on, among other things,~~ the ~~effectiveness of our internal control over financial reporting~~future. ~~This~~We ~~assessment~~may ~~includes~~also ~~disclosure~~make ofsignificant ~~any~~investments ~~material weaknesses identified by our management~~ in ~~our~~complementary ~~internal~~companies, ~~control~~products ~~over~~or ~~financial reporting~~technologies. WeAcquisitions ~~may~~present ~~not~~many ~~be able to remediate future material weaknesses~~risks, ~~or to complete our evaluation, testing~~ and ~~any~~we ~~required~~may ~~remediation~~not inrealize ~~a timely fashion. During~~ the ~~evaluation~~financial and ~~testing~~strategic ~~process,~~goals ifthat wewere ~~identify~~contemplated ~~one~~at orthe ~~more~~time ~~material~~of ~~weaknesses~~any intransaction. ~~our~~We ~~internal~~cannot ~~control~~provide ~~over~~assurance ~~financial~~that ~~reporting,~~ we will be ~~unable~~able to ~~assert~~successfully ~~that~~integrate ~~our~~any ~~internal~~business, ~~controls~~products, ~~are~~technologies ~~effective.~~or Ifpersonnel ~~we are unable to assert~~ that ~~our internal control over financial reporting is effective,~~ we ~~could~~may ~~lose~~acquire ~~investor confidence~~ in the ~~accuracy~~future, and ~~completeness of~~ our ~~financial~~failure ~~reports,~~to ~~which~~do ~~would~~so ~~have~~could aharm ~~material~~our ~~adverse~~business, ~~effect~~financial oncondition ~~the~~and ~~price~~operating ~~of our common stock~~results.

~~Because~~Weakness wein ~~are a relatively small company,~~ the ~~requirements~~United ofStates ~~being a public company, including compliance with the reporting requirements of the Exchange Act~~ and ~~the~~international ~~requirements~~economies ~~of the Sarbanes-Oxley Act,~~ may ~~strain~~continue ~~our~~to ~~resources,~~adversely ~~increase~~affect our ~~costs and distract management; and we may be unable to comply with these requirements in a timely or cost-effective manner~~business.

AsThe apast ~~public~~few ~~company,~~years wehave ~~need~~been tocharacterized ~~comply~~by ~~with~~fluctuating ~~certain~~global ~~laws,~~economic ~~regulations~~conditions. ~~and~~Because ~~requirements~~we market, ~~certain~~sell ~~corporate governance provisions of the Sarbanes-Oxley Act~~ and ~~related~~license ~~regulations of the SEC. If we list~~ our ~~securities~~products onthroughout ~~an exchange,~~ the ~~exchange will impose additional requirements on listed companies~~world, ~~including~~in ~~enhanced~~addition ~~corporate~~to ~~governance practices. For example,~~ the ~~NASDAQ~~ongoing ~~listing~~adverse ~~requirements~~effects ~~require~~on ~~that~~our ~~listed~~business ~~companies satisfy certain corporate governance requirements relating to independent directors, audit committees, distribution~~ of ~~annual~~continued ~~and~~weakness ~~interim~~in ~~reports,~~the ~~shareholder~~U.S. ~~meetings~~economy, ~~shareholder~~we ~~approvals,~~could ~~solicitation~~be ofsignificantly ~~proxies,~~affected ~~conflicts~~by ofcontinuing ~~interest,~~weak ~~shareholder~~economic ~~voting~~conditions ~~rights~~in ~~and~~foreign ~~codes of business conduct. Complying with the SEC statutes, regulations~~ and ~~requirements~~domestic ~~will~~markets ~~occupy~~that acould ~~significant~~reduce ~~amount~~demand offor ~~time of~~ our ~~board of directors and management and could increase our costs and expenses~~products.

