UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

WASHINGTON,
D.C. 20549



FORM
10-K/A

(Amendment
No.1)





(Mark
One)

☒	ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



FOR
THE FISCAL YEAR ENDED SEPTEMBER 30, 2015



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



FOR
THE TRANSITION PERIOD FROM __________ TO __________



COMMISSION
FILE NUMBER: 001-37535



SITO
MOBILE, LTD.

(Name
of registrant in its charter)



|Delaware                                                            |  | 13-4122844                               
|------------------------------------------------------------------- |  | -----------------------------------------
|(State
    or other jurisdiction of 
incorporation or organization) |  | (I.R.S.
    Employer 
Identification No.)



100
Town Square Place, Suite 204, Jersey City, NJ 07310

(Address
of principal executive offices) (Zip Code)



Issuer’s
telephone Number: (201) 275-0555



Securities
registered under Section 12(b) of the Exchange Act:



|Title
of each class            |  | Name of each exchange on which registered
|------------------------------ |  | -----------------------------------------
|Common
Stock, $0.001 par value |  | The Nasdaq Capital Market                







Securities
registered under Section 12(g) of the Exchange Act: None



Indicate
by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
☐    No ☒



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ☒No☐



Indicate
by check mark whether the registrant (1) has filed all reports required 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 ☒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 during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes ☒No☐



Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. Yes ☒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 the definitions of “large accelerated filer,” “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 ☒



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



The aggregate market
value of the common stock held by non-affiliates of the registrant, based upon the last sale price of the common stock of the
Company as of the last business day of its most recently completed second fiscal quarter, or March 31, 2015, was approximately
$35,556,822





The number of shares of registrant’s
common stock outstanding, as of November 23, 2015 was 17,155,748.




















EXPLANATORY NOTE



This annual report on Form 10-K/A (“Form
10-K/A”) is being filed to amend our annual report on Form 10-K for the year ended September 30, 2014 (the “Original
Form 10-K”), which was originally filed with the Securities and Exchange Commission (“SEC”) on November 25,
2015. The Original Form 10-K included consolidated financial statements of the Company as of September 30, 2014 and for the year
then ended that were audited by our prior independent registered public accounting firm, L.L. Bradford & Company, LLC (“L.L.
Bradford”) . On January 6, 2016, the Company was advised by the SEC that it had taken action to suspend L.L. Bradford’s
privilege to practice before the SEC. Accordingly this Form 10-K/A is being filed to include consolidated financial statements
of the Company as of September 30, 2014 and for the year then ended which have been re-audited by our independent registered accounting
firm, RBSM, LLP.



Pursuant to Rule 12b-15 under the Securities
Exchange Act of 1934, as amended, the Form 10-K/A contains current dated certifications from the Principal Executive Officer and
the Principal Financial Officer.



We have not updated the information contained herein for events occurring subsequent
to November 25, 2015, the filing date of the Original Form 10-K.













TABLE
OF CONTENTS



|             |                                                                                                              | Page
|------------ | ------------------------------------------------------------------------------------------------------------ | ----
|             | PART I                                                                                                       |     
|Item
    1.  | Business                                                                                                     | 1   
|Item
    1A. | Risk Factors                                                                                                 | 6   
|Item
    2.  | Properties                                                                                                   | 13  
|Item
    3.  | Legal Proceedings                                                                                            | 13  
|Item
    4.  | Mine Safety Disclosures                                                                                      | 13  
|             |                                                                                                              |     
|             | PART II                                                                                                      |     
|Item
    5.  | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 13  
|Item
    6.  | Selected Financial Data                                                                                      | 15  
|Item
    7.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        | 15  
|Item
    8.  | Financial Statements and Supplementary Data                                                                  | 20  
|Item
    9.  | Changes In and Disagreements with Accountants on Accounting and Financial Disclosure                         | 20  
|Item
    9A. | Controls and Procedures                                                                                      | 21  
|Item
    9B. | Other Information.                                                                                           | 21  
|             |                                                                                                              |     
|             | PART III                                                                                                     |     
|Item
    10. | Directors, Executive Officers and Corporate Governance;                                                      | 22  
|Item
    11. | Executive Compensation                                                                                       | 27  
|Item
    12  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               | 32  
|Item
    13. | Certain Relationship and Related Transactions, and Director Independence                                     | 33  
|Item
    14. | Principal Accounting Fees and Services                                                                       | 33  
|             |                                                                                                              |     
|             | PART
IV                                                                                                      |     
|Item
    15. | Exhibits                                                                                                     |     
|             |                                                                                                              | 36  
|SIGNATURES  











FORWARD
LOOKING STATEMENTS



This
Annual Report on Form 10-K (including the section regarding Management's Discussion and Analysis and Results of Operation) contains
forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates"
and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to
represent an all-inclusive means of identifying forward-looking statements as denoted in this Annual Report on Form 10-K. Additionally,
statements concerning future matters are forward-looking statements.



Although
forward-looking statements in this Annual Report on Form 10-K reflect the good faith judgment of our management, such statements
can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject
to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or
anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes
include, without limitation, those specifically addressed under the heading "Risks Factors" in this Annual Report on
Form 10-K. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date
of this Annual Report on Form 10-K.



We
undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that
may arise after the date of this Annual Report on Form 10-K, except as required by law. Readers are urged to carefully review
and consider the various disclosures made throughout the entirety of this Annual Report, which are designed to advise interested
parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.











PART
I



ITEM
1. DESCRIPTION OF BUSINESS



General



We
are a mobile location-based advertising platform serving businesses, advertisers and brands. Through our platform, our solutions
allow marketers to create content targeted to audiences, based on location, interests, behaviors and loyalty. Through the proliferation
of mobile devices, SITO Mobile provides our customers with the ability to deliver actionable content in a real-time manner, while
providing measurement and analytics that allow campaigns to be fluid and transaction driven.



The
rebranding as SITO Mobile in September 2014 follows a period of expansion for the Company throughout the U.S. and Canada. The
new corporate identity is intended to reinforce our emphasis on mobile location-based advertising and mobile messaging platforms
that give brands, agencies and retailers the ability to transform digital marketing by delivering targeted mobile advertising
campaigns based on geo-location, in-store traffic and customer response. Our platform also drives focus on our core offerings
and launches enhancements to location-based advertising products, such as Verified Walk-in, our proprietary mobile attribution
engine. We believe this will give clients the appropriate measurement, beyond click through rates to properly assess return on
investment and alter advertising programs in real-time, which we believe can mean the difference in competitive advantage.



Our
offerings now include:



SITO
Location Based Advertising - Deliver display advertisements and videos (rich media) on behalf of advertisers,
including the following features:



| | ● | Geo-fencing
                                         – Targets customers within a certain radius of location and uses technology to
                                         push coupons, ads and promotions to mobile applications.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Verified
                                         Walk-in – Tracks foot-traffic to locations and which ads drove action.
| | - | ------------------------------------------------------------------------------------------------------------------------



| | ● | Behavioral
                                         Targeting – Tracks past behaviors over 30-90 day increments allowing for real-time
                                         campaign management.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Analytics
                                         and Optimization – Culling and building measurement system used to track metrics
                                         such as user demographics, psychographics, Cost Per Thousand Ad Impressions Served (“CPM”),
                                         click-throughs and time of engagement.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



SITO
Mobile Messaging– Platform for building and controlling tailored
programs including messaging, customer incentive programs, etc.



| | ● | Creates
                                         a direct channel to customers;                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                        
| | ● | Builds
                                         customer loyalty;                                                                                                                                      
| |   |                                                                                                                                                                                                        
| | ● | Drives
                                         consumer interaction to increase sales; and                                                                                                            
| |   |                                                                                                                                                                                                        
| | ● | Everywhere
                                         – a portal/platform where customers can manage their own campaigns and can tailor
                                         to regions and products.





1







Recent
Developments



Reverse
Stock Split



On
July 29, 2015, the Company filed an amendment to the Certificate of Incorporation to effect a 1-for-10 reverse split of its issued
and outstanding common stock. The reverse split became effective in the market on July 30, 2015. Following the reverse split,
every ten shares of the Company's issued and outstanding common stock were automatically combined and converted into one issued
and outstanding share of common stock with a par value of $0.001 per share. No fractional shares were issued.



Asset
Purchase Agreement with Hipcricket, Inc.



On
July 8, 2015, we, together with our wholly owned subsidiary, SITO Mobile Solutions, Inc., Hipcricket, Inc. (“Hipcricket”)
and, solely as a guarantor of Hipcricket’s indemnity obligations, ESW Capital LLC entered into an Asset Purchase Agreement
pursuant to which we acquired the assets of Hipcricket’s mobile advertising business (the “Purchased Assets”).



The
Company paid $3,700,000 for the Purchased Assets by issuing to Hipcricket 620,560 shares of the Company’s common stock (the
“Shares”), and paying $1,300,000 in cash. The Company acquired all rights in and to contracts with Hipcricket’s
mobile advertising customers, customer lists and records as well as certain intellectual assets and properties used in Hipcricket’s
mobile advertising business. The Company hired certain employees of Hipcricket to service the Hipcricket customers.



The
Asset Purchase Agreement contains standard representations and warranties for a transaction of its nature. The Company and Hipcricket
have agreed to indemnify each other for any breaches of representations, warranties and covenants given in the Agreement. The
Agreement also contains certain non-compete covenants. Except with respect to fraud, neither Hipcricket nor the Company will have
aggregate liability to the other in excess of $2,400,000.



Pursuant
to the terms of the Asset Purchase Agreement, we registered the Shares pursuant to a registration statement on Form S-1 which
was declared effective on September 16, 2015. We shall maintain the effectiveness of the registration statement until such time
as the Shares may be sold without registration, without volume or manner of sale limitations under Rule 144 of the Securities
Act of 1933, as amended.



Agreement
with Fortress Credit Co.



On
October 3, 2014 we entered into a Revenue Sharing and Note Purchase Agreement (the “Fortress Agreement”) by and among
SITO Mobile Solutions, Inc., our wholly-owned subsidiary (“Licensee”), SITO Mobile R&D IP, LLC, our wholly-owned
subsidiary, Fortress Credit Co LLC, as collateral agent (the “Collateral Agent”), CF DB EZ LLC (the “Revenue
Participant”) and the Fortress Credit Co LLC (the “Note Purchaser” and together with the Revenue Participant,
the “Investors”).



Pursuant
to the Fortress Agreement, we issued and sold senior secured notes with an aggregate original principal amount of $10,000,000
and issued, pursuant to a Subscription Agreement, 261,954 new shares of common stock to Fortress at a purchase price of $3.817
per share (which represents the trailing 30-day average closing price) for an aggregate amount of $1,000,000. After deducting
original issue discount of 10% on the notes and a structuring fee, we received $9,850,000 before the payment of legal and due
diligence expenses.



The
original principal amount of the notes shall bear interest at a rate equal to LIBOR plus 9% per annum. Such interest shall be
paid in cash except that 2% per annum of the interest shall be paid-in-kind, by increasing the principal amount of the notes by
the amount of such interest. The term of the notes is 42 months and we must make, beginning in October 2015, monthly amortization
payments on the notes, each in a principal amount equal to $333,334 until the notes are paid in full. We shall also apply 85%
of Monetization Revenues (as defined in theFortressAgreement) from the Company’s patents to the payment of accrued and unpaid interest and then to repay the outstanding principal
(at par) of, the notes until all amounts due with respect to the notes have been paid in full. After the repayment of the notes,
in addition to the interest, we shall pay the Revenue Participant up to 50% of Monetization Revenues totaling (i) $5,000,000,
if paid in full prior to March 31, 2018 and (ii) $7,500,000 thereafter. We must also pay $350,000 toFortress Credit Co
LLCupon repayment of the notes.





2







We
may prepay the notes in whole or in part, without penalty or premium, except that any optional prepayments of the notes prior
to the first anniversary of the issuance of the notes shall be accompanied by a prepayment premium equal to 5% of the principal
amount prepaid.



The
Fortress Agreement contains certain standard events of default. We granted to Fortress Credit Co LLC, for the benefit of the Investors,
a non-exclusive, royalty free, license (including the right to grant sublicenses) with respect to our patents, as reflected in,
the Patent License Agreement. Fortress Credit Co LLC and the Investors agree that such license shall only be used following an
Event of Default, as defined in the Fortress Agreement. We granted the Investors a first priority senior security interest in
all of our assets.



Agreement
with DoubleVision



On
July 24, 2014 we, SITO Mobile Solutions, Inc., our wholly-owned subsidiary, DoubleVision Networks, Inc. (“DoubleVision”),
and the shareholders of DoubleVision entered into a Share Purchase Agreement (the “DV Purchase Agreement”) pursuant
to which we acquired all of the shares of DoubleVision.



We
paid $3,600,000 for DoubleVision by issuing 800,000 shares of our common stock to the shareholders of DoubleVision at an agreed-upon
valuation of $4.50 per share. We also agreed to pay $400,000 to one of DoubleVision’s creditors. Substantially all of the
shareholders of DoubleVision are subject to lockup agreements which restricted the sale of the shares for at least one year from
the date upon which they were issued.



On
June 30, 2015, pursuant to the terms of the DV Purchase Agreement which provided for additional payment of purchase price consideration
should we achieve at least $3,000,000 in media placement revenue in the twelve-month period starting August 1, 2014, we issued
additional consideration of 296,402 shares of common stock that is valued at $1,067,044 based upon a $3.60 share price on the
date of issuance.



Background
of Industry Growth and Potential



Across
the globe, the mobile channel is growing fast. People in every country are buying more and more advanced mobile devices, and businesses
and consumers alike are using mobile phones for everyday activities such as checking the weather, taking advantages of discounts,
shopping or sending and receiving financial information. As the use of mobile phones increases, e-Business and channel strategy
professionals are challenged to determine how these devices integrate with their existing sales and service channels. Rapid adoption
of the mobile channel is a critical driver of the need for e-Business professionals to evolve their strategy and operations to
agile commerce



Principal
Products and Services



Messaging
and Notifications – Our Short Message Service (SMS) gateway has proven to be an excellent channel for retailers
to communicate with their brand loyalists on a very personal level. This is accomplished through integration with the client’s
customer relationship management (CRM) database. With such integration, retailers are able to send targeted mobile coupons and
transactional messages based on a shopper’s CRM profile. Targeted mobile coupons can be sent based on past purchase behaviors
making the content relevant and timely to a shopper. Transactional messages can add another layer of value by sending shipping
and order pick-up alerts, as well as notifications for reorders, layaway and new product releases. Our SMS uses short messages
that are accepted in the mobile marketplace. Twitter’s S-1 filing form reports “the 140-character constraint of a
tweet emanates from our origins as an SMS-based messaging system, and we leverage this simplicity to develop products that seamlessly
bridge our user experience across all devices” (Twitter Form S-1/A filed with the Securities and Exchange Commission on
November 4, 2013).



Location
Based Advertising– We use location-based mobile advertising including geo-fencing, verified walk-ins and behavioral
targeting with analytics and optimization for the client. “Geo-fencing” targets customers within a certain radius
of location and uses technology to push coupons, ads and promotions to mobile apps and mobile websites in real-time. Analytics
and optimization allow clients to measure campaign performance and insight into key metrics, with a measurement system to track
key metrics like user demographics, psychographics, CPM, click-throughs and time of engagement. We also offer mobile messaging
a platform for building and controlling tailored CRM programs using text messaging and voice calls. This enables marketers to
develop the most intimate, direct digital channel to their customers. Our platform allows brands to access the right audiences
at the right time in the key locations ultimately driving traffic and sales.





3







According
to a report released by eMarketer, mobile advertising will account for the vast majority of growth in the global ad market over
the next four years. New projections highlight the importance of digital devices in the world's advertising industry, the growth
of which is projected to come primarily through mobile phones. Of the more than $150 billion in global ad market growth projected
through 2018, $118 billion is expected to be derived from mobile advertising. Global expenditure on mobile ads is forecasted to
increase to $21 billion in 2015 from an estimated $3.3 billion in 2011 (Gartner). BIA/Kelsey forecasts location targeted mobile
ad revenues will reach $10.8 billion and rise to 52% of overall mobile revenues by 2017. The number of U.S. smartphone owners
using mobile coupons is expected to grow to 29.5 million, up from 7.4 million just two years ago (BI Intelligence).



We
provide a product to deliver location based mobile advertisements directly to consumers’ smartphones for retailers and advertisers.
We have found that by combining multiple real time bidding networks with our ability to serve coupons, ads and promotions at times
and places when consumers are most interested, we can create relevant content for consumers. We enable advertisers to deliver
targeted ads in mobile applications (“Apps”) to the smartphones of people within close proximity (approximately 15
feet) of a specific location. We launched this revenue stream in December 2013. Our revenue is driven by our sales of mobile advertising
campaigns that feature banner ads on mobile devices. Our revenue is based on the same key media metrics as Internet advertising,
which are the number of audience impressions and the CPM (cost per thousand) price to reach that audience. We enable advertisers
to reach highly targeted audiences at CPM prices that are significantly below CPM prices for print and Internet advertising.



Competition



The
mobile media and data communications market for products and services continues to be competitive with the rapid growth and adoption
of mobile data services, along with the increased demand for mobile marketing and advertising solutions.



We
believe we have a unique offering of services and technology that will provide us with a competitive edge. However, some of our
competitors are more established, benefit from greater name recognition, have larger customer bases and have greater financial,
technical and marketing resources. Other competitors have proprietary technology that differentiates their product and service
offerings from our product and service offerings. As a result of these competitive advantages, our competitors and potential competitors
may be able to respond more quickly to market forces, undertake more extensive marketing campaigns for their brands, products
and services, and make more attractive offers to potential customers.



We compete
with publicly traded companies providing similar service offerings to ours, including Facebook (FB), Twitter (TWTR), Tube Mogul
(TUBE), Voltari (VLTC), and Mobivity (MFON) and private companies, including Ninth Decimal, PlaceIQ, xAd, Verve, ThinkNear, OpenMarket
and Twilio.



We
expect new market entrants, existing competitors and nontraditional players to introduce new products and services that compete
with our products. Additionally, we face the risk that our customers may seek to develop in-house products as an alternative to
those currently being provided by us.



Certain
Agreements



Our
business agreements consist primarily of customer agreements and carrier agreements. Customer agreements are typically agreements
with companies which have sales relationships with the end users of the transacted media content or service application. These
agreements typically involve a split of the fees received between the brand owner and us or a fixed fee per transaction. Carrier
agreements are infrastructure in nature and establish the connection to the end user that enables us to deliver and collect payment
for the transacted media content or service application.



The
majority our reported revenue in the fiscal years ended in 2013 and 2014 was generated through our relationship with AT&T.
Of our revenue earned during the year ended September 30, 2015, approximately 43.9% was generated from contracts with six (6)
AT&T customers and 43.3% of our revenue comes from notifications sent on behalf of just one of those AT&T customers. The
bulk of that revenue comes from voice and text message notifications sent on behalf of corporate programs for a single client.





4







Intellectual
Property Development



Research
and Development



During
the fiscal years ended September 30, 2015 and 2014 we spent $1,444,629 and $451,926, respectively, on software development that
was capitalized. Software development costs amortized and charged to operations in fiscal 2015 and fiscal 2014 were $680,648 and
$416,609, respectively.



Our research and development activities relate
primarily to general coding of software and product development. These activities consist of both new products and support or
improvements to existing products. During the fiscal years ended September 30, 2015 and 2014, we had research and development
expense of $47,838 and $58,829, respectively.



Patents
and Licenses for Operations



We
currently hold rights to multiple purchased and developed patents relating to certain aspects of accessing information on a mobile
device, sending information to and between mobile devices, advertising and media streaming. We believe the ownership of such patents
is an important factor in our existing and future business. We have 22 patents issued from May 1998 to September 2015 in the United
States.



We
regularly file patent applications to protect innovations arising from our research, development and design, and are currently
pursuing multiple patent applications. Over time, we have accumulated a portfolio of issued patents primarily in the U.S. No single
patent is solely responsible for protecting our systems and services. We believe the duration of our patents is adequate relative
to the expected lives of our systems and services.



Some
of our systems and services may include intellectual property obtained from third parties. It may be necessary in the future to
seek or renew licenses relating to various aspects of our systems and services. There is no guarantee that such licenses could
be obtained on reasonable terms or at all. Because of technological changes in the industries in which we compete, current extensive
patent coverage, and the rapid rate of issuance of new patents, it is possible that certain components of our systems and services
may unknowingly infringe existing patents or intellectual property rights of others.



Patent
Portfolio Development, Protection and Licensing.



We
have a portfolio of intellectual property relevant to our industry related to mobile search, commerce, advertising and streaming
media. This portfolio represents our many years of innovation in the wireless industry through U.S. patented technology developed
by us, including new and amended patents granted to us by the U.S. Patent and Trademark Office as well as patented technology
we purchased from Microsoft and others.



We
established a separate subsidiary, SITO Mobile Solutions R&D IP, LLC, dedicated to the monetization of these assets, primarily
through licensing. The patents cover three broad categories:



| | ● | Digital
                                         Video and Audio Streaming and Advertising - these patents related to Over the Top
                                         (“OTT”) streaming services and protocols (e.g. HLS, MPEG DASH) as well as
                                         the notion of dynamic advertising insertion into these streams and the billing and tracking
                                         of ad-revenues thereof.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Sending
                                         Information to and Between Mobile Devices - these patents relate to over-the-air provisioning
                                         of smartphones and mobile devices such that the customer, when transitioning over to
                                         new phones or modifying existing phones, can highly customize their phones, from carrier
                                         plan to interface to smartphone design features to content and form of delivery. While
                                         still an emerging market, carriers, under duress from governments worldwide, are unlocking
                                         carrier plans and it is expected in the short-term that consumers will be able to go
                                         online and pick their carrier plan of choice. We have patents in this area as well as
                                         smartphone back-up and synchronization patents that make up our mobility portfolio.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





5







| | ● | Accessing
                                         Information on a Mobile Device - this group of patents relates to features that offer
                                         users improved effectiveness in accessing information on a mobile device, whether content
                                         or services or advertising solutions. This includes everything from abbreviated dial
                                         codes for rapid access to services to providing ads and coupons to these links through
                                         to more efficient user interface features. This category of patents will be primarily
                                         used for defensive purposes. Our patent litigation with Zoove Corporation involved patents
                                         in this category.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In
October 2014, we pledged as collateral on $10,000,000 in new borrowings from Fortress our entire portfolio of patents and we entered
into an intellectual property revenue sharing agreement that provides for Fortress to receive a portion of proceeds from the sale
or licensing of our patents.



Government
Regulation



We
provide value-added and enabling platforms for carrier-based distribution of various software and media content, as well as notifications
and other communications. Applicable regulations are primarily under the Federal Communications Commission and related to the
operations policies and procedures of the wireless communications carriers. Messaging is regulated by, among other things,
the Telephone Consumer Protection Act (TCPA) and safeguarding personal health information, moreover, is regulated by, among
other things, the Privacy Rule of the Health Insurance Portability and Accountability Act (HIPAA). Given the growing and dynamic
evolution of digital wireless products that can be offered to consumers over a wireless communication network, regulators could
impose rules, requirements and standards of conduct on third-party content and infrastructure providers such as us. We are not
currently aware of any pending regulations that would materially impact our operations.



Corporate
Overview



We
were incorporated in Delaware on May 31, 2000, under our original name, Hosting Site Network, Inc. On May 12, 2008,
we changed our name to Single Touch Systems Inc. and on September 26, 2014, we changed our name to SITO Mobile, Ltd. On July 24,
2008, we acquired all of the outstanding shares of SITO Mobile Solutions, Inc., which was incorporated in Nevada on April 2,
2002.



