11. Subsequent Events

Amendments to Series E Preferred Stock Purchase Agreement

On January 25, 2017, the Company entered into an amendment (the “Amendment”) to the securities purchase agreement, dated July 21, 2016, with each of the holders of the Series E convertible preferred stock of the Company. Pursuant to the Amendment, the Company (i) extended the date for redemption by the Company of the Series E Preferred Stock from January 25, 2017 until March 8, 2017; (ii) increased the optional redemption amount payable to the holders of the Series E Preferred Stock after January 25, 2017 from 165% to 170% of the aggregate conversion amount then outstanding, and (iii) issued to the holders of the Series E Preferred Stock 5.5-year warrants (the “Warrants”) to purchase an aggregate of 1,000,000 shares of common stock of the Company at an exercise price of $0.60 per share. The Warrants are not exercisable for six months following the date of issuance.

On March 8, 2017, the Company entered into a lock-up agreement with each of the holders of the Series E convertible preferred stock of the Company (the “Series E Stockholders”) pursuant to which the Series E Stockholders agreed not to sell any common stock obtained upon conversion of the Series E Preferred Stock, until after March 31, 2017, for less than $0.50 per share.

Restructuring Agreement

As discussed in Note 5, the Company entered into the Restructuring Agreement with DBD and the Managing Member on December 22, 2016. The Restructuring Agreement required that the Company obtain stockholder approval and third party consent to the assignment of the Patents to a newly created special purpose entity, or SPE. Stockholder approval was obtained at a special meeting of stockholders on March 8, 2017, and third party consents and the transfer of the Patents to INVT SPE are expected to be completed prior to April 30, 2017. INVT SPE will be managed and controlled by the Managing Member, and the economic arrangements provided for under the Restructuring Agreement are reflected in the governing documents for INVT SPE.

Upon the date on which the Patents are transferred to INVT SPE, the Company will be relieved of its obligations under its prior agreements with the Senior Lender, including any scheduled amortization payments to the Senior Lender, the liquidity covenant will no longer apply, and the Company will be relieved from any further responsibility to maintain the Patents, retroactive to December 22, 2016. Accordingly, the Senior notes payable, Senior revenue share and certain other liabilities will be extinguished. In addition, the carrying value of the Patents and goodwill will be eliminated, and the Company’s portion of the value of INVT SPE will be added to the consolidated balance sheet. Management believes there is no impairment to its financial condition as of December 31, 2016 as a result of the Restructuring Agreement, and because the requirements of the Restructuring Agreement will be met subsequent to December 31, 2016, the resulting gain on debt extinguishment and assignment of the Patents to INVT SPE will be reflected in the Company’s financial statements in the quarter in which the transfer of Patents to INVT SPE occurs (which is expected to be the quarter ended June 30, 2017).