36Risks Related to the Market for our Common Stock

~~From~~Our ~~time~~stock toprice ~~time~~has webeen ~~may~~and ~~make~~is ~~acquisitions.~~likely ~~The~~to ~~failure~~continue to ~~successfully~~be ~~integrate~~volatile, ~~future~~and ~~acquisitions~~an ~~could~~investment ~~harm~~in our ~~business,~~common ~~financial~~stock ~~condition~~could ~~and~~decline ~~operating~~in ~~results~~value.

AsSince athe ~~part~~Recapitalization ofTransaction, ~~our~~the ~~business~~closing ~~strategy,~~stock weprice ~~have~~has inranged ~~the~~from ~~past~~a ~~and~~low ~~may~~price ~~make~~of ~~acquisitions~~$1.00 inper ~~the~~share ~~future.~~to Wea ~~may~~high ~~also~~price ~~make~~of ~~significant~~$4.95 ~~investments~~per inshare. ~~complementary~~A ~~companies,~~contributing ~~products~~factor orto ~~technologies.~~the ~~Acquisitions~~price ~~present~~fluctuation ~~many~~is ~~risks,~~the ~~and~~low weaverage ~~may~~daily ~~not~~volume, ~~realize~~which over the ~~financial~~last ~~and~~three ~~strategic~~fiscal ~~goals~~years ~~that~~has ~~were~~averaged ~~contemplated~~fewer atthan 1,000 shares per day. Given the ~~time~~lack of ~~any~~market ~~transaction.~~makers Wein ~~cannot~~the ~~provide~~stock ~~assurance~~and ~~that~~the welow ~~will~~demand, bea ~~able~~shareholder’s attempt to ~~successfully~~sell ~~integrate~~a ~~any~~large ~~business,~~number ~~products,~~of ~~technologies~~shares orrelative ~~personnel~~to ~~that~~the weaverage ~~may~~daily ~~acquire~~volume in ~~the~~a ~~future,~~short ~~and~~period ~~our~~of ~~failure~~time towill dolikely sohave ~~could~~a ~~harm~~material ~~our~~negative ~~business,~~impact ~~financial~~on ~~condition~~the ~~and~~share ~~operating results~~price.

~~Weakness in the United States and international economies may continue to adversely affect our business.~~30

~~The~~Our ~~past~~common ~~few~~stock ~~years~~may ~~have~~be ~~been~~considered ~~characterized~~“penny ~~by fluctuating global economic conditions. Because we market~~stock”, ~~sell~~further ~~and~~reducing ~~license~~its ~~our products throughout the world, in addition to the ongoing adverse effects on our business of continued weakness in the U~~liquidity.~~S. economy, we could be significantly affected by weak economic conditions in foreign and domestic markets that could reduce demand for our products.~~

~~Risks~~Our ~~Related~~common stock may be considered “penny stock”, which will further reduce the liquidity of our common stock. Trading in penny stocks is limited because broker-dealers are required to provide their customers with disclosure documents prior to allowing them to participate in transactions involving the ~~Market~~common ~~for~~stock. These disclosure requirements are burdensome to broker-dealers and may discourage them from allowing their customers to participate in transactions involving our ~~Common~~common ~~Stock~~stock, thereby further reducing the liquidity of our common stock.

~~Our~~Penny ~~stock~~stocks are equity securities with a market price ~~has~~below ~~been~~$5.00 ~~and~~per share other than a security (i) that is ~~likely~~registered toon ~~continue~~a tonational beexchange ~~volatile~~or included for quotation on the NASDAQ system, ~~and~~(ii) anwhose ~~investment~~issuer has net tangible assets of more than $2,000,000 if it has been in ~~our~~continuous ~~common~~operation ~~stock~~for ~~could~~greater ~~decline~~than three years, or net tangible assets of more than $5,000,000 if it has been in ~~value~~continuous operation for less than three years or (iii) whose issuer has average revenue of at least $6,000,000 for the last three fiscal years.

