Docstoc

XPLORE TECHNOLOGIES CORP S-1/A Filing - DOC

Document Sample
XPLORE TECHNOLOGIES CORP S-1/A Filing - DOC Powered By Docstoc
					Table of Contents

                               As filed with the Securities and Exchange Commission on September 14, 2012

                                                                                                                 Registration No. 333-182860




                                                UNITED STATES
                                    SECURITIES AND EXCHANGE COMMISSION
                                                            Washington, D.C. 20549

                                                        AMENDMENT NO. 1
                                                              TO
                                                           FORM S-1
                                                      REGISTRATION STATEMENT
                                                               UNDER
                                                      THE SECURITIES ACT OF 1933

                                              XPLORE TECHNOLOGIES CORP.
                                               (Exact name of registrant as specified in its charter)

                  Delaware                                             3570                                      26-0563295
        (State or Other Jurisdiction of                   (Primary Standard Industrial                        (I.R.S. Employer
       Incorporation or Organization)                     Classification Code Number)                      Identification Number)

                                                              14000 Summit Drive
                                                                    Suite 900
                                                              Austin, Texas 78728
                                                                 (512) 336-7797
                                          (Address, including zip code, and telephone number including
                                              area code, of Registrant's principal executive offices)

                                                             Michael J. Rapisand
                                                           Chief Financial Officer
                                                             14000 Summit Drive
                                                                   Suite 900
                                                             Austin, Texas 78728
                                                                (512) 336-7797
                                           (Name, address, including zip code, and telephone number
                                                   including area code, of agent for service)

                                                                With copies to:

                    Jonathan J. Russo, Esq.                                                   Christopher S. Auguste, Esq.
            Pillsbury Winthrop Shaw Pittman LLP                                            Kramer Levin Naftalis & Frankel LLP
                         1540 Broadway                                                        1177 Avenue of the Americas
                   New York, NY 10036-4039                                                        New York, NY 10136
                    Tel. No.: (212) 858-1528                                                     Tel. No.: (212) 715-9265
                    Fax No.: (212) 858-1500                                                      Fax No.: (212) 715-8000

                                   Approximate date of commencement of proposed sale to the public:
                               As soon as practicable after this Registration Statement is declared effective.

     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. 
     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 

     If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. 

     If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. 

    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See definitions of "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                Smaller Reporting Company 

       The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date
until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a), may determine.
Table of Contents

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is
not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.



                    PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED SEPTEMBER 14, 2012



  • Shares
Common Stock




This is a firm commitment public offering of    • shares of common stock of Xplore Technologies Corp.

Our common stock is currently quoted on the OTCQB under the symbol "XLRTD". On September 13, 2012, the last reported sale price for our
common stock on the OTCQB was $5.92 per share. We have applied to the NASDAQ Capital Market to list our common stock under the
symbol "XPLR".

Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 8 of this
prospectus for a discussion of information that should be considered in connection with an investment in our
common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
                                                                                                           Per Share            Total
Public offering price                                                                                  $                   $
Underwriting discounts and commissions (1)                                                             $                   $
Proceeds to us, before expenses                                                                        $                   $

(1)
       See "Underwriting" for a description of compensation payable to the underwriters.

We have granted a 45-day option to the representative of the underwriters to purchase up to    • additional shares of common stock solely to
cover over-allotments, if any.

The underwriters expect to deliver our shares to purchasers in the offering on or about   • , 2012.

                                                      Aegis Capital Corp
                                               The date of this prospectus is September 14, 2012
Table of Contents
                                                          TABLE OF CONTENTS


                                                                                                                 Page
             Prospectus Summary                                                                                         1

             Risk Factors                                                                                               8

             Use of Proceeds                                                                                        17

             Market for Our Common Stock and Related Stockholder Matters                                            18

             Capitalization                                                                                         19

             Dilution                                                                                               21

             Selected Consolidated Financial Data                                                                   22

             Management's Discussion and Analysis of Financial Condition and Results of Operations                  24

             Business                                                                                               36

             Directors and Executive Officers                                                                       46

             Executive Compensation                                                                                 49

             Security Ownership of Certain Beneficial Owners and Management                                         59

             Transactions with Related Persons                                                                      62

             Description of Capital Stock                                                                           67

             Underwriting                                                                                           72

             Transfer Agent and Registrar                                                                           80

             Legal Matters                                                                                          80

             Experts                                                                                                80

             Where You Can Find More Information                                                                    80

             Index to Consolidated Financial Statements                                                            F-1

      You should rely only on information contained in this prospectus. We have not, and the underwriters have not, authorized
anyone to provide you with additional information or information different from that contained in this prospectus. We are not making
an offer of these securities in any state or other jurisdiction where the offer is not permitted. The information in this prospectus may
only be accurate as of the date on the front of this prospectus regardless of time of delivery of this prospectus or any sale of our
securities.

      No person is authorized in connection with this prospectus to give any information or to make any representations about us, the
common stock offered hereby or any matter discussed in this prospectus, other than the information and representations contained in
this prospectus. If any other information or representation is given or made, such information or representation may not be relied
upon as having been authorized by us. This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy our
common stock in any circumstance under which the offer or solicitation is unlawful. Neither the delivery of this prospectus nor any
distribution of our common stock in accordance with this prospectus shall, under any circumstances, imply that there has been no
change in our affairs since the date of this prospectus.

                                                                   i
Table of Contents



                                                           PROSPECTUS SUMMARY

          This summary highlights selected information appearing elsewhere in this prospectus. While this summary highlights what we
   consider to be important information about us, you should carefully read this entire prospectus before investing in our common stock,
   especially the risks and other information we discuss under the headings "Risk Factors" and "Management's Discussion and Analysis of
   Financial Condition and Results of Operation", and our consolidated financial statements and related notes beginning on page F-1. Our
   fiscal year end is March 31 and our fiscal years ended March 31, 2011 and 2012 and our fiscal year ending March 31, 2013 are sometimes
   referred to herein as fiscal 2011, 2012 and 2013, respectively. Some of the statements made in this prospectus discuss future events and
   developments, including our future strategy and our ability to generate revenue, income and cash flow. These forward-looking statements
   involve risks and uncertainties which could cause actual results to differ materially from those contemplated in these forward-looking
   statements. See "Cautionary Note Regarding Forward-Looking Statements". Unless otherwise indicated or the context requires otherwise,
   the words "we," "us," "our", the "Company" or "our Company" and "Xplore" refer to Xplore Technologies Corp., a Delaware corporation,
   and our wholly owned subsidiaries.

          Except as otherwise indicated in this prospectus, all common stock share and per share information, and all exercise prices with
   respect to our options and warrants, reflect the 1-for-400 reverse split of our common stock which was consummated on September 13,
   2012 but does not reflect the automatic conversion of all of our preferred stock into common stock which will occur upon the consummation
   of the offering. Unless otherwise indicated, this prospectus assumes the over-allotment option of the underwriters has not been exercised.

   Our Business

         Xplore engineers, develops, integrates and markets rugged, mobile computing systems. Our products are designed to enhance the
   ability of persons to perform their jobs outside of traditional office settings. Our family of iX TM tablet personal computer (PC) systems,
   which we refer to as iX104, are designed to operate in challenging work environments such as extreme temperatures, repeated vibrations or
   dirty and wet or dusty conditions. The iX104 systems can be fitted with a wide range of performance matched accessories, including
   multiple docking station solutions, wireless connectivity alternatives, global positioning system modules, biometric and smartcard modules,
   as well as traditional peripherals like keyboards and cases.

        Our revenue is currently derived through the sale of our iX104 systems in the rugged, mobile tablet PC market. Over the past several
   years, our iX104 systems have been recognized for their ruggedness and versatility by Pen Computing ("Best Rugged Slate Style Tablet
   PC"), Table PC2 ("Editor's Choice Award for our AllVue TM Screen") and Lap Top Magazine ("Editor's Choice Award").

        We believe we are positioned for future revenue growth in the markets in which we compete. We launched our fifth generation iX104C
   line of rugged tablet PCs in May 2011, and we believe that customer response has been favorable. From fiscal 2011 to fiscal 2012, our
   revenue increased by approximately 55%, primarily due to $20.3 million in orders we received during fiscal 2012, including purchase
   orders from one of the world's largest telecommunications companies and one of the largest conventional oil and natural gas producers in
   North America. Partial shipment of these orders occurred in the third and fourth quarters of fiscal 2012 and the first quarter of fiscal 2013,
   and we expect to fulfill the balance of these orders in the second quarter of fiscal 2013. For the three months ended June 30, 2012, we had
   revenue of $10.0 million and net income of $0.8 million. We completed three consecutive quarters of net income for the first time in our
   16-year history. For the nine months ended June 30, 2012, we had revenue of $29.7 million and net income of $2.4 million. At a time when
   we believe awareness and demand for tablet computers is significantly increasing, we have introduced a family of computers that, based
   upon third-party certifications, surpasses the standards and specifications that have been the accepted measuring sticks for rugged tablet
   computers in today's marketplace.
Table of Contents


         Our iX104C5 TM introduces what we believe are "industry firsts" and differentiating features, including a tool-less removable dual solid
   state drive (SSD) module, tool-less access to the SIM and MicroSD ports and an ingress protection rating of IP 67 for submersion in water.
   The new C5 family also features the Intel® Core TM i7 processor and Windows® 7 operating system. Our specially designed AllVue TM
   screen is viewable in challenging lighting conditions, including direct sunlight and dimly-lit environments, and features an improved screen
   contrast ratio of 600:1.

        Our key initiatives for future revenue growth include the following:

        •
               New product development—based on input from customer and key industry participants;

        •
               The expansion of sales activities in non-U.S. markets, particularly in Europe;

        •
               Continued penetration into the Fortune 500/Global 2000 markets;

        •
               Establishment of key relationships with new distributors; and

        •
               Focus on military/government markets.

   Our Market Opportunity

        Based upon an annual white paper published by the Mobile and Wireless Practice of Venture Development Corporation (which we
   refer to as VDC), we believe that an increasing number of companies are requiring their employees to transact business in the field and/or
   other non-traditional office environments. VDC projects worldwide sales in the rugged mobile computing market to grow to over
   $6.8 billion by the end of 2013, and for the market for large form factor rugged devices to grow to $3.5 billion by the end of 2013.

        We believe our family of rugged tablet PCs are uniquely positioned to capitalize on the convergence of four current market trends:

        •
               the increasing awareness and adoption of more rugged mobile computers, such as tablet PCs, in the face of the failure rates for
               office oriented computers that have been deployed into challenging operating environments;

        •
               the transition toward rugged computing solutions in non-traditional office environments;

        •
               the surge in consumer tablet offerings; and

        •
               the expanding wireless data movement.

   Our Strategy

        We currently compete in the large form factor rugged tablet PC market. We currently have five products in this market. Our strategy is
   to become the leading global developer and marketer of rugged mobile wireless computer systems.

        Our strategy includes the following key elements:

        Leverage Existing Markets —We seek to continue to analyze the needs of the vertical markets that we are currently selling to so that
   we can continue to grow our business. We intend to continue to focus on customer specific applications by leveraging our core products and
   technology, as well as our key strategic alliances.
     Identifying and targeting vertical markets, major account and OEM opportunities —To achieve broad market penetration by our
products, we intend to continue to focus on specific vertical market applications, major accounts and OEM relationships, such as Dell, Inc.,
Psion Plc (acquired by Motorola Solutions, Inc.), which we refer to as Psion, and Peak Technologies.



                                                                   2
Table of Contents


         Investment and nurturing of key relationships —We intend to continue to outsource our manufacturing function so that we can
   continue to focus our efforts on our technology and product development, customer application and project deployment activities, through
   our collaborations on engineering and manufacturing matters with our contract manufacturer, Wistron Corporation, which we refer to as
   Wistron. In addition, we have a strategic relationship with VT Miltope with respect to our Armadillo System, an integrated tablet and active
   docking system. Our targeted military market segments include ground and C4I (Command, Control, Communications, Computers and
   Intelligence) systems.

        Flexible product design and customer centric approach —We believe that the design of our products provides us with the flexibility to
   respond to customer specific requirements. We involve our customers in product development and enhancements. This approach is intended
   to result in improved communication throughout the entire sales cycle and is designed to position our products as the optimal mobile
   computing platform for our customers.

        Delivery of high quality, reliable systems —We measure and seek to improve product quality through rigorous quality assurance
   programs implemented with our strategic alliances, in concert with performing our custom designed test programs. Additionally, we utilize
   feedback provided by our customers.

         Marketing and distribution relationships —Within each targeted vertical industry, we intend to expand our focus on co-marketing
   relationships with key application providers and systems integrators. We expect this strategy to allow us to define multiple channels of sale
   within a region while maintaining key strategic alliances.

       Expand into New Rugged Product Markets —We currently have five products in the large form factor segment of the rugged mobile
   computer market. We continue to consider other market opportunities that are broader in scope and opportunity.

   Our Risks and Challenges

        An investment in our common stock involves a high degree of risk including risks related to our business, such as the following:

        •
               We have a history of net losses; we may incur additional losses.

        •
               Our revenue is highly dependent on one product family.

        •
               In any given year, one customer could account for more than 10% of our revenue.

        •
               We experience lengthy sales cycles for our products and the delay of an expected large order could result in a significant
               unexpected revenue shortfall.

        •
               Our quarterly operating results are likely to fluctuate and you should not rely on quarterly operating results as indicative of
               future results.

        •
               We are currently dependent on Wistron to manufacture our products, including our products under development.

        •
               We face competition from companies that have greater resources than we do and we may not be able to effectively compete
               against these companies.

        •
               If we are unable to successfully protect our intellectual property, our competitive position will be harmed.

        •
               If others claim we infringe on their intellectual property rights, we may be subject to costly and time consuming litigation.
3
Table of Contents


        We are subject to a number of additional risks which you should be aware of before you buy our common stock. The risks are
   discussed more fully in the section entitled "Risk Factors" following this prospectus summary.

   Our Corporate Information

         We were incorporated in the federal jurisdiction of Canada in 1996 and domesticated to Delaware in 2007. Our executive offices are
   located at 14000 Summit Drive, Suite 900, Austin, Texas 78728. Our telephone number is (512) 336-7797. Our website is located at
   http://www.xploretech.com/. Our trademarks or trade names as used in this prospectus include: "iX TM ", "iX104C5 TM " and "AllVue TM ".



                                                                    4
Table of Contents



                                                               THE OFFERING


   Common stock offered by us:                             1,700,000 shares
   Common stock outstanding before the offering as of
     September 13, 2012:                                   752,168 shares
   Common stock to be outstanding after the offering:      7,966,036 shares(1)
   Offering price:                                         $• per share
   Use of proceeds:                                        We intend to use the net proceeds received from this offering to expand our sales and
                                                           marketing efforts, increase our product offerings and for working capital and general
                                                           corporate purposes. See "Use of Proceeds" on page 17.
   Risk factors:                                           Investing in our common stock involves a high degree of risk. You should carefully
                                                           consider the information set forth in the "Risk Factors" section beginning on page 8.
   Stock Symbol:                                           Our common stock is currently quoted on the OTCQB under the symbol "XLRTD". We
                                                           have applied to the NASDAQ Capital Market to list our common stock under the symbol
                                                           "XPLR".
   Lock-up:                                                We and our directors, officers and principal stockholders have agreed with the underwriters
                                                           to a lock-up of shares for a period of 90 days after the date of this prospectus. See
                                                           "Underwriting" section on page 72.


   (1)
           Gives effect to the automatic conversion of all our preferred stock into common stock, which will occur upon consummation of the
           offering as if such offering occurred on September 13, 2012, and (i) assumes no exercise by the underwriters of their option to
           purchase up to 255,000 shares of common stock to cover over-allotments, if any, (ii) excludes 70,034 shares of our common stock
           issuable upon exercise of outstanding stock options under our stock incentive plans at a weighted average exercise price of $30.26
           per share as of September 13, 2012, (iii) excludes 419,356 shares of our common stock issuable upon exercise of outstanding
           warrants at a weighted average exercise price of $21.93 per share as of September 13, 2012, (iv) excludes 85,000 shares of common
           stock underlying the warrants to be issued to the underwriters in connection with this offering and (v) excludes shares of common
           stock issuable in connection with dividends with respect to our preferred stock from September 14, 2012 through the consummation
           of this offering.



                                                                      5
Table of Contents



                                        SUMMARY CONSOLIDATED FINANCIAL INFORMATION

         The following summary consolidated statements of operations for the years ended March 31, 2012 and 2011 have been derived from
   our audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated statements of operations
   data for the three month periods ended June 30, 2012 and 2011 and the consolidated balance sheets data as of June 30, 2012 are derived
   from unaudited consolidated financial statements that are included elsewhere in this prospectus. The historical financial data presented
   below is not necessarily indicative of our financial results in future periods, and the results for the three month period ended June 30, 2012
   are not necessarily indicative of our operating results to be expected for the full fiscal year ending March 31, 2013 or any other period. You
   should read the summary consolidated financial data in conjunction with those financial statements and the accompanying notes and
   "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our consolidated financial statements are
   prepared and presented in accordance with United States generally accepted accounting principles, or U.S. GAAP. Our unaudited
   consolidated financial statements have been prepared on a basis consistent with our audited financial statements and include all
   adjustments, consisting of normal and recurring adjustments that we consider necessary for a fair presentation of the financial position and
   results of operations as of and for such periods. Except as otherwise noted, all share and per share data for the periods shown have been
   adjusted to reflect a 1-for-400 reverse stock split which was consummated on September 13, 2012, but does not give effect to the automatic
   conversion of all of our preferred stock into common stock which will occur upon consummation of the offering.


                                                                                                              For the three months ended
                                                                For the year ended March 31,                            June 30,
                                                                 2012                   2011                   2012                 2011
                                                                           (in thousands, except share and per share amounts)
                 Consolidated Statements of
                   Operations Data:
                 Revenue                                    $       27,528       $        17,759       $          9,950      $          2,678
                 Cost of revenue                                    19,140                12,338                  6,645                 2,105
                 Gross profit                                        8,388                 5,421                  3,305                   573
                 Operating expenses                                  8,625                 8,032                  2,400                 1,987
                 Income (loss) from operations                        (237 )              (2,611 )                  905                (1,414 )
                 Other expenses                                       (286 )              (3,778 )                  (86 )                 (49 )
                 Net income (loss)                          $         (523 )     $        (6,389 )     $            819      $         (1,463 )
                 Net loss attributable to common
                   stockholders                             $        (5,124 )    $         (9,247 )    $           (318 )    $         (2,506 )
                 Loss per share attributable to common
                   stockholders, basic and fully diluted    $        (10.00 )    $         (24.19 )    $          (0.53 )    $             (5.48 )
                 Weighted average number of common
                   shares outstanding, basic and fully
                   diluted                                         512,252               382,308               605,381               457,186

        The following table presents consolidated balance sheets data as of June 30, 2012 on:

        •
               an actual basis;

        •
               a pro forma basis, giving effect to the automatic conversion of all our preferred stock into common stock upon consummation
               of the offering as if such offering occurred on September 13, 2012; and

        •
               a pro forma as adjusted basis, giving effect to the pro forma adjustments and the sale by us of 1,700,000 shares of common
               stock in this offering at an assumed public offering price of $5.92 per share, after deducting underwriting discounts and
               commissions and estimated offering expenses.



                                                                        6
Table of Contents


        The pro forma as adjusted information set forth below is illustrative only and will be adjusted based on the actual public offering price
   and other terms of this offering determined at pricing.


                                                                                             As of June 30, 2012
                                                                                                                       Pro Forma As
                                                                               Actual            Pro Forma              Adjusted(1)
                                                                                                 (in thousands)
                 Consolidated Balance Sheets Data:
                 Cash and cash equivalents                                 $       2,893     $         2,893       $           10,958
                 Working capital                                                   7,239               7,239                   15,304
                 Total assets                                                     11,346              11,346                   19,411
                 Common Stock and additional paid in capital                     143,561             143,664                  151,729
                 Total stockholders' equity                                        7,660               7,660                   15,725


                 (1)
                         A $1.00 increase or decrease in the assumed public offering price per share would increase or decrease our cash and
                         cash equivalents, working capital, total assets and total stockholders' equity by approximately $1,564, assuming the
                         number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting
                         the underwriting discount and estimated offering expenses payable by us.



                                                                       7
Table of Contents


                                                               RISK FACTORS

      Investing in our securities involves a great deal of risk. Careful consideration should be made of the following factors as well as other
information included in this prospectus before deciding to purchase our securities. There are many risks that affect our business and results of
operations, some of which are beyond our control. If any of the following risks actually occur, our business, financial condition or operating
results could be materially harmed. This could cause the trading price of our common stock to decline, and you may lose all or part of your
investment. Additional risks that we do not yet know of or that we currently think are immaterial may also affect our business and results of
operations.