We
maintain a website located at http://www.sitomobile.com, and electronic copies of our periodic or other reports and any amendments
to those reports, are available, free of charge, under the “Investors” link on our website as soon as practicable
after such material is filed with, or furnished to, the Securities and Exchange Commission.



Employees



We
currently have 49 full-time including our chief executive officer and chief financial officer, 9 persons serving as programmers
and technical staff operators, 37 persons in sales and account management and 2 persons in administration. We do not have any
part time employees. We expect to increase our future employee levels on an as-needed basis in connection with our expected growth.



ITEM
1A. RISK FACTORS.



RISKS
RELATED TO OUR BUSINESS



We
have a history of operating losses.



We have a history of losses and may continue
to incur operating and net losses for the foreseeable future. We incurred a consolidated net loss of $4,528,193 for the fiscal
year ended September 30, 2015 and a consolidated net loss of $4,510,514 for the fiscal year ended September 30, 2014. As of September
30, 2015, our accumulated deficit was $138,937,724. We have not achieved profitability on an annual basis. We may not be able
to reach a level of revenue to achieve profitability. If our revenues grow slower than anticipated, or if operating expenses exceed
expectations, then we may not be able to achieve profitability in the near future or at all, which may depress the price of our
stock.







6







We
currently rely on AT&T to market our mobile messaging products and services to their customers and to generate the majority
of our wireless applications revenues. The loss of or a change in our relationships with AT&T or their customers could materially
reduce our revenues.



Our
success in mobile messaging is highly dependent upon maintaining successful relationships with AT&T and one of their customers.
A significant portion of our revenue has always been derived from a single AT&T customer, and currently, nearly all of our
wireless applications revenues are paid to us through AT&T. We expect that we will continue to generate a substantial majority
of our wireless applications revenues through marketing relationships with AT&T for the foreseeable future. Our failure to
maintain or build our relationships with AT&T and any reduction in the business received through AT&T would materially
reduce our revenues and thus harm our business, operating results and financial condition.



The
AT&T customer to which the majority of our mobile messaging products and services are sold is currently reviewing proposals
to continue services that have been submitted by AT&T with the Company as a subcontractor in the same manner as our current
relationship, submitted by the Company as a direct vendor to AT&T’s customer and submitted by competitors. The terms
of the proposals, if accepted by AT&T’s customer, will result in lower prices for our products and services, which may
result in lower future revenues should mobile messaging volumes remain the same or continue at reduced levels. There can be no
assurance that AT&T’s customer will select AT&T or the Company to continue to provide services, and in the event
that a competitor’s proposal is chosen, our wireless applications revenue would decrease significantly.



Should
AT&T choose to promote another vendor’s products and services over our products and services, our current and future
business could be negatively impacted. In addition, AT&T has significant influence over the pricing of many of its suppliers,
including us. We work together with AT&T to provide competitive pricing to the end users but AT&T ultimately has the final
contracting authority with their clients who benefit from our products and services. If AT&T decides not to market or distribute
our products and services or decides to terminate, not renew or modify the terms of its agreement with us, we may be unable to
replace the agreement with acceptable alternatives which would materially harm our business, operating results and financial condition.



We
may not be able to effectively protect or monetize our patents.



We
have 22 patents which were issued from May 1998 to September 2015 related to mobile search, commerce, advertising and streaming
media. To monetize some or all of our patents through sales would require access to potential buyers, which may be difficult for
a smaller company such as us to obtain, and would also require completion of a buyer’s due diligence investigation into
the strength of our patents, demonstration to the buyer that owning such patents would have defensive or offensive value, and
negotiation of the price and other terms of transaction documents.



To
monetize some or all of the patents by licensing would require similar steps. In addition, we may not be able to monetize our
patents as against companies who use our patented inventions unless they respect our ability to enforce our patents against them
if they were not to agree to licenses.



To
prosecute patent infringement actions may require us to incur substantial legal fees and costs. The outcome of litigation is never
certain, and the amount of damages that might be awarded to us under any judgment is also uncertain. Even if a judgment is obtained
it would be subject to appeal and to the uncertainties of collection. In addition, companies whose actual or planned activities
are blocked by our patents could attempt to develop technological work-arounds in order to avoid compensating us.



There
can be no assurance that we will be able to effectively protect or monetize our patents, or that we will be able to obtain a return
equal to the fair intrinsic value of the patents. Any effort to obtain monetization could entail significant expenses and also
opportunity costs.





7







We
may need to raise additional capital to meet our business requirements in the future. Capital raising may be costly or difficult
to obtain and could dilute current stockholders’ ownership interests.



Over
the next twelve months we believe that existing capital and anticipated funds from operations may be sufficient to sustain our
current level of operations and debt service. Inasmuch as the Company is pursuing the monetization of its intellectual property,
which plans are subject to change, additional external financing relating to such efforts may be required. Increased acceleration
in our core business, monthly principal payments on our debt and/or other economic influences might also necessitate additional
financing. There can be no assurance that we will be able obtain additional debt financing, if at all or upon terms that
will be acceptable to us or our existing secured lender.



As
a result of the recent economic recession, and the continuing economic uncertainty, it has been difficult for companies to obtain
equity or debt financing. While the credit markets have improved over the last year, it remains difficult for smaller companies
to obtain financing on reasonable terms.



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



Debt
securities, on the other hand, are senior to common stock, might contain onerous restrictive covenant and must be repaid when
they mature. If we do not profitably use the money raised, we may not have enough cash on hand to repay the debt upon maturity
without impairing our operations.



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



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



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



We
may not be able to manage our growth effectively.



Our
strategy envisions growing our business. There can be no assurance that such growth will occur, either to the extent our strategy
envisions, or at all. Even if we do experience growth, if we fail to manage our growth effectively, our financial results could
be adversely affected. Growth may place a strain on our management systems and resources. We must continue to refine and expand
our business development capabilities, our systems and processes and our access to financing sources. As we grow, we must continue
to hire, train, supervise and manage new employees. We cannot assure you that we will be able to:



| | ● | meet
                                         our capital needs;                                                                                                                                                                                       
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                        
| | ● | implement,
                                         improve and expand our operational, financial, management information, risk management
                                         and other systems effectively or efficiently or in a timely manner;
| |   |                                                                                                                                                                                                                                                        
| | ● | allocate
                                         our human resources optimally;                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                                        
| | ● | identify,
                                         hire, train, motivate and retain qualified managers and employees;                                                                                                                                  
| |   |                                                                                                                                                                                                                                                        
| | ● | develop
                                         the management skills of our managers and supervisors; or                                                                                                                                             
| |   |                                                                                                                                                                                                                                                        
| | ● | evolve
                                         a corporate culture that is conducive to success.                                                                                                                                                      



If we are
unable to manage our growth and our operations our financial results could be adversely affected.





8







If
we fail to maintain an effective system of internal control over financial reporting and other business practices, and of board-level
oversight, we may not be able to report our financial results accurately or prevent and detect fraud and other improprieties.
Consequently, investors could lose confidence in our financial reporting, and this may decrease the trading price of our stock.



We
must maintain effective internal controls to provide reliable financial reports and to prevent and detect fraud and other improprieties.
We are responsible for reviewing and assessing our internal controls and implementing additional controls when improvement is
needed. Failure to implement any required changes to our internal controls or other changes we identify as necessary to maintain
an effective system of internal controls could harm our operating results and cause investors to lose confidence in our reported
financial information. Any such loss of confidence would have a negative effect on the market price of our stock.



Sarbanes-Oxley
Act requirements regarding internal control over financial reporting, and other internal controls over business practices, are
costly to implement and maintain, and such costs are relatively more burdensome for smaller companies such as us than for larger
companies. We have limited internal personnel to implement procedures and must scale our procedures to be compatible with our
resources. We also rely on outside professionals including accountants and attorneys to support our control procedures. Until
fiscal year 2012 we did not have an Audit Committee, Compensation Committee or Governance and Nominating Committee composed of
independent directors. We are working to improve all of our controls but, if our controls are not effective, we may not be able
to report our financial results accurately or prevent and detect fraud and other improprieties which could lead to a decrease
in the market price of our stock.



Our
management ranks are thin and failing to add key personnel could adversely affect our business.



Our
future performance depends substantially on the continued service and efforts of our senior management team. Our management’s
efforts will be critical to us as we continue to develop technology and if we lose any member of our senior management team, we
may experience difficulties in competing effectively, developing our technology and implementing our business plan. Additionally,
we need to identify and hire additional senior managers to perform key tasks and roles.  Competition for such personnel is
intense and there can be no assurance that we will be successful in attracting and retaining such personnel. The inability to
attract or retain qualified personnel in the future, or delays in hiring required personnel, to perform key tasks and roles could
have a material adverse effect upon our business, results of operations and financial condition.



We
may not realize the anticipated benefits of past or future acquisitions, and integration of these acquisitions may disrupt our
business and management.



We
acquired DoubleVision in July 2014 and completed our acquisition of the assets of Hipcricket in July 2015. Our growth strategy
is dependent on the success of these acquisitions and in the future we may acquire additional companies, products or technologies
or enter into joint ventures or other strategic initiatives. We may not realize the anticipated benefits of this acquisition or
any other future acquisition, and any acquisition has numerous risks. These risks include the following:



| | ● | difficulty
                                         in assimilating the operations and personnel of the acquired company;                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                        
| | ● | difficulty
                                         in effectively integrating the acquired technologies or products with our current technologies;                                                                                    
| |   |                                                                                                                                                                                                                                        
| | ● | difficulty
                                         in maintaining controls, procedures and policies during the transition and integration;                                                                                            
| |   |                                                                                                                                                                                                                                        
| | ● | disruption
                                         of our ongoing business and distraction of our management and employees from other opportunities
                                         and challenges due to integration issues;
| |   |                                                                                                                                                                                                                                        
| | ● | difficulty
                                         integrating the acquired company’s accounting, management information and other
                                         administrative systems;                                   
| |   |                                                                                                                                                                                                                                        
| | ● | inability
                                         to retain key technical and managerial personnel of the acquired business;                                                                                                          
| |   |                                                                                                                                                                                                                                        
| | ● | inability
                                         to retain key customers, vendors and other business partners of the acquired business;                                                                                              
| |   |                                                                                                                                                                                                                                        
| | ● | inability
                                         to achieve the financial and strategic goals for the acquired and combined businesses;                                                                                              





9







| | ● | incurring
                                         acquisition-related costs or amortization costs for acquired intangible assets that could
                                         impact our operating results;                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                      
| | ● | potential
                                         failure of the due diligence processes to identify significant issues with product quality,
                                         intellectual property infringement and other legal and financial liabilities, among other
                                         things;and
| |   |                                                                                                                                                                                                                                                                                                                                      
| | ● | potential
                                         inability to assert that internal controls over financial reporting are effective.                                                                                                                                                                                                



Mergers
and acquisitions of companies are inherently risky and, if we do not complete the integration of acquired businesses successfully
and in a timely manner, we may not realize the anticipated benefits of the acquisitions to the extent anticipated, which could
adversely affect our business, financial condition or results of operations.



We
are subject to competition and, if technological conditions change, our competitors may be better able to react than we are.



We
have many actual and potential competitors, many of whom may have more financial resources, personnel, intellectual property,
development and/or reputational resources than we do. If we and our business do not grow larger, we will not be able to enjoy
the brand power and economies of scale that many of our competitors enjoy. In addition, it is likely that our industry will be
subject to rapid and profound technological changes. Our competitors may have more ability to react to such changes than we do
which could harm our business, operating results and financial condition.



We
may be unable to develop and timely introduce new products or services.



The
planned timing and introduction of new products and services are subject to risks and uncertainties. Unexpected technical, operational,
deployment, distribution or other problems could delay or prevent the introduction of new products and services, which could result
in a loss of, or delay in, revenues.



We
may not be able to adequately safeguard our intellectual property rights from unauthorized use, and we may become subject to claims
that we infringe on others’ intellectual property rights.



We
rely on a combination of patents, trade secrets, copyrights, trademarks, and other intellectual property laws, nondisclosure agreements
and other arrangements with employees, actual and prospective customers and actual or prospective capital providers and their
agents and advisors, and other protective measures to preserve our proprietary rights. These measures afford only limited protection
and may not preclude competitors from developing products or services similar or superior to ours. Moreover, the laws of certain
foreign countries do not protect intellectual property rights to the same extent as the laws of the United States.



Although
we implement protective measures and intend to defend our proprietary rights our efforts may not be successful. From time to time,
we may litigate within the United States or abroad to enforce our issued or licensed patents, to protect our trade secrets and
know-how or to determine the enforceability, scope and validity of our proprietary rights and the proprietary rights of others.
Enforcing or defending our proprietary rights can involve complex factual and legal questions and could be expensive, would require
management’s attention and might not bring us timely or effective relief.



Furthermore,
third parties may assert that our products or processes infringe their intellectual property rights. Although there are no pending
or threatened intellectual property lawsuits against us, we may face litigation or infringement claims in the future. Infringement
claims could result in substantial judgments, and could result in substantial costs and diversion of our resources even if we
ultimately prevail. A third party claiming infringement may also obtain an injunction or other equitable relief which could effectively
block our use of allegedly infringing intellectual property. Although we may seek licenses from third parties covering intellectual
property that we are allegedly infringing, we may not be able to obtain any such licenses on acceptable terms and conditions,
if at all.





10







RISKS
RELATED TO OUR INDUSTRY



Demand
for the services we provide is not yet well established.



Brand
owners who are potential users of the services we provide must weigh their decisions in light of limited budgets for marketing
and notification, the inertia of dealing with well-established providers of traditional modalities for marketing and notification,
lack of experience with services such as ours and the perception (whether or not well founded) of technological risk and not-fully-demonstrated
cost-effectiveness of our services. There are indications that the market among major brand owners for services such as ours may
be in an early stage of development.



System
or network failures could reduce our sales, increase costs or result in a loss of end users of our products and services.



Any
failure of, or technical problem with, carriers’, third parties’ billing systems, delivery or information systems,
or communications networks could result in the inability of end users to receive communications or download our products, prevent
the completion of a billing transaction, or interfere with access to some aspects of our products. If any of these systems fails
or if there is an interruption in the supply of power, an earthquake, superstorm, fire, flood or other natural disaster, or an
act of war or terrorism, end users might be unable to access our offerings. For example, from time to time, our carriers have
experienced failures with their billing and delivery systems and communication networks, including gateway failures that reduced
the provisioning capacity of their branded e-commerce system. Any failure of, or technical problem with, the carriers’,
third parties’ or our systems could cause us to lose end users or revenues or incur substantial repair costs and distract
management from operating our business, or persuade retailers or brand owners that solutions utilizing our programs are not sufficiently
reliable. This, in turn, could harm our business, operating results and financial condition.



RISKS
RELATED TO OUR COMMON STOCK



Trading
in our stock has been modest, so investors may not be able to sell as much stock as they want at prevailing prices. Moreover,
modest volume can increase stock price volatility.



The
average daily trading volume in our common stock for the year ended September 30, 2015 was approximately 18,352 shares. If trading
in our stock continues at this level, it may be difficult for investors to sell or buy substantial quantities of shares in the
public market at any given time at prevailing prices. Moreover, the market price for shares of our common stock may be made more
volatile because of the relatively low volume of trading in our common stock. When trading volume is low, significant price movement
can be caused trading a relatively small number of shares.



Securities
analysts may not initiate coverage or continue to cover our common stock, and this may have a negative impact on the market price
of our common stock.



Common
stock prices are often significantly influenced by the research and reports that securities analysts publish about companies and
their business. We do not have any control over these analysts. There is no guarantee that securities analysts will cover our
common stock. If securities analysts do not cover our common stock, the lack of research coverage may adversely affect the market
price of our common stock. If our common stock is covered by securities analysts and our stock is downgraded, our stock price
will likely decline. If one or more of these analysts ceases to cover us or fails to publish regular reports on us, we can lose
visibility in the financial markets, which can cause our stock price or trading volume to decline.



The
price of our common stock has been and may continue to be volatile, which could lead to losses by investors and costly securities
litigation.



The
trading price of our common stock has been and is likely to be volatile and could fluctuate in response to factors such as:



| | ● | actual
                                         or anticipated monetizations of our patents;
| | - | --------------------------------------------------------------------------------------------
| |   |                                                                                             

| | ● | actual
                                         or anticipated variations in our operating results (including whether we have achieved
                                         our key business targets and/or earnings estimates) and prospects;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                   

| | ● | announcements
                                         of technological innovations or new services by us or our competitors;
| | - | -----------------------------------------------------------------------------------------------------------------------------





11







| | ● | announcements
                                         by us or our competitors of significant acquisitions, business successes, strategic partnerships,
                                         joint ventures or capital commitments;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                         

| | ● | additions
                                         or departures of key personnel;
| | - | ----------------------------------------------------------------------------------
| |   |                                                                                   

| | ● | sales
                                         of our common stock or other securities in the open market (particularly if overall trading
                                         volume is not high);
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                         

| | ● | general
                                         market conditions and broader political and economic conditions; and
| | - | ---------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                      

| | ● | other
                                         events or factors, many of which are beyond our control.
| | - | -------------------------------------------------------------------------------------------------------



The
stock market has experienced significant price and volume fluctuations, which have often been unrelated to the operating performance
of companies, and in particular the market prices of stock in smaller companies and technology companies have been highly volatile.
The market price of our common stock at any particular time may not remain the market price in the future. In the past, following
periods of volatility in the market price of a company’s securities, securities class action litigation has often been initiated
against that company. Litigation initiated against us, whether or not successful, could result in substantial costs and diversion
of our management’s attention and resources, which could harm our business and financial condition.



We
do not expect any cash dividends to be paid on our common stock in the foreseeable future.



We
have never declared or paid a cash dividend on our common stock, and we do not anticipate paying cash dividends in the foreseeable
future. We expect to use future earnings, if any, as well as any capital that may be raised in the future, to fund business growth.
Consequently, a stockholder’s only opportunity to achieve a return on investment would be for the price of our common stock
to appreciate. We cannot assure stockholders of a positive return on their investment when they sell their shares, nor can we
assure that stockholders will not lose the entire amount of their investment.



You
may experience dilution of your ownership interests because of the future issuance of additional shares of our common stock and
our preferred stock.





We have aggressively issued common stock and
other equity-based securities in support of our business objectives and initiatives. In the future, we may issue our authorized
but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. We
are currently authorized to issue an aggregate of 305,000,000 shares of capital stock consisting of 300,000,000 shares of common
stock and 5,000,000 shares of preferred stock with preferences and rights to be determined by our Board of Directors. As of September
30, 2015, there were 17,155,748 shares outstanding. Potentially issuable common shares as of September 30, 2015 amounted to 2,261,671
shares and include 250 warrants and 2,261,421 options.



The
holders of such options can be expected to exercise them at a time when our common stock is trading at a price higher than the
exercise price of these outstanding options. If these options to purchase our common stock are exercised, or other equity interests
are granted under our 2008, 2009 or 2010 stock plans, or under other plans or agreements adopted in the future, such equity interests
will have a dilutive effect on your ownership of common stock. We may also issue additional shares of our common stock or other
securities that are convertible into or exercisable for common stock in connection with hiring or retaining employees, future
acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. Such securities may
be issued at below-market prices or, in any event, prices that are significantly lower than the price at which you may have paid
for your shares. The future issuance of any such securities may create downward pressure on, or dampen any upward trend in, the
trading price of our common stock.



Our
certificate of incorporation, bylaws and Delaware law contain provisions that could have the effect of deterring or delaying changes
in incumbent management, proxy contests or changes in control.



Anti-takeover
provisions of our certificate of incorporation, bylaws and Delaware law may have the effect of deterring or delaying attempts
by our stockholders to remove or replace management, engage in proxy contests and/or effect changes in control. The provisions
of our charter documents include:



| | ● | the
                                         inability of stockholders to call special meetings of stockholders;
| | - | ----------------------------------------------------------------------------------------------------------------





12







| | ● | the
                                         ability of our Board of Directors to amend our bylaws without stockholder approval; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                     

| | ● | the
                                         ability of our Board of Directors to issue up to 5,000,000 shares of preferred stock
                                         without stockholder approval upon the terms and conditions and with the rights, privileges
                                         and preferences as our Board of Directors may determine.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In
addition, as a Delaware corporation, we are subject to Delaware law, including Section 203 of the Delaware General Corporation
Law. In general, Section 203 prohibits a Delaware corporation from engaging in any business combination with any interested stockholder
for a period of three years following the date that the stockholder became an interested stockholder unless certain specific requirements
are met as set forth in Section 203. These provisions, alone or together, could have the effect of deterring or delaying changes
in incumbent management, proxy contests or changes in control. We think Section 203 does not currently apply to us, but in the
future it may apply to us.



ITEM
2. PROPERTIES.



Our
executive offices are located at 100 Town Square Place, Suite 204, Jersey City, New Jersey 07310. We have a four-year lease for
this space at a rate of $20,649 per month.  The facilities comprise approximately 7,500 square feet consisting entirely of
sales, marketing and administrative office space.



We
also maintain offices located in Rogers, Arkansas, Meridian, Idaho and Seattle, Washington and house our servers at locations
in California, Idaho, Maryland and Illinois.



ITEM
3. LEGAL PROCEEDINGS.



We
are not currently a party to, nor is any of our property currently the subject of, any pending legal proceeding that will have
a material adverse effect on our business.



ITEM
4. MINE SAFETY DISCLOSURES.



Not
applicable.



PART
II



ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.



Our
common stock is presently quoted on the NASDAQ Capital Marketunder the symbol “SITO”.
The following table sets forth, for the fiscal quarters indicated, the high and low closing sale prices per share of our common
stock. Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual
transactions.





|                                      |  | Quarter Ended      |  | High |      |  | Low | 
|------------------------------------- |  | ------------------ |  | ---- | ---- |  | --- | 
|Fiscal Year Ending September 30, 2015 |  | September 30, 2015 |  |      | 6.00 |  |     | 
|                                      |  | June 30, 2015      |  |      | 3.90 |  |     | 
|                                      |  | March 31, 2015     |  |      | 4.90 |  |     | 
|                                      |  | December 31, 2014  |  |      | 4.20 |  |     | 
|Fiscal Year Ending September 30, 2014 |  | September 30, 2014 |  |      | 4.40 |  |     | 
|                                      |  | June 30, 2014      |  |      | 5.00 |  |     | 
|                                      |  | March 31, 2014     |  |      | 7.00 |  |     | 
|                                      |  | December 31, 2013  |  |      | 6.90 |  |     | 





13







Holders





As of November 23, 2015 there were
approximately 149 record holders of our common stock. This does not include the holders of approximately 187 un-exchanged stock
certificates or the additional holders of our common stock who held their shares in street name as of that date.





Dividends



We
have never paid or declared any cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable
future but rather intend to retain future earnings, if any, for reinvestment in our future business. Any future determination
to pay cash dividends will be in compliance with our contractual obligations and otherwise at the discretion of the Board of Directors
and based upon our financial condition, results of operations, capital requirements and such other factors as the Board of Directors
deems relevant.



Transfer
Agent



Our
registrar and transfer agent is Continental Stock Transfer & Trust Company.



Equity
Compensation Plan Information



The
following table reflects information for equity compensation plans and arrangements for any and all directors, officers, employees
and/or consultants through September 30, 2015.