~~Since~~Rules ~~2011,~~promulgated by the ~~closing~~Securities ~~price~~and ofExchange ~~our~~Commission ~~common~~under ~~stock~~Section ~~has~~15(g) ~~ranged from a low price~~ of ~~$1.00 per share to a high price of $4.95 per share. A contributing factor to~~ the ~~price~~Exchange ~~fluctuation~~Act isrequire ~~the~~broker-dealers ~~low~~engaging ~~average~~in ~~daily~~transactions ~~volume, which over the last three fiscal years has averaged fewer than 1,000 shares per day. Given the lack of market makers~~ in ~~the~~penny ~~stock and the low demand~~stocks, ~~a shareholder’s attempt~~ to ~~sell~~first aprovide ~~large number of shares relative~~ to ~~the~~their ~~average~~customers ~~daily volume in~~ a ~~short~~series ~~period~~ of ~~time~~disclosures ~~will~~and ~~likely~~documents ~~have a material negative impact on the share price.~~including:

~~Our common stock may be considered “penny stock”, further reducing its liquidity.~~·

~~Our~~a ~~common~~standardized ~~stock~~risk ~~may~~disclosure bedocument ~~considered~~identifying ~~“penny stock”, which will further reduce~~ the ~~liquidity~~risks ofinherent ~~our~~in ~~common~~investment ~~stock. Trading~~ in penny stocks is limited because broker-dealers are required to provide their customers with disclosure documents prior to allowing them to participate in transactions involving the common stock. These disclosure requirements are burdensome to broker-dealers and may discourage them from allowing their customers to participate in transactions involving our common stock, thereby further reducing the liquidity of our common stock.;

Penny stocks are equity securities with a market price below $5.00 per share other than a security (i) that is registered on a national exchange or included for quotation on the NASDAQ system, (ii) whose issuer has net tangible assets of more than $2,000,000 if it has been in continuous operation for greater than three years, or net tangible assets of more than $5,000,000 if it has been in continuous operation for less than three years or (iii) whose issuer has average revenue of at least $6,000,000 for the last three fiscal years.·

~~Rules~~all ~~promulgated~~compensation received by the ~~Securities and Exchange Commission under Section 15(g) of the Exchange Act require~~ broker-~~dealers~~dealer ~~engaging~~ in ~~transactions~~connection inwith ~~penny~~the ~~stocks, to first provide to their customers a series of disclosures and documents including:~~transaction;

acurrent ~~standardized~~quotation ~~risk~~prices ~~disclosure~~and ~~document~~other ~~identifying~~relevant ~~the~~market ~~risks inherent in investment in penny stocks~~data; and

~~all~~a ~~compensation~~monthly ~~received~~account bystatement reflecting the ~~broker-dealer~~fair inmarket ~~connection~~value ~~with~~of the ~~transaction;~~securities.

·These rules also require that a broker-dealer obtain financial and other information from a customer, determine that transactions in penny stocks are suitable for such customer and deliver a written statement to such customer setting forth the basis for this determination.

~~current~~A ~~quotation~~small ~~prices~~number ~~and~~of ~~other~~shareholders ~~relevant~~own ~~market~~a ~~data;~~large ~~and~~number of shares thereby potentially exerting significant influence over us.

·As of August 24, 2016, the three members of our board of directors beneficially owned approximately 35.7% of our outstanding shares and two other shareholders together beneficially own approximately 33.5% of outstanding shares. This concentration of ownership could significantly influence all matters requiring shareholder approval and could delay, deter or prevent a change in control of the Company or other business combinations that might otherwise be beneficial to our other shareholders. Accordingly, this concentration of ownership may harm the market price of our common stock. In addition, the interest of our significant shareholders may not always coincide with the interest of the Company’s other shareholders. In deciding how to vote on such matters, they may be influenced by interests that conflict with our other shareholders.

aOur ~~monthly~~stock ~~account~~is ~~statement~~thinly ~~reflecting~~traded, ~~the~~so ~~fair~~you ~~market~~may ~~value~~be ofunable ~~the~~to ~~securities~~sell at or near ask prices or at all.