Risks Related To Our Business

We have a history of net losses and we may incur additional losses.

     We have incurred net losses in each fiscal year since our inception. For our fiscal year ended March 31, 2012, we incurred a net loss of
approximately $0.5 million. In addition, as of June 30, 2012, our accumulated deficit was approximately $136 million. Our losses have resulted
primarily from expenses incurred in research and development of our technology and products and from selling and marketing our products.
We may continue to incur additional operating losses as we continue our research and development efforts, introduce new products and expand
our sales and marketing activities. We cannot assure you that our revenue will increase or that we will be profitable in any future period.

Since our revenue is highly dependent on one product family, any significant reduction of sales of this product family would materially
harm our operating results.

    Because our revenue is derived substantially from sales of our iX104 systems, we are highly dependent upon the continued market
acceptance of the iX104 product family. We cannot assure you that the iX104 product family will continue to achieve acceptance in the
marketplace. Any significant reduction of sales of the iX104 product family would materially harm our operating results.

In fiscal year 2012, approximately 37% of our revenue was derived from one of our customers. If we are unable to replace revenue
generated from one of our major resellers or end-user customers with revenue from others in future periods, our revenue may materially
decline and our growth would be limited.

      Historically, in any given year a single customer, either reseller or end-user customer, could account for more than 10% of our revenue. In
fiscal year 2012, one reseller, Prosys Information Systems, Inc., which we refer to as Prosys, accounted for approximately 37% of our total
revenue, for one end-user customer, and in fiscal year 2011, one reseller, ID.SYS Int'l Ident Systems Consult GmbH, accounted for
approximately 11% of our total revenue. For the three months ended June 30, 2012, two resellers, Prosys and OCR Canadian Ltd., accounted
for approximately 59% of our total revenue. If we are unable to replace revenue generated from one of our major resellers or end-user
customers with revenue from others, our revenue may decline and our growth could be limited.

We experience lengthy sales cycles for our products and the delay of an expected large order could result in a significant unexpected
revenue shortfall.

     The purchase of an iX104 system is often an enterprise-wide decision for prospective end-user customers, which requires us to engage in
sales efforts over an extended period of time and provide a significant level of education to prospective end-user customers regarding the uses
and benefits of such systems. As a result, our products generally have a lengthy sales cycle ranging from several months to several years.
Consequently, if forecasted sales from a specific end-user customer are not realized, we may not be able to generate revenue from alternative
sources in time to compensate for the shortfall. The loss or delay of an expected large order could result in a significant unexpected revenue
shortfall. Moreover, to

                                                                       8
Table of Contents

the extent that significant contracts are entered into and performed earlier than expected, operating results for subsequent periods may fall
below expectations.

Our quarterly operating results are likely to fluctuate as a result of many factors and our quarterly operating results may not be indicative
of results in any given year or future quarter.

     Our quarterly revenue, expenses, operating results, and gross profit margins may vary significantly from quarter to quarter. As a result, our
operating results may fall below the expectations of securities analysts and investors in some quarters, which could result in a decrease in the
market price of our common stock. The reasons our quarterly results may fluctuate include the fact that we may be unable to replace revenue
generated from one of our major resellers or end-user customers with revenue from others, the lengthy sales cycle related to our products and
delays in the delivery of products and components. Our quarterly revenue could also be materially affected in any period by a decline in the
economic prospects of our customers or the economy in general, which could alter current or prospective customers' spending priorities or
budget cycles or extend our sales cycle for the period. Due to such factors, our quarterly operating results are likely to fluctuate and such results
may not be indicative of our results in any given year or future quarter. You should not rely on quarter-to-quarter comparisons of our results of
operations as an indicator of our future results.

We are currently dependent on Wistron Corporation, which we refer to as Wistron, to manufacture our products and products under
development and our reliance on Wistron subjects us to significant operational risks, any of which would impair our ability to deliver
products to our customers should they occur.

     We currently rely primarily on Wistron for the manufacture of our products. Our reliance involves a number of risks, including:

     •
            reduced management and control of component purchases;

     •
            reduced control over delivery schedule and quality assurance;

     •
            reduced control over manufacturing yields;

     •
            lack of adequate capacity during periods of excess demand;

     •
            limited warranties on products supplied to us;

     •
            potential increases in prices;

     •
            interruption of supplies from assemblers as a result of fire, natural calamity, strike or other significant events; and

     •
            misappropriation of our intellectual property.

     Our business is therefore dependent upon Wistron for their manufacturing capabilities. During the fiscal years ended March 31, 2012 and
2011, we purchased inventory and engineering services of approximately $13.7 million and $10.5 million, respectively, from Wistron. Our
agreement with Wistron contains a provision that allows for termination by either party to the agreement for any reason upon 120 days' notice.
We cannot assure you that Wistron will continue to work with us, that they will be able to meet our manufacturing needs in a satisfactory and
timely manner, that Wistron has the required capacity to satisfy our manufacturing needs or that we can obtain additional or alternative
manufacturers when and if needed.

     The availability of Wistron and the amount and timing of resources to be devoted by Wistron to our activities is not within our control,
and we cannot assure you that we will not encounter manufacturing problems that would materially harm our business. The loss of Wistron, a
significant price increase, an interruption of supply or the inability to obtain additional or an alternative manufacturer when and if needed
would impair our ability to deliver our products to our customers.

                                                                         9
Table of Contents

We face competition from companies that have greater resources than we do and we may not be able to effectively compete against these
companies.

     We operate in a highly competitive industry. Our primary competitors in the mobile rugged computer market include DRS
Technologies, Inc. and General Dynamics Itronix (which we refer to as GD/Itronix) in the tablet PC market, and Panasonic, the largest provider
of mobile rugged computers. We also face competition from manufacturers of non-rugged mobile computers, such as Dell, Inc.,
Hewlett-Packard Company, Apple Computer, Inc., Sony and Toshiba, to the extent customers decide to purchase less expensive traditional
computers for use in environments we believe are better suited for mobile rugged computers. The principal competitive factors in our industry
include:

     •
            product performance, features and reliability;

     •
            price;

     •
            name recognition; and

     •
            product availability and lead times.

      Most of our competitors have longer operating histories, greater name recognition, larger customer bases and significantly greater
financial, technical, sales, marketing and other resources than we do. In addition, because of the higher volume of components that many of our
competitors purchase from their suppliers, they are able to keep their costs of supply relatively low and, as a result, may be able to recognize
higher margins on their product sales than we do. Many of our competitors may also have existing relationships with the resellers who we use
to sell our products, or with our potential customers. This competition may result in reduced prices, reduced margins and longer sales cycles for
our products. The introduction of lower-priced personal computers, combined with the brand strength, extensive distribution channels and
financial resources of the larger vendors, would cause us to lose market share and would reduce our margins on those personal computers we
sell. If any of our larger competitors were to commit greater technical, sales, marketing and other resources to our markets, our ability to
compete would be adversely affected. If we are unable to successfully compete with our competitors our sales would suffer and as a result our
financial condition will be adversely affected.

If we are unable to successfully protect our intellectual property, our competitive position will be harmed.

     Our ability to compete is heavily affected by our ability to protect our intellectual property. We rely on a combination of patents, patent
applications, copyright and trademark laws, trade secrets, confidentiality procedures and contractual provisions to protect our proprietary rights.
We also enter, and plan to continue to enter, into confidentiality or license agreements with our employees, consultants and other parties with
whom we contract, and control access to and distribution of our software, documentation and other proprietary information. The steps we take
to protect our intellectual property may be inadequate. Existing trade secret, trademark and copyright laws offer only limited protection.
Unauthorized parties may attempt to copy aspects of our products or obtain and use information which we regard as proprietary. Policing
unauthorized use of our products is difficult, time consuming and costly, particularly in foreign countries where the laws may not protect our
proprietary rights as fully as in the United States. We cannot assure you that our means of protecting our proprietary rights will be adequate or
that our competitors will not independently develop similar technology, the effect of either of which would harm our competitive position in
the market.

Others could claim that we infringe on their intellectual property rights, which may result in costly and time consuming litigation and could
delay or otherwise impair the development and commercialization of our products.

     In recent years, there has been a significant increase in litigation in the United States involving patents and other intellectual property
rights. We do not believe that our products infringe on the proprietary rights of third parties. There can be no assurance, however, that third
parties will not claim such

                                                                        10
Table of Contents

infringement by us or our licensees with respect to current or future products. Claims for alleged infringement and any resulting lawsuit, if
successful, could subject us to significant liability for damages and invalidation of our intellectual property rights. Any such claims, with or
without merit, could be time consuming, expensive to defend, cause product shipment delays or require us to enter into a royalty or licensing
agreement, any of which could delay the development and commercialization of our products or reduce our margins. If we are unable to obtain
a required license, our ability to sell or use certain products may be impaired. In addition, if we fail to obtain a license, or if the terms of the
license are burdensome to us, our operations could be materially harmed.

We are subject to risks by doing business outside of the United States that could impair our ability to grow our revenue.

     In the fiscal years ended March 31, 2012 and March 31, 2011, approximately 37% and 60%, respectively, of our revenue was comprised
of sales made outside of the United States. Our operations may be materially and adversely affected by many risks related to doing business
outside of the United States, including:

     •
            increases in duty rates, exchange or price controls;

     •
            governmental currency controls;

     •
            import restrictions;

     •
            political, social and economic changes and disruptions;

     •
            in certain jurisdictions, reduced protection for our intellectual property rights; and

     •
            difficulty in enforcing contracts or legal rights under foreign legal systems.

     The occurrence of any one these risks could impair our ability to grow our revenue.

The ongoing uncertainty and volatility in the financial markets related to the European sovereign debt crisis, the potential partial or
complete breakup of the Eurozone and the state of the global economic recovery may adversely affect our operating results.

     Global financial markets continue to experience disruptions, including increased volatility and diminished liquidity and credit availability.
In particular, the current European debt crisis, particularly most recently in Greece, Italy, Ireland, Portugal and Spain, and related European
financial restructuring efforts may cause the value of the European currencies, including the Euro, to further deteriorate, thus reducing the
purchasing power of European customers. In the event that one or more countries were to replace the Euro with their legacy currency, then our
revenue and operating results in such countries, or Europe generally, would likely be adversely affected until stable exchange rates were
established and economic confidence restored.

    In addition, the European crisis is contributing to instability in global credit markets. The world has recently experienced a global
macroeconomic downturn, and if economic and financial market conditions in the United States or other key markets, including Europe, remain
uncertain, persist or deteriorate further, our customers may respond by suspending, delaying or reducing their expenditures, which may
adversely affect our business, operating results, and financial condition.

If we are unable to retain key personnel we may not be able to execute our business strategy.

     Our operations are dependent on the abilities, experience and efforts of a number of key personnel, including Philip S. Sassower, our
chairman and chief executive officer, Mark Holleran, our president and chief operating officer, Michael J. Rapisand, our chief financial officer
and corporate secretary, and Bryan Bell, our vice president of engineering. Should any of these persons or other key employees be unable or

                                                                         11
Table of Contents

unwilling to continue in our employ, our ability to execute our business strategy may be adversely affected. In addition, our success is highly
dependent on our continuing ability to identify, hire, train, motivate and retain highly qualified management, technical and sales and marketing
personnel. Competition for such personnel is intense. We may be unable to attract and retain the personnel necessary for the development of
our business. Because we have experienced operating losses, which resulted in a reduction in workforce in the past, we may have a more
difficult time in attracting and retaining the employees we need. Other than an employment agreement with our President and Chief Operating
Officer, our relationships with our key employees are "at will." Also, we do not have "key person" life insurance policies covering any of our
employees. The inability to attract or retain qualified personnel in the future or delays in hiring skilled personnel could harm our relations with
our customers and our ability to respond to technological change which would prevent us from executing our business strategy.

If we are unable to acquire key components or are unable to acquire them on favorable terms, our business will suffer.

     Some key components included in our line of products are currently available only from single or limited sources. In addition, some of the
suppliers of these components are also supplying certain of our competitors. We cannot be certain that our suppliers will be able to meet our
demand for components in a timely and cost-effective manner. We carry limited inventory of our products and some of our product
components, and as a result, rely on our suppliers to deliver our products and necessary components to us or our contract manufacturers in a
timely manner based upon forecasts we provide. We may not be able to develop an alternative source of supply in a timely manner, which
could hurt our ability to deliver our products to our customers. In addition, if we are unable to buy components on a timely and a cost-efficient
basis, the margins we receive for our products may suffer, which would negatively impact our future financial performance and, in turn,
seriously harm our business.

     At various times, some of the key components for our products have been in short supply. Delays in receiving components would harm
our ability to deliver our products on a timely basis. In addition, because we expect to rely on purchase orders rather than long-term contracts
with our suppliers, we cannot predict with certainty our ability to procure components in the longer term. If we receive a smaller allocation of
components than is necessary to manufacture products in quantities sufficient to meet our customers' demand, those customers could choose to
purchase competing products.

If we fail to predict our manufacturing requirements accurately, we could incur additional costs or experience manufacturing delays,
which could reduce our gross margins or cause us to lose sales.

      We provide, and will continue to provide, forecasts of our demand to our contract manufacturer prior to the scheduled delivery of products
to our customers. If we overestimate our requirements, our contract manufacturer may have excess component inventory, which could increase
our costs. If we underestimate our requirements, our contract manufacturer may have an inadequate component inventory, which could
interrupt the manufacturing of our products and result in delays in shipments and revenue. In addition, lead times for materials and components
that we order vary significantly and depend on factors such as the specific supplier, contract terms and demand for each component at a given
time. We may also experience shortages of components from time to time, which also could delay the manufacturing of our products or
increase the costs of our products.

Our inability to obtain any third-party license required to develop new products and product enhancements could seriously harm our
business, financial condition and results of operations.

     From time to time, we are required to license technology from third parties to develop new products or product enhancements. Third-party
licenses may not be available to us on commercially reasonable terms, or at all. Our inability to obtain any third-party license necessary to
develop new products or product enhancements could require us to obtain substitute technology of lower quality or performance standards, or
at greater cost, which could seriously harm our business, financial condition and results of operations.

                                                                        12
Table of Contents

We must respond quickly and effectively to new technological developments, and the failure to do so could have a material and adverse
effect on our results of operations.

     Our failure to maintain our technological capabilities or to respond effectively to technological changes could adversely affect our
business, results of operations or financial condition. Our future success also depends on our ability to enhance existing hardware and systems
and to respond to changing technological developments. If we are unable to successfully develop and bring to market new hardware and
systems in a timely manner, our competitors' technologies or services may render our products or services noncompetitive or obsolete.

Risks Relating To Ownership Of Our Common Stock

Two of our stockholders, Philip S. Sassower and Phoenix Venture Fund LLC, and other entities controlled by Mr. Sassower, beneficially
own approximately 35.5% of our common stock, after giving effect to the consummation of the offering (including the conversion of all
preferred stock into common stock) and thus have effective control over matters requiring stockholder approval.

     One of our principal stockholders, Phoenix Venture Fund LLC, which we refer to as Phoenix, is co-managed by Philip S. Sassower, our
chairman and chief executive officer, and Andrea Goren, one of our directors. As of the date of this prospectus, Phoenix beneficially owns
approximately 22.7% of our common stock, after giving effect to the consummation of the offering (including the conversion of all preferred
stock into common stock). In addition, Mr. Sassower, personally and through other entities controlled by him other than Phoenix, beneficially
owns, in the aggregate, approximately 12.8% of our common stock, after giving effect to the consummation of the offering (including the
conversion of all preferred stock into common stock). Thus, Phoenix and Mr. Sassower, together, beneficially own in the aggregate,
approximately 35.5% of our common stock, giving effect to the consummation of the offering (including the conversion of all preferred stock
into common stock). Accordingly, Phoenix and Mr. Sassower have the ability to exercise significant influence (and have effective control) over
matters generally requiring stockholder approval, including the election of directors and the approval of significant corporate transactions,
which could have the effect of delaying or preventing a third party from acquiring control over us.

The anti-takeover effect of certain of our charter provisions could adversely affect holders of our common stock.

      Our authorized capital consists of preferred stock issuable in one or more series. Our board of directors has the authority to issue preferred
stock and determine the price, designation, rights, preferences, privileges, restrictions and conditions, including voting and dividend rights, of
those shares without any further vote or action by stockholders. The rights of the holders of common stock will be subject to, and may be
adversely affected by, the rights of holders of any preferred stock that may be issued in the future. The issuance of additional preferred stock,
while providing desirable flexibility in connection with possible financings and acquisitions and other corporate purposes, could make it more
difficult for a third party to acquire a majority of the voting power of our outstanding voting securities, which could deprive our holders of
common stock of a premium that they might otherwise realize in connection with a proposed acquisition of our Company.

We recently completed a 1-for-400 reverse stock split of our outstanding common stock. Even though the reverse stock split caused an
increase in the market price of our common stock so that we are currently in compliance with the minimum bid price requirement of the
NASDAQ Capital Market, we cannot assure you that we will be able to continue to comply with that price requirement.

     The listing of our common stock on the NASDAQ Capital Market is a condition of our offering. We consummated a 1-for-400 reverse
stock split of our outstanding common stock to be able to meet the $4.00 minimum bid price requirement of the listing rules of the NASDAQ
Capital Market. Even though the reverse stock split caused the market price of our common stock to be in compliance with the minimum bid

                                                                        13
Table of Contents

price of the NASDAQ Capital Market, there can be no assurance that the market price of our common stock will remain at that level. It is not
uncommon for the market price of a company's common stock to decline in the period following a reverse stock split. If the market price of our
common stock declines, the percentage decline may be greater than would occur in the absence of a reverse stock split. In any event, other
factors unrelated to the number of shares of our common stock outstanding, such as negative financial or operational results, could adversely
affect the market price of our common stock and jeopardize our ability to maintain the NASDAQ Capital Market's minimum bid price
requirement.

If our common stock were delisted from the NASDAQ Capital Market and determined to be a "penny stock," a broker-dealer may find it
more difficult to trade our common stock and an investor may find it more difficult to acquire or dispose of our common stock in the
secondary market.

     If our common stock were removed from listing with the NASDAQ Capital Market, it may be subject to the so called "penny stock" rules.
The SEC has adopted regulations that define a "penny stock" to be any equity security that has a market price per share of less than $5.00,
subject to certain exceptions, such as any securities listed on a national securities exchange. For any transaction involving a "penny stock,"
unless exempt, the rules impose additional sales practice requirements on broker-dealers, subject to certain exceptions. If our common stock
were delisted from the NASDAQ Capital Market and determined to be a "penny stock," a broker-dealer may find it more difficult to trade our
common stock and an investor may find it more difficult to acquire or dispose of our common stock on the secondary market. Investors in
penny stocks should be prepared for the possibility that they may lose their whole investment.

The market price of our common stock following the recently completed reverse stock split may not attract new investors, including
institutional investors, and may not satisfy the investing requirements of those investors. Consequently, the trading liquidity of our common
stock may not improve.

     Although we believe that a higher market price of our common stock may help generate greater or broader investor interest, there can be
no assurance that the reverse stock split will result in a share price that will attract new investors, including institutional investors. In addition,
there can be no assurance that the market price of our common stock will satisfy the investing requirements of those investors. Over the past
several years, active trading in our common stock has been limited. The trading liquidity of our common stock may not necessarily improve
following the reverse stock split.

Many factors can adversely affect the price of our common stock.

     The trading price of our common stock has been highly volatile and may continue to fluctuate substantially. We believe that a variety of
factors have caused and could in the future cause the stock price of our common stock to fluctuate significantly, including:

     •
             announcements of developments related to our business;

     •
             quarterly fluctuations in our actual or anticipated operating results;

     •
             announcements of technological innovations;

     •
             new products or product enhancements introduced by us or by our competitors;

     •
             developments in patents and other intellectual property rights and litigation;

     •
             developments in our relationships with our third party manufacturers and/or strategic partners;

     •
             developments in our relationships with our customers and/or suppliers; and

     •
             general conditions in the global economy.
     In addition, in recent years the stock market in general, and the market for shares of small capitalization technology companies in
particular, has experienced substantial price and volume fluctuations, which have often been unrelated or disproportionate to the operating
performance of

                                                                    14
Table of Contents

affected companies. Any fluctuations in the future could adversely affect the market price of our common stock and the market price of our
common stock may decline.

We do not expect to pay dividends on our common stock.

     We have never paid cash dividends on our common stock. Our current policy is to retain any future earnings to finance the future
development and expansion of our business. Any future determination about the payment of dividends will be made at the discretion of our
board of directors and will depend upon our earnings, capital requirements, operating and financial conditions and on such other factors the
board of directors deems relevant. Under the terms of our financing agreement with our senior lender, we are prohibited from paying cash
dividends to holders of our common stock.

Risks Related to the Offering

The market price for our shares may be volatile.