Equity
Compensation Plan Information







|                                                           |  | Number of  securities  to be issued  upon exercise of  outstanding options,  warrants and rights (a) |           |  | Weighted-  average exercise  price of  outstanding  options,  warrants and  rights  (b) |  |      | Number of  securities  remaining available for  future issuance under  equity compensation plans  (excluding securities  reflected in column  (a)) (c) | 
|---------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------- | --------- |  | --------------------------------------------------------------------------------------- |  | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------ | 
|Equity compensation plans approved by security holders     |  |                                                                                                      | 156,700   |  |                                                                                         |  | 5.27 |                                                                                                                                                        | 
|Equity compensation plans not approved by security holders |  |                                                                                                      | 2,104,971 |  |                                                                                         |  | 4.98 |                                                                                                                                                        | 
|Total                                                      |  |                                                                                                      | 2,261,671 |  |                                                                                         |  | 5.00 |                                                                                                                                                        | 



In
April 2008 our Board of Directors and stockholders adopted the 2008 Stock Option Plan (the “2008 Plan”) to provide
participating employees, non-employee directors, consultants and advisors with an additional incentive to promote our success.
The maximum number of shares of common stock which may be issued pursuant to options and awards granted under the 2008 Plan is
880,000. The 2008 Plan is currently administered by our Compensation Committee designated by our Board of Directors. The 2008
Plan authorizes the grant to 2008 Plan participants of non-qualified stock options, incentive stock options, restricted stock
awards, and stock appreciation rights. No option shall be exercisable more than 10 years after the date of grant. Upon separation
from service, no further vesting of options can occur, and vested options will expire unless exercised within a year after separation,
except as provided in individual employment agreements. No option granted under the 2008 Plan is transferable by the individual
or entity to whom it was granted otherwise than by will or laws of decent and distribution, and, during the lifetime of such individual,
is not exercisable by any other person, but only by him.





14







In
December 2009 our Board of Directors adopted the 2009 Employee and Consultant Stock Plan (“2009 Plan”) to provide
common stock grants to selected employees, non-employee directors, consultants and advisors. The total number of shares subject
to the 2009 Plan is 200,000. The 2009 Plan is administered by our Board of Directors.



In
December 2010 our Board of Directors adopted the 2010 Stock Plan (“2010 Plan”) to provide common stock option grants
to selected employees, non-employee directors, consultants and advisors. In June 2011, the Board increased the total number of
shares subject to the 2010 Plan to 2,500,000 and to 4,000,000 in November 2013. The 2010 Plan is administered by our Board of
Directors.



Recent
Sales of Unregistered Securities





In October 2014, the Company issued
261,954 shares for which the Company received $1,000,000 in gross proceeds.





The
Company relied on an exemption pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, in connection with the foregoing
issuance.



Issuer
Purchases of Equity Securities



None.



ITEM
6. SELECTED FINANCIAL DATA.



Not
required for smaller reporting companies.



ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.



The
following Management’s Discussion and Analysis should be read in conjunction with our financial statements and the related
notes thereto included elsewhere herein. The Management’s Discussion and Analysis contains forward-looking statements that
involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that
are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,”
“intend,” “anticipate,” “target,” “estimate,” “expect,” and the like,
and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,”
etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject
to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the
forward-looking statements in this prospectus. Our actual results and the timing of events could differ materially from those
anticipated in these forward-looking statements as a result of several factors including, but not limited to, those noted under
“Risk Factors” of the reports filed with the Securities and Exchange Commission. We do not undertake any obligation
to update forward-looking statements to reflect events or circumstances occurring after the date of this annual report.



Overview



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



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





15







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



On
July 24, 2014, we acquired all of the shares of DoubleVision Networks, Inc. (“DoubleVision”). We paid $3,600,000
for DoubleVision by issuing 800,000 shares of the Company’s common stock to the sellers at an agreed-upon valuation of $4.50
per share. We also agreed to pay $400,000 to one of DoubleVision’s creditors. Substantially all of the DoubleVision shareholders
were subject to lockup/leak out agreements that restricted the sale of the shares acquired for at least one year and provided
in some instances, for orderly disposition of the shares after the first anniversary.



On
June 30, 2015, pursuant to the terms of the DoubleVision purchase agreement which provided for additional payment of purchase
price consideration should we achieve at least $3,000,000 in media placement revenue in the twelve-month period starting August
1, 2014, we issued additional consideration of 296,402 shares of common stock that is valued at $1,067,044 based upon a $3.60
share price on the date of issuance.



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



Results
of Operations



Results
of Operations for the Fiscal Years Ended September 30, 2015 and 2014



During
the year ended September 30, 2015, our revenue increased by approximately 60% over revenue generated during the year ended September
30, 2014 ($15,809,467 in the year ended September 30, 2015 compared to $9,871,558 in the year ended September 30, 2014). Our revenue
growth in fiscal 2015 as compared to fiscal 2014 was comprised of a $7,335,482 or 967% increase in media placement revenue, a
$1,033,724 or 13% decrease in wireless application revenues and a $363,849 or 40% decrease in licensing and royalty revenue. The
increase in media placement revenue followed the acquisition of DoubleVision in July 2014 and subsequent expansion of our direct
sales force, addition of new sales partners, launch of enhanced media placement product offerings and the July 2015 acquisition
of the Hipcricket media placement business. Media placement revenue has increased on a sequential quarterly basis for each quarter
since we launched the business in December 2013. Wireless applications revenue declined primarily due to a decrease in the number
of text and voice messages that we sent on behalf of our largest customer within our AT&T relationship. During the first six
months of fiscal 2015, the customer transitioned its database of customers who receive our messages to a new standard rate messaging
program and the transition caused a decline in the number of customers who elected to continue to receive messages. Our wireless
applications revenue declined due to realizing a $750,000 one-time licensing and royalty revenue in fiscal 2014 from our agreement
with Zoove Corporation.



Of
our revenue earned during the year ended September 30, 2015, approximately 44% was generated from contracts with six (6) customers
pursuant to our agreements with AT&T. Of our revenue earned during the year ended September 30, 2014, approximately 84% was
generated from contracts with seven (7) customers pursuant to our agreements with AT&T and 10% was generated from our
agreement with Zoove Corporation. The decrease in the percentage of annual revenue generated pursuant to our agreements with AT&T
is attributable to an increase in media placement revenues which does not involve AT&T.





16







Royalties
and application costs represent the direct out-of-pocket costs associated with revenue. Royalties and application costs vary substantially
in line with wireless applications and media placement revenue and totaled $6,357,616 for the year ended September 30, 2015, compared
to $4,006,488 for the year ended September 30, 2014, an increase of 59%. Our gross margin was 60% for the year ended September
30, 2015 as compared to 59% for the year ended September 30, 2014. When excluding licensing and royalties’ revenue for the
year ended September 30, 2015 and 2014, our gross margin was 58% and 55%, respectively. The increase was attributable to the relatively
higher gross margin that we realized for our media placement revenues as compared to our wireless applications revenue. Excluding
licensing and royalties’ revenue and amortization expense, our gross margin was 63% for the year ended September 30, 2015
as compared to 60% for the year ended September 30, 2014. Our media placement business generated a 64% gross margin for the year
ended September 30, 2015 as compared to our wireless applications business that generated a 53% gross margin for that period.
For the year ended September 30, 2015, our media placement revenues comprised of 51% of total revenue and contributed more to
our overall gross margin as compared to the year ended September 30, 2014 in which media placement revenue comprised of 8% of
total revenue.



Research
and Development expense decreased from $58,829 for the year ended September 30, 2014 to $47,838 for the year September 30, 2015.
We have shifted our investment in technology from open ended research and development to the development of our mobile engagement
platform through software development efforts. We capitalize the cost of developing our mobile engagement platform and amortize
our investment over three (3) years. For the years ended September 30, 2015 and 2014, we recognized $680,648 and $416,609 in amortization
of software development costs, respectively, with the increased amortization attributable to the increased investment which was
made in developing our platform.



General and administrative expense,
excluding stock based compensation, was $5,484,542 for the year ended September 30, 2015 as compared to $5,901,922 for the
year ended September 30, 2014. This decrease of $416,680 or 7% is primarily attributable to our accruing $574,787 in
compensation expense in connection with terminating our employment agreement with our former Executive Chairman on
December 13, 2013 and savings from termination of our former Chief Executive Officer in September 2014.



Sales
and marketing expense, excluding stock based compensation, was $4,655,140 for the year ended September 30, 2015 as compared to
$1,258,259 for the year ended September 30, 2014, an increase of $3,396,881 or 270%, that is primarily attributable to increased
media placement revenue that we realized by expanding of our direct sales force and customer management personnel in connection
with our media placement business that we launched in December 2013, expanded following the DoubleVision acquisition in July 2014
and further expanded with the July 2015 acquisition of Hipcricket’s mobile advertising business.





For the year
ended September 30, 2015, total stock based compensation expense decreased 65% to $814,916 from $2,094,970 for the year ended September
30, 2014. The decrease is attributable to fewer stock based compensation issuances as part of our effort to reduce the number of
issued and potentially issuable shares of our common stock.







The
Company received $54,189 in interest income from debtor-in-possession financing in connection with an effort to acquire the assets
of Hipcricket, Inc. through a U.S. Federal Bankruptcy Court sale.



Interest
expense for the year ended September 30, 2015 and 2014 was $1,781,573 and $749,458, respectively, an increase of $1,032,115 or
138%. The increase in interest expense is attributable to the increase in the outstanding interest of our debt. In October 2014,
we sold a secured $10,000,000 42-month note having an interest rate of LIBOR plus 9% per annum. As of September 30, 2015, the
LIBOR interest rate was 0.02%. Included in interest expense for the year ended September 30, 2015 was $638,885 in amortization
of discounts on the debt for a structuring fee, termination fees and the rights assigned to the note holder to share in our potential
future new intellectual property monetization revenue streams.



In
the year ended September 30, 2015, we recognized a $831,000 non-cash charge for the impairment of a long-lived asset that consisted
of a software license for a text messaging platform that we acquired in March 2012. We developed new software that replaced the
licensed software, which led us to conclude that the licensed software was impaired and charged off as a one-time non-cash expense.





17













Our net loss
for the year ended September 30, 2015 was $4,528,193 as compared to a net loss of $4,510,514 for the year ended September 30, 2014,
in increase of $17,679 that is primarily attributable to the $5,937,909 increase in revenue, the increase in our gross margin and
the $1,280,054 decrease in stock based compensation expense for employees, directors and consultants that is partially offset by
the $1,032,115 increase in interest expense and the $831,000 charge for the impairment of a software license. Excluding stock based
compensation and the impairment charge, our net loss for the year ended September 30, 2015 was $2,793,786, which includes the one-time
compensation expense charge of $574,787, noted above. For the year ended September 30, 2014, our net loss, excluding stock based
compensation, was $2,415,544. Our earnings before interest, taxes, depreciation and amortization, and the long-term asset
impairment charge or adjusted EBITDA was a loss of $1,550,585 for the year ended September 30, 2015 as compared to a loss of $3,448,210
for the year ended September 30, 2014.





Our net loss on a
basic and fully diluted basis was $0.29 per share for the fiscal year ended September 30, 2015 based on our weighted average shares
outstanding of 15,632,148 as compared to a net loss of $0.31 per share for the fiscal year ended September 30, 2014 based on our
weighted average shares outstanding of 14,374,967. The increase in the number of weighted shares outstanding primarily reflects
the issuance of 2,082,615 shares of common stock, of which 833,700 shares were issued for warrants which were exercised, 261,954
shares were issued to Fortress, 70,000 shares were issued for consulting services, 296,401 were issued to DoubleVision for the
earnout provision and the 620,500 shares were issued for the acquisition of the Hipcricket mobile advertising business.



Liquidity
and Capital Resources



At September 30, 2015, we had total assets
of $18,598,680 and total liabilities of $13,284,984. At September 30, 2014, we had total assets of $10,106,768 and total liabilities
of $7,450,054. The $8,491,912 or 84% increase in assets is primarily attributable to the $1,383,954 net increase in cash from
exercises of warrants to purchase our common stock, and the sale of a long-term secured note, and our common stock to Fortress,
$2,961,341 increase in goodwill from the Hipcricket and DoubleVision acquisitions, $1,597,173 increase in accounts receivable
attributable to increased revenues and a $763,981 increase in capitalized software development costs attributable to enhancing
our mobile engagement platform. The $5,830,930 increase in liabilities is primarily attributable to the $4,974,249 net increase
in debt resulting from the sale of a long-term note to Fortress and repayment of convertible debentures.







During the fiscal year ended September
30, 2015, we used $2,299,981 in cash for operating activities as compared to the $969,749 used for operating activities during
the fiscal year ended September 30, 2014. Cash used for operating activities for the fiscal year ended September 30, 2015 is primarily
attributable to our $4,528,193 net loss for the period that was partially offset by noncash expenses of: $1,742,015 in depreciation
and amortization expense, $831,000 for the impairment of the software license, $818,916 in stock compensation expense and $245,500
from an increase in our allowance for doubtful accounts receivable. In addition, we used $1,842,673 in cash for operating activities
for growth in our accounts receivable this fiscal year which has resulted in increased media placement revenue, which typically
remains outstanding in accounts receivable longer than our wireless applications revenue. Cash used for operating activities for
the fiscal year ended September 30, 2015 included a $336,445 decrease in accrued expenses, including a $255,294 decrease in accrued
interest that resulted from paying off interest on our convertible notes and a $81,151 decrease in other accrued expenses that
were offset by a $687,384 increase in accounts payable, and a $217,412 increase in deferred revenue related to customer prepayments
of media placement and licensing and royalty revenues.





Cash
used in investing activities for the fiscal year ended September 30, 2015 was $3,678,223, of which $1,444,629 represented capitalized
internal costs of our software development for our core operations, $1,300,000 was attributable to the cash costs paid to acquire
the Hipcricket mobile advertising business in July 2015, $438,508 was attributable to investments in our intellectual property
which is designed to strengthen our intellectual property portfolio and expand our mobile communications/advertising offerings,
and $495,096 was attributable to purchases of property and equipment in connection with the expansion of our Jersey City offices
and personnel.



Cash provided
from financing activities for the year ended September 30, 2015 totaled $7,362,158. We received $8,205,816 from the sale of our
note to Fortress, net of fees and expenses. On October 3, 2014,we, together with our wholly owned subsidiaries SITO
Mobile Solutions, Inc. and SITO Mobile R&D IP entered into a Revenue Sharing and Note Purchase Agreement with Fortress Credit
Co LLC, as collateral agent and CF DB EZ LLC and Fortress Credit Co LLC pursuant to which we issued and sold a senior secured note
with an aggregate original principal amount of $10,000,000 and issued 261,954 shares of common stock to Fortress at $3.817 per
share. After deducting original issue discount of 10% on the note and a structuring fee to the investors, we received $8,850,000
before paying legal and due diligence expenses. In addition, we received $1,000,000 from the issuance of common stock to Fortress
and used proceeds from the issuance to repay $3,708,000 in principal plus accrued interest on outstanding convertible notes that
had a 10% interest rate and gave the note holders’ the right to convert the debentures into 775,600 shares of our common
stock. We received $1,959,000 in cash from the issuance of an aggregate of 833,700 shares of our common stock to warrant holders
that exercised their warrants at exercise prices ranging from$2.50 to $3.05 per share.



Our note payable to Fortress bears interest
at a rate equal to LIBOR plus 9% per annum of which 2% per annum of the interest shall be paid through the with issuance of shares
of common stock at maturity. The term of the Note is 42 months and we began making monthly interest payments in October 2014. In
October 2015, we began making monthly amortization payments on the note, each in the amount of $333,334. We agreed to apply 85%
of any revenues from new licensing and royalty arrangements that we generate using our patents (“Monetization Revenues”)
to the payment of accrued and unpaid interest on, and then to repay outstanding principal (at par) of, the note until all amounts
due with respect to the note has been paid in full. After the repayment of the note, we will pay Fortress up to 50% of Monetization
Revenues totaling (i) $5,000,000, if paid in full prior to March 31, 2018 and (ii) $7,500,000 thereafter. In addition, we must
also pay $350,000 to the Fortress upon repayment of the note.





18







We are seeking to increase our working
capital to facilitate anticipated revenue growth, invest in our technology platform, develop our patent portfolio for new monetization
opportunities and to improve liquidity. Over the next twelve months we believe that existing capital and anticipated funds from
operations may be sufficient to sustain current level of operations and debt service. Inasmuch as the Company is pursuing the monetization
of its intellectual property, which plans are subject to change, additional external financing relating to such efforts may be
required. Increased acceleration in our core business, monthly principal payments on our debt and/or other economic influences
might also necessitate additional financing. There can be no assurance that we will be able obtain additional debt financing,
if at all or upon terms that will be acceptable to us or our existing secured lender.



As a result of the recent economic recession,
and the continuing economic uncertainty, it has been difficult for companies to obtain equity or debt financing. While the credit
markets have improved over the last year, it remains difficult for smaller companies to obtain financing on reasonable terms.



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



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



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



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



Off-Balance Sheet Arrangements



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



Critical Accounting Policies and Estimates



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



Revenue Recognition and Deferred
Revenue



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

The Company evaluates whether
it is appropriate to recognize media placement revenue based on the gross amount billed to the customers or the net amount earned
as revenue.  When the Company is primarily obligated in a transaction, has latitude in establishing prices, is responsible
for fulfillment of the transaction, has credit risk, or has several but not all of these indicators, revenue is recorded on
a gross basis. While none of the factors individually are considered presumptive or determinative, in reaching conclusions
on gross versus net revenue recognition, the Company places the most weight on the analysis of whether or not it is the
primary obligor in the arrangement. The Company records the net amounts as media placement revenue earned if it
is not primarily obligated or does not have latitude in establishing prices or credit risk.

The Company recognizes wireless
applications revenue based on the delivery of Short Message Service (SMS) text messages and voice messages and messaging program
management services. Wireless applications revenues are recognized when the Company’s services are delivered based
on the specific terms of the Company’s contracts with customers, which are commonly based on the number of messages delivered.
At such time, the Company’s services have been provided, the fees charged are fixed or determinable, persuasive
evidence of an arrangement exists, and collectability is reasonably assured.

19







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

Deferred revenue arises as a result of differences between
the timing of revenue recognition and receipt of cash from the Company’s customers.

Software Development Costs



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



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



Long-Lived
Assets



We
account for our long-lived assets in accordance with Accounting Standards Codification (“ASC”) Topic 360-10-05, “Accounting
for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for
impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer
be appropriate. We assess recoverability of the carrying value of an asset by estimating the future net cash flows expected to
result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset,
an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value.
During the year ended September 30, 2015, we recognized an impairment loss of $831,000 on our “Anywhere” Software
License as further discussed in Note 7 of the financial statements.



Fair
Value Measurement



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



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



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



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



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



ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.



All
financial information required by this Item is attached hereto at the end of this report beginning on page F-1 and is hereby incorporated
by reference.





20







ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.



None.



ITEM
9A. CONTROLS AND PROCEDURES.



Evaluation
of Disclosure Controls and Procedures.



Our
management, with the participation of our CEO and our CFO, evaluated the effectiveness of our disclosure controls and procedures
(as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based
on that evaluation, our CEO and our CFO concluded that our disclosure controls and procedures as of the end of the period covered
by this report were effective to ensure that information required to be disclosed is made known to management and others, as appropriate,
to allow timely decision regarding required disclosure and that the information required to be disclosed by us in reports that
we file or submit under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time
periods specified in the Commission’s rules and forms and (ii) accumulated and communicated to our management, including
our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure. A controls system cannot provide absolute assurance, however, that the objectives of
the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within a company have been detected.





Limitations on the
Effectiveness of Controls.

A control system, no
matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control
system are met. Because of the inherent limitations in all controls systems, no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, within a company have been detected. Our disclosure controls and procedures
are designed to provide reasonable assurance of achieving its objectives.

Management’s
Annual Report on Internal Control over Financial Reporting.



Our
management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule
13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting
principles generally accepted in the United States.



Our
internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company
are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets
that could have a material effect on the financial statements





Our management conducted
an evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2015 based on the criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this evaluation, management concluded that our internal control over financial reporting was effective as of September
30, 2015, based on those criteria.



A
control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives
of the control system are met. Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving
their control objectives.





This
annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal
control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public
accounting firm pursuant to rules of the SEC that permits the Company to provide only management’s report in this annual
report.

Changes
in Internal Controls.



There
has been no change in our internal control over financial reporting that occurred during the last fiscal quarter of fiscal year
ended September 30, 2015 that has materially affected, or is reasonably likely to materially affect our internal control over
financial reporting.



ITEM
9B. OTHER INFORMATION.



None.





21







PART
III



ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.



The following
persons are our executive officers and directors and hold the offices set forth opposite their names.



|Name                                              |  | Age |  | Position                            
|------------------------------------------------- |  | --- |  | ------------------------------------
|                                                  |  |     |  |                                     
|Jerry Hug                                         |  | 48  |  | Chief Executive Officer and Director
|                                                  |  |     |  |                                     
|Kurt Streams                                      |  | 53  |  | Chief Financial Officer             
|                                                  |  |     |  |                                     
|Betsy J. Bernard                                  |  | 60  |  | Lead Director                       
|                                                  |  |     |  |                                     
|Jonathan E. Sandelman                             |  | 57  |  | Director                            
|                                                  |  |     |  |                                     
|Peter D. Holden                                   |  | 50  |  | Director                            
|                                                  |  |     |  |                                     
|Joseph
                                 A. Beatty |  | 52  |  | Director                            
|                                                  |  |     |  |                                     
|Philip B. Livingston                              |  | 58  |  | Director                            





Our Board of Directors consists of six
members, including four independent members (Ms. Bernard, Messrs. Sandelman, Beatty and Livingston). Only our non-executive directors
receive any cash remuneration for acting as such. All directors may, however be reimbursed their expenses, if any, for attendance
at meetings of the Board of Directors.





The
following is a brief account of the business experience during the past five years of each of our directors and executive officers:



Jerry
Hug became our interim Chief Executive Officer on August 27, 2014 and our Chief Executive Officer and a Director on November
10, 2014. Mr. Hug joined the Company in 2011 as our Director of Corporate Development and was then promoted to Executive Vice
President in March 2013. Between 2007 and 2010, Mr. Hug was the co-founder and President of Waveyard Development LLC, a water-sports
resort destination development company. From 2003 to June 2006, Mr. Hug served as Executive Vice President and Chief Strategy
Officer of Wireless Retail Inc., a $400 million wireless services company that was among the first U.S. businesses to use the
store-in-store business model to sell mobile phones for wireless carriers through large nationwide retailers. Mr. Hug was interim
CFO for Wireless Retail Inc. leading up to its sale to Radio Shack Corporation. From 2002 to 2004, Mr. Hug was Managing Partner
of Redwood Partners, an early-stage merchant bank and advisory firm that focused on providing early-stage capital and executive
management to technology, media and telecommunications businesses.



The
Board of Directors has concluded that Mr. Hug is qualified to serve as a director of the Company because of his extensive experience
in the wireless industry and his prior experience in finance.



Kurt
Streams joined us on November 1, 2013 as our Chief Financial Officer. From 2009 through 2013, Mr. Streams was a Partner
at GBM LLC, a business management firm serving public and private companies, where he managed patents and licensing for a publicly-held
consumer products client. From 2008 through 2009, Mr. Streams was a Principal at RBSM LLP, a CPA firm that is a U.S. member of
Russell Bedford International, one of the world’s top 15 accounting networks according to International Accounting Bulletin.
Mr. Streams has served as CFO of three companies including IGIA, Inc. where he managed patents and licensing for IGIA’s
portfolio of branded consumer products. Prior, he was CFO at The Deal, LLC, a private equity owned financial news organization.
Mr. Streams started his career at Deloitte & Touche where he served in several positions which culminated in his role as Senior
Audit Manager in Connecticut and The Netherlands. Mr. Streams was awarded a BA in Economics from the University of Massachusetts
at Amherst and is a CPA.