~~These~~The ~~rules~~shares ~~also~~of ~~require~~our common stock are traded on the OTC Bulletin Board. Shares of our common stock are thinly traded, meaning that athe ~~broker-dealer~~number ~~obtain~~of ~~financial~~persons ~~and~~interested ~~other~~in ~~information~~purchasing ~~from~~our common stock at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to a ~~customer~~number of factors, ~~determine~~including the fact that ~~transactions~~we are a small company that is relatively unknown to stock analysts, stockbrokers, institutional investors and others in ~~penny~~the ~~stocks~~investment ~~are~~community ~~suitable~~who ~~for~~generate or influence sales volume. Even in the event that we come to the attention of such ~~customer~~persons, ~~and~~they ~~deliver~~would alikely ~~written~~be ~~statement~~reluctant to follow an unproven company such ~~customer~~as ~~setting~~ours ~~forth~~or purchase or recommend the ~~basis~~purchase of our shares until such time as we become more seasoned and viable. As a consequence, our stock price may not reflect an actual or perceived value of the business. Also, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. A broader or more active public trading market for ~~this~~our ~~determination~~common shares may not develop or if developed, may not be sustained. Due to these conditions, you may not be able to sell your shares at or near ask prices or at all if you need money or otherwise desire to liquidate your shares.

3731

AWe ~~small~~do ~~number~~not ofpresently ~~shareholders~~intend ~~own~~to apay ~~large~~any ~~number~~cash ofdividends ~~shares~~or ~~thereby~~repurchase ~~potentially~~any ~~exerting~~shares ~~significant~~of ~~influence~~our ~~over~~common usstock.

AsWe ofdo ~~April~~not ~~10,~~presently ~~2016,~~intend ~~the~~to ~~three~~pay ~~members~~any ofcash ~~our~~dividends ~~board~~on ofour ~~directors~~common ~~beneficially~~stock. ~~own~~Any ~~approximately~~payment ~~35.7%~~ of ~~our~~future ~~outstanding~~dividends ~~shares.~~will ~~Two~~be ~~other~~at ~~shareholders~~the ~~together~~discretion ~~beneficially~~of ~~own~~the ~~approximately~~board ~~33.5%~~ of ~~outstanding~~directors ~~shares.~~and ~~This~~will ~~concentration~~depend ofon, ~~ownership~~among ~~could~~other ~~significantly~~things, ~~influence~~our ~~all~~earnings, ~~matters~~financial ~~requiring~~condition, ~~shareholder~~capital ~~approval~~requirements, ~~and~~level ~~could~~of ~~delay~~indebtedness, ~~deter~~statutory orand ~~prevent~~contractual arestrictions ~~change~~applying into ~~control~~the payment of ~~the~~dividends, ~~Company~~and or other ~~business~~considerations ~~combinations~~ that ~~might~~our ~~otherwise~~board beof ~~beneficial~~directors todeems ~~our other shareholders~~relevant. ~~Accordingly,~~Cash ~~this~~dividend ~~concentration~~payments ofin ~~ownership~~the future may ~~harm~~only ~~the~~be ~~market~~made ~~price~~out of ~~our~~legally ~~common~~available ~~stock.~~funds ~~In addition~~and, ~~the~~if ~~interest~~we ofexperience ~~our~~substantial ~~significant~~losses, ~~shareholders~~such funds may not ~~always~~be ~~coincide with the interest of the Company’s other shareholders~~available. InAccordingly, ~~deciding~~you ~~how~~may have to ~~vote~~sell onsome ~~such~~or ~~matters,~~all ~~they~~of ~~may~~your becommon ~~influenced~~stock byin ~~interests~~order ~~that~~to ~~conflict~~generate ~~with~~cash ~~our~~flow ~~other~~from ~~shareholders~~your investment.

~~Our~~We ~~stock~~are isa ~~thinly~~“smaller ~~traded,~~reporting socompany” ~~you~~and ~~may~~the bereduced ~~unable~~disclosure requirements applicable to ~~sell~~us atmay ormake ~~near~~our ~~ask~~common ~~prices~~stock orless atattractive ~~all.~~to investors.