     The market price for our shares is likely to be highly volatile and subject to wide fluctuations in response to factors including the
following:

     •
            actual or anticipated fluctuations in our quarterly operating results;

     •
            changes in financial estimates by securities research analysts;

     •
            conditions in the markets for our products;

     •
            changes in the economic performance or market valuations of our customers; and

     •
            announcements by us, or our competitors of new products, acquisitions, strategic relationships, joint ventures or capital
            commitments.

     The financial markets in the United States and other countries have experienced significant price and volume fluctuations, and market
prices have been and continue to be extremely volatile. Volatility in the price of our shares may be caused by factors outside of our control and
may be unrelated or disproportionate to our results of operations. In the past, following periods of volatility in the market price of a public
company's securities, stockholders have frequently instituted securities class action litigation against that company. Litigation of this kind could
result in substantial costs and a diversion of our management's attention and resources.

    Because we do not intend to pay dividends on our shares, stockholders will benefit from an investment in our shares only if those shares
appreciate in value.

Investors in this offering will experience immediate and substantial dilution in net tangible book value.

     The assumed public offering price will be substantially higher than the net tangible book value per share of our outstanding shares of
common stock. As a result, investors purchasing shares of our common stock in this offering will incur immediate dilution of $3.90 per share,
based on the public offering price of $5.92 per share. Investors purchasing shares of our common stock in this offering will pay a price per
share that substantially exceeds the book value of our assets after subtracting our liabilities. See "Dilution" for a more complete description of
how the value of your investment in our common stock will be diluted upon the completion of this offering.

We have not determined a specific use for a portion of the net proceeds from this offering, and we may use these proceeds in ways with
which you may not agree.

     While we intend to use the net proceeds from this offering to expand sales and marketing efforts, increase our product offerings and for
working capital and other general corporate purposes, our management will have considerable discretion in the application of these proceeds
received in connection with this offering. You will not have the opportunity, as part of your investment decision, to assess whether

                                                                         15
Table of Contents

the proceeds are being used appropriately. You must rely on the judgment of our management regarding the application of the net proceeds of
this offering. The net proceeds may be used for corporate purposes that do not improve our profitability or increase our share price. The net
proceeds from this offering may also be placed in investments that do not produce income or lose value.

We may need additional capital, and the sale of additional shares or equity or debt securities could result in additional dilution to our
stockholders.

     We believe that our current cash and cash flow from operations, together with borrowings under our Accounts Receivable Purchasing
Agreement (which we refer to as ARPA) and the net proceeds from this offering will be sufficient to meet our anticipated cash needs for the
next 12 months. We may, however, require additional cash resources due to changed business conditions or other future developments. If these
resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain one or more
additional credit facilities. The sale of additional equity securities could result in additional dilution to our stockholders. The incurrence of
indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our
operations. It is uncertain whether financing will be available in amounts or on terms acceptable to us, if at all.

Sales of a substantial number of shares of our common stock following this offering may adversely affect the market price of our common
stock and the issuance of additional shares will dilute all other stockholders.

     Sales of a substantial number of shares of our common stock in the public market or otherwise following this offering, or the perception
that such sales could occur, could adversely affect the market price of our common stock. After completion of this offering (including the
conversion of all preferred stock into common stock), our existing stockholders will own approximately 78.7% of our common stock assuming
there is no exercise of the underwriters' over-allotment option.

     After completion of this offering (including the conversion of all preferred stock into common stock), there will be 7,966,036 shares of our
common stock outstanding. In addition, our second amended and restated certificate of incorporation, which we intend to file immediately
following the consummation of the offering, will permit the issuance of up to approximately 7,033,964 additional shares of common stock after
this offering. Thus, we have the ability to issue substantial amounts of common stock in the future, which would dilute the percentage
ownership held by the investors who purchase shares of our common stock in this offering.

     We have agreed, with limited exceptions, that we will not, without the prior written consent of Aegis Capital Corp., the managing
underwriter, during the period ending 90 days from the date of this offering, directly or indirectly, offer to sell, sell or otherwise dispose of any
of shares of our common stock or file a registration statement with the SEC relating to the offering of any shares of our common stock, subject
to customary exceptions.

     Our directors, executive officers and stockholders who beneficially own more than 5% of our common stock have signed 90-day lock-up
agreements with the underwriter, subject to customary exceptions. After the lock-up agreements pertaining to this offering expire 90 days from
the date of this offering, unless waived earlier by the representative of the underwriters, up to approximately 3,100,000 shares that had been
locked up will be eligible for future sale in the public market. Sales of a significant number of these shares of common stock in the public
market could reduce the market price of the common stock.

                                                                         16
Table of Contents


                                                             USE OF PROCEEDS

    We estimate that the net proceeds from the sale of the 1,700,000 shares of common stock in the offering at an assumed offering price of
$5.92 will be approximately $8.07 million, after deducting the underwriting discounts and commissions and estimated offering expenses, or
$9.46 million if the underwriters exercise their over-allotment option in full.

     We currently intend to use the net proceeds received from this offering to expand our sales and marketing efforts, increase our product
offerings and for working capital and general corporate purposes.

     The amount and timing of our actual expenditures will depend on numerous factors, including the status of our development efforts, sales
and marketing activities and the amount of cash generated or used by our operations. We may find it necessary or advisable to use portions of
the proceeds for other purposes, and we will have broad discretion and flexibility in the application of the net proceeds. Pending these uses, the
proceeds will be invested in short-term bank deposits.

                                                                       17
Table of Contents


                       MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Market and Other Information

     Our common stock is currently quoted on the OTC Markets Group Inc.'s OTCQB Link quotation platform under the symbol "XLRTD",
and, beginning on October 12, 2012, will trade under the symbol "XLRT". We have applied to the NASDAQ Capital Market to list our
common stock under the symbol "XPLR".

     On September 13, 2012, we consummated a 1-for-400 reverse stock split and received the requisite stockholder consent to convert each
series of our outstanding preferred stock into common stock upon consummation of this offering. The information in the table below does not
reflect the reverse stock split or the automatic conversion of our preferred stock.

     Immediately following the offering, we will have one class of common stock and no classes of preferred stock outstanding. As of
September 13, 2012, there were approximately 260 registered holders of record of our common stock, and the last reported sale price of our
common stock on the OTCQB was $5.92 per share.

      The following table (which does not give effect to our 1-for-400 reverse stock split) sets forth the high and low sales price of our common
stock on the OTCQB Link since February 17, 2011 and on the OTC Bulletin Board prior to February 17, 2011, for each quarterly period during
the fiscal years ended March 31, 2012 and 2011, and for the first and second quarters of the fiscal year ending March 31, 2013, as quoted in
U.S. dollars.


                                                                                                            US $
                     PERIOD                                                                          High          Low
                     Fiscal Year Ending March 31, 2013:
                     First Quarter                                                                     0.06         0.03
                     Second Quarter (through September 13, 2012)                                       0.04         0.01
                     Fiscal Year Ended March 31, 2012:
                     First Quarter                                                                     0.14         0.04
                     Second Quarter                                                                    0.15         0.04
                     Third Quarter                                                                     0.08         0.03
                     Fourth Quarter                                                                    0.08         0.04
                     Fiscal Year Ended March 31, 2011:
                     First Quarter                                                                     0.25         0.07
                     Second Quarter                                                                    0.08         0.06
                     Third Quarter                                                                     0.16         0.01
                     Fourth Quarter                                                                    0.14         0.03

Dividend Policy

    We have not declared or paid any dividends on our common stock during our last five fiscal years. The payment of dividends on our
common stock in the future will depend on our earnings, capital requirements, operating and financial condition and such other factors as our
board of directors may consider appropriate. Under the terms of our financing agreement with our senior lender, we are prohibited from paying
cash dividends without the senior lender's prior written consent. We currently expect to use all available funds to finance the future
development and expansion of our business and do not anticipate paying dividends on our common stock in the foreseeable future.

                                                                       18
Table of Contents


                                                            CAPITALIZATION

     The following table sets forth our consolidated cash and cash equivalents and capitalization as of June 30, 2012. Such information is set
forth on the following basis:

    •
            on an actual basis, giving effect to a l-for-400 reverse stock split (which was consummated on September 13, 2012);

    •
            on a pro forma basis, giving effect to a 1-for-400 reverse stock split (which was consummated on September 13, 2012) and the
            automatic conversion of all our preferred stock into common stock upon consummation of this offering as if such offering occurred
            on September 13, 2012; and

    •
            on a pro forma as adjusted basis, giving effect to the pro forma adjustments and the sale by us of 1,700,000 shares of common
            stock in this offering at an assumed public offering price of $5.92 per share, after deducting underwriting discounts and
            commissions and estimated offering expenses.

     The pro forma as adjusted information below is illustrative only and our capitalization following the completion of this offering will be
adjusted based on the actual public offering price and other terms of this offering determined at pricing. You should read this table together
with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our audited and unaudited consolidated
financial statements and the related notes appearing elsewhere in this prospectus.


                                                                                         As of June 30, 2012
                                                                                                                    Pro Forma as
                                                                     Actual              Pro forma(1)              Adjusted(1)(2)
                                                                              (in thousands, except per share amounts)
              Cash and cash equivalents                          $        2,893      $             2,893        $             10,958
              Total indebtedness                                             —                        —                           —
              Stockholders' equity:
              Series A Preferred Stock, par value $0.001 per
                share; 64,000 shares authorized; 62,874
                shares issued                                                 63                       —                            —
              Series B Preferred Stock, par value $0.001 per
                share; 10,000 shares authorized; 7,732 shares
                issued                                                        8                        —                            —
              Series C Preferred Stock, par value $0.001 per
                share; 20,000 shares authorized; 17,074
                shares issued                                                 17                       —                            —
              Series D Preferred Stock, par value $0.001 per
                share; 20,000 shares authorized; 14,902
                shares issued                                                 15                       —                            —
              Common Stock, par value $0.001 per share;
                authorized 1,350,000 shares authorized; 641
                shares issued                                                1                        6                           8
              Additional paid-in capital                               143,560                  143,658                     151,721
              Total stockholders' equity                                 7,660                    7,660                      15,725
              Total capitalization                                      10,553                   10,553                      26,683


              (1)
                     Excludes (i) 70 shares of our common stock issuable upon exercise of outstanding stock options under our stock incentive
                     plans at a weighted average exercise price of $30.26 per share as of September 13, 2012, after giving effect to our
                     1-for-400 reverse stock split, (ii) 419 shares of our common stock issuable upon exercise of outstanding warrants at a
                     weighted average exercise price of $21.93 per share as of September 13, 2012, after giving effect to our 1-for-400 reverse
                     stock split, (iii) 85 shares of common stock underlying the warrants to be issued to the underwriters in connection with
                     this offering, (iv) 255 shares of common stock issuable upon the exercise of the underwriters' over-allotment option,
                     (v) 196 shares of common stock issuable to holders of our outstanding preferred stock representing dividends on such
      preferred stock from July 1, 2012 through September 13, 2012 and (vi) shares of common stock issuable in connection
      with dividends with respect to our preferred stock from September 14, 2012 through the consummation of this offering.

(2)
      A $1.00 increase or decrease in the assumed public offering price per share would increase or decrease our pro forma as
      adjusted cash and cash equivalents, additional paid-in capital, total stockholders' equity and total capitalization by
      approximately $1,564, assuming the number of shares

                                                     19
Table of Contents

                    offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting
                    discount and estimated offering expenses payable by us.

        The number of pro forma shares of common stock shown as issued and outstanding in the table is based on 6,070 shares of our pro
    forma common stock outstanding as of June 30, 2012.

                                                                     20
Table of Contents


                                                                    DILUTION

         If you invest in our common stock, your investment will be diluted immediately to the extent of the difference between the public
    offering price per share of common stock you pay in this offering, and the pro forma net tangible book value per share of common stock
    immediately after this offering.

          Net tangible book value represents the amount of our total tangible assets reduced by our total liabilities. Tangible assets equal our
    total assets less goodwill and intangible assets. Our net tangible book value as of June 30, 2012 was $7,660,000, or $3.72 per share. Pro
    forma net tangible book value per share represents our pro forma net tangible book value divided by the number of shares of common
    stock outstanding, after the automatic conversion of all our preferred stock into common stock (which will occur upon consummation of
    the offering as if the offering occurred on September 13, 2012). As of June 30, 2012, our pro forma net tangible book value was
    $7,660,000 and our pro forma net tangible book value per share was $1.26.

         After giving effect to the sale of 1,700,000 shares of common stock in the offering at an assumed public offering price of $5.92 per
    share, and after deducting the underwriting discount and commission and estimated offering expenses, our pro forma as adjusted net
    tangible book value as of June 30, 2012 would have been $15,725,000, or $2.02 per share. This represents an immediate increase in pro
    forma net tangible book value of $0.76 per share to existing stockholders and immediate dilution of $3.90 per share to new investors
    purchasing shares in the offering.

         The following table illustrates this per share dilution:


                                                                                               As of               Pro Forma
                                                                                            June 30, 2012          as Adjusted
              Assumed public offering price per share                                                          $             5.92
                Pro forma net tangible book value per share(1)                          $               1.26
                Increase in pro forma net tangible book value per share attributable
                  to new investors                                                      $               0.76

                Pro forma as adjusted net tangible book value per share                                        $             2.02

              Dilution in pro forma net tangible book value per share to new
                investors                                                                                      $             3.90



              (1)
                     The calculation of pro forma net tangible book value as of June 30, 2012 assumes the conversion of all of our preferred
                     stock into common stock at the conversion rates in effect at September 13, 2012 as if the offering occurred on
                     September 13, 2012.

                     The pro forma net tangible book value per share information above excludes the following:

                     •
                             429,581 shares of common stock issuable upon the exercise of warrants outstanding at June 30, 2012 with a
                             weighted average exercise price of $22.06 per share; and

                     •
                             70,071 shares of common stock issuable upon the exercise of options outstanding at June 30, 2012 with a
                             weighted average exercise price of $30.24 per share.

    If the underwriters' over-allotment option is exercised, our pro forma as adjusted net tangible book value following the offering will be
$2.13 per share, and the dilution to new investors in the offering will be $3.79 per share.

     Assuming the underwriters' over-allotment is not exercised, a $1.00 increase or decrease in the assumed public offering price per share
would increase or decrease our pro forma as adjusted net tangible book value per share after this offering by approximately $0.06 and $0.09,
respectively, and dilution per share to new investors by approximately $0.94 and $0.91, respectively, after deducting the underwriting discount
and estimated offering expenses payable by us.

                                                                      21
Table of Contents


                                            SELECTED CONSOLIDATED FINANCIAL DATA

      The selected consolidated statements of operations data for the years ended March 31, 2012 and 2011 and the consolidated balance
sheets data as of March 31, 2012 and 2011 have been derived from our audited consolidated financial statements included elsewhere in this
prospectus. The selected consolidated statements of operations data for the three month periods ended June 30, 2012 and 2011 and the
consolidated balance sheets data as of June 30, 2012 are derived from our unaudited consolidated financial statements included elsewhere in
this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future, and the results for the
three month period ended June 30, 2012 are not necessarily indicative of our operating results to be expected for the full year ending
March 31, 2013 or any other period. The unaudited consolidated financial statements have been prepared on the same basis as the audited
consolidated financial statements and, in the opinion of management, reflect all adjustments, which consist only of normal and recurring
adjustments, necessary for the fair presentation of those unaudited consolidated financial statements. You should read the selected
consolidated financial data in conjunction with those financial statements and the accompanying notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." Our consolidated financial statements are prepared and presented in accordance
with United States generally accepted accounting principles, or U.S. GAAP. All share and per share data for the periods shown have been
adjusted to reflect the 1-for-400 reverse stock split (which was consummated on September 13, 2012) but have not been adjusted for the
automatic conversion of all our preferred stock into common stock (which will occur upon consummation of this offering).


                                                                 For the year ended                          Three months ended
                                                                     March 31,                                    June 30,
                                                              2012                  2011                  2012                2011
                                                                      (in thousands, except share and per share amounts)
              Statements of Operations Data:
              Revenue                                    $      27,528       $        17,759      $         9,950      $          2,678
              Cost of revenue                                   19,140                12,338                6,645                 2,105
              Gross profit                                       8,388                 5,421                3,305                   573
              Operating expenses                                 8,625                 8,032                2,400                 1,987
              Income (loss) from operations                       (237 )              (2,611 )                905                (1,414 )
              Other expenses                                      (286 )              (3,778 )                (86 )                 (49 )
              Net income (loss)                          $        (523 )     $        (6,389 )    $           819      $         (1,463 )
              Net loss attributable to common
                stockholders                             $       (5,124 )    $        (9,247 )    $           (318 )   $         (2,506 )
              Loss per share attributable to common
                stockholders, basic and fully diluted    $       (10.00 )    $        (24.19 )    $          (0.53 )   $             (5.48 )
              Weighted average number of common
                shares outstanding, basic and fully
                diluted                                        512,252              382,308              605,381               457,186
              Balance Sheets Data:
              Cash and cash equivalents                  $         199       $           168      $         2,893      $           133
              Total assets                                      13,023                 7,272               11,346                5,881
              Total liabilities                                  6,583                 3,474                3,686                3,211
              Total stockholders' equity                         6,440                 3,798                7,660                2,670
              Total liabilities and stockholders'
                equity                                   $      13,023       $         7,272      $        11,346      $         5,881

                                                                        22
Table of Contents


                              CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This prospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934, as amended. Forward looking statements give our current expectations or forecasts of future events. You
can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward looking statements involve risks
and uncertainties and include statements regarding, among other things, our projected revenue growth and profitability, our growth strategies
and opportunity, anticipated trends in our market and our anticipated needs for working capital. They are generally identifiable by use of the
words "may," "will," "should," "anticipate," "estimate," "plans," "potential," "projects," "continuing," "ongoing," "expects," "management
believes," "we believe," "we intend" or the negative of these words or other variations on these words or comparable terminology. These
statements may be found under the sections entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations"
and "Business," as well as in this prospectus generally. In particular, these include statements relating to future actions, prospective products,
market acceptance, future performance or results of current and anticipated products, sales efforts, expenses, and the outcome of contingencies
such as legal proceedings and financial results.

      Examples of forward-looking statements in this prospectus include, but are not limited to, our expectations regarding our business
strategy, business prospects, operating results, working capital, liquidity, capital expenditure and requirements. Important assumptions relating
to the forward-looking statements include, among others, assumptions regarding demand for our products, the cost, terms and availability of
components, pricing levels, the timing and cost of capital expenditures, competitive conditions and general economic conditions. These
statements are based on our management's expectations, beliefs and assumptions concerning future events affecting us, which in turn are based
on currently available information. These assumptions could prove inaccurate. Although we believe that the estimates and projections reflected
in the forward-looking statements are reasonable, our expectations may prove to be incorrect.

    Important factors that could cause actual results to differ materially from the results and events anticipated or implied by such
forward-looking statements include, but are not limited to:

     •
            changes in the market acceptance of our products;

     •
            changes in political, economic or regulatory conditions generally and in the markets in which we operate;

     •
            non-performance of Wistron and other suppliers on their manufacturing commitments and customers on their purchase
            commitments;

     •
            adverse conditions in the industries in which our customers operate, including a continuation of the global recession;

     •
            our ability to manage growth;

     •
            our ability to retain and attract senior management and other key employees;

     •
            our ability to quickly and effectively respond to new technological developments;

     •
            increased levels of competition; and

     •
            other risks, including those described in the "Risk Factors" discussion of this prospectus.

     We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to
predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual
results to differ materially from those contained in any forward-looking statement. The forward-looking statements in this prospectus are based
on assumptions management believes are reasonable. However, due to the uncertainties associated with forward-looking statements, you
should not place undue reliance on any forward-looking statements. Further, forward-looking statements speak only as of the date they are
made, and unless required by law, we expressly disclaim any obligation or undertaking to publicly update any of them in light of new
information, future events, or otherwise.

                                                                23
Table of Contents


                                         MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                                      FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with our
consolidated financial statements and the notes to those statements appearing elsewhere in this prospectus. This discussion and analysis
contains forward-looking statements reflecting our management's current expectations that involve risks, uncertainties and assumptions. Our
actual results and the timing of events may differ materially from those described in or implied by these forward-looking statements due to a
number of factors, including those discussed below and elsewhere in this prospectus, particularly on page 8 entitled "Risk Factors". Our fiscal
year end is March 31.

General

     We engineer, develop, integrate and market rugged, mobile computing systems. Our line of iX™ tablet PCs is designed to operate in
challenging work environments, including extreme temperatures, constant vibrations, rain, blowing dirt and dusty conditions. Our systems can
be fitted with a wide range of performance-matched accessories, including multiple docking station solutions, wireless connectivity
alternatives, global positioning system modules, biometric and smartcard modules, as well as traditional peripherals like keyboards, mice and
cases.