22







Betsy
J. Bernard joined our Board of Directors on July 15, 2014. Ms. Bernard was previously the President of AT&T, a position
she held from October 2002 until her retirement in December 2003. Ms. Bernard also served as President and CEO of AT&T Consumer
from April 2001 through October 2002. Prior to 2001, Ms. Bernard held senior executive positions with Qwest Communications International,
Inc., USWEST, Inc. AVIRNEX Communications Group and Pacific Bell. Ms. Bernard serves as a Director, a member of the Finance Committee
and Chair of the Nominating and Governance Committee of Principal Financial Group, Inc. and as a director, a member of the compensation
committee and Chair of the Nominating and Governance Committee of Zimmer Holdings. She previously served as Chair of the Telular
Corporation. Ms. Bernard serves on the advisory boards of GroTech Ventures, Innovate Partners and the Silverfern Group. Ms. Bernard
received a BA from St. Lawrence University, an MBA from Fairleigh Dickinson University, an MS degree in management from Stanford
University’s Sloan Fellowship Program, and a Doctor of Laws (Honorary) from Pepperdine University.



The
Board of Directors has concluded that Ms. Bernard is qualified to serve as a director of the Company because of her past experience
in senior executive roles with leading global telecommunications companies and her significant experience as a director of public
company boards, including service as chairman of the board, and experience as a member of compensation and audit committees as
well as chair of nomination and governance committees.



Jonathan
E. Sandelman joined our Board of Directors on December 10, 2012. Mr. Sandelman is the Chief Executive Officer, Founder,
and Chief Investment Officer at Sandelman Partners, LP. He founded the firm on July 1, 2005. Mr. Sandelman is the President and
Director at NMS Services Inc., NMS Services (Cayman) Inc., and BAC Services Inc. He was the President of the New York Office at
Bank of America Securities LLC. Mr. Sandelman joined the firm in 1998 as the Head of Equity Financial Products and took charge
of the equity department in 2002. He headed the firm's debt and equities business before becoming the President, a post that Mr.
Sandelman held until October 20, 2004. He was the Deputy Head of Global Equities, member of the Risk Management Committee, member
of the Compensation Committee, and Managing Director of Equity Derivatives at Salomon Brothers. Mr. Sandelman was a Director of
Do Something and Impact Web Enterprises, Inc. He holds a Bachelor of Arts and a Juris Doctor from Yeshiva University-Cardozo Law
School.



Mr.
Sandelman’s financial and intellectual property knowledge and experience qualifies him to serve on the Company’s Board
of Directors.



Peter
D. Holden, joined our Board of Directors on March 29, 2013. Since September 2014, Mr. Holden has served as the President of
IPCREATE – a pioneer in invention-on-demandTMthat works with organizations to generate and patent
disruptive inventions to speed, quality and scale to complement their own internal research and development efforts in a more
market-driven way. Prior to IPCREATE, from July 2012 to August 2014, Mr. Holden was Senior Vice President at IPVALUE Management,
Inc., a leader in “IP agency” transactions for blue chip companies worldwide. Prior to joining IPVALUE, in September
2006, Mr. Holden founded the IP Investment Group at Coller Capital LP and led the investment and subsequent monetization of thousands
of patents, delivering top-quartile returns to investors. In 1999 Mr. Holden founded and ran Invisible Hand LLC an IP venturing
fund focused on building and/or acquiring fundamental IP positions and repurposing these into founders’ equity in promising
early stage companies. Mr. Holden formerly held senior positions at Panasonic based out of Osaka, Japan and University Patents,
Inc. Mr. Holden holds Ph.D. and undergraduate degrees from the United Kingdom. He also held positions as Senior Fellow at Wharton
Business School and was awarded the Honda Fellowship at the University of Electro-Communications in Tokyo, Japan. He has also
advised several governmental and sovereign initiatives on IP fund formation and is on the Innovation Advisory Board of United
Technologies Corp.



Mr.
Holden’s financial and intellectual property knowledge and experience qualifies him to serve on the Company’s Board
of Directors.



Joseph
A. Beatty, joined our Board of Directors on September 9, 2014. Mr. Beatty was President and Chief Executive Officer and
a board member of Telular Corporation from 2008 until its sale in June 2013. Prior to serving Telular’s President and Chief
Executive Officer, Mr. Beatty served as its Executive Vice President (beginning in April 2007) and Chief Financial Officer and
Secretary (beginning in May 2007). From June 2003 until June 2006, Mr. Beatty was President and Chief Executive Officer of Concourse
Communications Group, a privately held developer and operator of distributed antenna systems and airport wi-fi networks. From
March 2001 until June 2003, Mr. Beatty worked with private equity firm Cardinal Growth L.P. on various acquisition projects and
also acted as part-time Interim Chief Financial Officer for Novaxess B.V., a privately held telecom services provider based in
the Netherlands. From November 1996 until February 2001, Mr. Beatty was a co-founder and the Chief Financial Officer of Focal
Communications Corporation, a publicly held telecom services provider. Earlier in his career, Mr. Beatty was a securities analyst
and also held numerous technical management positions for a local telecom services provider. Mr. Beatty is a former Chairman and
continues to serve on the board of trustees of Edward Health Services Corporation, a not-for-profit healthcare provider located
in Naperville, Illinois. He is also a director of EHSC Cayman Segregated Portfolio, its captive insurance subsidiary, domiciled
in the Cayman Islands, Intelliquent, Inc. and CityScan, Inc. Mr. Beatty earned a bachelor’s degree in electrical engineering
from the University of Illinois and an MBA from the University of Chicago’s Booth School of Business. He is also a Chartered
Financial Analyst.





23







Mr.
Beatty’s extensive management and leadership experience in the telecommunications industry and his strong background in
finance and impressive experience as a member of senior management for a number of telecommunications companies provides our Board
of Directors with key expertise in financial matters and valuable insight regarding strategic opportunities.



Philip
B. Livingston, joined our Board of Directors on November 10, 2014. Mr. Livingston was Chief Executive Officer of Ambassador
Group Inc. (“AGI”), an educational student travel company. He joined AGI in May 2014. Previously he was Chief Executive
Officer of LexisNexis Web Based Marketing Solutions until October 2013. He joined LexisNexis in April 2009 as Senior Vice President
of Practice Management and served in executive management positions from April 2009 to October 2013. Mr. Livingston has, in the
past, served as chief financial officer for Celestial Seasonings, Inc., Catalina Marketing Corporation and World Wrestling Entertainment.
From 1999 to 2003 he served as President of Financial Executives International, the leading professional association of chief
financial officers and controllers. In the past, he has served on numerous public and private company boards including Broadsoft
Corporation, Insurance Auto Auction, Cott Corporation, MSC Software and Seitel Inc. Mr. Livingston received a BA and BS from the
University of Maryland, and his MBA from University of California, Berkeley.



The
Board of Directors has concluded that Mr. Livingston is qualified to serve as a director of the Company because of his past experience
in senior executive roles with leading global companies and his significant experience as a director of public company boards,
including service as chairman of board committees, and experience as a member and chairperson of audit committees.



Involvement
in Certain Legal Proceedings



During
the past ten years, none of our directors, executive officers, promoters, control persons, or nominees has been:



| | ● | the
                                         subject of any bankruptcy petition filed by or against any business of which such person
                                         was a general partner or executive officer either at the time of the bankruptcy or within
                                         two years prior to that time;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | convicted
                                         in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic
                                         violations and other minor offenses);
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | subject
                                         to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of
                                         any court of competent jurisdiction or any Federal or State authority, permanently or
                                         temporarily enjoining, barring, suspending or otherwise limiting his involvement
                                         in any type of business, securities or banking activities;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | found
                                         by a court of competent jurisdiction (in a civil action), the Commission or the Commodity
                                         Futures Trading Commission to have violated a federal or state securities or commodities
                                         law;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the
                                         subject of, or a party to, any Federal or State judicial or administrative order, judgment,
                                         decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged
                                         violation of (a) any Federal or State securities or commodities law or regulation; (b)
                                         any law or regulation respecting financial institutions or insurance companies including,
                                         but not limited to, a temporary or permanent injunction, order of disgorgement or restitution,
                                         civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition
                                         order; or (c) any law or regulation prohibiting mail or wire fraud or fraud in connection
                                         with any business entity; or
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the
                                         subject of, or a party to, any sanction or order, not subsequently reversed, suspended
                                         or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the
                                         Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29)
                                         of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association,
                                         entity or organization that has disciplinary authority over its members or persons associated
                                         with a member.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





24







Committees
of the Board of Directors



The
following table sets forth the three standing committees of our Board of Directors and the members of each committee:



|Director             |  | Audit Committee |  | Compensation Committee |  | Governance and 
Nominating Committee
|-------------------- |  | --------------- |  | ---------------------- |  | ------------------------------------
|Betsy J. Bernard     |  | X               |  | X                      |  | Chair                               
|Joseph A. Beatty*    |  | Chair           |  | X                      |  | X                                   
|Philip B. Livingston |  | X               |  | Chair                  |  | X                                   



*
Audit Committee Financial Expert.



To
assist it in carrying out its duties, the Board of Directors has delegated certain authority to an Audit Committee, a Compensation
Committee and a Corporate Governance and Nominating Committee as the functions of each are described below.



Audit
Committee



The
Audit Committee is currently comprised of Mr. Beatty (Chairman), Ms. Bernard, and Mr. Livingston. We believe all the members of
the audit committee are “independent," as defined by SEC rules adopted pursuant to the requirements of the Sarbanes-Oxley
Act of 2002.



The
duties and responsibilities of the Audit Committee are set forth in the Audit Committee’s charter adopted by the Board of
Directors in fiscal year ending September 30, 2012.



The
Audit Committee oversees the financial reporting process for the Company on behalf of the Board of Directors and has other duties
and functions as described in its charter.



The
Company’s management has the primary responsibility for the Company’s financial statements and the reporting process.
The Company’s independent registered public accounting firm is responsible for auditing the Company’s financial statements
and expressing an opinion as to their conformity with accounting principles generally accepted in the United States.



Our
Audit Committee serves to monitor our financial reporting process and internal control system; retains and pre-approves audit
and any non-audit services to be performed by our independent registered accounting firm; directly consults with our independent
registered public accounting firm; reviews and appraises the efforts of our independent registered public accounting firm; and
provides an open avenue of communication among our independent registered public accounting firm, financial and senior management
and the Board of Directors.



Our
Audit Committee reviewed and discussed with representatives of RBSM LLP, our independent registered public accounting firm, our
audited financial statements for the year ended September 30, 2015 with the Board of Directors, and the matters required to be
discussed by the Statement on Auditing Standards, as amended.





Also in connection with the
filing of this annual report on Form 10-K, our current Audit Committee reviewed and the Chairman of our Audit Committee
discussed with representatives of RBSM, LLP, our audited financial statements for the year ended September 30, 2014 with the
Board of Directors, and the matters required to be discussed by the Statement on Auditing Standards, as amended.



Our
board of directors has determined that Joseph A. Beatty is an “audit committee financial expert” as such term is defined
in Item 407(d) of Regulation S-K promulgated by the SEC.





25







Compensation
Committee



The
Compensation Committee is currently comprised of Mr. Livingston (Chairman), Ms. Bernard, and Mr. Beatty. We believe all of the
members of the Committee are “independent," as defined by SEC rules adopted pursuant to the requirements of the Sarbanes-Oxley
Act of 2002.



The
duties and responsibilities of the Compensation Committee are set forth in the Compensation Committee’s charter adopted
by the Board of Directors in fiscal year ending September 30, 2012.



Among
its duties, our Compensation Committee determines the compensation and benefits paid to our executive officers, including our
President, Chief Executive Officer and our Executive Chairman.



Our
Compensation Committee reviews and determines salaries, bonuses and other forms of compensation paid to our executive officers
and management, approves recipients of stock option awards and establishes the number of shares and other terms applicable to
such awards.



Our
Compensation Committee also determines the compensation paid to our Board of Directors, including equity-based awards. More information
about the compensation of our non-employee directors is set forth in the section of this annual report titled “Director
Compensation.”



Governance
and Nominating Committee



The
Governance and Nominating Committee is currently comprised of Ms. Bernard (Chairman), Mr. Beatty and Mr. Livingston. We believe
all the members of the Committee are “independent," as defined by SEC rules adopted pursuant to the requirements of
the Sarbanes-Oxley Act of 2002.



The
duties and responsibilities of the Governance and Nominating Committee are set forth in the Governance and Nominating Committee’s
charter adopted by the Board of Directors in fiscal year ending September 30, 2012.



Our
Corporate Governance and Nominating Committee is charged with recommending the slate of director nominees for election to the
Board of Directors, identifying and recommending candidates to fill vacancies on the Board of Directors, and reviewing, evaluating
and recommending changes to our corporate governance processes. Among its duties and responsibilities, the Corporate Governance
and Nominating Committee periodically evaluates and assesses the performance of the Board of Directors; reviews the qualifications
of candidates for director positions; assists in identifying, interviewing and recruiting candidates for the Board of Directors;
reviews the composition of each committee of the Board of Directors and presents recommendations for committee memberships; and
reviews and recommends changes to the charter of the Governance and Nominating Committee and to the charters of other Board of
Director committees.



The
process followed by the Governance and Nominating Committee to identify and evaluate candidates includes (i) requests to Board
of Director members, our Chief Executive Officer, and others for recommendations; (ii) meetings from time to time to evaluate
biographical information and background material relating to potential candidates and their qualifications; and (iii) interviews
of selected candidates. The Corporate Governance and Nominating Committee also considers recommendations for nomination to the
Board of Directors submitted by shareholders.



In
evaluating the suitability of candidates to serve on the Board of Directors, including shareholder nominees, the Governance and
Nominating Committee seeks candidates who are “independent," as defined by SEC rules adopted pursuant to the requirements
of the Sarbanes-Oxley Act of 2002 and who meet certain selection criteria established by the Governance and Nominating Committee.



Corporate
Governance Materials



The
full text of the charters of our Audit, Governance and Nominating, and Compensation Committees and our Insider Trading Policy
and Code of Ethics can be found at http://ir.sitomobile.com/governance-documents.





26







Code
of Ethics



On
December 1, 2004 we adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions. A copy of our Code of Ethics will be provided to any
person requesting same without charge. To request a copy of our Code of Ethics please make written request to our Chief Financial
Officer c/o SITO Mobile, Ltd. at 100 Town Square Place, Suite 204, Jersey City, NJ 07310.



Family
Relationships



There are
no family relationships among our executive officers and directors.



Compliance
with Section 16(A) of the Exchange Act



Section
16(a) of the Securities Exchange Act of 1934, as amended, requires that our directors and executive officers and persons who beneficially
own more than 10% of our common stock (referred to herein as the “reporting persons”) file with the SEC various reports
as to their ownership of and activities relating to our common stock. Such reporting persons are required by the SEC regulations
to furnish us with copies of all Section 16(a) reports they file. Based solely upon a review of copies of Section 16(a) reports
and representations received by us from reporting persons, and without conducting any independent investigation of our own during
the fiscal year ended September 30, 2015 all reports were timely filed.



Changes
in Nominating Procedures



None.



ITEM
11. EXECUTIVE COMPENSATION.



Compensation
Discussion and Analysis



The
following Compensation Discussion and Analysis describes the material elements of compensation for our executive officers identified
in the Summary Compensation Table (“Named Executive Officers”), and executive officers that we may hire in the future.
As more fully described above, the Compensation Committee is responsible for recommendations relating to compensation of the Company’s
directors and executive officers.



Compensation
Program Objectives and Rewards



Our
compensation philosophy is based on the premise of attracting, retaining, and motivating exceptional leaders, setting high goals,
working toward the common objectives of meeting the expectations of clients and stockholders, and rewarding outstanding performance.
Following this philosophy, in determining executive compensation, we consider all relevant factors, such as the competition for
talent, our desire to link pay with performance in the future, the use of equity to align executive interests with those of our
stockholders, individual contributions, teamwork and performance, and each executive’s total compensation package. We strive
to accomplish these objectives by compensating all executives with total compensation packages consisting of a combination of
competitive base salary and incentive compensation.



The
primary purpose of the compensation and benefits described below is to attract, retain, and motivate highly talented individuals
when we do hire, who will engage in the behaviors necessary to enable us to succeed in our mission while upholding our values
in a highly competitive marketplace. Different elements are designed to engender different behaviors, and the actual incentive
amounts, which may be awarded to each Named Executive Officer are subject to the annual review of the of the Compensation Committee.





27







The
Elements of our Compensation Program



Base
Salary



Executive
officer base salaries are based on job responsibilities and individual contribution. The Compensation Committee reviews the base
salaries of our executive officers, including our Named Executive Officers, considering factors such as corporate progress toward
achieving certain objectives, individual performance experience and expertise and salaries paid to executives at companies similarly
situated to ours.



Incentive
Compensation Awards



Each
of our Named Executive is eligible for an annual cash bonus, based upon net revenue, gross margins, and individual key performance
indicators, set by the Compensation Committee annually. Our Compensation Committee sets the target bonus compensation paid as
a percentage of each executive’s base salary with payment based upon certain threshold performance set by the Compensation
Committee. The target bonus compensation is reviewed on an annual basis by our Compensation Committee.



Equity
Incentive Awards



The
equity grant component of the compensation plan for our named Executives is performance based. The number of performance options
to be received by each of the executives is based upon the achievement by the Company of certain net revenues and gross margins
targets which is reviewed on an annual basis by our Compensation Committee.



Benefits
and Prerequisites



Other
than health insurance and a 401(k) plan, we do not currently provide any employee benefit or retirement programs.



We
have no plans in place and have never maintained any plans that provide for the payment of retirement benefits or benefits that
will be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental
executive retirement plans, tax-qualified deferred contribution plans and nonqualified deferred contribution plans.



Employment
Agreements



Effective
November 1, 2013, we entered into an employment agreement with Kurt Streams who serves as our Chief Financial Officer. Pursuant
to our employment agreement with Mr. Streams dated October 18, 2013 we agreed to pay Mr. Streams an annual salary of $200,000,
which is reviewed annually and discretionary cash bonuses. Our agreement with Mr. Streams also calls for successive one-year renewals
unless either party elects against renewal.



Pursuant
to the employment agreement with Mr. Streams, we granted to Mr. Streams an option to purchase 2,500 shares of our common stock
under our 2009 Employee and Consultant Stock Plan. We also grated to Mr. Streams stock options under our 2010 Stock Option Plan
to purchase 75,000 shares of our common stock at a strike price equal to the closing price of the Company’s stock on October
31, 2013 of $6.20, with the scheduled expiration date of the stock options to be November 1, 2018. The stock options
vest annually in equal installments of 25,000 over a three year period commencing on November 1, 2014.



We
have not entered into an employment agreement with our CEO, Jerry Hug.



Separation
and Change in Control Arrangements



Pursuant
to the terms of the employment agreement with Mr. Streams, in the event that Mr. Streams is (i) terminated without Cause (as defined
in the Employment Agreement), (ii) terminated due to a Disability (as defined in the Employment Agreement), (iii) resigns with
Good Reason (as defined in the Employment Agreement), or (iv) the Employment Agreement is not renewed at the election of the Company,
Mr. Streams shall be entitled to receive severance benefits. Mr. Streams shall be entitled to receive the following severance
benefits: (i) Base Salary immediately in effect immediately prior to the termination of the Employment Agreement (the “Termination
Date”) for a period of three months and (ii) payment of COBRA premiums for Mr. Streams and his eligible dependents for a
period of three months, subject to the Company’s right to discontinue or change its COBRA policy. Receipt of severance benefits
shall be contingent upon Mr. Streams executing and delivering a general release of all claims in favor of the Company and its
related persons.





28







In
addition to severance benefits Mr. Streams shall receive (i) any salary earned and accrued but unpaid prior to the Termination
Date, (ii) payment for all accrued by unused paid time off and (iii) any documented business expenses incurred in accordance with
the Company’s polices.



Summary
Compensation Table



The
following table sets forth information concerning the total compensation paid or accrued by us during the two fiscal years ended
September 30, 2015 to:



| | ● | all
                                         individuals who served as our chief executive officer, chief financial officer or acted
                                         in a similar capacity for us at any time during the fiscal year ended September 30, 2015
                                         and;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | all
                                         individuals who served as executive officers of ours at any time during the fiscal year
                                         ended September 30, 2015 and received annual compensation during the fiscal year ended
                                         September 30, 2014 in excess of $100,000.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|Position                           |  | Year |      |  | Salary($) |  |         | Bonus($) |  |  | StockAwards($) |  |  | Option Awards($) |   |  | Total($) | 
|---------------------------------- |  | ---- | ---- |  | --------- |  | ------- | -------- |  |  | -------------- |  |  | ---------------- | - |  | -------- | 
|                                   |  |      |      |  |           |  |         |          |  |  |                |  |  |                  |   |  |          | 
|Jerry Hug                          |  |      | 2014 |  |           |  | 250,000 |          |  |  | 0              |  |  |                  | 0 |  |          | 
|Chief Executive Officer (1)        |  |      | 2015 |  |           |  | 250,000 |          |  |  | 0              |  |  |                  | 0 |  |          | 
|                                   |  |      |      |  |           |  |         |          |  |  |                |  |  |                  |   |  |          | 
|Kurt Streams                       |  |      | 2014 |  |           |  | 183,333 |          |  |  | 0              |  |  |                  | 0 |  |          | 
|Chief Financial Officer (2)        |  |      | 2015 |  |           |  | 200,000 |          |  |  | 0              |  |  |                  | 0 |  |          | 
|                                   |  |      |      |  |           |  |         |          |  |  |                |  |  |                  |   |  |          | 
|James Orsini                       |  |      | 2014 |  |           |  | 403,268 |          |  |  | 0              |  |  |                  | 0 |  |          | 
|Former Chief Executive Officer (3) |  |      | 2015 |  |           |  | 0       |          |  |  | 0              |  |  |                  | 0 |  |          | 





Note:
The table above includes only the value of options that vested during the periods indicated. The listed executives may have also
received unvested options that may vest in a future period. See “Outstanding Equity Awards at Fiscal Year-End” below.



| | (1) | Mr.
                                         Hug was appointed Interim CEO on August 19, 2014. Mr. Hug was previously Director of
                                         Corporate Development.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Kurt
                                         Streams was appointed in fiscal 2014 on November 1, 2013 as our Chief Financial Officer.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------



| | (3) | The
                                         Company entered into a Separation and General Release Agreement (the “Separation
                                         Agreement”) with James Orsini, its Chief Executive Officer, which confirms his
                                         removal from all positions held with the Company, including its subsidiaries, divisions,
                                         affiliates, partnerships, joint ventures and related business entities, effective September
                                         19, 2014. Pursuant to the terms of the Separation Agreement and in accordance with the
                                         terms of his employment agreement, the Company will pay to Mr. Orsini, one year of his
                                         base salary, accrued but unused vacation time and will provide continued medical coverage
                                         for a period of one year. In addition, the Company will reimburse Mr. Orsini for $10,000
                                         for his attorneys’ fees in connection with his Separation Agreement. In exchange
                                         for these payments, and other provisions, Mr. Orsini agreed to a general release in favor
                                         of the Company. The Separation Agreement became effective September 19, 2014.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





29









Employment
Agreements and Benefits



Outstanding
Equity Awards



The
following table reflects options granted to our executive officers named in the Summary Compensation Table.