~~The~~We ~~shares of our common stock~~ are ~~traded~~currently ona ~~the~~“smaller ~~OTC~~reporting ~~Bulletin Board. Shares of our common stock are thinly traded~~company”, meaning that ~~the~~we ~~number~~are ofnot ~~persons~~an ~~interested~~investment incompany, ~~purchasing~~an ~~our~~asset-backed ~~common~~issuer, ~~stock at~~ or ~~near~~a ~~ask prices at any given time may be relatively small or non~~majority-~~existent.~~owned ~~This~~subsidiary ~~situation is attributable to a number~~ of ~~factors, including the fact that we are~~ a ~~small~~parent company that is ~~relatively~~not ~~unknown~~a tosmaller ~~stock~~reporting ~~analysts,~~company ~~stockbrokers, institutional investors~~ and ~~others~~have ina ~~the~~public ~~investment~~float ~~community~~of ~~who~~less ~~generate~~than or$75 ~~influence~~million ~~sales~~and ~~volume.~~annual ~~Even~~revenues inof ~~the~~less ~~event~~than ~~that~~$50 wemillion ~~come~~during to the ~~attention~~most ofrecently ~~such~~completed ~~persons,~~fiscal ~~they~~year. ~~would~~Smaller ~~likely~~reporting becompanies ~~reluctant~~are able to ~~follow~~provide ansimplified ~~unproven~~executive ~~company~~compensation ~~such~~disclosures asin ~~ours~~their orfilings; ~~purchase~~are orexempt ~~recommend~~from the ~~purchase~~provisions of ~~our~~Section ~~shares~~404(b) ~~until~~of ~~such~~the ~~time~~Sarbanes-Oxley asAct werequiring ~~become~~that ~~more~~independent ~~seasoned~~registered ~~and~~public ~~viable.~~accounting Asfirms aprovide ~~consequence, our stock price may not reflect~~ an ~~actual~~attestation orreport ~~perceived~~on ~~value of~~ the ~~business.~~effectiveness ~~Also,~~of ~~there~~internal ~~may~~control beover ~~periods~~financial ofreporting; ~~several~~and ~~days~~have orcertain ~~more~~other ~~when~~decreased ~~trading~~disclosure ~~activity~~obligations in ~~our~~their ~~shares~~SEC isfilings, ~~minimal or non-existent~~including, asamong ~~compared~~other tothings, aonly ~~seasoned~~being ~~issuer~~required ~~that~~to ~~has~~provide atwo ~~large~~years ~~and steady volume~~ of ~~trading~~audited ~~activity~~financial ~~that~~statements ~~will~~in ~~generally~~annual ~~support continuous sales without an adverse effect on share price~~reports. AWe ~~broader~~have ortaken ~~more~~advantage ~~active~~of ~~public~~some ~~trading~~of ~~market~~these ~~for~~reduced ~~our~~disclosure ~~common~~obligations, ~~stock~~and ~~may~~thus ~~not~~the ~~develop~~information orwe ifprovide ~~developed,~~shareholders may ~~not~~ be ~~sustained.~~different ~~Due~~from towhat ~~these conditions,~~ you ~~may~~might ~~not~~receive befrom ~~able~~other topublic ~~sell~~companies ~~your~~in ~~shares~~which ~~at or near ask prices or at all if~~ you ~~need~~hold ~~money or otherwise desire to liquidate your~~ shares.

WeRisks doRelated ~~not presently intend~~ to ~~pay~~the ~~any~~CADRA ~~cash dividends or repurchase any shares of our common stock.~~ Sale

WeA doportion ~~not presently intend to pay any cash dividends on our common stock. Any payment~~ of ~~future dividends will be at~~ the ~~discretion~~purchase ofprice ~~the~~was ~~board~~deferred ~~of directors~~ and will depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends, and other considerations that our board of directors deems relevant. Cash dividend payments in the future may only be made out of legally available funds and, if we ~~experience substantial losses, such funds~~ may not bereceive ~~available.~~those ~~Accordingly, you may have to sell some or all of your common stock in order to generate cash flow from your investment~~payments.