     Our revenue is currently derived through the sale of our iX104 systems in the rugged, mobile tablet PC market. We believe we are
positioned for future revenue growth in the markets in which we compete. We launched our fifth generation iX104C line of rugged tablet PCs
in May 2011, and we believe that customer response has been favorable. From fiscal 2011 to fiscal 2012, our revenue increased by
approximately 55%, primarily due to $20.3 million in orders we received during fiscal 2012, including purchase orders from one of the world's
largest telecommunications companies and from one of the largest conventional oil and natural gas producers in North America. Partial
shipment of these orders occurred in the third and fourth quarters of fiscal 2012 and the first quarter of fiscal 2013, and we expect to fulfill the
balance of these orders in the second quarter of fiscal 2013. For the three months ended March 31, 2012, our revenue was $10.8 million,
representing the largest dollar amount of revenue for any quarter in our history, and we had net income of $1.3 million. We completed three
consecutive quarters of net income for the first time in our 16-year history and for the nine months ended June 30, 2012, we had revenue of
$29.7 million and net income of $2.4 million. At a time when we believe awareness and demand for tablet computers is significantly
increasing, we have introduced a family of computers that, based upon third-party certifications, surpasses the standards and specifications that
have been the accepted measuring sticks for rugged tablet computers in today's marketplace.

     We are dependent upon the market acceptance of our newest generation of the iX104 tablet PC system. Our iX104C5 TM introduces what
we believe are "industry firsts" and differentiating features, including a tool-less removable dual solid state drive (SSD) module, tool-less
access to the SIM and MicroSD ports and an ingress protection rating of IP 67 for submersion in water. The new C5 family also features the
Intel® Core™ i7 processor and Windows® 7 operating system. Our specially designed AllVue TM screen is viewable in challenging lighting
conditions, including direct sunlight and dimly-lit environments, and features an improved screen contrast ratio of 600:1.

    Management believes that if we are successful in gaining more marketplace awareness of our iX104 tablet PC family of products, we
should be able to increase our future revenue.

Critical Accounting Policies

    Our consolidated financial statements and accompanying notes included in this prospectus are prepared in accordance with U.S. generally
accepted accounting principles. Preparing financial statements requires management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. These estimates

                                                                        24
Table of Contents

and assumptions are affected by management's application of accounting policies. Estimates are deemed critical when a different estimate
could have reasonably been used or where changes in the estimates are reasonably likely to occur from period to period, and would materially
impact our financial condition, changes in financial condition or results of operations. Our significant accounting policies are discussed in
Note 2 of the Notes to our Consolidated Financial Statements as of March 31, 2012 and 2011 and for each of years in the two year period ended
March 31, 2012. On an ongoing basis, we evaluate our estimates, including those related to our revenue recognition, allowance for doubtful
accounts, inventory valuation, warranty reserves, tooling amortization, financial instruments, stock based compensation and income taxes. We
base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates.

     Our critical accounting policies are as follows:

     Revenue Recognition. Our revenue is derived from the sale of rugged, mobile technology which includes rugged mobile Tablet PC
computers and related accessories. Our customers are predominantly resellers. However, we also sell directly to end-users. Revenue is
recognized, net of an allowance for estimated returns, when title and risks of ownership are transferred to the customer, all significant
contractual obligations have been satisfied, the sales price is fixed or determinable and the ability to collect is reasonably assured. Our revenue
recognition criteria have generally been met when the product has been shipped. Shipments are based on firm purchase orders from our
customers with stated terms. The shipping terms are F.O.B. shipping point. We do not have installation, training or other commitments
subsequent to shipment that are other than incidental. Our prices are determined based on negotiations with our customers and are not subject
to adjustment. Generally, we do not hold inventory at our resellers and we do not expect resellers to hold inventories of our products other than
in limited circumstances where such inventory is monitored by us. As a result, we expect returns to be minimal. We have not had material
adjustments as our returns have been minimal.

     Allowance for Doubtful Accounts. We regularly review and monitor collections of our accounts receivables and make estimated
provisions, generally monthly, based on our experience, aging attributes, results of collection efforts and current market conditions. If our
estimate for allowance for doubtful accounts is too low, additional charges will be incurred in future periods and these additional charges could
have a material adverse effect on our financial position and results of operations. Our estimates have not required significant adjustment due to
actual experience.

     Warranty Reserves. Provisions are made at the time of sale for warranties, which are based on our experience and monitored regularly.
The revenue related to warranty is recognized when our obligations are generally covered by a warranty coverage agreement provided by a
third party. Warranty obligations related to revenue recognized are primarily covered by warranty coverage agreements provided by Wistron;
however, we also provide the coverage on some of our obligations for which we establish related reserves at the time of sale. If our estimates
for warranties and returns are too low, additional charges will be incurred in future periods and these additional charges could have a material
adverse effect on our financial position and results of operations. Our estimates have not required significant adjustment due to actual
experience.

     Inventory Valuation. We adjust our inventory values so that the carrying value does not exceed net realizable value. The valuation of
inventory at the lower of average cost or net realizable value requires us to use estimates regarding the amount of current inventory that will be
sold and the prices at which it will be sold and our assessment of expected orders from our customers. Additionally, the estimates reflect
changes in our products or changes in demand because of various factors, including the market for our products, obsolescence, production
discontinuation, technology changes and competition. While the estimates are subject to revisions and actual results could differ, our
experience is that the estimates used

                                                                        25
Table of Contents

by current management have not been required to be adjusted based on actual results. Accordingly, while any change to the estimates could
have a material impact, there have been no material adjustments to originally provided amounts.

     Tooling Amortization. We amortize tooling costs over a two year period or estimated life, whichever is shorter. Those costs are
recorded as a cost of revenue, subject to an assessment that future revenue will be sufficient to fully recover the cost of the tooling. This
assessment requires an assessment of the market for our products and our future revenue expectations. On a quarterly basis, this assessment is
reviewed and the cost of tooling is written down to its net realizable value if its recoverability is not reasonably expected based on estimates of
future revenue for the periods covered by these financial statements. There have been no instances where we determined that useful life was
significantly less than two years. Accordingly, we have not recorded material adjustments.

     Income Taxes. We have significant valuation allowances that we intend to maintain until it is more likely than not the deferred tax
assets will be realized. Our income tax expense recorded in the future will be reduced to the extent of decreases in our valuation allowances.
Changes in the tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. We are not aware of any such
changes that would have a material effect on our results of operations, cash flows or financial position.

      Financial Instruments. The warrants we issued in connection with the issuance of secured subordinated promissory notes or common
stock or for services have been valued separately using the Black-Scholes methodology. The notes were originally reflected in our financial
statements at a discounted value and the difference between this discount amount and the face value of the notes, which is repayable at
maturity, was amortized as additional non-cash interest expense during the expected terms of the notes. The determination of the values
attributed to the warrants required the use of estimates and judgments particularly related to the assumptions used in the Black-Scholes
calculation. In addition, options and warrants to acquire common stock issued to employees, directors and consultants have been valued using a
Black-Scholes calculation and their valuations are impacted by the assumptions used in this calculation.

     Stock-Based Compensation Expense. We apply the fair value method of accounting for all of our employee stock-based compensation.
We use the Black-Scholes option pricing model to determine the fair value of stock option awards at the date of the issuance of the award. The
value is expensed over the vesting period which is generally three years. See Note 9 to our consolidated financial statements for required
disclosures.

     Our estimates of stock-based compensation expense require a number of complex and subjective assumptions including our stock price
volatility, employee exercise patterns, future forfeitures, dividend yield, related tax effects and the selection of an appropriate fair value model.
We estimate expected share price volatility based on historical volatility using daily prices over the term of past options. We use historical data
to estimate pre-vesting forfeitures, and we record stock -based compensation expense only for those awards that are expected to vest. The
dividend yield assumption is based on the Company's history and future expectations of dividend payouts.

     The assumptions used in calculating the fair value of stock-based compensation expense and related tax effects represent management's
best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change
and we use different assumptions, or if we decide to use a different valuation model, our stock-based compensation expense could be materially
different in the future from what we have recorded in the current period, which could materially affect our results of operations.

                                                                         26
Table of Contents

Recent Accounting Pronouncements

    We have implemented all required new accounting pronouncements in effect that may impact our consolidated financial statements. We
do not believe any such new accounting pronouncements might have a material impact on our consolidated financial position or results of
operations.

Results of Operations

     Revenue. We derive revenue from sales of our rugged wireless tablet PC systems, which encompass a family of active pen and touch
tablet PC computers, embedded wireless, desktop, vehicle, fork-lift or truck docking stations and a range of supporting performance-matched
accessories, peripherals and support services. Our revenue also includes service revenue derived from out-of-warranty repairs.

     Cost of Revenue. Cost of revenue consists of the costs associated with manufacturing, assembling and testing our products, related
overhead costs, maintenance, compensation, freight and other costs related to manufacturing support, including depreciation of tooling assets
and logistics. We use contract manufacturers to manufacture our products and supporting components, which represents a significant majority
of our cost of revenue. In addition, the costs associated with providing warranty repairs, as well as the costs associated with generating service
revenue, are included in cost of revenue.

     Gross Profit. Gross profit has been, and will continue to be, affected by a variety of factors, including competition, product mix and
average selling prices of products, maintenance, new product introductions and enhancements, the cost of components and manufacturing
labor, fluctuations in manufacturing volumes, component shortages, the mix of distribution channels through which our products are sold, and
warranty costs.

     Sales, Marketing and Support. Sales, marketing and support expenses include salaries, commissions, agent fees and costs associated
with co-operative marketing programs, as well as other personnel-related costs, travel expenses, advertising programs, trade shows and other
promotional activities associated with the marketing and selling of our products. We also believe part of our future success will be dependent
upon establishing and maintaining successful relationships with a variety of resellers.

      Product Research, Development and Engineering. Product research, development and engineering expenses consist of salaries and
related expenses for development and engineering personnel and non-recurring engineering costs, including prototype costs related to the
design, development, testing and enhancement of our product families. We expense our research and development costs as they are incurred.
There may be components of our research and development efforts that require significant expenditures, the timing of which can cause
quarterly fluctuation in our expenses.

    General Administration. General administration expenses consist of salaries and related expenses for finance, accounting, procurement
and information technology personnel, investor relations, professional fees, including legal fees for litigation and settlement payments,
corporate expenses, and costs associated with being a U.S. public company, including regulatory compliance costs.

     Interest. Interest expense includes interest on promissory note borrowings, interest on borrowings related to our credit facility, non-cash
interest charges representing the amortization of the value assigned to warrants issued with promissory notes and discounts and amortization of
deferred financing costs consisting principally of legal fees and commissions and fees related to financing transactions.

     Other Income and Expense. Other income and expense includes gains and/or losses on dispositions of assets, foreign exchange and
other miscellaneous income and expense.

      Inflation. During the fiscal years ended March 31, 2012 and 2011, and the three months ended June 30, 2012 and 2011, we believe
inflation and changing prices have not had a material impact on our net sales and revenue, or on income (loss) from continuing operations.

                                                                       27
Table of Contents

Three Months Ended June 30, 2012 vs. Three Months Ended June 30, 2011

     Revenue. Total revenue for the three months ended June 30, 2012 was $9,950,000 as compared to $2,678,000 for the three months
ended June 30, 2011, an increase of $7,272,000 or approximately 272%. The increase in revenue was due to an increase in unit sales of
approximately 256% for the three months ended June 30, 2012 compared to the three months ended June 30, 2011, along with an increase in
our average sales price of approximately 16%. The increase in unit sales was principally attributable to the fulfillment of a portion of the
previously announced purchase orders we received in the second half of our fiscal year 2012, approximating $20,300,000. We expect to make
additional shipments to fulfill these orders in the second quarter of our fiscal year ending March 31, 2013. The increase in average selling
prices was principally due to a more favorable product mix.

     We operate in one segment, the sale of rugged mobile wireless Tablet PC computing systems. The United States and Canada accounted
for approximately 61% and 25%, respectively, of our total revenue for the three months ended June 30, 2012. The United States, Germany and
Canada accounted for approximately 41%, 19%, and 16%, respectively, of our total revenue for the three months ended June 30, 2011.

     We have a number of customers and in any given period a single customer can account for a significant portion of our sales. For the three
months ended June 30, 2012, we had two customers located in the United States of America and Canada who accounted for approximately 59%
of our total revenue. For the three months ended June 30, 2011, we had two customers located in Canada and Germany who accounted for
approximately 30% of our total revenue. At June 30, 2012, we had one customer with an aggregate receivable balance that was approximately
11% of our outstanding receivables. At June 30, 2011, we had one customer with an aggregate receivable balance that was approximately 24%
of our outstanding receivables.

     Cost of Revenue. Total cost of revenue for the three months ended June 30, 2012 was $6,645,000 as compared to $2,105,000 for the
three months ended June 30, 2011, an increase of $4,540,000 or approximately 216%. The increase from the prior year quarterly period was
primarily due to the increase in unit sales of approximately 218% offset by a slight decrease in average units cost of approximately 2%.

      We rely on a single supplier for the majority of our finished goods. The inventory purchases and engineering services from this supplier
for the three months ended June 30, 2012 and 2011 were $6,671,000 and $1,480,000, respectively. At June 30, 2012 and 2011, we owed this
supplier $2,451,000 and $664,000, respectively, recorded in accounts payable and accrued liabilities.

      Gross Profit. Total gross profit increased by $2,732,000 to $3,305,000 (33.2% of revenue) for the three months ended June 30, 2012
from $573,000 (21.4% of revenue) for the three months ended June 30, 2011. The increase was primarily due to the aforementioned increase in
unit sales and average selling prices.

     Sales, Marketing and Support Expenses.         Sales, marketing and support expenses for the three months ended June 30, 2012 were
$963,000 as compared to $799,000 for the three months ended June 30, 2011. The increase of $164,000, or approximately 21%, was primarily
due to an increase in commission expense of $190,000 commensurate with the increase in revenue offset by a reduction in marketing expenses
of $31,000 as the prior year quarterly period included costs associated with the May 2011 product launch of the C5. For our fiscal year ending
March 31, 2013, we expect our sales, marketing and support expenses to increase in connection with additional sales efforts relating to our
iX104C5 TM .

     Product Research, Development and Engineering Expenses. Product research, development and engineering expenses for the three
months ended June 30, 2012 were $551,000, an increase of $65,000, or approximately 13%, compared to $486,000 for the three months ended
June 30, 2011. The increase was primarily due to an increase in headcount related costs of $85,000 associated principally with additional

                                                                     28
Table of Contents

headcount and an increase in product development costs of $29,000 associated with early stage new product development offset by a decrease
of $56,000 in patent filing expenses as the prior year period included new patent filings associated with the C5 feature set. For our fiscal year
ending March 31, 2013, we expect our product research, development and engineering expenses to increase primarily due to the development
of additional products.

     General Administration Expenses.      General administration expenses for the three months ended June 30, 2012 were $886,000 as
compared to $702,000 for the three months ended June 30, 2011, an increase of $184,000, or approximately 26%. The increase was attributable
to an increase in headcount related expenses of $113,000, consisting primarily of an incentive compensation accrual for meeting interim
revenue and cash flow performance objectives with such payout contingent upon achievement at year end, an increase in information systems
of $24,000 due to a system upgrade, an increase in audit fees of $23,000 attributable to the timing of billings and an increase in the general
allowance for doubtful accounts of $20,000 associated with the increase in accounts receivables.

    For the three months ended June 30, 2012 and 2011, the fair value of employee stock-based compensation expense was $186,000 and
$202,000, respectively. Stock compensation expense was recorded in the employee related functional classification.

     Depreciation and amortization expenses for the three months ended June 30, 2012 and 2011 were $130,000 and $118,000, respectively.
Depreciation and amortization primarily consists of tooling amortization and depreciation of demonstration units deployed to customers and is
recorded in the related functional classification.

     Interest Expense. Interest expense for the three months ended June 30, 2012 was $62,000 compared to $34,000 for the three months
ended June 30, 2011, an increase of $28,000. The increase was principally attributable to the discount fees of 0.52% charged on eligible
receivables arising from the increase in North American revenue. On June 29, 2012, the ARPA agreement was amended to eliminate the
discount fee.

    Other Expenses.      Other expenses for the three months ended June 30, 2012 were $24,000, compared to $15,000 for the three months
ended June 30, 2011.

     Net Income. The net income for the three months ended June 30, 2012 was $819,000 as compared to a net loss of $1,463,000 for the
three months ended June 30, 2011, an increase of $2,282,000. The increase was principally due to the increase in revenue of 272% offset by an
increase in operating expenses of 21%.

      Net Loss Attributable to Common Stockholders. Net loss attributable to common stockholders for the three months ended June 30, 2012
was $318,000 as compared to $2,506,000 for the three months ended June 30, 2011. The decrease of $2,188,000 was due to an increase in net
income of $2,282,000 offset by an increase in dividends to our preferred stockholders of $94,000. Our outstanding shares of preferred stock
accrue cumulative dividends that are paid in shares quarterly on the first day of June, September, December and March. The dividends
attributable to these shares for the three months ended June 30, 2012 and 2011 were $1,137,000 and $1,043,000, respectively. The dividend
rate for the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock was 7.5% per annum. The dividends for the
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock were paid in shares of common stock determined by dividing
(i) the aggregate amount of the dividend then payable by (ii) the volume weighted average trading price of the common stock over the 10
trading days ending on the third trading day immediately preceding the dividend payment date, less a discount of 25% of the volume weighted
average trading price of the common stock. The dividend rate for the Series D Preferred Stock is 10% per annum, payable in additional shares
of Series D Preferred Stock valued at $1.00 per share. The values for dividends paid and dividends accrued and unpaid are determined based on
the market prices of our common stock as of the dates of share issuances or accrual multiplied by the equivalent common shares.

                                                                       29
Table of Contents

     A summary of paid dividends for the three months ended June 30, 2012 and 2011 and accrued and unpaid dividends as of June 30, 2012
and 2011 is as follows (in thousands of US dollars):


                                                                                            Dividends
                                                                             Paid For Qtr                Accrued and
                                                                                Ended                    Unpaid as of
                                                                               June 30                     June 30
                                                                          2012           2011         2012           2011
                     Series A Preferred Stock                         $      551     $     526      $    194      $     133
                     Series B Preferred Stock                                 68            69            24             16
                     Series C Preferred Stock                                220           210            78             53
                     Series D Preferred Stock                                364           508           122            100

Fiscal Year Ended March 31, 2012 vs. Fiscal Year Ended March 31, 2011

      Revenue. Total revenue for the fiscal year ended March 31, 2012 was $27,528,000 as compared to $17,759,000 for the fiscal year
ended March 31, 2011, an increase of $9,769,000, or approximately 55%. The increase in revenue was attributable to an increase in unit sales
of approximately 54%, along with an increase in our average selling prices of approximately 1%. The increase in unit sales was principally
attributable to the fulfillment of a portion of the previously announced purchase orders we received in the second half of our fiscal year 2012,
approximating $20,300,000. We expect to make additional shipments to fulfill these orders in the first and second quarters of our fiscal year
ending March 31, 2013. The increase in average selling prices was principally due to a more favorable product mix.

     We operate in one segment, the sale of rugged mobile wireless tablet PC computing systems. Approximately 63% of our revenue in the
year ended March 31, 2012 was derived from sales in the United States and approximately 11% of that revenue was derived from sales in
Canada. The United States, Germany and Canada accounted for approximately 40%, 13% and 12%, respectively, of our revenue during the
year ended March 31, 2011. At March 31, 2012, we had one reseller customer, Prosys Information Systems Inc., who had a receivable balance
accounting for approximately 71% of our total outstanding accounts receivables. We collected the receivable balance with this reseller
subsequent to our fiscal year end.

      In any year a single customer may account for a significant portion of our sales. For the fiscal year ended March 31, 2012, we had a
reseller customer located in the United States who accounted for approximately 37% of our total revenue, all of which was for sales to one
end-user. For the fiscal year ended March 31, 2011, we had one customer located in Germany who accounted for approximately 11% of our
total revenue.

     Cost of Revenue. Total cost of revenue for the year ended March 31, 2012 was $19,140,000 as compared to $12,338,000 for the year
ended March 31, 2011, representing an increase of $6,802,000, or approximately 55%. The increase was primarily due to the aforementioned
increase in unit sales.

      We rely on a single supplier for the majority of our finished goods. At March 31, 2012 and 2011, we owed this supplier $3,858,000 and
$971,000, respectively, which we recorded in accounts payable and accrued liabilities. The inventory purchases and engineering services from
this supplier during the years ended March 31, 2012 and 2011 were $13,687,000 and $10,453,000, respectively.

     Gross Profit. Total gross profit increased by $2,967,000 to $8,388,000 (30.5% of revenue) for the year ended March 31, 2012 from
$5,421,000 (30.5% of revenue) for the year ended March 31, 2011. The increase in gross profit for the year ended March 31, 2012 as compared
to the prior year was attributable to the increase in revenue and unit sales.