Outstanding
Equity Awards at Fiscal Year-End







|Name             |  | Number ofsecuritiesunderlyingunexercisedoptionsexercisable(#) |                         |  | Number ofsecuritiesunderlyingunexercisedoptionsunexercisable(#) |  |             | Optionexerciseprice($) |  |  | Optionexpirationdate
|---------------- |  | ------------------------------------------------------------- | ----------------------- |  | --------------------------------------------------------------- |  | ----------- | ---------------------- |  |  | --------------------
|                 |  |                                                               |                         |  |                                                                 |  |             |                        |  |  |                     
|James Orsini (1) |  |                                                               | 150,000
        255,000 |  |                                                                 |  | -
        - |                        |  |  | 6.30
        4.69   
|                 |  |                                                               |                         |  |                                                                 |  |             |                        |  |  |                     
|Jerry Hug        |  |                                                               | 100,067                 |  |                                                                 |  | -           |                        |  |  | 6.50                
|                 |  |                                                               | 84,943                  |  |                                                                 |  | -           |                        |  |  | 4.69                
|                 |  |                                                               | 50,000                  |  |                                                                 |  | -           |                        |  |  | 4.69                
|                 |  |                                                               | -                       |  |                                                                 |  | 63,090      |                        |  |  | 2.805               
|                 |  |                                                               |                         |  |                                                                 |  |             |                        |  |  |                     
|Kurt Streams     |  |                                                               | 25,000                  |  |                                                                 |  | -           |                        |  |  | 6.20                
|                 |  |                                                               | -                       |  |                                                                 |  | 50,000      |                        |  |  | 6.20                
|                 |  |                                                               | -                       |  |                                                                 |  | 25,236      |                        |  |  | 2.805               



Note:
The table above reflects modifications to outstanding options made pursuant to November 2012 program where we modified the terms
of stock options granted to certain employees, officers, directors, and active third party service providers. See “Employment
Agreements and Benefits” above and "Certain Relationships and Related Transactions, and Director Independence - Outstanding
Current Service Provider High-Exercise-Price Plan Options" below.



| | (1) | The
                                         Company entered into a Separation and General Release Agreement (the “Separation
                                         Agreement”) with James Orsini, its Chief Executive Officer, which confirms his
                                         removal from all positions held with the Company, including its subsidiaries, divisions,
                                         affiliates, partnerships, joint ventures and related business entities, effective September
                                         19, 2014. The Separation Agreement became effective on September 19, 2014.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





30







Director
Compensation



Our
non-employee Board of Director members receive an annual cash payment of $30,000, payable quarterly, for service on the Board
of Directors and $250 per committee or board meeting, attended in-person or telephonically. Directors may also be reimbursed their
expenses for travelling, hotel and other expenses reasonably incurred in connection with attending board or committee meetings
or otherwise in connection with the Company’s business. There are currently no other cash compensation arrangements in place
for members of the Board of Directors acting as such.



Upon
appointment to the Board of Directors and annually thereafter, our directors receive a grant of five year options to purchase
20,000 shares of common stock which options vest immediately upon grant and which expire upon the earlier of the scheduled expiration
date or 18 months after the cessation of service, whichever is sooner. The chairperson of each of our standing committees receives
a grant of options to purchase 5,000 shares.



Effective
November 10, 2015, our Board of Directors agreed to increase the compensation of the Lead Director to $45,000 and options to purchase
30,000 shares of common stock.



The following
table sets forth compensation received by our directors in the fiscal year ended September 30, 2015.



|Name                  |  | Fees earned or  paid in cash  ($) |        |  | Stock  awards  ($) |  |   | Option  awards  ($) |  |  | All other  compensation  ($) |  |  | Total  ($) |  
|--------------------- |  | --------------------------------- | ------ |  | ------------------ |  | - | ------------------- |  |  | ---------------------------- |  |  | ---------- | -
|Jerry Hug (1)         |  |                                   | 0      |  |                    |  | 0 |                     |  |  | 0                            |  |  |            | 0
|Jonathan D. Sandelman |  |                                   | 32,500 |  |                    |  | 0 |                     |  |  | 48,000                       |  |  |            | 0
|Peter D. Holden (2)   |  |                                   | 16,750 |  |                    |  | 0 |                     |  |  | 40,767                       |  |  |            | 0
|Betsy J. Bernard      |  |                                   | 33,750 |  |                    |  | 0 |                     |  |  | 33,097                       |  |  |            | 0
|Joseph A. Beatty      |  |                                   | 33,750 |  |                    |  | 0 |                     |  |  | 25,845                       |  |  |            | 0
|Philip Livingston (3) |  |                                   | 25,750 |  |                    |  | 0 |                     |  |  | 48,325                       |  |  |            | 0



| | (1) | This
                                         table includes only his compensation which was expressly for service as a director. Mr.
                                         Hug received other compensation as an executive officer—see the Summary Compensation
                                         Table above.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                          

| | (2) | On
                                         October 10, 2013, we entered into a Consulting Agreement with Peter D. Holden pursuant
                                         to which Mr. Holden provided advice and support in connection with our review, analysis
                                         and development of our intellectual property. Pursuant to the Consulting Agreement, Mr.
                                         Holden received $13,000 per month, and, in addition, was granted an option to purchase
                                         50,000 shares of our common stock at a price of $6.09 per share.On
                                         February 1, 2015, we mutually agreed to terminate the Consulting Agreement and compensated
                                         Mr. Holden according to our standard board compensation plan.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

| | (3) | Mr.
                                         Livingston was appointed as a Director on November 10, 2014.
| | --- | ---------------------------------------------------------------------------------------------------------





31







ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.







The following table sets forth the
beneficial ownership of our Common Stock by each of our directors and named executive officers, each person known to us to beneficially
own 5% or more of our Common Stock, and by the officers and directors of the Company as a group. Except as otherwise indicated,
all shares are owned directly, based on 17,155,478 shares outstanding as of September 30, 2015. Unless otherwise indicated in
the footnotes to the following table, each person named in the table has sole voting and investment power (subject to applicable
community property laws) and that person’s address is c/o SITO Mobile, Ltd., 100 Town Square Place, Suite 204, Jersey City,
NJ 07310. Shares of Common Stock subject to options, warrants, or convertible notes currently exercisable or convertible or exercisable
or convertible within 60 days after September 30, 2015 are deemed outstanding for computing the share ownership and percentage
of the person holding such options, warrants, or convertible notes but are not deemed outstanding for computing the percentage
of any other person.







|Name                                          |  | Shares |           |  | Percentage | 
|--------------------------------------------- |  | ------ | --------- |  | ---------- | 
|Jerry Hug (1)                                 |  |        | 239,373   |  |            | 
|Kurt Streams (2)                              |  |        | 60,912    |  |            | 
|Betsy J. Bernard (3)                          |  |        | 89,753    |  |            | 
|Jonathan E. Sandelman (4)                     |  |        | 505,788   |  |            | 
|Peter D. Holden (5)                           |  |        | 86,986    |  |            | 
|Joseph A. Beatty (6)                          |  |        | 52,610    |  |            | 
|Philip B. Livingston (7)                      |  |        | 32,824    |  |            | 
|                                              |  |        |           |  |            | 
|Officers and Directors as a Group (7 persons) |  |        | 1,068,246 |  |            | 
|                                              |  |        |           |  |            | 
|Nicole Braun (8)                              |  |        | 2,199,722 |  |            | 
|Ashford Capital Management, Inc. (9)          |  |        | 1,189,582 |  |            | 







| | (1) | Includes: (a) 218,343 shares underlying stock options which are fully vested; and (b) 63,090 shares underlying performance options which will vest in the next 60 days.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------





| | (2) | Includes: (a) 50,000 shares underlying stock options which are fully vested; and (b) 25,236 shares underlying performance options which will vest in the next 60 days. Does not include 25,000 shares underlying unvested stock options.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





| | (3) | Includes
                                         36,014 shares underlying stock options which are fully vested.
| | --- | ----------------------------------------------------------------------------------------------------------------



| | (4) | Includes
                                         68,288 shares underlying stock options which are fully vested.
| | --- | ----------------------------------------------------------------------------------------------------------------



| | (5) | Includes
                                         86,986 shares underlying stock options which are fully vested.
| | --- | ----------------------------------------------------------------------------------------------------------------



| | (6) | Includes
                                         32,945 shares underlying stock options which are fully vested.
| | --- | ----------------------------------------------------------------------------------------------------------------



| | (7) | Includes
                                         29,548 shares underlying stock options which are fully vested.
| | --- | ----------------------------------------------------------------------------------------------------------------



| | (8) | The
                                         address for Ms. Braun is P. O. Box 1318, Rancho Santa Fe, CA 92067. Ms. Braun holds
                                         2,174,722 shares in her name and 25,000 shares as custodian for her children.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (9) | The
                                         address for Ashford Capital Management, Inc. is One Walker’s Mill Road, Wilmington,
                                         DE 19807. Theodore H. Ashford III has the voting authority with respect to 1,189,582
                                         shares.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (*) | Less than 1%.
| | --- | -------------





32







ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.



In
addition to the cash and equity compensation arrangements of our directors and executive officers discussed above under “Director
Compensation” and “Executive Compensation,” the following is a description of transactions since October 1,
2014, to which we have been a party in which the amount involved exceeded or will exceed $120,000 and in which any of our directors,
executive officers, beneficial holders of 5% or more of our capital stock, or entities affiliated with them, had or will have
a direct or indirect material interest.



Consulting
Agreement with Peter Holden -On October 10, 2013, we entered into a Consulting Agreement with Peter D. Holden pursuant
to which Mr. Holden provided advice and support in connection with our review, analysis and development of our intellectual property.
Pursuant to the Consulting Agreement, Mr. Holden received $13,000 per month and, in addition, was granted an option to purchase
50,000 shares of our common stock at a price of $0.609 per share. The options vested immediately and expire on October 10, 2016.
The Consulting Agreement was terminated in February 2015.



Director
Independence



Our
Board of Directors presently consists of six members. Our Board of Directors has determined that each of Ms. Bernard, Messrs.
Sandelman, Beatty and Livingston are “independent," as defined by SEC rules adopted pursuant to the requirements of
the Sarbanes-Oxley Act of 2002 and in accordance with Rule 4200(a)(15) of the Marketplace Rules of the Nasdaq Stock Market, Inc.



ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES.



Audit
Fees



The aggregate fees billed for each of the
last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual
financial statements and review of financial statements included in the registrant's Form 10-Q or services that are normally provided
by the accountant in connection with statutory and regulatory filings or engagements for the fiscal years ending September 30,
2015 and 2014 were: $63,000, and $57,000, respectively.



Audit-Related
Fees



No
aggregate fees were billed in either of the last two fiscal years for assurance and related services by the principal accountant
that are reasonably related to the performance of the audit or review of the registrant's financial statements and are not reported
under item (1) for the fiscal years ending September 30, 2015 and 2014.



Tax
Fees



No
aggregate fees were billed for professional services rendered by the principal accountant for tax compliance, tax advice, and
tax planning for the fiscal years ending September 30, 2015 and 2014.



All
Other Fees



Other
aggregate fees billed for professional services provided by the principal accountant, other than the services reported above,
for the fiscal years ending September 30, 2015 and 2014 were $0 and $0 and included fees related to our registration statements
on Form S-1 and for attendance at the Company’s annual meeting.





33







Audit
Committee Pre-Approval Policies



Our
Audit Committee has approved the principal accountant's performance of services for the audit of the registrant's annual financial
statements and review of financial statements included in our Form 10-K or services that are normally provided by the accountant
in connection with statutory and regulatory filings or engagements for the fiscal year ending September 30, 2015. Audit-related
fees, tax fees, and all other fees, if any, are approved by the Audit Committee.



Work
Performed by Others



The
percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent
employees was less than 50 percent.



PART
IV



ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.



|Exhibit
    No. |  | Description                                                                                                                                                                                                                                                                                                            
|--------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                |  |                                                                                                                                                                                                                                                                                                                        
|3.1             |  | Amended
    and Restated Certificate of Incorporation of SITO Mobile, Ltd. filed with the Secretary of State, State of Delaware September
    25, 2013 (Incorporated by reference to Exhibit 3.5 to the registrant's Registration Statement on Form S-1 file on November
    6, 2013).                                 
|3.2             |  | Certificate
    of Amendment to the Certificate of Incorporation filed with the Secretary of State of Delaware on September 26, 2014 (Incorporated
    by reference to current report on 8-K filed September 30, 2014).                                                                                                
|3.4             |  | Amended
    and Restated Bylaws of Hosting Site Network, Inc. (currently known as SITO Mobile, Ltd.) Incorporated by reference to Exhibit
    3.3 to Post-Effective Amendment No. 2 to the registrant’s Registration Statement on Form SB-2, filed February 8, 2002.                                                   
|10.3            |  | Services
    Agreement 20071210.103.C Between SITO Mobile Solutions, Inc. and AT&T Services, Inc. dated April 11, 2008. Incorporated
    by reference to Exhibit 10.6 to the registrant’s Annual Report on Form 10-K, filed January 14, 2010.                                                                          
|10.3.1          |  | Amendment
    20071210.103.A.001 to the Services Agreement 20071210.103.C Between SITO Mobile Solutions, Inc., and AT&T Services, Inc.,
    dated March 20, 2009. Incorporated by reference to Exhibit 10.7 to the registrant’s Annual Report on Form 10-K, filed
    January 14, 2010.                                
|10.3.2          |  | Amendment
    20071210.103.A.002 to Services Agreement 20071210.103.C Between SITO Mobile Solutions, Inc. and AT&T Services, Inc., dated
    October 25, 2010. Incorporated by reference to Exhibit 10.6.2 to the registrant’s Registration Statement on Form S-1,
    filed November 12, 2010.                        
|10.3.3          |  | Amendment
    20071210.103.A.005 between SITO Mobile Solutions, Inc., and AT&T Services dated October 10, 2014 (Incorporated by
    reference to Exhibit 10.3.3 to the registrant’s annual report on Form 10-K, filed December 2, 2014).                                                                               
|10.4+           |  | 2008
    Stock Option Plan for SITO Mobile, Ltd. (formerly Hosting Site Network, Inc.) Incorporated by reference to Exhibit 10.10 to
    the registrant’s Current Report on Form 8-K, filed July 31, 2008.                                                                                                             
|10.4.1+         |  | Form
    of Notice of Stock Option Grant/Stock Option Agreement under 2008 Stock Option Plan. Incorporated by reference to Exhibit
    10.7.1 to the registrant’s Registration Statement on Form S-1, filed November 12, 2010.                                                                                         
|10.6+           |  | 2009
    Employee and Consultant Stock Plan. Incorporated by reference to Exhibit 4 to the registrant’s Registration Statement
    on Form S-8 (SEC File No. 333-163557), filed December 8, 2009.                                                                                                                      
|10.6.1+         |  | Form
    of stock grant acknowledgement letter under 2009 Employee and Consultant Stock Plan. Incorporated by reference to Exhibit
    10.16.1 to the registrant’s Registration Statement on Form S-1, filed November 12, 2010.                                                                                        
|10.7+           |  | 2010
    Stock Option Plan. Incorporated by reference to Exhibit 10.32 to the registrant’s Annual Report on Form 10-K, filed
    December 29, 2010.                                                                                                                                                                    
|10.7.1+         |  | Certificate
    regarding amendment of 2010 Stock Plan. Incorporated by reference to Exhibit 10.32.1 to the registrant’s registration
    statement on Form S-1, filed June 24, 2011.                                                                                                                                  
|10.7.2+         |  | Form
    of Notice of Stock Option Grant/Stock Option Agreement under 2010 Stock Plan. Incorporated by reference to Exhibit 10.32.2
    to the registrant’s registration statement on Form S-1, filed June 24, 2011.                                                                                                   
|10.8+           |  | Employment
    letter agreement, between James Orsini and us, dated March 10, 2011. Incorporated by reference to Exhibit 10.1 to the registrant's
    Quarterly Report on Form 10-Q, filed May 16, 2011.                                                                                                               
|10.9+           |  | Amendment
    of employment letter agreement, between James Orsini and us, dated May 16, 2011. Incorporated by reference to Exhibit 10.33.1
    to the registrant’s registration statement on Form S-1, filed June 24, 2011.                                                                                           
|10.10+          |  | Form
    of Indemnification Agreement. Incorporated by reference to Exhibit 10.3 to the registrant’s Quarterly Report on Form
    10-Q, filed February 13, 2012.                                                                                                                                                       
|10.11           |  | Form
    of Warrant replacing Stock Option in favor of Pharmacy Management Strategies LLC, dated June 28, 2011. Incorporated by reference
    to Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q, filed May 18, 2012 .                                                                                  
|10.11.1         |  | Joint
    Marketing Agreement between Pharmacy Management Strategies LLC and SITO Mobile Solutions, Inc., dated March 12, 2012 (Incorporated
    by reference to Exhibit 3.5 to the registrant's Registration Statement on Form S-1 file on November 6, 2013).                                                         
|10.12           |  | Settlement
    Agreement and Mutual General Release, among Soapbox Mobile, Inc. with, by and including all Common Shareholders collectively
    and individually and us, effective March 30, 2012. Incorporated by reference to Exhibit 10.1 to the registrant’s Quarterly
    Report on Form 10-Q, filed May 18, 2012.
|10.12.1         |  | Perpetual
    Exclusive License Agreement among Soapbox Mobile, Inc. and us, effective March 30, 2012. Incorporated by reference to Exhibit
    10.1.1 to the registrant’s Quarterly Report on Form 10-Q, filed May 18, 2012.                                                                                          





34







|10.13+    |  | Board
    of Directors Service Letter Agreement between Jonathan E. Sandelman and us dated December 10, 2012. Incorporated by reference
    to Exhibit 10.29 to the registrant's Annual Report on Form 10-K, filed January 2, 2013.                                                                                                                
|--------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.14+    |  | Employment
    letter agreement between Kurt Streams and us, dated October 18, 2013. Incorporated by reference to Exhibit 10.1 to the registrant’s
    current report on Form 8-K, filed October 21, 2013.                                                                                                                                         
|10.15     |  | Patent
    License and Settlement Agreement, dated November 12, 2013 (Incorporated by reference to Exhibit 10.1 to the registrant’s
    current report on Form 8-K, filed November 14, 2013).                                                                                                                                                      
|10.16     |  | Consulting
    Agreement between Peter Holden and the Company dated as of October 10, 2013 (Incorporated by reference to Exhibit 10.30 to
    the registrant’s annual report on Form 10-K, filed December 9, 2014).                                                                                                                                
|10.17     |  | Joint
    Licensing Agreement entered into as of April 21, 2014 between VideoStar, LLC and Television Technology LLC (Incorporated by
    reference to Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q filed August 12, 2014).                                                                                                      
|10.18     |  | Share
    Purchase Agreement, dated July 24, 2014, by and among the Company and Doublevision Networks, Inc. (Incorporated by reference
    to Exhibit 10.1 to the registrant’s current report on Form 8-K, filed July 29, 2014).                                                                                                                   
|10.19     |  | Revenue
    Sharing and Note Purchase Agreement, dated October 3, 2014 (Incorporated by reference to Exhibit 10.1 to the registrant’s
    current report on Form 8-K, filed October 9, 2014).                                                                                                                                                      
|10.20     |  | Subscription
    Agreement, dated October 3, 2014, (Incorporated by reference to Exhibit 10.2 to the registrant’s current report on Form
    8-K, filed October 9, 2014).                                                                                                                                                                          
|10.21+    |  | Board
    of Directors Service Letter Agreement between Betsy J. Bernard and SITO Mobile, Ltd dated July 15, 2014 (Incorporated
    by reference to Exhibit 10.31 to the registrant’s annual report on Form 10-K, filed December 2, 2014).                                                                                                         
|10.22+    |  | Board
    of Directors Service Letter Agreement between Joseph A. Beatty and SITO Mobile, Ltd dated September 9, 2014 (Incorporated
    by reference to Exhibit 10.32 to the registrant’s annual report on Form 10-K, filed December 2, 2014).                                                                                                     
|10.23+    |  | Board
    of Directors Service Letter Agreement between Philip B. Livingston and us dated November 10, 2014 (Incorporated by reference
    to Exhibit 10.33 to the registrant’s annual report on Form 10-K, filed December 2, 2014).                                                                                                               
|10.24     |  | Asset
    Purchase Agreement dated as of July 8, 2015 by and among SITO Mobile, Ltd., SITO Mobile Solutions, Inc., Hipcricket, Inc.
    and solely for purposes of Section 10.10, ESW Capital LLC dated as of January 20, 2015 (Incorporated by reference to Exhibit
    10.1 to the registrant’s current report on Form 8-K, filed July 13, 2015).
|21        |  | List
    of Subsidiaries (Incorporated by reference to Exhibit 21 to the registrant’s annual report on Form 10-K, filed December
    2, 2014).                                                                                                                                                                                                     
|23.1*     |  | Consent
    of RBSM, LLP                                                                                                                                                                                                                                                                                                                           
|31.1*     |  | Certification
    of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934                                                                                                                                                                                                                                        
|31.2*     |  | Certification
    of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934                                                                                                                                                                                                                                        
|32.1*     |  | Certification
    of Chief Executive Officer pursuant to Section 1350                                                                                                                                                                                                                                                                              
|32.2*     |  | Certification
    of Chief Financial Officer pursuant to Section 1350                                                                                                                                                                                                                                                                              
|          |  |                                                                                                                                                                                                                                                                                                                                                    
|101.INS** |  | XBRL
    Instance Document.                                                                                                                                                                                                                                                                                                                        
|101.SCH** |  | XBRL
    Taxonomy Extension Schema Document.                                                                                                                                                                                                                                                                                                       
|101.CAL** |  | XBRL
    Taxonomy Extension Calculation Linkbase Document.                                                                                                                                                                                                                                                                                         
|101.DEF** |  | XBRL
    Taxonomy Extension Definition Linkbase Document.                                                                                                                                                                                                                                                                                          
|101.LAB** |  | XBRL
    Taxonomy Extension Label Linkbase Document.                                                                                                                                                                                                                                                                                               
|101.PRE** |  | XBRL
    Taxonomy Extension Presentation Linkbase Document.                                                                                                                                                                                                                                                                                        



|*  | Filed
    herewith                                                                              
|-- | ------------------------------------------------------------------------------------------------
|** | Furnished herewith                                                                              
|+  | Each of these
    Exhibits constitutes a management contract, compensatory plan, or arrangement.