WeUp ~~are~~to $750,000 of the total purchase price from the CADRA Sale is based on the revenues generated by the CADRA business during the three-year period following the asset sale. Specifically, the Company will be paid earn-out payments equal to 10% of CADRA revenue generated by Mentor up to the $750,000 maximum. Through May 31, 2016 we have received a ~~“smaller~~total ~~reporting~~of ~~company”~~$527,000 of the maximum earn-out payments for the revenue recorded by Mentor through January 31, 2016. The Company is due one additional earn-out payment based on CADRA revenues generated between February 1, 2016 and October 31, 2016 (the ~~reduced~~“Remaining ~~disclosure~~Earn-Out ~~requirements~~Period”). ~~applicable~~Mentor has broad discretion to usoperate its post-closing business, and may ~~make~~choose ~~our~~to ~~common~~do ~~stock~~so ~~less~~in ~~attractive~~a tomanner ~~investors~~which may or may not result in the payment of all of the CADRA earn-out payments.

WeCADRA ~~are~~royalty ~~currently~~payments awere ~~“smaller~~recorded ~~reporting~~at ~~company”,~~the ~~meaning~~transaction ~~that~~date webased ~~are~~on ~~not~~fair anvalue ~~investment~~of ~~company,~~the anexpected ~~asset-backed~~royalty ~~issuer,~~payments oras adescribed ~~majority-owned~~in ~~subsidiary~~the offinancial astatements. ~~parent~~As ~~company~~of ~~that~~August is31, ~~not~~2016, athe ~~smaller~~Company ~~reporting~~estimated ~~company~~the ~~and~~fair ~~have~~value ~~a public float~~ of ~~less~~the ~~than~~one ~~$75~~remaining ~~million~~future ~~and~~payment ~~annual~~at ~~revenues of less than~~ $50130,000 ~~million~~which ~~during~~is ~~the~~subject ~~most~~to ~~recently~~adjustment ~~completed~~each fiscal ~~year.~~quarter ~~Smaller~~based ~~reporting~~on ~~companies~~an ~~are~~independent ~~able~~third toparty ~~provide~~valuation. ~~simplified~~There ~~executive~~can ~~compensation~~be ~~disclosures~~no inassurance ~~their~~that ~~filings; are exempt from~~ the ~~provisions~~Company ofwill ~~Section~~receive ~~404(b)~~all of the ~~Sarbanes-Oxley~~royalty ~~Act~~payments ~~requiring~~it ~~that~~has ~~independent~~recorded ~~registered~~on ~~public~~its ~~accounting~~balance ~~firms~~sheet ~~provide~~as ~~an attestation report on the effectiveness~~ of ~~internal~~August ~~control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings~~31, ~~including, among other things, only being required to provide two years of audited financial statements in annual reports~~2016. WeIf ~~have~~the ~~taken~~actual ~~advantage~~CADRA ofrevenue ~~some~~results ofare ~~these~~lower ~~reduced~~than ~~disclosure~~the ~~obligations,~~forecasted ~~and~~results ~~thus~~ the ~~information~~Company ~~we provide shareholders~~ may behave ~~different~~to ~~from~~adjust ~~what~~the ~~you~~royalty ~~might~~asset ~~receive~~through ~~from~~a ~~other~~charge ~~public~~to ~~companies in which you hold shares~~earnings.

38Mentor did not assume any of the excluded liabilities under the Asset Purchase Agreement.

~~Risks~~Under ~~Related~~the toAsset Purchase Agreement, Mentor did not assume all of the liabilities associated with the CADRA ~~Sale~~business. Certain liabilities remained with the Company post-closing. For example, Mentor only assumed customer support obligations related to certain assigned contracts and obligations for performance under contracts that arise after the closing, and did not assume liability for any obligation or breach by the Company that occurred or arose prior to the closing. While the Company believes that it has adequately accrued for these liabilities or is adequately insured against certain of the risks associated with such excluded liabilities, there can be no assurances that additional expenditures will not be incurred in resolving these liabilities.