                                                                      30
Table of Contents

     Sales, Marketing and Support Expenses. Sales, marketing and support expenses for the year ended March 31, 2012 were $3,763,000,
compared to $2,995,000 for the year ended March 31, 2011. The increase of $768,000, or approximately 26%, was due to an increase in sales
commissions of $221,000 associated with the increase in revenue, an increase in expenses related to demonstration units of $216,000 associated
with the product launch and marketing of our iX104C5 TM , an increase in our headcount related costs of $207,000 for increases in sales and
marketing staffing, which included the hiring of a vice president of marketing, in addition to an increase in travel costs of $112,000 associated
with the higher sales level, partially offset by a decrease in stock compensation of $35,000. For our fiscal year ending March 31, 2013, we
expect our sales, marketing and support expenses to increase in connection with additional sales efforts relating to our iX104C5 TM .

     Product Research, Development and Engineering Expenses. Product research, development and engineering expenses for year ended
March 31, 2012 were $1,525,000 as compared to $2,063,000 for the year ended March 31, 2011, a decrease of $538,000, or approximately
26%. Our accrued liabilities as of March 31, 2011 included an estimated $398,000 in engineering services related to the development of a
rugged notebook PC by an outside supplier during fiscal 2009. We were not billed for these services and the related statutory period for
collection lapsed in fiscal 2012. In the fourth quarter of fiscal 2012, we eliminated the engineering accrual of $398,000, resulting in a reduction
in product research, development and engineering expense in that amount. Excluding the elimination of the accrual related to the development
of our rugged notebook, engineering expenses declined by $140,000, or approximately 7%. During the year ended March 31, 2012, our product
development focus was limited, with our primary focus on the completion and testing of the C5, which was launched in May 2011, and the
development of new docking accessories, including a wireless docking system. In contrast, during the year ended March 31, 2011, our major
development activities related to the C5 occurred and were completed and, as such, the scope of such work was greater. The decrease in
product development related expenses arising from reduced activities was $325,000 and the decline in stock compensation was $74,000. These
declines were offset by an increase in headcount related costs of $145,000, primarily associated with the hiring of employees for positions that
were open in fiscal 2011, new incentive compensation of $71,000 for meeting product enhancement and revenue performance objectives and
an increase in patent filing costs of $43,000 for C5 patents. For our fiscal year ending March 31, 2013, we expect our product research,
development and engineering expenses to increase primarily due to the development of additional products, and, to a lesser extent, the
non-recurrence of the $398,000 reduction in fiscal year 2012 engineering expenses.

      General Administration Expenses. General administration expenses for the year ended March 31, 2012 were $3,337,000, compared to
$2,974,000 for the year ended March 31, 2011, an increase of $363,000, or approximately 12%. The increase consists of new incentive
compensation of $221,000 for meeting revenue and cash flow performance objectives, charges of $165,000 for settlement of patent
infringement claims and an increase in headcount related costs of $151,000 for staffing upgrades and the hiring of a vice president of
operations. These increases were offset by a decrease in stock compensation of $143,000, a decrease in professional fees and other various
expense reductions of $31,000.

     For our fiscal years 2012 and 2011, the fair value of employee stock-based compensation expense was $790,000 and $1,055,000,
respectively. The decrease in expense of $265,000 for fiscal year 2012 primarily results from differences in the timing of the issuances of
grants and the value of our common stock at respective issuance dates. Of the current grants outstanding, approximately 85% were issued on
March 29, 2011, when our board of directors granted options to purchase an aggregate of 47,685,000 shares of common stock, at an exercise
price of $0.06 per share, to all employees, directors and certain consultants. One-fourth of each granted option vested immediately, with the
remainder vesting annually over three years. In connection with the grant, all of our executive officers other than our chief executive officer
voluntarily terminated all of their rights to outstanding option grants aggregating 6,201,395 shares of common stock. The fair value of the
option grants with immediate vesting, reduced by the voluntarily terminated shares that were not vested, resulted in the recognition of
approximately $466,000 of stock

                                                                        31
Table of Contents

compensation expense in the fourth quarter of the year ended March 31, 2011. We recorded stock-based compensation expense in the employee
related functional classification.

      Depreciation and amortization expenses for fiscal years 2012 and 2011 were $647,000 and $310,000, respectively, an increase of
$337,000. The increase in depreciation and amortization expense was due to the tooling amortization associated with the C5 of approximately
$169,000 and the depreciation of our new C5 tablet PC demonstration units of $167,000. We recorded depreciation and amortization expense
in the related functional classification.

     Interest Expense. Interest expense for the year ended March 31, 2012 was $221,000, compared to $3,735,000 for the year ended
March 31, 2011. The decrease of $3,514,000 was attributable primarily to the reduction in outstanding borrowings resulting from the exchange
of all of our outstanding secured subordinated promissory notes for shares of our Series D Preferred Stock on December 16, 2010. This
decrease was partially offset by interest expense of $202,000 attributable to borrowings associated with our working capital facility in fiscal
2012, as compared to $145,000 in interest expense from the same credit facility for the previous year.

    Other Expense.      Other expense for the year ended March 31, 2012 was $65,000, compared to $43,000 for the year ended March 31,
2011.

     Net Loss. The net loss for the year ended March 31, 2012 was $523,000 ($1.02 per common share) compared to a net loss of
$6,389,000 ($16.71 per common share) for the year ended March 31, 2011. The $5,866,000 decrease in our net loss in fiscal 2012, and the
decrease in the loss per common share, was primarily due to the decrease in interest expense of $3,514,000 and the reduction in our operating
loss of $2,374,000 primarily attributable to the increase in revenue.

      Net Loss Attributable to Common Stockholders. Net loss attributable to common stockholders for the year ended March 31, 2012 was
$5,124,000, compared to $9,247,000 for the year ended March 31, 2011, a decrease of $4,123,000. This decrease was due to a decrease in net
loss of $5,866,000 offset by an increase in dividends to our preferred stockholders of $1,743,000. Our outstanding shares of preferred stock
accrue cumulative dividends that are paid quarterly on the first day of June, September, December and March. The dividends attributable to
these shares for the years ended March 31, 2012 and 2011 were $4,601,000 and $2,858,000, respectively. The increase in dividends was
attributable to the increase in the dividend rates on our existing preferred stock and the issuance of our Series D Preferred Stock on
December 16, 2010 in connection with our recapitalization, and the issuance of additional shares of our Series D Preferred Stock on
February 23, 2011 and October 14, 2011 in connection with two private placements. The dividend rate for the Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock was 5% per annum through November 30, 2010 and was increased to 7.5% per annum
for periods after November 30, 2010 in connection with our recapitalization. The dividends for the Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock were paid in shares of our common stock determined by dividing (i) the aggregate amount of the dividend
then payable by (ii) the volume weighted average trading price of the common stock over the 10 trading days ending on the third trading day
immediately preceding the dividend payment date, less a discount of 25% of the volume weighted average trading price of the common stock.
The dividend rate for the Series D Preferred Stock is 10% per annum, payable in additional shares of Series D Preferred Stock valued at $1.00
per share. The values for dividends paid in shares of our common stock and related dividends accrued and unpaid are determined based on the
market prices of our common stock as of the dates of share issuances or accrual multiplied by the equivalent common shares.

                                                                      32
Table of Contents

    A summary of paid dividends for the years ended March 31, 2012 and 2011 and accrued and unpaid dividends as of March 31, 2012 and
2011 are as follows (in thousands of US dollars):


                                                                                            Dividends
                                                                           Paid For Years                      Accrued and
                                                                               Ended                           Unpaid as of
                                                                             March 31,                           March 31,
                                                                        2012              2011              2012           2011
                      Series A Preferred Stock                      $     1,940      $      1,330       $      201      $     262
                      Series B Preferred Stock                              243               176               25             35
                      Series C Preferred Stock                              774               531               80            105
                      Series D Preferred Stock                            1,732               388              178            170

Liquidity and Capital Resources

     We have incurred net losses in each fiscal year since our inception and we may report a net loss for our fiscal year ending March 31, 2013.
As of June 30, 2012, our working capital was $7,239,000 and our cash and cash equivalents were $2,893,000. From inception, we have
financed our operations and met our capital expenditure requirements primarily from the gross proceeds of private and public sales of debt and
equity securities totaling approximately $102.8 million.

     Sources of capital available to us are a credit facility with a specialty finance company.

      On December 10, 2009, we entered into an Accounts Receivable Purchasing Agreement (as amended, the "ARPA") with DSCH Capital
Partners, LLC d/b/a Far West Capital ("FWC"). Pursuant to the ARPA, FWC may purchase, in its sole discretion, our eligible accounts
receivable on a revolving basis, up to a maximum of $8,500,000. Under the terms of the ARPA, FWC purchases eligible receivables from our
subsidiary with full recourse for the face amount of such eligible receivables. FWC retains 15% of the purchase price of the purchased
receivables as a reserve amount. We are required to pay FWC a monthly cost of funds fee equal to the net funds employed by FWC (i.e., the
daily balance of the purchase price of all purchased receivables less the reserve amount, plus any unpaid fees and expenses due to FWC under
the ARPA) multiplied by the annual prime lending rate reported in The Wall Street Journal plus 10.00%, which fees accrue daily. In June 2012,
in connection with the reduction of our cost of funds rate and the elimination of the discount to FWC in connection with its purchase of eligible
receivables, we agreed to a net worth financial covenant requiring, as of the last day of each fiscal quarter, our subsidiary to have a net worth
(defined as assets minus liabilities) of not less than $4,000,000. In the event we are unable to maintain the minimum net worth requirement, the
monthly cost of funds fee required to be paid to FWC will be increased to equal the net funds employed by FWC multiplied by the lesser of
(a) the maximum rate allowed under applicable law and (b) the annual prime lending rate reported in The Wall Street Journal plus 16.0%,
which fees accrue daily. On August 26, 2011, we entered into an amendment to the ARPA to provide for advances up to $700,000 based upon
eligible finished goods Tablet PC inventory, provided that total funds advanced on such inventory does not exceed 30% of all eligible inventory
and provided further that the advances will at no time exceed 40% of the sum of (1) total funds advanced by FWC under the ARPA and
(2) products scheduled to be shipped in satisfaction of customer purchase orders within 90 days. Eligible inventory is valued at the lower of
cost or market value.

     The ARPA also provides that FWC has the right to require the subsidiary to repurchase any purchased accounts receivable: (a) if there is a
dispute as to the validity of such receivable by the account debtor, (b) if certain covenants, warranties or representations made by the subsidiary
with respect to such receivables are breached, (c) upon and during the continuance of an event of default under the ARPA or upon the
termination of the ARPA, or (d) if such receivable remains unpaid 90 days after the invoice date. The ARPA has an initial term of one year
with automatic renewals for successive one-year periods.

                                                                         33
Table of Contents

Notwithstanding that, FWC may terminate the ARPA at any time upon 150 days prior written notice or without prior notice upon and during
the continuance of an event of default.

     The ARPA contains standard representations, warranties, covenants, indemnities and releases for agreements governing financing
arrangements of this type. We have guaranteed the obligations of our subsidiary under the ARPA pursuant to a corporate guaranty and
suretyship. In addition, pursuant to the ARPA, our obligations under the ARPA are secured by a first priority security interest on all our assets.

     As of September 13, 2012, there were no borrowings outstanding under the ARPA.

     We believe that our current cash and cash flow from operations, together with borrowings under the ARPA, will be sufficient to fund our
anticipated operations, working capital and capital spending for the next 12 months. We may, however, require additional cash resources due to
changing business conditions or other future developments. Our ability to maintain sufficient liquidity depends partially on our ability to
achieve anticipated levels of revenue, while continuing to control costs. If we do not have sufficient available cash, we would have to seek
additional debt or equity financing through other external sources, which may not be available on acceptable terms, or at all.

Cash Flow Results

     The table set forth below provides a summary statement of cash flows for the periods indicated:


                                                                          Year Ended                           Three Months
                                                                           March 31,                          Ended June 30,
                                                                  2012                  2011               2012             2011
                                                                                  (In thousands of US dollars)
                      Net cash provided by (used in)
                        operating activities                 $      (1,079 )      $      (2,108 )    $      2,835       $          49
                      Net cash used in investing
                        activities                                       (543 )            (682 )            (152 )           (136 )
                      Net cash provided by financing
                        activities                                   1,653                2,569                11               52
                      Cash and cash equivalents                        199                  168             2,893              133

Fiscal Year Ended March 31, 2012

     Net cash used in operating activities in fiscal year 2012 was $1,079,000 as compared to $2,108,000 in fiscal year 2011, a favorable
decrease of $1,029,000, or approximately 49%. The decrease was principally due to a favorable decrease in our net loss, net of items not
affecting cash, of $3,561,000, a favorable decrease in the use of cash arising from the timing of accounts payable of $3,718,000, a favorable
reduction in the use of cash for purchases of inventory of $1,245,000, offset by a reduction in cash resulting from the timing of accounts
receivable billings and collections of $7,207,000, primarily due to a significant increase in billings in the last month of fiscal year 2012 and an
unfavorable reduction of cash provided by prepaid expenses of $288,000.

     Net cash used in investment activities consists of additions to fixed assets and demonstration units. For the year ended March 31, 2012, the
cash used in investing activities principally consist of demonstration units of our newly launched C5 tablet PC's. For the year ended March 31,
2011, the cash used in investing activities consisted primarily of tooling equipment of $478,000 related to the C5 and demonstration units.

     Net cash provided by financing activities for the years ended March 31, 2012 and 2011 was $1,653,000 and $2,569,000, respectively. Net
cash provided by financing activities for the year ended March 31, 2012 consists of net proceeds from the issuance of Series D Preferred Stock
of $2,182,000 in a private placement, plus aggregate proceeds from the issuance of common stock through our employee stock purchase plan of
$37,000, less net repayments of our working capital credit facility of $566,000. Net cash provided by financing activities for the year ended
March 31, 2011 consisted of net proceeds from the issuance of promissory notes in a private placement of $1,593,000, which notes were
subsequently

                                                                           34
Table of Contents

exchanged for Series D Preferred Stock and warrants, net proceeds from issuance of Series D Preferred Stock in a private placement of
$937,000, plus aggregate proceeds from the issuance of common stock through our employee stock purchase plan and a private placement of
$28,000 plus net borrowings of $11,000 of our working capital credit facility.

Three Months Ended June 30, 2012

     Our operating activities provided $2,835,000 of net cash for the three months ended June 30, 2012 as compared to $49,000 of net cash
provided by operating activities for the three months ended June 30, 2011, a change of $2,786,000. The increase in net cash provided by
operating activities is due to a favorable increase in cash from the timing of accounts receivable billings and collections of $4,565,000, a
favorable increase in our net income, net of items not affecting cash, of $2,279,000 and a favorable fluctuation in prepaid expense of $99,000
offset by an unfavorable reduction in cash from the reduction in accounts payable and accrued liabilities of $2,488,000 and an unfavorable
increase in inventory of $1,669,000.

     Net cash used in investment activities consists of additions to fixed assets, which for the three months ended June 30, 2012, consisted of
tooling costs and demonstration units of our iX104C5 Tablet PCs. For the three months ended June 30, 2011, the additions consisted primarily
of demonstration units.

     Our financing activities provided $11,000 of net cash for the three months ended June 30, 2012 as compared to $52,000 of net cash for the
three months ended June 30, 2011. Net cash provided by financing activities for the three months ended June 30, 2012 consisted of proceeds
from the issuance of common stock. For the three months ended June 30, 2011, net cash provided by financing activities consisted of net
borrowings from our working capital credit facility.

                                                                      35
Table of Contents


                                                                  BUSINESS

Company Overview

     Xplore engineers, develops, integrates and markets rugged, mobile computing systems. Our products are designed to enhance the ability of
persons to perform their jobs outside of traditional office settings. Our family of iX™ tablet personal computer (PC) systems, which we refer to
as iX104, are designed to operate in challenging work environments such as extreme temperatures, repeated vibrations or dirty and wet or dusty
conditions. The iX104 systems can be fitted with a wide range of performance matched accessories, including multiple docking station
solutions, wireless connectivity alternatives, global positioning system modules, biometric and smartcard modules, as well as traditional
peripherals like keyboards and cases.

     Our strategy is to become the leading developer and marketer of rugged mobile wireless computing systems. Our revenue is currently
derived through the sale of our iX104 systems in the rugged, mobile tablet PC market. Over the past several years, our iX104 systems have
been recognized for their ruggedness and versatility by Pen Computing ("Best Rugged Slate-Style Tablet PC"), Table PC2 ("Editor's Choice
Award for our AllVue™ Screen") and Lap Top Magazine ("Editor's Choice Award").

Recent Developments

     We believe we are positioned for future revenue growth in the markets in which we compete. We launched our fifth generation iX104C
line of rugged tablet PCs in May 2011, and we believe that customer response has been favorable. At a time when we believe awareness and
demand for tablet computers is significantly increasing, Xplore has introduced a family of computers that, based upon third-party certifications,
we believe surpasses the performance standards and specifications that have been the accepted measuring sticks for rugged tablet computers in
today's marketplace.

     Our key initiatives for future revenue growth include the following:

     •
            New product development—based on input from customer and key industry participants;

     •
            The expansion of sales activities in non-U.S. markets, particularly in Europe;

     •
            Continued penetration into the Fortune 500/Global 2000 markets;

     •
            Establishment of key relationships with new distributors; and

     •
            Focus on military/government markets.

     We have spent more than a decade on research, development and product improvements with each generation of our iX104. Among what
we believe are our industry "firsts" is that we believe we were the first manufacturer to incorporate dual-mode inputs with active pen and finger
touch capabilities. We also believe Xplore pioneered the best outdoor-readable display and wLAN wireless solutions. Xplore's signature iX104
computers have consistently been recognized for their ruggedness, versatility and best-in-class technologies.

     We believe our new iX104C5 TM continues to introduce "industry firsts" and differentiating features, including a tool-less removable dual
solid state drive (SSD) module, tool-less access to the SIM and MicroSD ports, and an ingress protection rating of IP 67 for submersion in
water. Our new C5 family also features the Intel® Core™ i7 processor and runs on the Windows® 7 operating system.

     We have made a significant investment to expand our presence in the U.S. military market, one of the world's largest consumers of rugged
mobile computers. We have made product enhancements and increased the functionality of our military docking system. Together with the new
C5 military tablet, our specialized MDock provides a rugged state-of-the-art computing system with improved power and versatility for harsh,
military environments.

                                                                       36
Table of Contents

      We are proud of our reseller network and continue to expand and improve our network to reach new markets and new geographies, as well
as to create demand for our expanded product offering in our existing markets. Our efforts have resulted in attracting new and significant
relationships with Fortune 500 and Global 2000 companies. In fiscal 2012 we received orders totaling $20.3 million, including purchase orders
from one of the world's largest telecommunications companies and from one of the largest conventional oil and natural gas producers in North
America. Partial shipment of these orders occurred in the third and fourth quarters of fiscal 2012 and the first quarter of fiscal 2013, and we
expect to fulfill the balance of these orders in the second quarter of fiscal 2013.

     We have built a scalable manufacturing infrastructure to support our growing business. Wistron Corporation, our contract manufacturer
located in Taiwan (which we refer to as Wistron), continues to manufacture the iX104. Wistron is recognized as a leading provider of
computers and electronic components to some of the world's largest technology companies, including Dell, Inc. and Hewlett-Packard
Company. We expect this alliance with Wistron to support our expected sales growth and product demand for the foreseeable future.

     We are a Delaware corporation. Shares of our common stock are currently quoted on the OTC Markets Group Inc.'s OTCQB Link™
quotation platform under the symbol "XLRTD", and, beginning October 12, 2012, will trade under the symbol "XLRT". We intend to apply to
have our common stock listed on the NASDAQ Capital Market under the symbol "XPLR".

Our Market Opportunity

     Based upon an annual white paper published by the Mobile and Wireless Practice of Venture Development Corporation (which we refer to
as VDC), we believe that an increasing number of companies are requiring their employees to transact business in the field and/or other
non-traditional office environments. VDC projects worldwide sales in the rugged mobile computing market to grow to over $6.8 billion by the
end of 2013, and for the market for large form factor rugged devices to grow to $3.5 billion by the end of 2013.

    We believe our family of rugged tablet PCs are uniquely positioned to capitalize on the convergence of four current market trends:

    •
            the increasing awareness and adoption of more rugged mobile computers, such as tablet PCs, in the face of the failure rates for
            office oriented computers that have been deployed into challenging operating environments;

    •
            the transition toward rugged computing solutions in non-traditional office environments;

    •
            the surge in consumer tablet offerings; and

    •
            the expanding wireless data movement.