35







SIGNATURES



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



|                       | SITO
    Mobile, Ltd.
|---------------------- | ---------------------
|                       |                      
|Date:
    July 1, 2016 | By:                  
|                       |                      
|                       |                      
|                       |                      
|                       |                      
|Date:
    July 1, 2016 | By:                  
|                       |                      
|                       |                      
|                       |                      



Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.



|Date:
    July 1, 2016 | /s/
    Jerry Hug                            
|---------------------- | ---------------------------------------------
|                       | Jerry
    Hug, Chief Executive Officer       
|                       | and
    Director(Principal Executive Officer)



|Date:
    July 1, 2016 | /s/
    Betsy J. Bernard           
|---------------------- | -----------------------------------
|                       | Betsy
    J. Bernard, Director     
|                       |                                    
|Date:
    July 1, 2016 | /s/
    Jonathan Sandelman         
|                       | Jonathan
    E. Sandelman, Director



|Date:
    July 1, 2016 | /s/
    Peter D. Holden      
|---------------------- | -----------------------------
|                       | Peter
    D. Holden, Director



|Date:
    July 1, 2016 | /s/
    Joseph A. Beatty            
|---------------------- | ------------------------------------
|                       | Joseph
    A. Beatty, Director      
|                       |                                     
|Date:
    July 1, 2016 | /s/
    Richard O’Connell, Jr.      
|                       | Richard
    O’Connell, Jr., Director



36









INDEX TO FINANCIAL STATEMENTS



|                                                                                                              | Page         
|------------------------------------------------------------------------------------------------------------- | -------------
|Report
    of Independent Registered Public Accountant Firm (RBSM)                                            | F-2          
|Consolidated
    Balance Sheets as of September 30, 2015 and 2014                                             | F-3
    - F-4
|Consolidated
    Statements of Operations for the years ended September 30, 2015 and 2014                     | F-5          
|Consolidated
    Statement of Changes In Stockholders’ Equity for the years ended September 30, 2015 and 2014 | F-6          
|Consolidated
    Statements of Cash Flows for the years ended September 30, 2015 and 2014                     | F-7
    - F-9
|Notes
    to Consolidated Financial Statements                                                                | F-10         





F-1








| | 805
Third Avenue
        New
        York, NY 10022
        212.838-5100
        212.838.2676/
        Fax
        www.rbsmllp.com
| | ----------------------------------------------------------------------------------------------------------------------------------



REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the Board of Directors and Stockholders

SITO Mobile, Ltd.



We have audited the accompanying consolidated
balance sheets of SITO Mobile, Ltd. (the “Company”) as of September 30, 2015 and 2014, and the related consolidated
statements of operations, stockholders’ equity and cash flows for the years then ended. These consolidated financial statements
are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.



We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not
engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.



In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the consolidated financial position of SITO Mobile, Ltd.
at September 30, 2015 and 2014, and the consolidated results of its operations and its cash flows for the years then ended, in
conformity with U.S. generally accepted accounting principles.





New York, NY

June 30, 2016











F-2







|SITO
    Mobile, Ltd.          
|-------------------------------
|CONSOLIDATED
    BALANCE SHEETS



|                                                |  | September 30, |            |  | September 30, |  
|----------------------------------------------- |  | ------------- | ---------- |  | ------------- | -
|                                                |  | 2015          |            |  | 2014          |  
|                                                |  |               |            |  |               |  
|Assets                                          |  |               |            |  |               |  
|Current
    assets                              |  |               |            |  |               |  
|Cash
    and cash equivalents                   |  | $             | 2,004,139  |  |               | $
|Accounts
    receivable, net - current portion  |  |               | 4,265,481  |  |               |  
|Other
    prepaid expenses                      |  |               | 312,606    |  |               |  
|                                                |  |               |            |  |               |  
|Total
    current assets                        |  |               | 6,582,226  |  |               |  
|                                                |  |               |            |  |               |  
|Property
    and equipment, net                 |  |               | 610,161    |  |               |  
|                                                |  |               |            |  |               |  
|Other
    assets                                |  |               |            |  |               |  
|Accounts
    receivable, net                    |  |               | 225,000    |  |               |  
|Capitalized
    software development costs, net |  |               | 1,403,397  |  |               |  
|Intangible
    assets:                          |  |               |            |  |               |  
|Patents                                         |  |               | 493,952    |  |               |  
|Patent
    applications cost                    |  |               | 826,074    |  |               |  
|Software
    license                            |  |               | -          |  |               |  
|Other
    intangible assets, net                |  |               | 1,837,227  |  |               |  
|Goodwill                                        |  |               | 6,444,225  |  |               |  
|Deferred
    loan costs, net                    |  |               | 92,842     |  |               |  
|Other
    assets including security deposits    |  |               | 83,576     |  |               |  
|                                                |  |               |            |  |               |  
|Total
    other assets                          |  |               | 11,406,293 |  |               |  
|                                                |  |               |            |  |               |  
|Total
    assets                                |  | $             | 18,598,680 |  |               | $





F-3









|SITO
    Mobile, Ltd.          
|-------------------------------
|CONSOLIDATED
    BALANCE SHEETS





|                                                                                                                                                                                                      |  | September 30, |              |   | September 30, |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------------ | - | ------------- | -
|                                                                                                                                                                                                      |  | 2015          |              |   | 2014          |  
|                                                                                                                                                                                                      |  |               |              |   |               |  
|Liabilities and Stockholders' Equity                                                                                                                                                                  |  |               |              |   |               |  
|Current liabilities                                                                                                                                                                                   |  |               |              |   |               |  
|Accounts payable                                                                                                                                                                                      |  | $             | 2,339,189    |   |               | $
|Accrued expenses                                                                                                                                                                                      |  |               | 809,081      |   |               |  
|Accrued compensation - related party                                                                                                                                                                  |  |               | 253,016      |   |               |  
|Deferred revenue                                                                                                                                                                                      |  |               | 595,669      |   |               |  
|Current obligation under capital lease                                                                                                                                                                |  |               | 15,858       |   |               |  
|Note payable, net - current portion                                                                                                                                                                   |  |               | 3,575,024    |   |               |  
|Convertible debentures - related party                                                                                                                                                                |  |               | -            |   |               |  
|Convertible debentures                                                                                                                                                                                |  |               | -            |   |               |  
|                                                                                                                                                                                                      |  |               |              |   |               |  
|Total current liabilities                                                                                                                                                                             |  |               | 7,587,837    |   |               |  
|                                                                                                                                                                                                      |  |               |              |   |               |  
|Long-term liabilities                                                                                                                                                                                 |  |               |              |   |               |  
|Obligations under capital lease                                                                                                                                                                       |  |               | 7,023        |   |               |  
|Note payable                                                                                                                                                                                          |  |               | 5,690,124    |   |               |  
|                                                                                                                                                                                                      |  |               |              |   |               |  
|Total long-term liabilities                                                                                                                                                                           |  |               | 5,697,147    |   |               |  
|                                                                                                                                                                                                      |  |               |              |   |               |  
|Total liabilities                                                                                                                                                                                     |  |               | 13,284,984   |   |               |  
|                                                                                                                                                                                                      |  |               |              |   |               |  
|Commitments and contingencies - See notes 17                                                                                                                                                          |  |               | -            |   |               |  
|                                                                                                                                                                                                      |  |               |              |   |               |  
|Stockholders' Equity                                                                                                                                                                                  |  |               |              |   |               |  
|Preferred stock,  $.0001 par value, 5,000,000 shares authorized;   none outstanding                                                                                                                   |  |               | -            |   |               |  
|Common stock, $.001 par value; 300,000,000 shares authorized, 17,155,478 shares issued and outstanding as of September 30, 2015 and 15,072,863 shares issued and outstanding as of September 30, 2014 |  |               | 17,156       |   |               |  
|Additional paid-in capital                                                                                                                                                                            |  |               | 144,234,264  |   |               |  
|Accumulated deficit                                                                                                                                                                                   |  |               | (138,937,724 | ) |               |  
|                                                                                                                                                                                                      |  |               |              |   |               |  
|Total stockholders' equity                                                                                                                                                                            |  |               | 5,313,696    |   |               |  
|                                                                                                                                                                                                      |  |               |              |   |               |  
|Total liabilities and stockholders' equity                                                                                                                                                            |  | $             | 18,598,680   |   |               | $



The accompanying notes are an integral part of these consolidated financial statements





F-4







|SITO
    Mobile, Ltd.                    
|-----------------------------------------
|CONSOLIDATED
    STATEMENTS OF OPERATIONS





|                                                                |  | For the Twelve Months Ended |           
|--------------------------------------------------------------- |  | --------------------------- | ----------
|                                                                |  | September 30,               |           
|                                                                |  | 2015                        |           
|                                                                |  |                             |           
|Revenue                                                         |  |                             |           
|Wireless applications                                           |  | $                           | 7,163,037 
|Licensing and royalties                                         |  |                             | 552,589   
|Media placement                                                 |  |                             | 8,093,841 
|Total Revenue                                                   |  |                             | 15,809,467
|                                                                |  |                             |           
|Cost of Revenue                                                 |  |                             | 6,357,616 
|                                                                |  |                             |           
|Gross Profit                                                    |  |                             | 9,451,851 
|                                                                |  |                             |           
|Operating Expenses                                              |  |                             |           
|General and administrative (including stock based compensation) |  |                             | 6,225,370 
|Sales and marketing (including stock based compensation)        |  |                             | 4,729,228 
|Loss on impairment of long-lived asset                          |  |                             | 831,000   
|Depreciation and amortization                                   |  |                             | 419,530   
|Research and development                                        |  |                             | 47,838    
|                                                                |  |                             |           
|Total
    Operating Expenses                                    |  |                             | 12,252,966
|                                                                |  |                             |           
|Loss from operations                                            |  |                             | (2,801,115
|                                                                |  |                             |           
|Other Income (Expenses)                                         |  |                             |           
|Interest income                                                 |  |                             | 54,495    
|Interest expense                                                |  |                             | (1,781,573
|                                                                |  |                             |           
|Net loss before income taxes                                    |  |                             | (4,528,193
|                                                                |  |                             |           
|Provision for income taxes                                      |  |                             | -         
|                                                                |  |                             |           
|Net loss                                                        |  | $                           | (4,528,193
|                                                                |  |                             |           
|Basic and diluted loss per share                                |  | $                           | (0.29     
|                                                                |  |                             |           
|Weighted average shares outstanding                             |  |                             | 15,632,148



The accompanying
notes are an integral part of these consolidated financial statements





F-5







|SITO
    Mobile, Ltd.                                          |  | 
|-------------------------------------------------------------- |  | 
|CONSOLIDATED
    STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY |  | 





|                                                             |  |              |            |   |         |   |        | Additional  |  |   |             |   |  |       |             
|------------------------------------------------------------ |  | ------------ | ---------- | - | ------- | - | ------ | ----------- |  | - | ----------- | - |  | ----- | ------------
|                                                             |  | Common Stock |            |   | Paid-in |   |        | Accumulated |  |   |             |  
|                                                             |  | Shares       |            |   | Amount  |   |        | Capital     |  |   | Deficit     |   |  | Total |             
|                                                             |  |              |            |   |         |   |        |             |  |   |             |   |  |       |             
|                                                             |  |              |            |   |         |   |        |             |  |   |             |   |  |       |             
|Balance - September 30, 2013                                 |  |              | 13,722,023 |   |         | $ | 13,721 |             |  | $ | 131,009,660 |   |  | $     | (129,899,017
|                                                             |  |              |            |   |         |   |        |             |  |   |             |   |  |       |             
|Shares issued on exercise of stock options                   |  |              | 374,596    |   |         |   | 375    |             |  |   | 1,687,076   |   |  |       | -           
|Shares issued on exercise of stock warrants                  |  |              | 202,650    |   |         |   | 203    |             |  |   | 213,254     |   |  |       | -           
|Shares issued in debt conversions                            |  |              | 10,000     |   |         |   | 10     |             |  |   | 49,990      |   |  |       | -           
|Shares issue for officer compensation                        |  |              | 2,500      |   |         |   | 3      |             |  |   | 14,497      |   |  |       |             
|Compensation recognized on option and warrant grants         |  |              | -          |   |         |   | -      |             |  |   | 998,917     |   |  |       | -           
|Purchase of common shares presented for retirement           |  |              | (38,906    | ) |         |   | (39    | )           |  |   | (201,422    | ) |  |       | -           
|Shares issued in the acquisition of DoubleVision             |  |              | 800,000    |   |         |   | 800    |             |  |   | 3,279,200   |   |  |       | -           
|Net loss for the year ended September 30, 2014               |  |              | -          |   |         |   | -      |             |  |   | -           |   |  |       | (4,510,514  
|                                                             |  |              |            |   |         |   |        |             |  |   |             |   |  |       |             
|Balance - September 30, 2014                                 |  |              | 15,072,863 |   |         |   | 15,073 |             |  |   | 137,051,172 |   |  |       | (134,409,531
|                                                             |  |              |            |   |         |   |        |             |  |   |             |   |  |       |             
|Shares issued on exercise of stock warrants                  |  |              | 833,700    |   |         |   | 834    |             |  |   | 2,108,221   |   |  |       | -           
|Shares issued for payment of services                        |  |              | 70,000     |   |         |   | 70     |             |  |   | 209,930     |   |  |       | -           
|Sale of shares in connection with debt                       |  |              | 261,954    |   |         |   | 262    |             |  |   | 999,738     |   |  |       | -           
|Additional shares issued in acquisition of DoubleVision      |  |              | 296,401    |   |         |   | 296    |             |  |   | 1,066,748   |   |  |       | -           
|Additional shares issued in acquisition of intangible assets |  |              | 620,560    |   |         |   | 621    |             |  |   | 2,543,676   |   |  |       | -           
|Compensation recognized on option and warrant grants         |  |              | -          |   |         |   | -      |             |  |   | 479,834     |   |  |       | -           
|Stock issuance costs                                         |  |              | -          |   |         |   | -      |             |  |   | (75,000     | ) |  |       | -           
|Warrant receivable                                           |  |              | -          |   |         |   | -      |             |  |   | (150,055    | ) |  |       | -           
|Net loss for the year ended September 30, 2015               |  |              | -          |   |         |   | -      |             |  |   | -           |   |  |       | (4,528,193  
|                                                             |  |              |            |   |         |   |        |             |  |   |             |   |  |       |             
|Balance - September 30, 2015                                 |  |              | 17,155,478 |   |         | $ | 17,156 |             |  | $ | 144,234,264 |   |  | $     | (138,937,724



The accompanying
notes are an integral part of these consolidated financial statements



F-6









|SITO
    Mobile, Ltd.                    
|-----------------------------------------
|CONSOLIDATED
    STATEMENTS OF CASH FLOWS





|                                                                            |  | For the Year Ended |           
|--------------------------------------------------------------------------- |  | ------------------ | ----------
|                                                                            |  | September 30,      |           
|                                                                            |  | 2015               |           
|                                                                            |  |                    |           
|Cash Flows from Operating Activities                                        |  |                    |           
|Net loss                                                                    |  | $                  | (4,528,193
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                    |           
|Depreciation expense                                                        |  |                    | 134,791   
|Amortization expense - software development costs                           |  |                    | 680,648   
|Amortization expense - patents                                              |  |                    | 174,918   
|Amortization expense - discount of debt                                     |  |                    | 587,543   
|Amortization expense - deferred costs                                       |  |                    | 51,342    
|Amortization expense - intangible assets                                    |  |                    | 112,773   
|Provision for bad debt                                                      |  |                    | 245,500   
|Stock based compensation                                                    |  |                    | 814,916   
|Write-off of capitalized patent application costs                           |  |                    | -         
|Loss on impairment of long-lived asset                                      |  |                    | 831,000   
|Changes in operating assets and liabilities:                                |  |                    |           
|(Increase) in accounts receivable, net                                      |  |                    | (1,842,673
|(Increase) in prepaid expenses                                              |  |                    | (160,612  
|(Increase) decrease in other assets                                         |  |                    | 29,715    
|Increase in accounts payable                                                |  |                    | 687,384   
|Increase (decrease) in accrued expenses                                     |  |                    | (81,151   
|Increase in deferred revenue                                                |  |                    | 217,412   
|Increase (decrease) in accrued interest                                     |  |                    | (255,294  
|                                                                            |  |                    |           
|Net cash used in operating activities                                       |  |                    | (2,299,981
|                                                                            |  |                    |           
|Cash Flows from Investing Activities                                        |  |                    |           
|Patents and patent applications costs                                       |  |                    | (438,508  
|Purchase of property and equipment                                          |  |                    | (495,086  
|Capitalized software development costs                                      |  |                    | (1,444,629
|Note receivable - discontinued operations                                   |  |                    | -         
|Acquisition of subsidiary, net of cash acquired                             |  |                    | -         
|Purchase of intangible assets                                               |  |                    | (1,300,000
|                                                                            |  |                    |           
|Net cash used in investing activities                                       |  | $                  | (3,678,223



F-7









|SITO
    Mobile, Ltd.                    
|-----------------------------------------
|CONSOLIDATED
    STATEMENTS OF CASH FLOWS



|                                                          |  | For the Year Ended |           
|--------------------------------------------------------- |  | ------------------ | ----------
|                                                          |  | September
    30,  |           
|                                                          |  | 2015               |           
|Cash Flows from Financing Activities                      |  |                    |           
|Proceeds
    from issuance of common stock                |  | $                  | 2,959,000 
|Purchase of Company's
    common stock                    |  |                    | -         
|Stock issuance costs                                      |  |                    | (75,000   
|Proceeds from issuance
    of note payable                |  |                    | 8,205,816 
|Principal reduction on
    obligation under capital lease |  |                    | (19,658   
|Principal
    reduction on convertible debt               |  |                    | (3,708,000
|                                                          |  |                    |           
|Net
    cash provided by financing activities             |  |                    | 7,362,158 
|                                                          |  |                    |           
|Net increase/(decrease)
    in cash and cash equivalents  |  |                    | 1,383,954 
|                                                          |  |                    |           
|Cash
    and cash equivalents - Beginning balance         |  |                    | 620,185   
|                                                          |  |                    |           
|Cash
    and cash equivalents - Ending balance            |  | $                  | 2,004,139 
|                                                          |  |                    |           
|Supplemental Information:                                 |  |                    |           
|                                                          |  |                    |           
|Interest
    expense paid                                 |  | $                  | 1,397,977 
|Income
    taxes paid                                     |  | $                  | -         
|                                                          |  |                    |           
|Non-cash investing
    and financing activities:          |  |                    |           





For the twelve months ended September 30, 2015



During
the year ended September 30, 2015, the Company issued 35,000 shares of its common stock at $3.40 per share for an aggregate amount
of $119,000, in exchange for consulting services.



During
the year ended September 30, 2015, the Company issued 35,000 shares of its common stock at $2.60 per share for an aggregate amount
of $91,000, in exchange for consulting services.



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





During
the year ended September 30, 2015, the Company issued 296,402 of its common stock at $3.60 per share for an aggregate amount of
$1,067,044 in connection with the acquisition of DoubleVision Networks Inc. ("DoubleVision") that represents a noncash
increase in goodwill. Under the terms of the Purchase and Sale Agreement, the earn-out provision could cause the Company to issue
additional shares of the Company’s common stock to the former DoubleVision shareholders if the Company’s media placement
revenues for the twelve-month period from August 1, 2014 to July 31, 2015 are at least $3,000,000, subject to certain conditions
such as receipt of customer payments and achievement of a gross margin threshold.



During the year ended September 30,
2015, the Company recognized stock-based compensation expense totaling $727,381, of which $166,000 was for payment of consulting
services, $479,834 was recognized through the vesting of 180,945 common stock options, and $81,547 from the amortization of prepaid
consulting fees compensated through the granting of 575,000 options.







During the year ended September 30,
2015, the Company issued 620,560 of its common stock at $4.10 per share for an aggregate amount of $2,544,297 in connection with
the acquisition of Hipcricket, Inc.'s ("Hipcricket") intangible assets.





F-8







For
the twelve months ended September 30, 2014



During
the year ended September 30, 2014, the Company issued 14,799 shares of its common stock through cashless exercises of 116,648
stock options granted to employees.



During
the year ended September 30, 2014, the Company issued 20,000 shares of its common stock to its current Chief Financial Officer
pursuant to his employment agreement.



During the year ended September 30,
2014, debt totaling $50,000 was converted into 10,000 shares of the Company's common stock.



During
the year ended September 30, 2014, the Company recognized stock-based compensation expense totaling $2,094,970, of which $14,500
was recognized through the issuance of 25,000 common shares to the Company's Chief Financial Officer, $998,917 was recognized
through the vesting of 626,633 common stock options, and $1,081,553 from the amortization of prepaid consulting fees compensated
through the granting of 575,000 options.



On
July 24, 2014, the Company acquired all of the shares of DoubleVision Networks, Inc., a New York corporation formed on May 6,
2010 and renamed from What’s Watched, Inc. on September 18, 2012 (“DoubleVision”). The Company paid $3.28 million
for DoubleVision by issuing 800,000 shares of the Company’s common stock to the Sellers at an agreed-upon valuation of $4.10
per share.



The
Company also agreed to pay $400,000 to one of DoubleVision’s creditors.



The accompanying notes are an integral part
of these consolidated financial statements







F-9







SITO Mobile, Ltd.

Notes To Consolidated Financial Statements







|1. | Organization, History and Business
|-- | ----------------------------------



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



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



Reverse
Stock Split



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



|2. | Summary of Significant Accounting Policies
|-- | ------------------------------------------



Reclassification



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



Principles of Consolidation



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



Cash and Cash Equivalents



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



Accounts
Receivable, net



Accounts receivable
are reported at the customers’ outstanding balances, less any allowance for doubtful accounts. Interest is not accrued on
overdue accounts receivable.



Allowance
for Doubtful Accounts



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



Property and Equipment, net



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



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





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









F-10







SITO Mobile, Ltd.

Notes To Consolidated Financial Statements





Long-Lived
Assets



The
Company accounts for its long-lived assets in accordance with Accounting Standards Codification (“ASC”) Topic 360-10-05,
“Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets
be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an
asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future
net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the
carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and
fair value or disposable value. During the year ended September 30, 2015, the Company recognized an impairment loss of $831,000
on their "Anywhere" Software License as further discussed in Note 7 of these financial statements.



Capitalized
Software Development Costs



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



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



Capital
Leases



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



Debt
issuance costs



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



Income
Taxes



The
Company accounts for its income taxes under the provisions of ASC Topic 740, “Income Taxes.” The method of accounting
for income taxes under ASC 740 is an asset and liability method. The asset and liability method requires the recognition of deferred
tax liabilities and assets for the expected future tax consequences of temporary differences between tax bases and financial reporting
bases of other assets and liabilities. The Company had no material unrecognized income tax assets or liabilities for the year
ended September 30, 2015 or for the year ended September 30, 2014. The Company recognizes income tax interest and penalties as
a separately identified component of general and administrative expense. During the year ended September 30, 2015 and 2014, there
were no income taxes, or related interest and penalty items in the statements of operations, or liabilities on the balance sheets.







F-11







SITO Mobile, Ltd.

Notes To Consolidated Financial Statements



Issuances
Involving Non-cash Consideration



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



Revenue
Recognition and Deferred Revenue



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

The
Company evaluates whether it is appropriate to recognize media placement revenue based on the gross amount billed to
the customers or the net amount earned as revenue.  When the Company is primarily obligated in a transaction, has latitude
in establishing prices, is responsible for fulfillment of the transaction, has credit risk, or has several but not all
of these indicators, revenue is recorded on a gross basis. While none of the factors individually are considered presumptive or
determinative, in reaching conclusions on gross versus net revenue recognition, the Company places the most weight
on the analysis of whether or not it is the primary obligor in the arrangement. The Company records the net amounts
as media placement revenue earned if it is not primarily obligated or does not have latitude in establishing prices
or credit risk.

The
Company recognizes wireless applications revenue based on the delivery of Short Message Service (SMS) text messages
and voice messages and messaging program management services. Wireless applications revenues are recognized when the Company’s
services are delivered based on the specific terms of the Company’s contracts with customers, which are commonly based on
the number of messages delivered. At such time, the Company’s services have been provided, the fees charged
are fixed or determinable, persuasive evidence of an arrangement exists, and collectability is reasonably assured.

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

Deferred
revenue arises as a result of differences between the timing of revenue recognition and receipt of cash from the Company’s
customers.



Stock
Based Compensation



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





F-12







SITO Mobile, Ltd.