A portion of the purchase price was deferred and we may not receive those payments.

Up to $750,000 of the total purchase price from the CADRA Sale is based on the revenues generated by the CADRA business during the three-year period following the asset sale. Specifically, the Company will be paid earn-out payments equal to 10% of CADRA revenue generated by Mentor up to the $750,000 maximum. In March 2014 and 2015, the Company received the first two earn-out payments totaling approximately $327,000 under this deferred arrangement related to the period from the transaction date to January 31, 2015. As of February 29, 2016, the maximum amount of earn-out payments that could be received in connection with the CADRA Sale totaled $423,000. On April 1, 2016, the Company received an earn-out payment of approximately $200,000 for the CADRA revenue generated by Mentor for the twelve month period ended January 31, 2016, thereby reducing the maximum amount of earn-out payments that may be collected to $223,000. The Company is due one additional earn-out payment based on CADRA revenues generated between February 1, 2016 and October 31, 2016 (the “Remaining Earn-Out Period”). Mentor has broad discretion to operate its post-closing business, and may choose to do so in a manner which may or may not result in the payment of all of the CADRA earn-out payments.

CADRA royalty payments were recorded at the transaction date based on fair value of the expected royalty payments as described in the financial statements. As of February 29, 2016, the Company estimated the fair value of these future payments at $346,000 and are subject to adjustment each fiscal quarter based on an independent third party valuation. As of February 29, 2016, the maximum amount of earn-out payments that could be received by the Company is $423,000. During the three month period ended February 29, 2016, the Company increased the fair value of the earn-out payments by $21,000 based on an independent valuation. There can be no assurance that the Company will receive all of the royalty payments it has recorded on its balance sheet as of February 29, 2016. If the actual CADRA revenue results are lower than the forecasted results the Company may have to adjust the royalty asset through a charge to earnings. As of February 29, 2016, the maximum amount of earn-out payments that could be received in connection with the CADRA Sale totaled $423,000. On April 1, 2016, the Company received an earn-out payment of approximately $200,000 for the CADRA revenue generated by Mentor for the twelve month period ended January 31, 2016, thereby reducing the maximum amount of earn-out payments that may be collected to $223,000. The Company is due one additional earn-out payment based on CADRA revenues generated between February 1, 2016 and October 31, 2016 (the “Remaining Earn-Out Period”).

Mentor did not assume any of the excluded liabilities under the Asset Purchase Agreement.

Under the Asset Purchase Agreement, Mentor did not assume all of the liabilities associated with the CADRA business. Certain liabilities remained with the Company post-closing. For example, Mentor only assumed customer support obligations related to certain assigned contracts and obligations for performance under contracts that arise after the closing, and did not assume liability for any obligation or breach by the Company that occurred or arose prior to the closing. While the Company believes that it has adequately accrued for these liabilities or is adequately insured against certain of the risks associated with such excluded liabilities, there can be no assurances that additional expenditures will not be incurred in resolving these liabilities.

Item 6. Exhibits

See Exhibit Index immediately following the signature page hereto, which Exhibit Index is incorporated herein by reference.

3932

SIGNATURES

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

	SOFTECH, INC.
Date: April 14, 2016	/s/ Amy E. McGuire
Date: October 17, 2016	/s/ Joseph P. Mullaney
	Amy E. McGuire
	Chief Financial Officer
Date: April 14, 2016	/s/ Joseph P. Mullaney
	Joseph P. Mullaney
	President & Chief Executive Officer
	President, Chief Executive Officer and Chief Financial Officer