Products

     Our new product line consists of five different models developed for use in specific environments and applications:

    •
            iX104C5 DMSR™—Dual-Mode Sunlight-Readable Xtreme Tablet

    •
            iX104C5 DM™—Dual-Mode Xtreme Tablet

    •
            iX104C5 DML™—Dual-Mode Lite Xtreme Tablet

    •
            iX104C5 M™—Military Xtreme Tablet

    •
            iX104C5 DMCR™—Dual-Mode Clean Room Xtreme Tablet

                                                                      37
Table of Contents

      Our line of iX™ tablet PCs is designed to operate in challenging work environments, including extreme temperatures, constant vibrations,
rain, blowing dirt and dusty conditions. Our systems can be fitted with a wide range of performance matched accessories, including multiple
docking station solutions, wireless connectivity alternatives, Global Positioning System (GPS) modules, biometric and smartcard modules, as
well as traditional peripherals like keyboards, mice and cases.

     Our family of iX TM computers offers the following features:

Rugged

     We have designed and built our products from the inside out, developing over 30 proprietary design elements that provide a heightened
and proven level of durability. Some of our products meet some of the strictest specifications in the world, such as those established by the U.S.
military, including Military Standard Testing for Environmental Extremes. Being designed to meet these specifications allows our products to
withstand damage from being dropped onto concrete from up to four feet, from being submerged for up to 30 minutes in up to 12 inches of
water, and from being exposed to extreme temperatures that are as low as -49° Fahrenheit and as high as 160° Fahrenheit. In addition, our
products are designed to continue to function when subjected to vibration, sand storms and other challenging outdoor work environments.

Screen Technology

      We strive to be a leader of screen technology with award winning displays. We have designed our AllVue TM screen to be viewable in
challenging lighting conditions, including direct sunlight and dimly-lit environments, with our latest models featuring an improved contrast
ratio of 600:1. Our screens also offer Dual Mode inputs—simultaneous use of a digital pen and/or finger to control the unit. The Dual Mode
supports more precise inputs through the pen with more directional finger touch inputs—all in a single unit with auto switching capabilities.

Processing Power

     We have the ability to provide processing power alternatives for our products on a timely and cost-effective basis. Our systems use Intel
processors and associated chipsets, as well as other performance enhancement technologies that we believe are essential in many field
applications (such as mapping and remote connectivity). In addition, we provide Lithium ION batteries that support usage times of between
three and five hours and our products include a "warm" swap feature allowing users to switch batteries in the field without having to power
down the system.

Remote Connectivity

     Our family of iX104C tablet PCs has a range of wireless communications options (wLAN, wWAN, Bluetooth, and PAN) as well as GPS
options.

Accessories

     We offer a broad range of add-on modules and accessories that we believe better enable our customers to adapt our computers to their
intended use. In particular, we believe our functional, durable and reliable docking solutions are tailored to customer needs. We have supplied
service, desktop, vehicle, forklift, armored vehicle, and mobile cart docking systems to our customers.

Heightened Safety Standards

     Our wireless-enabled tablet PC systems have been tested and certified both in North America and in the European Union for use in
hazardous locations.

                                                                       38
Table of Contents

      Our computers are designed to be used as a mobile computing system. These systems are comprised of an Xplore hardware platform that
is fully integrated with one or more software applications. Through its wide feature set, we believe our iX™ family of products allows the
customization of a platform that best suits a given application. Our computers combine processing power, viewability, ruggedness and
connectivity, and are designed to operate in extreme environments.

Strategy

    Our strategy is to become the leading developer and marketer of rugged mobile wireless computer systems. We currently compete in the
rugged tablet PC market.

Leverage Existing Markets

      We seek to continue to analyze the needs of the vertical markets that we are currently selling to so that we can continue to grow our
business. We intend to continue to focus on customer specific applications by leveraging our core products and technology, as well as our key
strategic alliances.

     Our strategy includes the following key elements:

Identifying and targeting vertical markets, major account and OEM opportunities

    To achieve broad market penetration by our products, we intend to continue to focus on specific vertical market applications, major
accounts and OEM relationships, such as Dell, Inc., Psion and Peak Technologies.

Investment and nurturing of key relationships

      We intend to continue to outsource our manufacturing function so that we can continue to focus our efforts on our technology and product
development, customer application and project deployment activities, through our collaborations on engineering and manufacturing matters
with our contract manufacturer, Wistron. In addition, we have a strategic relationship with VT Miltope. Our targeted military market segments
initially included ground and C4I (Command, Control, Communications, Computers and Intelligence) systems.

Flexible product design and customer-centric approach

     We believe that the design of our products provides us with the flexibility to respond to customer-specific requirements. We involve our
customers in product development and enhancements. This approach is intended to result in improved communication throughout the entire
sales cycle and is designed to position our products as the optimal mobile computing platform for our customers.

Delivery of high quality, reliable systems

    We measure and seek to improve product quality through rigorous quality assurance programs implemented with our strategic alliances, in
concert with performing our custom-designed test programs. Additionally, we utilize feedback provided by our customers.

Marketing and distribution relationships

     Within each targeted vertical industry, we intend to focus on co-marketing relationships with key application providers and systems
integrators. This strategy will allow us to define multiple channels of sale within a region while maintaining key strategic alliances.

                                                                     39
Table of Contents

Expand into New Rugged Product Markets

    We currently have five products in the large form factor segment of the rugged mobile computer market. We continue to consider other
market opportunities that are broader in scope and opportunity.

     We believe our family of rugged tablet PCs are uniquely positioned to capitalize on the convergence of four current market trends:

     •
            the increasing awareness and adoption of more rugged mobile computers, such as tablet PCs, in the face of the failure rates for
            office-oriented computers that have been deployed into challenging operating environments;

     •
            the transition toward rugged computing solutions in non-traditional office environments;

     •
            the surge in consumer tablet offerings; and

     •
            the expanding wireless data movement.

     We believe that many companies recognize that the total cost of computer ownership is improved by using rugged computing solutions.

Sales

     Our customers primarily consist of distribution companies such as large computer companies, specialized system integrators, software
vendors, distributors and value-added resellers, and to a lesser extent, end-users. For fiscal year 2012, approximately 97% of our total revenue
was attributable to sales through our distribution channels and approximately 3% of our total revenue was attributable to sales directly to our
end-users. We currently have relationships with more than 120 distributors. Our distributors generally have large sales organizations that in
turn sell our products to entities that are the ultimate end-users. Our distributors include large computer companies such as Dell, Inc.,
specialized system integrators such as Moxx Mobility, Psion and Peak Technologies, and software vendors such as Environmental Systems
Research Institute. In any given year, a single distributor may account for a significant portion of our revenue. In fiscal year 2012, we had one
reseller located in the United States, Prosys Information Systems Inc., that accounted for approximately 37% of our revenue.

     As of September 13, 2012, we had a sales team of ten individuals that have geographic responsibilities for direct and indirect sales
opportunities. Our sales team works closely with our distributors in defined regions. Our distributors are currently selling our products into the
public safety, utility, telecom, field service, warehousing logistics, transportation, oil and gas, manufacturing, route delivery, military and
homeland security markets.

     Our total revenue increased by approximately 55% in fiscal 2012 from fiscal 2011, due primarily to the purchase orders we received in the
third and fourth fiscal quarters of 2012. Total revenue for the three months ended June 30, 2012 increased by approximately $7,272,000, or
approximately 272%, as compared to the three months ended June 30, 2011. Our North American revenue was approximately 74% of total
revenue in fiscal year 2012 as compared to approximately 52% of total revenue in fiscal year 2011 and 86% of revenue for the three months
ended June 30, 2012. The increase in North American revenue from fiscal 2011 to fiscal 2012 and for the first three months of fiscal 2013 was
primarily attributable to orders from our large utility customer in the United States.

Marketing

   We have various marketing programs aimed at increasing awareness of our products and services, product management and corporate
communications. Key elements of our marketing programs include:

     •
            Participation in targeted industry trade shows and conferences;

                                                                       40
Table of Contents

     •
            Editorial coverage and advertisements placed in targeted vertical markets, technology and business mediums, including specific
            industry publications;

     •
            Product marketing refinement by obtaining customer feedback through data collected by our customer support team, as well as
            through surveys;

     •
            Use of our website for communications, as well as customer and channel support capabilities;

     •
            Inclusion of customers, industry experts and others in the product development and testing cycles; and

     •
            Development of proven case studies or application papers for specific vertical market applications.

      We also market our products through a number of different industry participants, including independent software vendors with application
software for a specific industry, systems integrators that bring elements such as wireless communications systems to a project, agents that
specialize in rugged mobile computing devices and other consultants. We believe that one of the driving forces behind these relationships is to
produce an active project in which the combination of our systems with the application software and support services seeks to provide a
tailored solution designed to meet specific customer needs.

     The market pricing for rugged computers is higher than that for commercial grade computers used in traditional office settings. We
believe that the higher pricing reflects our theory that the total cost of ownership of a rugged computer over a three to five year period can be
significantly lower than the cost of a non-rugged computer. In fact, several of our customers have disclosed in our customer-based market
research studies that they experienced higher direct costs using non-rugged devices ( e.g. more frequent damage, information retrieval costs,
replacement costs), as well as higher indirect costs, such as prolonged downtime.

     We recognize that, as a small company, our key to success depends on our ability to provide better products than our larger competitors
and to be more responsive to our customers' needs. Some of our product innovations, such as the AllVue TM screen and the Dual Mode
functionality, were the result of customer feedback. When embarking on the development of a new product or an upgrade of an existing one,
we devote resources to engaging customers in the design process. We believe that this process, combined with our flexibility to make quick
decisions with the support of our contract manufacturer, Wistron, has enabled us to deliver products and market leading technology ahead of
our competitors.

Market Segments

      We target a number of different sectors in which we believe the deployment of rugged mobile computers can greatly improve operating
efficiencies and reduce related costs.

      Logistics.  We believe globalization, increased competition and heightened consumer expectations are contributing factors to the
adoption of mobile computing technologies by many leading warehousing, distribution and retail entities. These operations typically require
real time price modifications, product introductions and transitions, and timely inventory management. We believe that this sector will continue
to automate order fulfillment, inventory control and management systems as part of an overall effort to integrate enterprise resource planning
and supply chain management information systems. Our end-users in this sector include Daimler AG.

      Utilities & Energy. Generally, utilities and energy related companies continuously have to respond to customers' requests and power
outages expeditiously and efficiently to remain competitive. We believe that the reliable and real-time movement of information to and from
the field is vital to the success of any field automation system. Hydro One in Canada and Essent in Europe are end-users of our products in this
sector.

                                                                       41
Table of Contents

     Telecommunications.         Generally, telecom related companies continuously have to respond to customers' requests for service and
infrastructure maintenance expeditiously and efficiently to remain competitive. We believe the reliable and real-time movement of information
to and from the field is vital to the success of any field automation system. A global top five telecommunications provider and Arkansas Utility
are end-users of our products in this sector.

     Public Safety. Given the focus in the U.S. on homeland security matters and the continued commitment by Federal, state and municipal
governments on law enforcement, fire and emergency medical services, members of the public safety sector are searching for efficiencies that
will better enable them to do their jobs. Rugged mobile computing devices assist these groups in a variety of ways. For example, having a
reliable and durable tablet PC provides law enforcement agencies with immediate and reliable access in the field to national and local criminal
databases. In this market segment, our products have been sold to over 300 public safety organizations in the U.S., including the Rochester,
Santa Monica, Detroit and Cleveland Police Departments, and multiple international organizations, including Air Berlin.

     Military. As the military continues to transition to commercial and industrial grade rugged mobile computing systems, we expect this
sector will represent a significant opportunity for our products. In particular, we believe the U.S. Department of Defense is generally moving
away from full military specifications adherence, except for system-critical operations, and instead is increasing emphasis on purchasing
commercial, off-the-shelf (COTS) equipment. The military market sector includes ground and C4I (Command, Control, Communications,
Computers and Intelligence) systems. Our end-users in this sector include the U.S. Air Force and the Royal Dutch Air Force.

      Field Service. According to VDC, the second largest market segment for large form factor rugged mobile devices is the field service
industry. This market segment includes mobile technicians from the telecommunications, cable and appliance sectors, who typically must have
real time access to mission critical data, including work tickets, schematics, manuals, customer service records, inventory levels and order
status. We believe that companies in this market sector recognize that linking field service personnel through the entire enterprise system can
improve customer response, billing, inventory management and throughput metrics, thereby increasing operational efficiencies. Our end-users
in this market segment include Dycom, Boeing and HydroChem.

Research and Development

     We have assembled an experienced engineering and product development team. Through the collaboration of our employees and the
engineering team of our contract manufacturer, Wistron, we believe we are able to bring significant resources to the research, development and
design of our products.

     We seek to design and manage product life cycles through a controlled and structured process. We involve customers and industry experts
from our target markets in the definition and refinement of our product development. Product development emphasis is placed on meeting
industry standards and product specifications, ease of integration, ease of use, cost reduction, design-for manufacturability, quality and
reliability.

     We continue to invest in research and development to enhance and expand our rugged mobile computing systems. Additional form
factors, operating systems and screen technologies are being considered for integration into our rugged platform as we seek to expand into
additional markets. During the fiscal years ended March 31, 2012 and 2011, we expended $1,923,000 and $2,063,000, respectively, on research
and development activities and during the three months ended June 30, 2012, we expended $551,000 on research and development activities.
None of the cost of such activities is borne by our customers.

                                                                      42
Table of Contents

Competition

     Competition in our industry is intense and is characterized by rapidly changing technologies, evolving industry standards, frequent new
product introductions and rapid changes in customer requirements. To be competitive, we must continue to develop and introduce, on a timely
and cost-effective basis, new products and product features that keep pace with technological developments and emerging industry standards
and address the increasingly sophisticated needs of our customers. We believe that the principal competitive factors affecting the market for our
products are the product's performance, features and reliability, price, customer service, reputation in the industry and brand loyalty. We
believe that our strongest competitive advantages are our products' durability and reputation in the industry. In order to compete, we will be
required to continue to respond promptly and effectively to the challenges of technological changes and our competitors' innovations.

     Our primary competitors in the mobile rugged computer market include the following:

    Panasonic. Panasonic is the largest provider of mobile rugged computers and offers a series of traditional and convertible notebooks.
Panasonic promotes a rugged computer, known as the Toughbook, which is well known in the industry.

     GD/Itronix.    GD/Itronix markets its semi-rugged pen tablet computer systems as part of its mobile portfolio, which also includes rugged
notebooks.

     DRS. DRS promotes a tablet PC as its main product in the rugged space and has a solution that competes with our iX104C5M in the
military market.

     We also face competition from manufacturers of non-rugged mobile computers, such as Dell, Inc., Hewlett-Packard Company, Apple
Computer, Inc., Sony and Toshiba, to the extent customers decide to purchase less expensive traditional computers for use in environments
better suited for mobile rugged computers.

     Our primary competitors have greater financial, technical, and research and development resources and marketing capabilities than we do.

Manufacturing

     We outsource the majority of our manufacturing services for our ruggedized mobile PC tablets to Wistron, including board production,
parts procurement, assembly, some quality assurance testing, warranty repair and service. We have a design and manufacturing agreement with
Wistron. Wistron makes computers and components for some of the world's largest technology companies, such as Dell, Inc. and
Hewlett-Packard Company. Wistron collaborates with us on product specifications and provides us with the flexibility to make changes to our
products as market conditions change.

     Under the terms of our agreement with Wistron, which we entered into in July 2003, Wistron provides us with design, manufacturing and
support services related to our ruggedized mobile PC tablets. The purchase price of our products produced by Wistron is determined based on
the specific configuration of the tablet PC being produced and is subject to a cost reduction plan and volume based discounts. At least
quarterly, we meet with Wistron to develop a cost reduction plan. The plan takes into account alternative suppliers along with components,
design, process changes and other cost savings procedures. Each month we provide Wistron with a six month rolling forecast of the products
we anticipate ordering. Generally, Wistron has 45 days after its acceptance of our purchase order to ship the product. If products ordered during
any quarter exceed the volume projected in the forecast, Wistron has agreed to use its reasonable best efforts to deliver the excess products
within 20 days after its acceptance of the applicable purchase order.

                                                                       43
Table of Contents

     Wistron has provided several warranties to us, including that Wistron has all necessary rights required to sell the products, that each
product will be free from any material defect for a period of up to 36 months, that the products will be free from any liens, encumbrances or
defects in title and that the products will comply with all specifications. The initial term of our agreement with Wistron was for one year and
automatically renews for additional one year terms, unless either party provides written notice of its intent to terminate the agreement at least
120 days prior to the expiration of any renewal term. The Wistron agreement most recently automatically renewed for a one-year term in July
2012. In addition, the Wistron agreement contains a provision that allows for termination for any reason by either party upon 120 days' notice.

    We purchase materials, supplies and product subassemblies for our ruggedized mobile personal computer tablets from a number of
vendors. Some key components included in our line of products are currently available only from single or limited sources. In the past, we have
experienced significant price increases and limited availability of certain components that are not available from multiple sources. We are
dependent upon Microsoft Corporation for various software products, including products included in our ruggedized mobile PC tablets.

     Like other participants in the computer manufacturing industry, we ordinarily acquire materials and components through a combination of
blanket and scheduled purchase orders to support our requirements for periods averaging 90 to 120 days. At times, we have been constrained
by parts availability in meeting our product orders. From time to time, we have obtained scarce components for somewhat higher prices on the
open market, which may have an impact on gross margins but does not disrupt production. On occasion, we have also acquired component
inventory from our suppliers in anticipation of supply constraints.

Intellectual Property

     Our performance and ability to compete are dependent to a significant degree on our proprietary technology. We rely primarily upon a
combination of patent, copyright and trade secret laws and license agreements to establish and protect proprietary rights in our products and
technology. We currently have four U.S. patents. In addition, we have four U.S. patent applications related to proprietary elements of our new
iX104C5 TM family of products and one patent application for our wireless dock. We are seeking to obtain additional patent protection for
certain key components of our technology, as well as obtaining protection in certain other international jurisdictions. Even with patent
protection, it may be possible for a third party to copy or otherwise obtain and use our products or technology without authorization or to
develop similar technology independently. In addition, effective patent, copyright and trade secret protection may be unavailable or limited in
certain foreign countries.

     We do not believe that our products infringe on the proprietary rights of any third parties. There can be no assurance, however, that third
parties will not claim such infringement by us or our licensees with respect to current or future products. In the past, we have had third parties
assert exclusive patent, copyright, trademark or other intellectual property right to technologies or marks that are important to our business.
Any such claims, with or without merit, could be time consuming, result in costly litigation, cause product shipment delays or require us to
enter into a royalty or licensing agreement, any of which could delay the development and commercialization of our products.

     We work closely with Wistron to stay abreast of the latest developments in rugged mobile computer technology. We obtain patent licenses
for some technologies, some of which require significant royalty payments, when we believe those licenses are necessary or advantageous to
our business. We have entered into non-exclusive licensing arrangements with Microsoft and other software suppliers for various operating
systems and application software that we sell with our rugged tablet PCs.

                                                                       44
Table of Contents

Government Regulation

     Our business is subject to regulation by various federal and state governmental agencies. Such regulation includes the radio frequency
emission regulatory activities of the U.S. Federal Communications Commission, the anti-trust regulatory activities of the U.S. Federal Trade
Commission and Department of Justice, the consumer protection laws of the Federal Trade Commission, the import/export regulatory activities
of the U.S. Department of Commerce, the product safety regulatory activities of the U.S. Consumer Products Safety Commission and
environmental regulation by a variety of regulatory authorities in each of the areas in which we conduct business.

Employees

    As of September 13, 2012, we had 42 full-time employees, of which 26 were employed in the operations, engineering, research and
development and customer support areas, five were involved in corporate, finance and administrative areas and 11 were employed in sales and
marketing. Our employees are not represented by a union or other collective bargaining unit and we have never experienced a work stoppage.
We believe that our employee relations are good.

Trademarks and Service Marks

    Trademarks or trade names of Xplore used in this prospectus include: "iX™" and "AllVue™." Each trademark, trade name or service
mark of any other company appearing in this prospectus belongs to its holder.

Properties

      We maintain our corporate functions, along with sales support, marketing, finance, engineering and operating groups, at a leased facility
totaling approximately 21,700 square feet at 14000 Summit Drive, Suite 900, Austin, Texas. The lease expires on August 31, 2014, and has a
current annual base rent, before reimbursable operating expenses, of approximately $165,000. We believe that our present facilities are suitable
for our existing and planned operations.