Notes To Consolidated Financial Statements



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



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



Loss per Share



The Company reports earnings (loss)
per share in accordance with ASC Topic 260-10, "Earnings per Share." Basic earnings (loss) per share are computed by
dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings
(loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the potential common shares had been issued and if the
additional common shares were dilutive. Diluted loss per share has not been presented since the effect of the assumed conversion
of warrants and debt to purchase common shares would have an anti-dilutive effect. Potential common shares as of September 30,
2015 that have been excluded from the computation of diluted net loss per share amounted to 2,548,345 shares and include 375,250
warrants and 2,173,095 options. Potential common shares as of September 30, 2014 that have been excluded from the computation
of diluted net loss per share amounted to 4,734,500 shares and included 1,348,950 warrants, 2,609,950 options, and $3,878,000
of debt and accrued interest convertible into 775,600 shares of the Company’s common stock.





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



Concentrations of Credit Risk



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



Of the Company’s revenue earned
during the year ended September 30, 2015, approximately 44% was generated from contracts with six customers covered under the Company’s
master services agreement with AT&T. Of the Company’s revenue earned during the year ended September 30, 2014, approximately
82% was generated from contracts with eight customers covered under the Company’s master services agreement with AT&T.



The Company’s accounts receivable
is typically unsecured and are derived from U.S. customers in different industries. The Company performs ongoing credit evaluations
of its customers and maintains allowances for potential credit losses. Historically, such losses have been within management’s
expectations. As of September 30, 2015 and 2014, two customers accounted for 38% and 77%, respectively, of the Company’s
net accounts receivable balance, respectively.



Use of Estimates



The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of 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. Actual results
could differ from those estimates.

Business Combinations



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





F-13







SITO Mobile, Ltd.

Notes To Consolidated Financial Statements



Recent Accounting Pronouncements



In June 2014, the FASB issued new
guidance on transfers and servicing ASU 2014-11, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase
Financings, and Disclosure), effective prospectively for fiscal years beginning after December 15, 2014 and interim periods within
those years. The new guidance requires that repurchase-to-maturity transactions and repurchase financing arrangements be accounted
for as secured borrowings and provides for enhanced disclosures, including the nature of collateral pledged and the time to maturity.
Certain interim period disclosures for repurchase agreements and securities lending transactions are not required until the second
quarter of 2015. The adoption of this new guidance will not have a material impact on the Company’s consolidated financial
statements.



In June 2014, the FASB has issued ASU
No. 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. This ASU requires that a performance target
that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As
such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further
clarifies 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. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning
after December 15, 2015. Earlier adoption is permitted. The Company has not yet determined the effect of the adoption of this standard
and it is not expected to have a material impact on the Company’s consolidated financial position and results of operations.



In August 2014, the Financial Accounting
Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15, (“ASU 2014-15”),
“Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. ASU 2014-15 requires
management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year
of the date the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties
in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity’s
ability to continue as a going concern. ASU 2014-15 applies to all entities and is effective for annual and interim reporting periods
ending after December 15, 2016, with early adoption permitted. The Company does not expect that the adoption of this standard will
have a material effect on its consolidated financial statements.



In February 2015, the FASB issued new
guidance to improve consolidation guidance for legal entities (Accounting Standards Update (“ASU”) 2015-02, Consolidation
(Topic 810): Amendments to the Consolidation Analysis), effective for fiscal years beginning after December 15, 2015 and interim
periods within those years and early adoption is permitted. The new standard is intended to improve targeted areas of the consolidation
guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures. The amendments
in the ASU affect the consolidation evaluation for reporting organizations. In addition, the amendments in this ASU simplify and
improve current GAAP by reducing the number of consolidation models. The Company is currently evaluating the impact of this guidance
on its consolidated financial statements.



In April 2015, the FASB issued ASU
2015-03, “Imputing of Interest – Simplifying the Presentation of Debt Issuance Costs.” This guidance requires
that the debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from
the debt liability, consistent with the presentation of a debt discount. This amendment is effective for fiscal years and interim
period within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating
the impact on its consolidated financial statements of adopting this new guidance but at this time does not expect it to have
an impact on the Company’s consolidated financial statements.



In August 2015, the FASB
issued ASU No. 2015-14 (“ASU 2015-14”), “Revenue from Contracts with Customers”. The objective of ASU
2015-14 is to defer the effective date of Update 2014-09 by one year. The objective of ASU 2014-09 is to establish a single comprehensive
model for entities to use in accounting for revenue arising from contracts with customers and will supersede most of the existing
revenue recognition guidance, including industry-specific guidance. The core principle of ASU 2014-09 is that an entity recognizes
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 new guidance is effective for annual reporting
periods (including interim periods within those periods) beginning after December 15, 2017 for public companies. Early adoption
is not permitted. The standard permits the use of either a retrospective or modified retrospective (cumulative effect) transition
method. The Company is currently evaluating the new guidance and has not determined the impact this standard may have on its consolidated
financial statements nor decided upon the method of adoption.



F-14







SITO Mobile, Ltd.

Notes To Consolidated Financial Statements



|3. | Accounts Receivable, net
|-- | ------------------------



Accounts receivable consist of the following:



| |                                  |  | September
                                         30, |           
| | -------------------------------- |  | ------------------------------------------------------ | ----------
| |                                  |  | 2015                                                   |           
| |                                  |  |                                                        |           
| | Accounts
    receivable          |  | $                                                      | 4,738,859 
| | Less
    allowance for bad debts |  |                                                        | (248,378  
| |                                  |  |                                                        | 4,490,481 
| | Less
    current portion         |  |                                                        | (4,265,481
| | Long-term
    portion            |  | $                                                      | 225,000   



On November 12, 2013, the Company entered into
an agreement with an unrelated third party regarding its usage since October 2010 of certain Company patented intellectual property.
Under the agreement, the Company receives a total of $750,000 and granted extended payment terms that consist of a $100,000 payment
received in November 2013, a $200,000 payment received in November 2014, a $225,000 payment to be received in November 2015 and
a $225,000 payment to be received in November 2016. The Company has no obligations under the agreement.





|4. | Property and Equipment, net
|-- | ---------------------------



The following is a summary of property
and equipment:



| |                                        |  | September
    30, |          
| | -------------------------------------- |  | ----------------- | ---------
| |                                        |  | 2015              |          
| |                                        |  |                   |          
| | Equipment
    and computer hardware    |  | $                 | 723,844  
| | Office
    furniture                   |  |                   | 213,473  
| | Leasehold
    Improvements             |  |                   | 186,902  
| | Equipment
    held under capital lease |  |                   | 66,272   
| |                                        |  |                   | 1,190,491
| | Less:
    accumulated depreciation     |  |                   | (580,330 
| |                                        |  | $                 | 610,161  



Depreciation expense for the year
ended September 30, 2015 and 2014 was $134,791 and $96,007, respectively.



|5. | Prepaid Consulting
|-- | ------------------



Pursuant to the terms of a Consulting
Agreement entered into in 2012, the Company's Executive Chairman at the time personally granted options to a third party to purchase
a total of 575,000 shares of the Company’s common stock that he owned in exchange for consulting services provided by the
third party that directly benefited the Company (the “Former Chairman Options”). Of the 575,000 Former Chairman Options,
375,000 had an exercise price of $2.95 per share and 200,000 had an exercise price of $4.80 per share. The Former Chairman Options
granted under the Consulting Agreement expired two years from their dates of grant in October and December 2012. In addition, the
term of the Consulting Agreement expired in December 2014, The Company recorded the $847,300 fair value of the Former Chairman
Options as contributed capital with an offset to prepaid consulting expense that was amortized to operations over the two-year
term of the consulting agreement. The Company’s value of $847,300 was determined using a Binomial Option model based upon
an expected life of 5 years, trading prices ranging from $3.00 to $4.60 per share, a risk free interest rate ranging from 0.25%
to 0.30%, and expected volatility ranging from 89.348% to 90.201%.



In September 2013, the Company, its
former Executive Chairman and the above-indicated third party entered into an agreement, whereby the Company granted options to
the third party that have the same terms as the Former Chairman Options in exchange for the third party’s assignment of its
interest in the Former Chairman Options to the Company. The Company valued the options granted to the third party in September
2013 at $718,871 and added the cost to the remaining unamortized prepaid consulting expense from the Former Chairman Options. The
total was amortized to operations over the term of the consulting agreement. Consulting fees charged to operations for the year
ended September 30, 2015 and 2014 was $81,547 and $1,081,553, respectively. As of September 30, 2015, the prepaid consulting expense
was fully amortized to operations.





F-15







SITO Mobile, Ltd.

Notes To Consolidated Financial Statements



|6. | Capitalized Software Development Costs, net
|-- | -------------------------------------------



The following is a summary of capitalized
software development costs:



| |                       |  | September
    30, |          
| | --------------------- |  | ----------------- | ---------
| |                       |  | 2015              |          
| |                       |  |                   |          
| | Beginning
    balance |  | $                 | 639,416  
| | Additions             |  |                   | 1,444,629
| | Amortization          |  |                   | (680,648 
| | Ending
    balance    |  | $                 | 1,403,397



Amortization expense for the remaining estimated lives of
these costs is as follows:





| | Year
    Ending September 30, |  |   |          
| | ----------------------------- |  | - | ---------
| | 2016                          |  | $ | 633,107  
| | 2017                          |  |   | 529,190  
| | 2018                          |  |   | 241,100  
| |                               |  | $ | 1,403,397







|7. | Intangible Assets
|-- | -----------------



Patents



The following is a summary of capitalized
patent costs:



| |                  |  | September
    30, |          
| | ---------------- |  | ----------------- | ---------
| |                  |  | 2015              |          
| |                  |  |                   |          
| | Patent
    costs |  | $                 | 1,357,407
| | Amortization     |  |                   | (863,455 
| |                  |  | $                 | 493,952  



Amortization expenses for the year
ended September 30, 2015 and 2014 was $174,918 and $216,839, respectively.



A schedule of amortization expense
over the estimated remaining lives of the patents is as follows:





| | Year
    Ending September 30, |  |   |        
| | ----------------------------- |  | - | -------
| | 2016                          |  | $ | 190,482
| | 2017                          |  |   | 112,495
| | 2018                          |  |   | 47,888 
| | 2019                          |  |   | 42,035 
| | 2020                          |  |   | 41,881 
| | Thereafter                    |  |   | 59,171 
| |                               |  | $ | 493,952







During the year ended September 30,
2015, the Company was issued US Patent 8,862,115 “Over the Air Provisioning of Mobile Device Settings”, US Patent
8,880,031 “Systems of Providing Information to a Telephony Subscriber”, US Patent 8,954,047 “Searching for Mobile
Content”, US Patent 9,026,673 “System and Method for Routing Media”, US Patent 9,077,798 “NP Automatic
Provisioning of Abbreviated Dialing Codes”, US Patent 9,135,635 “System and Method for Routing Media” and US
Patent 9,135,636 “System and Method for Routing Media”. The costs associated with these patents, totaling $221,443,
are being amortized over the patent’s estimated useful life of seven years.





F-16







SITO Mobile, Ltd.

Notes To Consolidated Financial Statements



Software license



On March 30, 2012, the Company acquired
an exclusive perpetual license to utilize the “Anywhere” software and related source code from Soap Box Mobile, Inc.
(“Soapbox”), a company in which the Company’s Executive Chairman at the time owned a majority preferred interest
of the license grant. The Company paid $785,000 in cash and 20,000 shares of Company common stock for the exclusive perpetual
license, of which the former Executive Chairman received $755,000 under terms of a November 27, 2012 agreement. During the year
ended September 30, 2015 due to lower than previously expected cash flows as a result of the decrease in the software usage, we
determined that indicators of impairment existed with respect to the "Anywhere" software license. As a result of our
assessment we determined that projected future cash flows associated with the "Anywhere" software license were not sufficient
to support the recoverability of the carrying value of the software license. Accordingly, during the fourth quarter of 2015, an
asset impairment charge of $831,000 was recorded as Impairment of long-lived asset in the Consolidated Statements of Operations
for the year ended September 30, 2015.



Other Intangible Assets, net



The following is a summary of other
intangible asset costs:



| |                            |  | September
    30, |          
| | -------------------------- |  | ----------------- | ---------
| |                            |  | 2015              |          
| |                            |  |                   |          
| | Technology                 |  | $                 | 970,000  
| | Customer
    relationships |  |                   | 870,000  
| | Backlog                    |  |                   | 110,000  
| | Amortization               |  |                   | (112,773 
| |                            |  | $                 | 1,837,227





Amortization expenses for the year
ended September 30, 2015 and 2014 was $112,773 and $0, respectively.



A schedule of amortization expense
over the estimated remaining lives of the patents is as follows:





| | Year
    Ending September 30, |  |   |          
| | ----------------------------- |  | - | ---------
| | 2016                          |  | $ | 330,470  
| | 2017                          |  |   | 271,000  
| | 2018                          |  |   | 271,000  
| | 2019                          |  |   | 271,000  
| | 2020                          |  |   | 231,036  
| | Thereafter                    |  |   | 462,721  
| |                               |  | $ | 1,837,227







Goodwill



On July 24, 2014, the Company and DoubleVision
and the shareholders of the DoubleVision entered into a Share Purchase Agreement pursuant to which the Company acquired all of
the shares of DoubleVision. The Company paid $3,600,000 for DoubleVision by issuing 800,000 shares of the Company’s
common stock to DoubleVision’s shareholders and paid $400,000 to one of DoubleVision’s creditors that resulted in the
Company recognizing $3,482,884 in goodwill. The Share Purchase Agreement has an earn-out provision that could cause the Company
to issue additional shares of the Company’s common stock equal to $1,000,000 (valued at the average closing price for the
ninety days ending July 31, 2015) as additional purchase price consideration if the Company’s media placement revenues for
the twelve-month period from August 1, 2014 to July 31, 2015 are at least $3,000,000, subject to certain conditions such as receipt
of customer payments and achievement of a gross margin threshold. In anticipation if achieving the earn-out provision, the Company
accrued $1,000,000 in purchase price payable and increased goodwill to $4,482,884 as of March 31, 2015. During the quarter ended
June 30, 2015, the Company issued 296,402 shares of its common stock at $3.60 per share for an aggregate amount of $1,067,044 in
satisfaction of the purchase price payable and an increase to goodwill of $67,044.



On July 8, 2015, the Company and
Hipcricket, Inc. entered into an Asset Purchase Agreement pursuant to which the Company acquired assets of Hipcricket’s
mobile advertising platform. The Company paid $3,844,297 for the Purchased Assets by issuing to Hipcricket 620,560 shares of the
Company’s common stock at an agreed-upon valuation of $2,544,297, and $1,300,000 in cash. The Company expensed additional
legal and professional fees in conjunction with the asset acquisition totaling $95,000. The acquisition resulted in the Company
recognizing $1,894,297 in goodwill. The Company does not amortize goodwill, but reduces the carrying amount of goodwill if management
determines that its implied fair value has been impaired.





F-17







SITO Mobile, Ltd.

Notes To Consolidated Financial Statements



|8. | Accrued Expenses
|-- | ----------------



The following is a summary of accrued
expenses:



| |                                                              |  | September
    30, |        
| | ------------------------------------------------------------ |  | ----------------- | -------
| |                                                              |  | 2015              |        
| |                                                              |  |                   |        
| | Accrued
    applications costs                               |  | $                 | 103,959
| | Accrued
    payroll and related expenses - unrelated parties |  |                   | 288,657
| | Accrued
    professional fees                                |  |                   | 415,665
| | Other
    accrued expenses                                   |  |                   | 800    
| |                                                              |  | $                 | 809,081





|9. | Capital Leases
|-- | --------------



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



Minimum future lease payments under
the capital leases at September 30, 2015 for each of the next four years and in the aggregate are as follows:





| | Year
    Ending September 30,                   |  |   |       
| | ----------------------------------------------- |  | - | ------
| | 2016                                            |  | $ | 16,614
| | 2017                                            |  |   | 3,790 
| | 2018                                            |  |   | 3,790 
| | 2019                                            |  |   | -     
| | Total minimum lease
    payments                |  |   | 24,194
| | Less amount representing
    interest           |  |   | (1,313
| | Present value of net
    minimum lease payments |  | $ | 22,881







The effective interest rate charged
on the capital leases range from approximately 2.25% to 7.428% per annum. The leases provide for a $1 purchase option. Interest
charged to operations for the year ended September 30, 2015 and 2014 was $1,229 and $767, respectively. Depreciation charged to
operations for year ended September 30, 2015 and 2014 was $13,106 and $10,622, respectively.



|10. | Income Taxes
|--- | ------------



Deferred income tax assets and liabilities
are computed annually for differences between financial statement and tax bases of assets and liabilities that will result in
taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences
are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during
the period in deferred tax assets and liabilities.



The effective tax rate on the net loss before income
taxes differs from the U.S. statutory rate as follows:





| |                              |  | September
    30, |    
| | ---------------------------- |  | ----------------- | ---
| |                              |  | 2015              |    
| |                              |  |                   |    
| | U.S statutory rate           |  |                   | 34 
| | Less
    valuation allowance |  |                   | (34
| | Effective
    tax rate       |  |                   | 0  





F-18









SITO Mobile, Ltd.

Notes To Consolidated Financial Statements



The significant components of deferred
tax assets and liabilities are as follows:



| |                                                  |  | September
    30, |            
| | ------------------------------------------------ |  | ----------------- | -----------
| | Deferred
    tax assets                          |  | 2015              |            
| | Stock
    based compensation                     |  | $                 | 1,100,276  
| | Net
    operating losses                         |  |                   | 13,457,760 
| | Allowance
    for doubtful accounts              |  |                   | 84,449     
| | Intangible
    assets                            |  |                   | 245,696    
| | Deferred
    revenue                             |  |                   | 52,759     
| | Accrued
    expenses                             |  |                   | 220,535    
| |                                                  |  |                   | 15,161,475 
| | Deferred tax liability                           |  |                   |            
| | Property
    and equipment                       |  |                   | (28,611    
| | Intangible
    assets                            |  |                   | -          
| | Net deferred tax assets                          |  |                   | 15,132,864 
| | Less
    valuation allowance                     |  |                   | (15,132,864
| | Deferred
    tax asset - net valuation allowance |  | $                 | -          



The net change in the valuation allowance for
the year ended September 30, 2015 was $(234,349).



As of September 30, 2015, the Company has a
net operating loss carryover of approximately $39,600,000 available to offset future income for income tax reporting purposes,
which will expire in various years through 2035, if not previously utilized. However, the Company’s ability to use the carryover
net operating loss may be substantially limited or eliminated pursuant to Internal Revenue Code Section 382.



We adopted the provisions of ASC
740-10-50, formerly FIN 48, “Accounting for Uncertainty in Income Taxes.” We had no material unrecognized income tax
assets or liabilities for the year ended September 30, 2015 or 2014.



Our policy regarding income tax interest
and penalties is to expense those items as general and administrative expense but to identify them for tax purposes. During the
year ended September 30, 2015 and 2014, there were no federal income tax, or related interest and penalty items in the income
statement, or liability on the balance sheet. We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions.
The Company is no longer subject to U.S. federal income tax examinations by tax authorities for years ending on or before September
30, 2012 or California state income tax examination by tax authorities for years ending on or before September 30, 2011. We are
not currently involved in any income tax examinations.





F-19







SITO Mobile, Ltd.

Notes To Consolidated Financial Statements



|11. | Convertible Debentures
|--- | ----------------------



| |                               |  | September
    30, |  
| | ----------------------------- |  | ----------------- | -
| |                               |  | 2015              |  
| |                               |  |                   |  
| | Notes Payable:                |  |                   |  
| | Convertible
    term note (a) |  | $                 | -
| | Convertible
    term note (b) |  |                   | -
| | Convertible
    term note (c) |  |                   | -
| | Convertible
    term note (d) |  |                   | -
| | Convertible
    term note (e) |  |                   | -
| | Principal balance             |  |                   | -
| | Accrued
Interest              |  |                   | -
| |                               |  |                   | -
| | Less:
    discount on debt    |  |                   | -
| |                               |  |                   | -
| | Less:
    current portion     |  |                   | -
| | Long
    term debt            |  | $                 | -



| | a) | In November and December 2011, the Company entered into convertible term notes bearing interest at 10% per annum with a maturity date of August 31, 2014 and issued warrants to purchase 360,000 shares of the Company’s common stock at $2.50 per share that expires on September 7, 2015.   The notes provided for conversion of the outstanding principal and the first year’s accrued interest, in the amount of $170,000, into shares of common stock at a conversion price of $5.00 per share at the option of the holders, In October 2014, the Company repaid the notes in full with a cash payment.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | On September 7, 2012, the Company entered into convertible term notes bearing interest at 10% per annum, payable semi-annually, with principal having a maturity date of September 7, 2014 and issued warrants to purchase 55,000 shares of the Company’s common stock at $2.50 per share that expires on September 17, 2015.  The notes provided for conversion of the outstanding principal into shares of common stock at a conversion price of $5.00 per share at the option of the holders.  In October 2014, the Company repaid the notes in full with a cash payment.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | c) | On September 27, 2012, the Company entered into convertible term notes bearing interest at 10% per annum, payable semi-annually, with principal having a maturity date of September 27, 2014 and issued warrants to purchase 206,000 shares of the Company’s common stock at $2.50 per share that expires on September 27, 2015.  The notes provided for conversion of the outstanding principal into shares of common stock at a conversion price of $5.00 per share at the option of the.  In October 2014, the Company repaid the notes in full with a cash payment.     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | d) | On September 28, 2012, the Company entered into convertible term notes bearing interest at 10% per annum, payable semi-annually, with principal having a maturity date of September 28, 2014 and issued warrants to purchase 51,000 shares of the Company’s common stock at $2.50 per share that expires on September 28, 2015. The notes provided for conversion of the outstanding principal into shares of common stock at a conversion price of $5.00 per share at the option of the holders. In October 2014, the Company repaid the notes in full with a cash payment.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | e) | On October 5, 2012, the Company entered into convertible term notes bearing interest at 10% per annum, payable semi-annually, with principal having a maturity date of October 5, 2014 and issued warrants to purchase 89,600 shares of the Company’s common stock at $2.50 per share that expires on October 5, 2015. The notes provided for conversion of the outstanding principal into shares of common stock at a conversion price of $5.00 per share at the option of the holders. In October 2014, the Company repaid the notes in full with a cash payment.         





F-20







SITO Mobile, Ltd.

Notes To Consolidated Financial Statements



In
connection with the 2012 private offering of convertible term notes, the Company incurred offering costs totaling $424,843 including
the fair value of warrants issued to the Placement Agent to purchase 47,992 shares of the Company’s common stock at a purchase
price of $3.04 per share. The value of the warrants of $166,319 was calculated using the Binomial Option model with a risk-free
interest rates ranging from 0.31% to 0.34%, volatility ranging from 94.17% to 95.23%, and trading prices ranging from $2.80 to
$3.30 per share. The $424,843 was amortized over the two-year term of the related debt using the effective interest method.



The convertible term notes were recorded
net of discounts that include the relative fair value of the warrants, the notes’ beneficial conversion features, and the
above indicated loan fee, all totaling $1,530,415. The discounts were amortized to interest expense over the term of the various
notes using the effective interest method.  The initial value of the warrants of $1,124,773 issued to investors was
calculated using the Binomial Option model with a risk-free interest rates ranging from 0.31% to 0.43%, volatility ranging from
94.17% to 103.00%, and trading prices ranging from $2.20 to $3.50 per share. The beneficial conversion feature of $51,516 was
calculated using trading prices ranging from $2.60 to $3.50 per share and an effective conversion price $3.22 per share.