4033

EXHIBIT INDEX

4134

	10.12	Amendment No.4 to Loan, Pledge and Security Agreement by and between Prides Crossing Capital Funding L.P. and SofTech, Inc. dated October 29, 2014 (incorporated by reference to Exhibit 10.18 to the Company’s Form 10-Q filed on January 14, 2015).
	10.13	Securities Purchase Agreement by and between Joseph Daly and SofTech, Inc. dated June 20, 2014 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on June 26, 2014).
	10.14	Promissory Note by and between EssigPR, Inc. and SofTech, Inc. dated June 20, 2014 (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on June 26, 2014).
	10.15	Partnership Agreement by and between Essig Research, Inc. and SofTech, Inc. dated June 20, 2014 (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed on June 26, 2014).
	10.16	Stock Purchase Agreement by and between Greenleaf Capital and SofTech, Inc. dated July 24, 2014 (incorporated by reference to Exhibit 10.14 to the Company’s Form 10-K filed on October 7, 2014).
	10.17	Short Term Loan Agreement by and between SofTech, Inc. and EssigPR, Inc. dated October 1, 2014 (incorporated by reference to Exhibit 10.15 to the Company’s Form 10-K filed on October 7, 2014).
	10.18	Amendment Term Loan Agreement by and between SofTech, Inc. and EssigPR, Inc. dated April 2, 2015 (incorporated by reference to Exhibit 10.18 to the Company’s Form 10-Q filed on April 14, 2015).
	10.19	Amendment No. 2 Term Loan Agreement by and between SofTech, Inc. and EssigPR, Inc. dated July 15, 2015 (incorporated by reference to Exhibit 10.19 to the Company’s Form 8-K filed on July 21, 2015).
	10.20	Amendment No. 3 Term Loan Agreement by and between SofTech, Inc. and EssigPR, Inc. dated October 16, 2015 (incorporated by reference to Exhibit 10.20 to the Company’s Form 8-K filed on October 16, 2015).
	10.21	Amendment No. 4 Term Loan Agreement by and between SofTech, Inc. and EssigPR, Inc. dated November 30, 2015, (incorporated by reference to Exhibit 10.21 to the Company’s Form 10-Q filed on January 14, 2016).
	10.22	Amendment No. 5 Term Loan Agreement by and between SofTech, Inc. and EssigPR, Inc. dated January 8, 2016, (incorporated by reference to Exhibit 10.22 to the Company’s Form 10-Q filed on January 14, 2016).
	10.23	Amendment No. 6 Term Loan Agreement by and between SofTech, Inc. and EssigPR, Inc. dated April 11, 2016, (incorporated by reference to Exhibit 10.23 to the Company’s Form 10-Q filed ~~herewith~~on April 14, 2016).
	10.24	~~Form~~Amendment ofNo. ~~Securities~~7 ~~Purchase~~Term Loan Agreement by and between SofTech, Inc. and ~~certain purchasers~~EssigPR, Inc. dated ~~September~~August 1812, ~~2014,~~2016 ~~September 22, 2014 and October 9, 2014~~ (incorporated by reference to Exhibit 10.1824 to the Company’s Form 10-QK filed on ~~January~~August 1429, ~~2015~~2016).
~~10.25~~	10.25	~~Form~~Amendment ofNo. ~~Securities~~8 ~~Purchase~~Term Loan Agreement by and between SofTech, Inc. and ~~Robert Anthonyson~~EssigPR, Inc. dated ~~September~~August 2130, ~~2015~~2016, ~~(incorporated by reference to Exhibit 10.21 to the Company’s Form 10-Q~~ filed ~~on October 15, 2015)~~herewith.
	10.26	Form of Securities Purchase Agreement by and between SofTech, Inc. and certain purchasers, dated September 18, 2014, September 22, 2014 and October 9, 2014 (incorporated by reference to Exhibit 10.18 to the Company’s Form 10-Q filed on January 14, 2015).
10.27		Form of Securities Purchase Agreement by and between SofTech, Inc. and Robert Anthonyson, dated September 21, 2015 (incorporated by reference to Exhibit 10.21 to the Company’s Form 10-Q filed on October 15, 2015).
21.1		Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to the Company’s Registration Statement filed on Form S-1 on June 9, 2011).
31.1		Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2		Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1		Certification of the Principal Executive Officer and Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of the Principal Financial Officer and Principal Executive Officer pursuant to 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

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Filing Compare · SOFTECH INC