Legal Proceedings

     On November 9, 2006, we issued a Statement of Claim against Deloitte & Touché LLP (which we refer to as Deloitte) in the Ontario
Superior Court of Justice. In the Statement of Claim, we alleged negligence against Deloitte with respect to the auditing services provided to us
in connection with its audit in accordance with Canadian generally accepted accounting principles of our 2002, 2003 and 2004 audited financial
statements. The Statement of Claim seeks damages in the amount of Cdn. $4,070,000 for direct and indirect losses. On December 22, 2006,
Deloitte filed an answer to the Statement of Claim. On March 28, 2008, Deloitte filed an amended defense and counterclaim against us, seeking
indemnification for damages, costs and expenses (including legal fees and disbursements and personnel time) allegedly incurred by Deloitte in
responding to regulatory inquiries, requests, reviews or investigations relating to, arising out of or associated with Deloitte's review or audit
engagements for or during our fiscal years 2002, 2003 and 2004. We do not expect the counterclaim to have a material adverse impact on our
financial condition or results of operations. The parties have completed discovery, however, no trial date has been set.

     We are involved in other various claims and legal actions arising in the ordinary course of business. We believe that the ultimate outcome
of these matters would not have a material adverse impact on our financial condition or the results of operations.

                                                                       45
Table of Contents


                                               DIRECTORS AND EXECUTIVE OFFICERS

    As of the date of this prospectus, our directors, executive officers and significant employees are as follows:


              Name                  Age                       Positions with our Company
              Philip S.                     Chairman of the Board of Directors and Chief Executive
                Sassower              72    Officer
              Mark Holleran           54    President and Chief Operating Officer
              Michael J.
                Rapisand              53    Chief Financial Officer and Corporate Secretary
              Bryan J. Bell           51    Vice President of Engineering
              Steven C.
                Linahan               59    Vice President of Operations
              Jim S. Plas             45    Vice President of Marketing
              Andrea Goren            44    Director
              Ben Irwin               52    Director
              Thomas F.
                Leonardis             67    Director
              Kent Misemer            63    Director
              Brian E.
                Usher-Jones           66    Director

       Philip S. Sassower has served as our Chief Executive Officer since February 2006 and has served as a member of our board of directors
since December 2004. Mr. Sassower is the Chief Executive Officer of SG Phoenix LLC, a private equity firm, and has served in that capacity
since May 2003. Mr. Sassower has also been Chief Executive Officer of Phoenix Enterprises LLC, a private equity firm, and has served in that
capacity since 1996. From January 10, 2008 to January 7, 2010, Mr. Sassower served as a director of The Fairchild Corporation, a motorcycle
accessories and aerospace parts and services company, and from May 13, 2008 to January 7, 2010, Mr. Sassower served as Chairman of the
Board and Acting Chief Executive Officer of The Fairchild Corporation. On March 18, 2009, The Fairchild Corporation and 61 subsidiaries
filed a petition for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court, District of Delaware. On August 5,
2010, Mr. Sassower became Chairman of the Board and Chief Executive Officer of Communication Intelligence Corporation (OTCQB: CICI),
an electronic signature solutions and biometric signature verification company. Mr. Sassower is co-manager of the managing member of
Phoenix, our principal stockholder, which we refer to in this prospectus as Phoenix. Mr. Sassower's qualifications to serve on our board of
directors include more than 40 years of business and investment experience. Mr. Sassower has extensive experience working with management
teams and boards of directors, and in acquiring, investing in and building companies and implementing new business strategies.

      Mark Holleran has served as our President and Chief Operating Officer since February 2006. Mr. Holleran served as our Vice President
of Sales from April 2003 to February 2006.

     Michael J. Rapisand has served as our Chief Financial Officer and Corporate Secretary since August 2004. Prior to joining us,
Mr. Rapisand served as Chief Financial Officer of TippingPoint Technologies, Inc., a network-based security hardware manufacturer, from
December 2002 to March 2004.

       Bryan J. Bell became our Vice President of Engineering in April 2008. Prior to joining us, Mr. Bell was Vice President of Operations at
Sirific Wireless, a developer of solutions for 3.5G multi-mode, multi-band mobile cellular and broadband data for notebook computers, from
February 2003 to March 2008.

      Steven C. Linahan became our Vice President of Operations in May 2011. Prior to joining us, Mr. Linahan was a self-employed
Manufacturing and Supply Chain consultant since January 2009. Prior to becoming a consultant, Mr. Linahan was Vice President,
Operations/Supply Chain at TippingPoint Technologies, Inc., a network-based security hardware manufacturer, from July 2006 to December
2008. Prior to joining TippingPoint, Mr. Linahan was Director, Supply Chain at ClearCube Technology, Inc., a manufacturer of centralized
computing and virtual desktop solutions.

                                                                       46
Table of Contents

      Jim S. Plas became our Vice President of Marketing on August 13, 2012. Prior to joining us, Mr. Plas was Vice President of Product
Management and Marketing at ACXIOM, a multi-channel marketing services company specializing in delivering consumer insight and
precision customer recognition to Global 2000 companies from 2006 to 2012. Prior to joining ACXIOM, Mr. Plas served as Director of Global
Product Management for Enterprise Services at Dell, Inc. from 2004 to 2006.

      Andrea Goren has served as a member of our board of directors since December 2004. Mr. Goren is a Managing Director of SG
Phoenix LLC, a private equity firm, and has served in that capacity since May 2003, and has been associated with Phoenix Enterprises LLC
since January 2003. On August 11, 2011, Mr. Goren was appointed as Chief Financial Officer of Communication Intelligence Corporation
(OTCQB: CICI), for whom he had served as Chief Financial Officer since December 2010. Mr. Goren has also served as a director of
Communication Intelligence Corporation since August 5, 2010. Prior to joining SG Phoenix LLC, Mr. Goren served as Vice President of
Shamrock International, Ltd., a private equity firm, from June 1999 to December 2002. From January 10, 2008 to January 7, 2010, Mr. Goren
served as a director of The Fairchild Corporation. Mr. Goren is co-manager of the managing member of Phoenix, our principal stockholder.
Mr. Goren's qualifications to serve on our board of directors include his experience and knowledge acquired in more than 12 years of private
equity investing. Mr. Goren has played a significant role in SG Phoenix LLC's private equity investments and has developed extensive
experience working with management teams and boards of directors, including at numerous public companies in which SG Phoenix LLC has
invested.

      F. Ben Irwin has served as a member of our board of directors since May 2009. Mr. Irwin has been President and Owner of Rejen Inc, a
re-manufacturer and retailer of inkjet and laser toner cartridges, since September 2005. Prior to that, Mr. Irwin served as Senior Vice President
of Engineering of General Dynamics Itronix (formerly Intronix Corp., "Intronix"), a designer and manufacturer of rugged laptop and handheld
computing products, from July 2000 to February 2005. Mr. Irwin's qualifications to serve on our board of directors include his industry
experience and knowledge acquired while he was with Itronix.

      Thomas F. Leonardis has served as a member of our board of directors since June 2005. Mr. Leonardis has been Chief Executive Officer
of Ember Industries, Inc., a contract electronics manufacturer, since November 2001. Mr. Leonardis served as a director of DataMetrics
Corporation, a designer and manufacturer of rugged electronic products, from November 2001 to March 2008. Mr. Leonardis' qualifications to
serve on our board of directors include his industry experience and knowledge acquired during the nine years he has served at Ember
Industries, Inc. and while serving as a director of DataMetrics Corporation.

      Kent Misemer has served as a member of our board of directors since November 2011. From 2003 through 2009, Mr. Misemer was the
Chief Executive Officer and President of Liberty Propane, LLC, a portfolio company of Sterling Capital Partners, an independent retail propane
company, which was sold in December 2009. Previously, Mr. Misemer was the President and Chief Executive Officer of Propane Continental.
In addition to being a co-founder of Liberty Propane, Mr. Misemer was also involved in the creation of Propane Continental and Tri-Power
Fuels, Inc. Mr. Misemer serves as a director and member of the audit committee of Cornerstone Records Management, LLC, a private data
storage and offsite data management company. Mr. Misemer formerly served as a director of Pro-Tech Industries, Inc. (OTCQB: PTCK)
through January 2012, a regional leader in design/build services for the Fire Life Safety, alarm/detection, electrical and voice/data
communications infrastructure segments. Mr. Misemer's qualifications to serve on our board of directors include his over 30 years of executive
management experience in the propane industry supply chain, as well as other industries.

      Brian E. Usher-Jones has served as a member of our board of directors since 1996. Since 1992, Mr. Usher-Jones has been self-employed
as a merchant banker. Mr. Usher-Jones is currently a director of Newlook Industries Corp., a publicly traded technology investment company,
and Wireless Age Communications Inc., a solutions provider for waste and energy efficient products. From November 2000

                                                                       47
Table of Contents

to September 2007, Mr. Usher-Jones served as Chairman and Chief Financial Officer of Oromonte Resources Inc., a mining exploration
company. Mr. Usher-Jones served as our Treasurer and Interim Chief Financial Officer from August 1996 to November 1997 and again from
August 2001 to December 2001. Mr. Usher-Jones' qualifications to serve on our board of directors include his service as our Treasurer and
Interim Chief Financial Officer and his significant executive-level and financial management experience at private and public companies.

      There are no family relationships between any of our directors or executive officers. Pursuant to the terms of our amended and restated
certificate of incorporation, as amended, the holders of a majority of the outstanding shares of our Series A Preferred Stock are entitled to elect
two directors to our board of directors. Messrs. Sassower and Goren represent the directors designated by the holders of the Series A Preferred
Stock. Following the consummation of this offering, no shares of Series A Preferred Stock will be outstanding and, accordingly, such holders
will no longer have such voting rights. Following this offering, none of our officers or directors has any arrangement or understanding with any
other person pursuant to which such officer or director was selected to serve as officer or director.

                                                                        48
Table of Contents


                                                      EXECUTIVE COMPENSATION

Compensation of Named Executive Officers

     The following table sets forth the compensation for our fiscal years ended March 31, 2012 and 2011 earned by or awarded to, as
applicable, our principal executive officer, principal financial officer and our other most highly compensated executive officers as of March 31,
2012. In this prospectus, we refer to such officers as our "named executive officers."


                                                                                      Stock         Option
                    Name and Principal               Salary          Bonus           Awards         Awards           Total
                    Position              Year       US($)           US($)           US($)(1)       US($)(1)         US($)
                     Philip S.
                      Sassower—            2012               —              —         10,000 (3)     20,281 (3)       30,281
                       Chief
                         Executive
                         Officer(2)        2011               —              —              —         29,881 (3)       29,881

                    Mark Holleran—         2012      250,000          204,283 (5)           —        173,759         628,042
                     President and
                        Chief
                        Operating
                        Officer            2011      200,000 (4)       84,683 (5)      50,000 (4)    259,587         594,270
                    Michael J.
                     Rapisand—             2012      180,000           54,000 (7)           —         66,830         300,830
                      Chief Financial
                        Officer and
                        Corporate          2011      150,000 (6)             — (8)     30,000 (6)     68,471         248,471
                      Secretary


              (1)
                      Option award amounts included in this table reflect the compensation cost for the fiscal year ended, related to all options
                      granted to the named executive officer, calculated in accordance with FASB ASC Topic 718 and using a Black-Scholes
                      valuation model.

              (2)
                      Mr. Sassower does not receive a salary in connection with his services as our Chief Executive Officer. Mr. Sassower is
                      also the Chairman of our Board of Directors.

              (3)
                      Mr. Sassower was entitled to receive fees for fiscal years 2012 and 2011 in connection with being a member of our Board
                      of Directors. For fiscal year 2012, Mr. Sassower accepted 10,000 shares of Series D Preferred Stock in lieu of cash
                      compensation. For fiscal year 2011, Mr. Sassower accepted options to purchase 375 shares of our common stock in lieu
                      of such fees. Such amount includes those options.

              (4)
                      Mr. Holleran accepted 50,000 shares of our Series D Preferred Stock in April 2011 in lieu of $50,000 of cash
                      compensation for fiscal 2011.

              (5)
                      Under the terms of Mr. Holleran's employment agreement, in fiscal years 2012 and 2011 he had the opportunity to earn a
                      cash performance bonus of up to 100% of his base salary ($250,000) based on the achievement of various objectives,
                      including revenue, cash flow and profitability objectives. In fiscal 2012, Mr. Holleran earned $112,000 of the
                      performance bonus under his employment agreement as certain revenue, cash flow and profitability objectives were
                      achieved. In fiscal 2011, Mr. Holleran did not receive any performance bonus under his employment agreement as the
                      objectives were not achieved. Mr. Holleran's bonuses of $92,203 and $84,683 paid in fiscal years 2012 and 2011,
                      respectively, were based on his efforts in managing our sales team.
(6)
      Mr. Rapisand accepted 30,000 shares of our Series D Preferred Stock in April 2011 in lieu of $30,000 of cash
      compensation for fiscal 2011.

(7)
      Under the terms of Mr. Rapisand's Management by Objective (MBO) bonus plan, in fiscal years 2012 and 2011, he had
      the opportunity to earn a cash bonus of up to 40% of his base salary ($72,000) based on his achievement of revenue, cash
      flow and profitability objectives. In fiscal 2012, Mr. Rapisand earned $54,000 of the performance bonus as certain
      revenue, cash flow and profitability objectives were achieved.

                                                      49
Table of Contents

              (8)
                      The objectives under Mr. Rapisand's MBO plan were not achieved in fiscal year 2011 and no bonus was earned or paid.

Elements of Our Compensation Program

     The compensation of our executives is designed to attract, as needed, individuals with the skills necessary for us to achieve our objectives,
retain individuals who perform at or above our expectations and reward individuals fairly over time. Our executives' compensation has three
primary components: base salary; an annual cash incentive bonus; and equity-based compensation. In addition, we provide our executives with
benefits that are generally available to our other salaried employees.

     As a small company, we recognize that while we must pay salaries which help us to attract and retain talented executives who will help us
grow, we must do so within budgetary constraints. We reward outstanding performance with cash bonuses which in large part are based on
financial measures, such as revenue and EBITDA targets, and the achievement of strategic goals and corporate milestones. In addition, we
reward our executives with equity-based compensation as we believe equity compensation provides an incentive to our executive officers to
build value for us over the long-term and aligns the interests of our executive officers and stockholders. Generally, we use stock options as our
equity-based compensation because we believe that options generate value to the recipient only if the price of our common stock increases
during the term of the option. Other than in the event of a change of control, the stock options granted to our executives generally vest solely
based on the passage of time. We believe these elements support our underlying philosophy of attracting and retaining talented executives
while remaining within our budgetary constraints and also creating cash incentives which reward company-wide and individual performance
and aligning the interests of our executive officers with those of our stockholders by providing our executive officers equity-based incentives to
ensure motivation over the long-term.

     The individual elements of our compensation program are as follows:

    Base Compensation. It is our policy that the base salaries paid to our executive officers should reflect the individual responsibility and
experience of the executive officer and the contribution that is expected from the executive officer. Base salaries are reviewed by the
compensation committee on an annual basis to satisfy these criteria.

      Our Chief Executive Officer does not receive a salary in connection with his services. Our President and Chief Operating Officer and our
Chief Financial Officer received an aggregate of 80,000 shares of our Series D Preferred Stock in lieu of a total of $80,000 in cash salaries in
fiscal 2011.

     Cash Incentive Bonuses. Our executive officers are eligible for annual incentive bonuses if they meet key financial and operational
objectives. The payment of cash incentive bonuses to executive officers is within the discretion of our compensation committee and is based on
our compensation committee's assessment of our performance and the performance of each executive officer measured in large part against
financial objectives, strategic goals and corporate milestones. These financial, strategic and corporate objectives include revenue and EBITDA
targets, product development objectives and corporate milestones such as the completion of financings. Our compensation committee may in its
discretion award a cash incentive bonus to an executive officer for partial achievement of such executive officer's objectives. The total amount
of the cash incentive bonus available to an executive officer is either based upon a percentage of such executive officer's base salary or a fixed
dollar amount. Bonuses are reviewed by the compensation committee on an annual basis. Furthermore, in recognition of an executive officer's
exceptional performance our board of directors may award a performance bonus in excess of that executive officer's maximum cash incentive
bonus.

    Each of our named executive officers (other than Philip S. Sassower) participates in his own individual Management by Objectives plan,
which we refer to as a MBO plan, as discussed in footnotes 5 and 7 in the

                                                                       50
Table of Contents

summary compensation table for fiscal years 2012 and 2011. The MBO plan of our President and Chief Operating Officer is set forth in his
employment agreement discussed below.

     Equity-Based Compensation. We use stock options to reward long-term performance and to ensure that our executive officers have a
continuing stake in our long-term success. Authority to make stock option grants to our executive officers rests with our board of directors. In
determining the size of stock option grants, our board of directors considers our actual performance against our strategic plan, individual
performance, the extent to which shares subject to previously granted options are vested and the recommendations of our Chief Executive
Officer and other members of senior management.

      We do not have any program, plan or obligation that requires us to grant equity compensation on specified dates. We grant stock options
at regularly scheduled meetings of our board of directors or at special meetings. The authority to make equity grants to our executive officers
rests with our board of directors, although, as noted above, our board of directors does, in determining the grants of equity awards, consider the
recommendations of our Chief Executive Officer and other members of senior management and our compensation committee. All stock options
granted have an exercise price equal to or greater than the closing price of our common stock on the date that the grant action occurs.

     With respect to establishing compensation for our executive officers, we do not have any formal policies in determining how specific
forms of compensation are structured or implemented to reflect the individual performances and/or individual contributions to the specific
items of our performance. In addition, we have no policies regarding the adjustment or recovery of awards or payments if the relevant
performance measures, upon which such award or payment was based are restated or otherwise adjusted in a manner that would reduce the size
of an award or payment.

     With respect to newly hired employees, our practice is typically to make stock grants at the first meeting of our board of directors
following such employee's hire date. We do not have any program, plan or practice to time stock options grants with the release of material
non-public information. We do not time, nor do we plan to time, the release of material non-public information for the purposes of affecting the
value of executive compensation.

     On May 14, 2010, our board of directors granted an aggregate of 4,588 restricted share awards, which vested on March 31, 2011, to
certain employees, including an aggregate of 2,750 share awards granted to our executive officers other than our Chief Executive Officer, in
lieu of cash compensation for fiscal year 2011. On February 23, 2011, our board of directors modified awards to the executive officers and
replaced the 2,750 shares of common stock with 110,000 shares of our Series D Preferred Stock. On March 31, 2011, 1,314 shares of our
common stock and 110,000 shares of our Series D Preferred Stock that were granted became fully vested. The market value of the common
stock was $44.00 on the date of grant, and the intrinsic value of the restricted shares of approximately $149,000 was recognized as
compensation expense in fiscal 2011.

      On March 29, 2011, our board of directors granted options to purchase an aggregate of 119,213 shares of common stock to all employees,
directors and certain consultants at an exercise price of $24.00 per share. One-fourth of each grant vested immediately with the remainder
vesting annually over the following three years. In connection with the grant, all of our executive officers other than our Chief Executive
Officer voluntarily terminated all rights to outstanding option grants aggregating 15,503 shares of common stock. The fair value of the grants
with immediate vesting reduced by the voluntarily terminated shares that were not vested resulted in the recognition of approximately $466,000
of stock compensation expense in the fourth quarter of the year ended March 31, 2011.

     On August 4, 2011, our board of directors granted preferred stock to each director in lieu of cash compensation otherwise payable to each
director in connection with his service as a board member. Our board of directors granted to each director 10,000 shares of our Series D
Preferred stock, which fully vested on March 31, 2012, for services provided during the fiscal year ended March 31, 2012.

                                                                       51
Table of Contents

    On August 4, 2011, our board of directors approved the issuance to SG Phoenix LLC, an entity controlled by Philip Sassower (our Chief
Executive Officer) and Andrea Goren (a director), of 150,000 shares of our Series D Preferred stock, which award fully vested on March 31,
2012, for services rendered for the year ended March 31, 2012.

Employment Agreements

Mark Holleran

      On June 30, 2006, we entered into an employment agreement with Mark Holleran, our President and Chief Operating Officer. The
agreement was for a period of two years, and is automatically renewable for additional one year periods unless either party gives written notice
that it or he does not wish to extend the term, in which case the agreement terminates on June 30 of the next year. The agreement automatically
renewed in June 2012 for an additional year. In consideration for his services, during the term Mr. Holleran is entitled to receive a base salary
of $250,000 per year, subject to any increase as may be approved by our board of directors. In fiscal 2011, Mr. Holleran agreed to take $50,000
of his salary through a stock award of 50,000 shares of Series D Preferred Stock. Mr. Holleran is also entitled to receive a performance bonus
of up to 100% of his base salary based on his achievement of objectives in the following categories: revenue, hiring new employees, product
development, retention of staff, EBITDA performance and additional financing. In addition, we may award, in our sole discretion, Mr. Holleran
additional performance bonuses in recognition of his performance.

      Mr. Holleran is also eligible to participate in a transaction bonus pool in the event of the sale of our Company during the term of
Mr. Holleran's employment agreement. The amount of the transaction bonus pool will be based upon the total consideration received by our
stockholders from the sale of our Company, less our transaction expenses. Mr. Holleran will be entitled to receive 50% of the total amount of
the transaction bonus pool.