Interest expense on the convertible
term notes for the year ended September 30, 2015 and 2014 was $1,950 and $372,059, respectively. Amortization of the discounts
for the year ended September 30, 2015 and 2014 totaled $0 and $376,627, respectively, which was charged to interest expense.



|12. | Note Payable
|--- | ------------



| |                                    |  | September
    30, |           
| | ---------------------------------- |  | ----------------- | ----------
| |                                    |  | 2015              |           
| |                                    |  |                   |           
| | Notes Payable:                     |  |                   |           
| | Principal
    outstanding          |  | $                 | 10,000,000
| | Accrued
    Interest               |  |                   | 202,975   
| | Accrued
    Termination Fee        |  |                   | 124,630   
| |                                    |  |                   | 10,327,605
| | Less:
    discount on note payable |  |                   | (1,062,457
| |                                    |  |                   | 9,265,148 
| | Less:
    current portion, net     |  |                   | (3,575,024
| | Long-term
    portion, net         |  | $                 | 5,690,124 



Scheduled maturities on long term debt are as follows:



| | Years ending September 30 |  | Principal |            |  | Discount Amortization |   |            | Accrued Interest |  |   | Accrued Termination Fee |  |  | Total |        
| | ------------------------- |  | --------- | ---------- |  | --------------------- | - | ---------- | ---------------- |  | - | ----------------------- |  |  | ----- | -------
| | 2016                      |  | $         | 4,000,000  |  |                       | $ | (595,881   | )                |  | $ | -                       |  |  | $     | -      
| | 2017                      |  |           | 4,000,000  |  |                       |   | (377,053   | )                |  |   | -                       |  |  |       | -      
| | 2018                      |  |           | 2,000,000  |  |                       |   | (89,523    | )                |  |   | 202,975                 |  |  |       | 124,630
| |                           |  | $         | 10,000,000 |  |                       | $ | (1,062,457 | )                |  | $ | 202,975                 |  |  | $     | 124,630





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



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





F-21







SITO Mobile, Ltd.

Notes To Consolidated Financial Statements



The principal amount of the note
bears interest at a rate equal to LIBOR plus 9% per annum. Such interest is payable in cash except that 2% per annum of the interest
shall be paid-in-kind, by increasing the principal amount of the Notes by the amount of such interest. The term of the Notes is
42 months and the Company must make, beginning in October 2015, monthly amortization payments on the Notes, each in a principal
amount equal to $333,334 until the Note is paid in full. The Company shall also apply 85% of Monetization Revenues (as defined
in the Agreement) from the Company’s patents to the payment of accrued and unpaid interest on, and then to repay outstanding
principal (at par) of, the Notes until all amounts due with respect to the Notes have been paid in full. After the repayment of
the Notes, in addition to the interest, the Company shall pay the Revenue Participants up to 50% of Monetization Revenues totaling
(i) $5,000,000, if paid in full prior to March 31, 2018 and (ii) $7,500,000 thereafter (the “Revenue Stream”). The
Company must also pay $350,000 to the Note Purchasers upon repayment of the Notes.



The Company may prepay the Notes in
whole or in part, without penalty or premium, except that any optional prepayments of the Notes prior to the first anniversary
of the Effective Date shall be accompanied by a prepayment premium equal to 5% of the principal amount prepaid.



The Agreement contains certain standard Events of Default.
The Company granted to the Collateral Agent, for the benefit of the Secured Parties, a non-exclusive, royalty free, license (including
the right to grant sublicenses) with respect to the Patents, which shall be evidenced by, and reflected in, the Patent License
Agreement. The Collateral Agent and the Investors agree that the Collateral Agent shall only use such license following an Event
of Default. Pursuant to the Security Agreement, the Company granted the Investors a first priority senior security interest in
all of the Company’s assets. The Company and the Investors assigned a value of $500,000 to the revenue sharing terms of the
Agreement and in accordance with ASC 470-10-25 “Debt Recognition”, the Company recognized $500,000 as deferred revenue
and a discount on the Note that is amortized over the 42-month term of the Note using the effective interest method. For the year
ended September 30, 2015, the Company recognized $178,043 in licensing revenue and interest expense from amortization of the deferred
revenue.



Interest expense on the Note for the years ended September
30, 2015 and 2014 was $1,014,874 and $0, respectively. Amortization of the discounts for the years ended September 30, 2015 and
2014 totaled $587,543 and $0, respectively, which was charged to interest expense. Accrual of termination fees for the years ended
September 30, 2015 and 2014 was $124,630 and $0, respectively, which was charged to interest expense.



|13. | Stock Based Compensation
|--- | ------------------------



During the year ended September 30,
2015, the Company recognized stock-based compensation expense totaling $727,381, of which $166,000 was for payment of consulting
services, $479,834 was recognized through the vesting of 180,945 common stock options, and $81,547 from the amortization of prepaid
consulting fees compensated through the granting of 575,000 options. During the year ended September 30, 2014, the Company recognized
stock-based compensation expense totaling $2,094,970, of which $14,500 was recognized through the issuance of 25,000 common shares
to the Company's Chief Financial Officer, $998,917 was recognized through the vesting of 626,633 common stock options, and $1,081,553
from the amortization of prepaid consulting fees compensated through the granting of 575,000 options (See Note 5).





|14. | Related Party Transactions
|--- | --------------------------



Effective December 13, 2013, the former
Executive Chairman’s employment under the employment agreement by and between the Company and the former Executive Chairman,
or otherwise, was terminated. Pursuant to a Separation Agreement and General Release dated April 9, 2014, the former Executive
Chairman resigned from the Board of Directors. For the year ended September 30, 2015, the Company paid $100,851 representing the
remaining severance obligation costs.



On April 21, 2014 (the “Effective
Date”), SITO Mobile R&D IP, LLC, the Company’s wholly-owned subsidiary, through a joint venture arrangement organized
as a limited liability company (the “JV”) with Personalized Media Communications, LLC (“PMC”), entered
into a Joint Licensing Program Agreement (the “Agreement”) with a national broadcasting entity (“Licensee”)
pursuant to which the JV grants the Licensee a term-limited license ( the “License”) to all patents licensable by the
JV (“Patents”), including an exclusive license to assert the Patents against certain infringing parties in the media
distribution industry. In exchange for the License, the Licensee will pay an annual fee of $1,250,000 for a minimum of three years
(“Annual Fee”). Commencing three years from the Effective Date, the Licensee may each year, at its sole option, pay
a $1,250,000 license fee to renew the License for every year for four additional years. Once the Licensee has paid a total of $8,750,000
in license fees, either in one lump sum or after paying $1,250,000 annually for seven years, the License is deemed to be perpetual.
For Patents infringement actions provided for under the License, the Licensee will pay 20% of the gross proceeds from settlements
received less any Annual Fee amounts paid and litigation costs incurred (“Share of Proceeds”). SITO Mobile R&D
IP, LLC and its joint venture partner will serve as co-plaintiffs with the Licensee in infringement actions under the License and
the Licensee will be responsible for any out-of-pocket costs of the JV associated with being a co-plaintiff in supporting Licensee
in such litigation, including attorneys’ fees. The Licensee will pay the Annual Fee and any Share of Proceeds to the JV.
Proceeds received by the JV are shared by SITO Mobile R&D IP, LLC and PMC on a 30% and 70% basis, respectively. In the event
that the Licensee does not assert any infringement actions under its rights in the License within five years of the Effective Date,
the JV may, at its sole option, choose to terminate Licensee’s exclusive right to assert infringement claims with no reduction
or adjustment to the Annual Fee. For the years ended September 30, 2015 and 2014, the Company amortized $374,545 and $166,438 in
revenue. As of September 30, 2015 the Company has $209,016 in deferred revenue under the Licensing Agreement.





F-22







SITO Mobile, Ltd.

Notes To Consolidated Financial Statements



The Company entered into a Separation
and General Release Agreement (the “Separation Agreement”) with its former Chief Executive Officer, James Orsini, which
confirmed his removal from all positions held with the Company, including its subsidiaries, divisions, affiliates, partnerships,
joint ventures and related business entities, effective September 19, 2014. Pursuant to the terms of the Separation Agreement and
in accordance with the terms of his employment agreement, the Company will pay to Mr. Orsini, one year of his base salary, accrued
but unused vacation time and will provide continued medical coverage for a period of one year. In addition, the Company reimbursed
Mr. Orsini $10,000 for his attorneys’ fees in connection with his Separation Agreement. In exchange for these payments, and
other provisions, Mr. Orsini agreed to a general release in favor of the Company. The Separation Agreement became effective September
19, 2014. For the year ended September 30, 2015 and 2014, the Company paid $447,851 and $3,830 under terms of the Separation Agreement
and has accrued $10,000 in remaining obligations.



|15. | Fair Value
|--- | ----------



The Company’s balance sheet includes
certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair values because
of the relatively short period of time between the origination of these instruments and their expected realization. The Company
determines the fair value of obligations under capital lease, notes payable and convertible debentures based on the effective yields
of similar obligations (Level 2).



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



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



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



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



The Company did not identify any assets
and liabilities that are required to be presented on the consolidated balance sheets at fair value. The Company does not have any
assets or liabilities measured at fair value on a recurring basis at September 30, 2015. The Company did not have any fair value
adjustments for assets and liabilities measured at fair value on a nonrecurring basis during the year ended September 30, 2015.



|16. | Stockholders’ Equity
|--- | --------------------



Common Stock



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



During the year ended September 30,
2015, the Company issued 2,082,615 shares of common stock of which 833,700 shares were issued for warrants exercised for which
the Company received $2,109,055 in gross proceeds, issued 261,954 shares for which the Company received $1,000,000 in gross proceeds,
70,000 shares for which the Company received investor relation services valued at $210,000, issued 296,402 shares in connection
with the original purchase agreement of DoubleVision Networks Inc. and issued 620,560 shares in connection with the asset purchase
agreement with Hipcricket, Inc.



During the year ended September 30,
2014, the Company issued 1,389,746 shares of its common stock of which 202,650 shares were issued for warrants exercised for which
the Company received $213,456 in gross proceeds and 10,000 shares of its common stock were issued through the conversion of $50,000
of principal and accrued interest on convertible debt, 14,798 shares were issued in cashless exercises of 116,648 common stock
options, 359,798 shares were issued on the exercise of 359,798 common stock options for which the Company received $1,687,457,
2,500 shares of common stock were issued as stock compensation and 800,000 shares of common stock were issued in conjunction with
the acquisition of DoubleVision Networks Inc.



In October 2013, the Board of Directors
authorized the Company to repurchase up to 20,000,000 shares of the Company’s common stock. For the year ended September
30, 2014 the company repurchased 38,906 shares at an aggregate cost of $201,461 and cancelled all of the repurchased shares. The
Company reduced common stock by $39, being the par value equivalent of the 38,906 shares and additional paid-in capital by $201,422,
being the remaining cost of the shares repurchased.





F-23







SITO Mobile, Ltd.

Notes To Consolidated Financial Statements





Warrants



During the year ended September 30,
2015, no warrants were granted, 833,700 warrants exercised to purchase 833,700 shares of the Company’s common stock of which
788,600 warrants had an exercise price of $2.50 per share, 45,100 warrants had an exercise price of $3.04 per share, and 140,000
warrants expired.



During the year ended September 30,
2014, four warrant holders exercised 202,650 warrants to purchase 202,650 shares of the Company common stock of which 172,500 warrants
had an exercise price of $0.80 per share, 30,000 warrants had an exercise price of $2.50 per share and 150 warrants had an exercise
price of $3.04 per share.



Options



During the year ended September 30,
2015, the Company granted options to Directors and employees as follows:





| | Grant
    Date        |  | Options
    Granted |         |  | Exercise
    Price |   |       | Expiration |  |  | Vesting               |  |  | Total
    Value |           |  | Risk
    Free Interest Rate |   |         | Volatility | 
| | --------------------- |  | ------------------- | ------- |  | ------------------ | - | ----- | ---------- |  |  | --------------------- |  |  | --------------- | --------- |  | --------------------------- | - | ------- | ---------- | 
| | November
    10, 2014 |  |                     | 25,000  |  |                    | $ | 3.03  |            |  |  | November
    10, 2019 |  |  |                 | Immediate |  |                             | $ | 48,325  |            | 
| | November
    21, 2014 |  |                     | 15,000  |  |                    | $ | 2.805 |            |  |  | November
    21, 2019 |  |  |                 | 3-years   |  |                             | $ | 28,230  |            | 
| | November
    21, 2014 |  |                     | 38,000  |  |                    | $ | 2.805 |            |  |  | November
    21, 2019 |  |  |                 | 3-years   |  |                             | $ | 71,516  |            | 
| | November
    21, 2014 |  |                     | 63,090  |  |                    | $ | 2.805 |            |  |  | November
    21, 2019 |  |  |                 | 3-years   |  |                             | $ | 120,502 |            | 
| | November
    21, 2014 |  |                     | 25,236  |  |                    | $ | 2.805 |            |  |  | November
    21, 2019 |  |  |                 | 3-years   |  |                             | $ | 48,201  |            | 
| | December
    15, 2014 |  |                     | 43,500  |  |                    | $ | 2.50  |            |  |  | December
    15, 2019 |  |  |                 | 3-years   |  |                             | $ | 72,341  |            | 
| | May
    20, 2015      |  |                     | 2,500   |  |                    | $ | 3.318 |            |  |  | May
    20, 2020      |  |  |                 | 3-years   |  |                             | $ | 6,000   |            | 
| | May
    20, 2015      |  |                     | 36,986  |  |                    | $ | 3.318 |            |  |  | May
    20, 2020      |  |  |                 | Immediate |  |                             | $ | 88,767  |            | 
| | August
    6, 2015    |  |                     | 18,000  |  |                    | $ | 3.86  |            |  |  | August
    6, 2020    |  |  |                 | 3-years   |  |                             | $ | 54,090  |            | 
| | August
    6, 2015    |  |                     | 11,014  |  |                    | $ | 3.86  |            |  |  | August
    6, 2020    |  |  |                 | Immediate |  |                             | $ | 33,097  |            | 
| | September
    9, 2015 |  |                     | 66,000  |  |                    | $ | 3.94  |            |  |  | September
    9, 2020 |  |  |                 | 3-years   |  |                             | $ | 214,698 |            | 
| | September
    9, 2015 |  |                     | 7,945   |  |                    | $ | 3.94  |            |  |  | September
    9, 2020 |  |  |                 | Immediate |  |                             | $ | 25,845  |            | 
| |                       |  |                     | 352,271 |  |                    |   |       |            |  |  |                       |  |  |                 |           |  |                             |   |         |            | 



The Company values options under the Binomial Option Model. The full value of
options grants is charged to operations over the vesting period with options grants that vest immediately being fully charged
on the date of grant.



During the year ended September 30,
2015, the Company recognized stock-based compensation expense totaling $727,381, of which $166,000 was for payment of consulting
services, $479,834 was recognized through the vesting of 180,945 common stock options, and $81,547 from the amortization of prepaid
consulting fees compensated through the granting of 575,000 options. During the year ended September 30, 2014, the Company recognized
stock-based compensation expense totaling $2,094,970, of which $14,500 was recognized through the issuance of 25,000 common shares
to the Company's Chief Financial Officer, $998,917 was recognized through the vesting of 626,633 common stock options, and $1,081,553
from the amortization of prepaid consulting fees compensated through the granting of 575,000 options.





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





| |                                  |  | Number ofShares |            |   | Weighted AverageExercise Price |  
| | -------------------------------- |  | --------------- | ---------- | - | ------------------------------ | -
| | Outstanding – September 30, 2013 |  |                 | 4,970,495  |   |                                | $
| | Granted                          |  |                 | 215,000    |   |                                | $
| | Exercised                        |  |                 | (679,095   | ) |                                | $
| | Cancelled                        |  |                 | (522,500   | ) |                                | $
| | Outstanding – September 30, 2014 |  |                 | 3,983,900  |   |                                | $
| | Granted                          |  |                 | 352,271    |   |                                | $
| | Exercised                        |  |                 | (833,700   | ) |                                | $
| | Cancelled                        |  |                 | (1,240,800 | ) |                                | $
| | Outstanding – September 30, 2015 |  |                 | 2,261,671  |   |                                | $



Of the 2,261,671 options and warrants
outstanding, 1,940,345 are fully vested and currently available for exercise.







F-24







SITO Mobile, Ltd.

Notes To Consolidated Financial Statements



|17. | Commitments and Contingency
|--- | ---------------------------



Operating Leases



The Company leases office space in
Rogers, Arkansas; Jersey City, New Jersey; Boise, Idaho; and Royal Oak, Michigan. The Rogers office is leased for a term of five
years, effective January 1, 2012. The Company’s Boise office space is subject to a 38-month lease that commenced on May
1, 2014. The Jersey City office lease, amended on November 6, 2014, expires on November 30, 2018 and the Company has the option
to extend the term for an additional five years. In addition to paying rent, the Company is also required to pay its pro rata
share of the property’s operating expenses. The Company entered into a sub-lease agreement on May 22, 2015 for an office
in Michigan. The term for the office space is month to month. Rent expense for the year ended September 30, 2015 and 2014 was
$332,809 and $216,811, respectively. Minimum future rental payments under non-cancellable operating leases with terms in excess
of one year as of September 30, 2015 for the next five years and in the aggregate are:





| | 2016 |  | $ | 328,917 | 
| | ---- |  | - | ------- | 
| | 2017 |  |   | 288,277 | 
| | 2018 |  |   | 256,608 | 
| | 2019 |  |   | 42,768  | 
| | 2020 |  |   | -       | 
| |      |  | $ | 916,570 | 







Incentive Compensation





On November 21, 2014, the Company
approved a compensation plan for the executive officers of the Company which provides for the payment of a cash bonus and an equity
grant of performance options to the Company’s Chief Executive Officer and its Chief Financial Officer (the “Executives”).
Each Executive is eligible for an annual cash bonus, based upon net revenue, gross margins, and individual key performance indicators,
set annually by the Company’s Compensation Committee (the “Target Performance”). The target bonus for the Chief
Executive Officer is 50% of his base salary and for the Chief Financial Officer, the target bonus is 40% of his base salary. Eighty
percent of the cash bonus is based upon the target net revenues and gross margins of the Company with 20% of the cash bonus based
upon individual key performance indicators. Fifty percent of the target cash bonus will be paid if threshold performance of 80%
of the Target Performance is achieved, 100% of the target cash bonus will be paid if the Target Performance is reached, with 150%
of the cash bonus paid if 120% of the Target Performance is achieved. As of September 30, 2015, the Company has accrued $169,125
in compensation expense for the potential incentive cash bonuses. The equity grant component of the compensation plan provides
for the grant of 105,000 performance options to purchase shares of Company common stock to the Chief Executive Officer and 42,000
performance options to purchase shares of Company common stock to the Chief Financial Officer, with the number of performance options
to be received by each of the Executives based upon the achievement by the Company of certain net revenues and gross margins targets.
The performance options will vest in three year increments commencing on the grant date and are exercisable at a price of $2.805.
As of September 30, 2015, the Company reduced the performance options to 63,090 options for the Chief Executive Officer and 25,236
options for the Chief Executive Officer based on the actual achievement of the key performance indicators and has recognized $88,491
in stock compensation expense for the performance options.





Litigation



From time to time we may be a defendant
and/or plaintiff in various other legal proceedings arising in the normal course of our business. We are currently not a party
to any material legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition,
we are not aware of any known litigation or liabilities involving the operators of our properties that could affect our operations.
Furthermore, as of the date, our management is not aware of any proceedings to which any of our directors, officers, or affiliates,
or any associate of any such director, officer, affiliate, or security holder is a party adverse to our company or has a material
interest adverse to us.







F-25







SITO Mobile, Ltd.

Notes To Consolidated Financial Statements





|18. | DoubleVision Acquisition
|--- | ------------------------



On July 24, 2014, the Company acquired
all of the outstanding capital stock of DoubleVision, a provider of mobile media for clients looking to place advertisements in
mobile devices based on real-time data.  With this acquisition, the Company integrated DoubleVision’s ability to
provide real-time advertising in its mobile media market with our product offerings.  The contractual price for the acquisition
was $3,680,000 million by issuing 800,000 shares of the Company’s common stock to DoubleVision’s shareholders at an
agreed-upon valuation of $4.10 per share, plus a cash payment of $400,000 to one of DoubleVision’s creditors.



In addition to the initial purchase
price, the agreement called for $1,000,000 in contingent consideration based on the Company achieving $3,000,000 in media
placement revenue in the twelve months ended July 31, 2014.  At March 31, 2015, the Company recorded the additional $1,000,000
purchase price payable in anticipation of achieving the revenue milestone and increased the goodwill to $4,482,884. During the
year ended September 30, 2015 the Company has issued 296,402 of its common stock at $3.60 per share for an aggregate amount of
$1,067,044 in satisfaction of the purchase price payable and increased by $67,044.



As of September 30, 2015, the allocation
of the purchase price to the assets acquired and liabilities assumed on the acquisition date was as follows:



| | Cash and cash equivalents                                                                     |  | $ | 10,102    |  
| | --------------------------------------------------------------------------------------------- |  | - | --------- | -
| | Accounts receivable                                                                           |  |   | 43,574    |  
| | Note receivable                                                                               |  |   | 10,000    |  
| | Machinery and equipment                                                                       |  |   | 21,764    |  
| | Software development costs                                                                    |  |   | 260,524   |  
| | Security deposit                                                                              |  |   | 6,150     |  
| | Goodwill                                                                                      |  |   | 3,482,884 |  
| | Accounts payable                                                                              |  |   | (154,998  | )
| | Total purchase price                                                                          |  | $ | 3,680,000 |  
| |                                                                                               |  |   |           |  
| | The following table summarizes the fair
    value of identifiable intangible assets acquired: |  |   |           |  
| |                                                                                               |  |   |           |  
| | Software development
    costs                                                                |  | $ | 260,524   |  
| | Total intangible assets acquired, excluding
    goodwill                                      |  | $ | 260,524   |  





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



Pro forma Information



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





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





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



|19. | Hipcricket Acquisition
|--- | ----------------------



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





F-26







SITO Mobile, Ltd.

Notes To Consolidated Financial Statements



As of September 30, 2015, the allocation
of the purchase price to the assets acquired and liabilities assumed on the acquisition date was as follows:



| | Technology                                                                                    |  | $ | 970,000   | 
| | --------------------------------------------------------------------------------------------- |  | - | --------- | 
| | Customer relationships                                                                        |  |   | 870,000   | 
| | Backlog                                                                                       |  |   | 110,000   | 
| | Goodwill                                                                                      |  |   | 1,894,297 | 
| | Total purchase price                                                                          |  | $ | 3,844,297 | 
| |                                                                                               |  |   |           | 
| | The following table summarizes
    the fair value of identifiable intangible assets acquired: |  |   |           | 
| |                                                                                               |  |   |           | 
| | Technology                                                                                    |  | $ | 970,000   | 
| | Customer relationships                                                                        |  |   | 870,000   | 
| | Backlog                                                                                       |  |   | 110,000   | 
| | Total
    intangible assets acquired, excluding goodwill                                      |  | $ | 1,950,000 | 



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



Pro forma Information



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





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





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



|20. | Subsequent Events
|--- | -----------------



On
November 18, 2015, the Company granted 331,836 options with a $3.51 exercise price to Directors, Executives and employees, of
which, 304,000 options are subject to Target Performance criteria that may reduce the number of options at a later date. The Company
cancelled 58,674 options with a $2.805 exercise price that were granted on November 21, 2014 to Executives and subject to Target
Performance criteria.







F-27