     As part of the employment agreement, we agreed that if we terminate Mr. Holleran's employment without cause during the term of his
employment agreement, Mr. Holleran would receive his base salary for one year, commencing on the termination date, reduced by the amount
earned by Mr. Holleran from other employment during that period, plus an additional amount equal to the average of the performances bonuses
paid to Mr. Holleran during the prior two calendar years. The employment agreement also contains customary non-compete, non-solicitation,
non-disparagement and confidentiality provisions.

Severance and Change in Control Benefits

     Mark Holleran, our President and Chief Operating Officer, has a provision in his employment agreement that gives him severance benefits
described above if his employment is terminated without cause.

     We have established a transaction bonus pool for our executive officers and senior management team upon the sale of our Company. The
amount of the transaction bonus pool is based upon the total consideration received by our stockholders from the sale of our business, less our
transaction expenses. Under the terms of his employment agreement, Mr. Holleran is entitled to receive 50% of the total amount of the
transaction bonus pool if our Company is sold during the term of his employment. In addition, under the terms of our transaction bonus pool, if
our Company is sold during the term of their employment, our Chief Financial Officer, Michael J. Rapisand, will receive 30% of the pool, our
Vice President of Engineering, Bryan J. Bell, will receive 5% of the pool and the remaining 15% of the pool will be distributed among our
senior management team as determined by our board of directors.

     We have chosen to provide these benefits to our executives because we believe we must remain competitive in the marketplace. These
severance and acceleration provisions and estimates of these change

                                                                       52
Table of Contents

of control and severance benefits are described in the section entitled "Estimated Payments and Benefits Upon Termination or Change in
Control" below.

Pension Benefits

    We do not sponsor any qualified or non-qualified defined benefit plans. We do maintain a 401(k) plan for our employees, including our
executive officers; however, we do not match contributions made by our employees, including contributions made by our executive officers.

Nonqualified Deferred Compensation

      We do not maintain any non-qualified defined contribution or deferred compensation plans. Our board of directors may elect to provide
our executive officers and employees with non-qualified defined contributions or deferred compensation benefits if it determines that doing so
is in our best interests.

Other Benefits

     Our executive officers are eligible to participate in all of our employee benefit plans, such as medical, dental, vision, group life and
disability insurance and our 401(k) plan, in each case on the same basis as our other employees.

Impact of Regulatory Requirements

      Deductibility of Executive Compensation. Our executive officers' MBO plans and our amended and restated share option plan do not
currently provide compensation that qualifies as "performance-based compensation" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended. Accordingly, compensation in excess of $1 million paid to a named executive officer during any one year
that is attributable to one of those arrangements would not currently be deductible for U.S. federal income tax purposes. We may, in the future,
reevaluate those plans and redesign them so that compensation attributable to one or both of those plans would qualify as "performance-based
compensation" within the meaning of Section 162(m) and would be deductible for U.S. federal income tax consequences. Our 2009 Stock
Incentive Plan provides for stock options and other awards that qualify as "performance-based compensation" as well as certain awards, such as
restricted share awards, that do not so qualify.

     Accounting for Stock-Based Compensation.        We account for stock-based payments in accordance with the requirements of Accounting
Standards Codification ("ASC") 718.

Stock Ownership Requirements

    We do not currently have any requirements or guidelines relating to the level of ownership of our common stock by our directors or
executive officers.

                                                                      53
Table of Contents

Outstanding Equity Awards at 2012 Fiscal Year-End

    The following table sets forth the equity awards outstanding at March 31, 2012 for each of the named executive officers.

Option Awards


                                                                     Equity Incentive
                                                                      Plan Awards
                                                Number of              Number of
                                                 Securities            Securities
                                                Underlying             Underlying                   Option             Option
                                                Unexercised            Unearned                    Exercise           Expiration
             Name                               Options (#)            Options (#)                 Price ($)            Date
               Philip S. Sassower—                        200                        100 (1)   $        40.00           04/29/2014
                 Chief Executive Officer                  375                         —        $        60.00           03/31/2014
                                                          375                         —        $        60.00           06/09/2014
                                                          375                         —        $        44.00           03/31/2015
                                                        1,626                      1,625 (2)   $        24.00           03/28/2016

             Mark Holleran—                            16,250                    16,250 (3) $           24.00           03/28/2016
              President and Chief
                 Operating Officer

               Michael J. Rapisand—                     6,250                      6,250 (4) $          24.00           03/28/2016
                Chief Financial Officer
                  and Corporate
                  Secretary


             (1)
                     100 options vested on April 20, 2012.

             (2)
                     812 options vest on March 29, 2013 and 813 options vest on March 29, 2014.

             (3)
                     8,125 options vest on March 29, 2013 and 8,125 options vest on March 29, 2014.

             (4)
                     3,125 options vest on March 29, 2013 and 3,125 options vest on March 29, 2014.

Stock Awards


                                                                                                STOCK VESTED
                                                                                             Series D Stock Awards
                                                                                        Number of
                                                                                          Shares                 Value
                                                                                        Acquired on           Realized on
                    Name                                                                Vesting (#)           Vesting ($)
                    Philip S. Sassower(1)                                                      10,000                10,000
                    Mark Holleran                                                                  —                     —
                    Michael J. Rapisand                                                            —                     —


                    (1)
                            For fiscal year 2012, Mr. Sassower accepted 10,000 shares of Series D Preferred Stock in lieu of cash
                            compensation for his services as a member of our Board of Directors for such year.

Estimated Payments and Benefits Upon Termination or Change in Control
Holleran Employment Agreement

     The following table describes the potential payments and benefits payable to Mr. Holleran, our President and Chief Operating Officer,
upon termination of his employment by us without cause, as if his employment had terminated as of the March 31, 2012, the last business day
of our last fiscal year. If Mr. Holleran's employment is terminated by us as a result of his death or disability or by us for cause or

                                                                    54
Table of Contents

voluntary by Mr. Holleran, he is entitled to receive any earned or accrued, but unpaid, base compensation and bonus and all accrued but unused
vacation days through the termination date.


                                                                                                       Termination
                                                                                                       by Company
                      Payments and Benefits                                                           Without Cause(1)
                      Compensation:
                        Base salary(2)                                                            $              250,000 (4)
                        Performance bonus(3)                                                      $               56,250 (5)
                      Benefits and Perquisites:                                                   $               15,936 (6)


                      (1)
                              For purposes of Mr. Holleran's employment agreement, "cause" includes, among other things, (i) his willful failure
                              to perform his duties under his employment agreement, (ii) any intentional act of fraud, embezzlement or theft
                              involving more than a nominal amount of our assets or property, (iii) any material damage to our assets, business
                              or reputation resulting from his intentional or grossly negligent conduct, (iv) his intentional wrongful disclosure of
                              material confidential information, (v) his intentional engagement in competitive activity which would constitute a
                              breach of his employment agreement and/or his duty of loyalty, (vi) his intentional breach of any material
                              employment policy, or (vii) his ineligibility for any reason to work lawfully in the United States for a period of
                              four consecutive months.

                      (2)
                              Assumes that there is no earned but unpaid base salary at the time of termination.

                      (3)
                              Assumes that there is no earned but unpaid bonus at the time of termination.

                      (4)
                              If Mr. Holleran is terminated without cause, Mr. Holleran is entitled to receive his base salary in effect
                              immediately prior to his termination of employment for a period of 12-months commencing on the termination
                              date, subject to reduction by any amounts he earns during the 12-month period.

                      (5)
                              Under the terms of Mr. Holleran's employment agreement, if Mr. Holleran is terminated without cause, he is
                              entitled to receive as severance an amount equal to the average of his performance bonuses paid to him during the
                              two calendar years preceding his termination. Mr. Holleran did not receive a performance bonus in fiscal 2011 and
                              received a performance bonus of $112,500 in fiscal 2012.

                      (6)
                              Represents payments of $1,328 a month to pay the cost of Mr. Holleran's continued participation in our group
                              health plans under COBRA during the 12-month severance period.

Change in Control Benefits

     Under the terms of our Amended and Restated Share Option Plan, which we also refer to as our Amended Plan, upon a change in control
of our Company all outstanding options will immediately vest and become exercisable. A "change of control" means the occurrence of (i) a
person, including the person's affiliates and any other person acting jointly or in concert with that person, becoming the beneficial owner of, or
exercising control over, more than 50.1% of the total voting power of our common stock; or (ii) our Company consolidating with, or merging
with or into, another person or selling, transferring, leasing or otherwise disposing of all or substantially all of our assets to any person, or any
person consolidating with, or merging with or into, our Company, in any such event pursuant to a transaction in which our outstanding shares
of common stock are converted into or exchanged for cash, securities or other property, except for any such transaction in which the holders of
our then outstanding common stock receive voting securities, or securities exchangeable at the option of the holder into voting securities, of the
surviving person which constitute a majority of the voting securities.

                                                                         55
Table of Contents

     Under our 2009 Stock Incentive Plan, in the event of certain business combinations, including the sale or lease of all or substantially all of
our assets, or a merger or consolidation involving us in which all or substantially all of the beneficial owners of our capital stock prior to such
business combination own 50% or less of the outstanding shares of common stock after the business combination or a similar transaction, each
of which we refer to as a "corporate transaction", and subject to any vesting acceleration provisions in an award agreement, outstanding awards
will be treated in the manner provided in the agreement relating to the corporate transaction (including as the same may be amended). The
corporate transaction agreement will not be required to treat all awards or individual types of awards similarly in the corporate transaction;
provided, however, that the corporate transaction agreement will provide for one of the following with respect to all outstanding awards (as
applicable):

     •
            the continuation of the outstanding award by us, if we are a surviving company;

     •
            the assumption of the outstanding award by the surviving company or its parent or subsidiary;

     •
            the substitution by the surviving company or its parent or subsidiary of its own award for the outstanding award;

     •
            full exercisability or vesting and accelerated expiration of the outstanding award, followed by the cancellation of such award;

     •
            the cancellation of an outstanding option or stock appreciation right and a payment to the optionee equal to the excess of (x) the
            fair market value of the shares subject to such option or stock appreciation right (whether or not such option or stock appreciation
            right is then exercisable or such shares are then vested) as of the closing date of such corporate transaction over (y) its aggregate
            exercise price; or

     •
            the cancellation of an outstanding restricted stock unit and a payment to the participant equal to the fair market value of the shares
            subject to such restricted stock unit (whether or not such restricted stock unit is then vested) as of the closing date of such
            corporate transaction.

    The following table sets forth the potential payments to our named executive officers as if we had a change of control as of March 31,
2012, the last business day of our 2012 fiscal year.


                                                                       Transaction                Market Value of
                      Name                                            Bonus Pool(1)              Accelerated Options
                      Philip S. Sassower—Chief Executive
                        Officer                                                       — (2)                            — (3)
                      Mark Holleran—President and Chief
                        Operating Officer                         $        1,050,904 (4)                               — (3)
                      Michael J. Rapisand—Chief Financial
                        Officer                                   $           630,542 (5)                              — (3)


                      (1)
                             Our named executive officers (except for Philip S. Sassower) are eligible to participate in a transaction bonus pool
                             designed to incent and reward our executives who are employed by us upon the sale of our Company. Under the
                             transaction bonus pool, an amount equal to 5% of the per share sales consideration up to $136 per share and 10%
                             of the remaining per share consideration received through such sale, in each case after deducting the transaction
                             expenses, will be allocated to the transaction bonus pool. The Board of Directors and management are currently in
                             discussions relating to an amendment to the transaction bonus pool to adjust the amount of consideration that the
                             participants are eligible to receive in connection with (i) the sale of all or substantially all of the outstanding
                             securities of the Company to an unrelated third party or parties or (ii) the sale of all or substantially all the assets
                             of the Company and its subsidiaries taken as a whole to an unrelated third party or parties ("Eligible Sale
                             Transaction"). Pursuant to such discussions, the transaction bonus pool may be amended so that all the eligible
                             participants in the transaction bonus pool are eligible to receive, in the aggregate, consideration equal to 5% of the
                             total net sales proceeds
56
Table of Contents

                          received by the Company's stockholders in an Eligible Sale Transaction plus an additional 5% of such proceeds
                          above $59 million (the "Hurdle Rate"), with such Hurdle Rate subject to increase on a dollar for dollar basis by the
                          amount of gross proceeds received by the Company in connection with the future issuance of equity securities or
                          securities convertible into equity securities of the Company in any financing transaction. No formal Board of
                          Directors action has been taken as of the date hereof with respect to such amendment. The participation in the
                          transaction bonus pool will be allocated as follows: 50% of the pool to Mark Holleran, our President and Chief
                          Operating Officer, 30% of the pool to Michael J. Rapisand, our Chief Financial Officer, 5% of the pool to Bryan J.
                          Bell, our Vice President of Engineering and the balance to our then current senior management team, as determined
                          by our board of directors, in consultation with Mr. Holleran.

                    (2)
                            Mr. Sassower is not eligible to participate in the transaction bonus pool.

                    (3)
                            Pursuant to the terms of our Amended Plan, certain outstanding options shall immediately vest upon the
                            occurrence of a change of control of our Company. Assuming a market price of $23.40 per share, which represents
                            the closing price of our common stock on March 31, 2012 as reported by the OTCQB Link, giving effect to the
                            reverse stock split, the exercise price of all of these options held by such executive officer would be above the
                            market price and thus the accelerated options would have a value of nil. Pursuant to our 2009 Plan, our board of
                            directors may determine, at the time of grant or thereafter, that the vesting of options granted under that plan may
                            accelerate upon a change in control of our Company. Currently, no such options have such acceleration
                            provisions, and we assume that our board of directors will not determine to accelerate the vesting of the options
                            with exercise prices below $23.40 per share in the future.

                    (4)
                            Assuming (i) a sale in which the holders of our common stock receive per share sales consideration of $23.40 per
                            share, which represented the closing price of our common stock on March 31, 2012 as reported by the OTCQB
                            Link, giving effect to the reverse stock split, (ii) transaction costs of 10% of the total proceeds, and (iii) the
                            aggregate transaction bonus pool of $2,101,807. Mr. Holleran would be entitled to receive 50% of the transaction
                            bonus pool.

                    (5)
                            Assuming (i) a sale in which the holders of our common stock receive per share sales consideration of $23.40 per
                            share, which represented the closing price of our common stock on March 31, 2012 as reported by the OTCQB
                            Link, giving effect to the reverse stock split, (ii) transaction costs of 10% of the total proceeds, and (iii) the
                            aggregate transaction bonus pool of $2,101,807. Mr. Rapisand would be entitled to receive 30% of the transaction
                            bonus pool.

                                                                      57
Table of Contents

Compensation of Directors

    The following table sets forth compensation information for our directors who are not named executive officers for our fiscal year ended
March 31, 2012.


                                                  Fees Earned          Series D
                                                     or Paid            Stock            Option
                     Name                          in Cash ($)        Awards ($)        Awards ($)        Total ($)
                     Brian E.
                        Usher-Jones(1)                           —         10,000             29,036         39,036
                     Andrea Goren(2)                             —         10,000             30,281         40,281
                     Thomas F.
                        Leonardis(3)                             —         10,000             30,281         40,281
                     Kent Misemer(4)                             —          4,000              2,937          6,937
                     F. Ben Irwin(5)                             —         10,000             27,376         37,376


                     (1)
                            As of March 31, 2012, an aggregate of 10,000 Series D Preferred Stock awards and 4,548 option awards were
                            outstanding.

                     (2)
                            As of March 31, 2012, an aggregate of 10,000 Series D Preferred Stock awards and 4,676 option awards were
                            outstanding.

                     (3)
                            As of March 31, 2012, an aggregate of 10,000 Series D Preferred Stock awards and 4,676 option awards were
                            outstanding.

                     (4)
                            As of March 31, 2012, an aggregate of 4,000 Series D Preferred Stock awards and 1,250 option awards were
                            outstanding.

                     (5)
                            As of March 31, 2012, an aggregate of 10,000 Series D Preferred Stock awards and 4,001 option awards were
                            outstanding.

Director Independence

     Our board of directors has determined that each of Brian E. Usher-Jones, F. Ben Irwin and Kent Misemer are independent directors as that
term is defined under current listing standards of NASDAQ.

                                                                     58
Table of Contents


                                                                             SECURITY OWNERSHIP OF CERTAIN
                                                                          BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain actual and pro forma information regarding the beneficial ownership of our capital stock as of
September 13, 2012 giving effect to our 1-for-400 reverse split of our common stock completed on such date by (i) each person known by us to
be the beneficial owner of more than 5% of any class of our voting securities, (ii) each of our directors, (iii) each of our "named executive
officers" and (iv) our directors and executive officers as a group. The pro forma information gives effect to the automatic conversion of all of
our preferred stock into common stock upon consummation of the offering (excluding shares of common stock issuable in connection with
dividends with respect to our preferred stock from September 14, 2012 through the consummation of this offering). The pro forma as adjusted
information gives effect to the automatic conversion of all our preferred stock into common stock upon consummation of the offering and the
sale by us of 1,700,000 shares of common stock in this offering at an assumed offering price of $5.92 per share (excluding shares of common
stock issuable in connection with dividends with respect to our preferred stock from September 14, 2012 through the consummation of this
offering).

     Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to
securities. For purposes of determining the applicable percentage of beneficial ownership of our common stock, we have assumed that each
series of our convertible preferred stock outstanding has been converted in full into common stock. All share ownership figures include shares
of our common stock issuable upon securities convertible or exchangeable into shares of our common stock within sixty (60) days of
September 13, 2012, which are deemed outstanding and beneficially owned by such person for purposes of computing his or her percentage
ownership, but not for purposes of computing the percentage ownership of any other person.



                                                                                 Series A Preferred
                                                                                 Stock Beneficially
                                                                                       Owned
                                                                                                                                                                                                                                                            Pro Forma A
                                                                                                                     Series B Preferred                                                                                                                   Adjusted Comm
                                                                                                                     Stock Beneficially                                                                                                                   Stock Beneficia
                                                                                                                           Owned                                                                                                                               Owned
                                                                                                                                                       Series C Preferred                  Series D Preferred              Pro Forma Common
                                                                                                                                                       Stock Beneficially                  Stock Beneficially               Stock Beneficially
                                                                                                                                                             Owned                               Owned                           Owned



                                             Common Stock
                                            Beneficially Owned
                                                                             Number of                            Number Of                        Number of                           Number of
                                                                             Shares of                             Shares of                       Shares of                           Shares of
                                                                              Series A                              Series B                        Series C                            Series D
                                                                             Preferred                             Preferred                       Preferred                           Preferred
                                                                               Stock                                 Stock                           Stock                               Stock
              Name of                                      Percentage                            Percentage                      Percentage                           Percentage                          Percentage      Number        Percentage     Number         Pe
              Beneficial                Number of              of                                    of                              of                                   of                                  of             of             of            of
              Owner(1)                  Shares(2)           Class(3)                              Class(4)                        Class(5)                             Class(6)                            Class(7)       Shares(8)       Class        Shares(9)
               Philip S. Sassower         1,005,098 (10)           42.5 %      44,708,384 (23)           71.1 %            —               —         4,320,000 (26)           25.3 %     5,225,535 (30)           34.2 %    2,876,302           44.9 %   2,876,302
              Mark Holleran                  25,410 (11)             1.1 %             —                   —               —               —                —                   —           57,539                    *        30,693              *        30,693
               Michael J. Rapisand           12,908 (12)               *          147,059                   *              —               —                —                   —           34,523                    *        20,043              *        20,043
              Brian E. Usher-Jones           17,087 (13)               *               —                   —               —               —                —                   —          126,627                    *        28,714              *        28,714
               Andrea Goren                 670,984 (14)           29.1 %      31,032,014 (24)           49.4 %            —               —         3,520,000 (27)           20.6 %     2,565,933 (31)           16.8 %    1,894,815           29.8 %   1,894,815
              Thomas F. Leonardis             3,701 (15)               *               —                   —               —               —                —                   —           10,423                    *         4,658              *         4,658
               Kent Misemer                  12,614 (16)               *               —                   —               —               —                —                   —          195,164 (32)             1.3 %      30,535              *        30,535
              F. Ben Irwin                    3,027 (17)             —                 —                   —               —               —                —                   —           10,423                    *         3,984              *         3,984
               Phoenix Venture
                Fund LLC                    624,031 (18)           27.4 %      31,032,014 (24)          49.4 %             —               —         3,320,000 (28)          19.4 %      2,341,655 (33)           15.3 %    1,818,654            28.8 %   1,818,654
                 110 East 59th Street
                New York,
                NY 10022
              Alex and James Goren          188,872 (19)            8.5 %       4,357,708 (25)            6.9 %            —               —           800,000 (29)            4.7 %     1,434,259 (34)            9.4 %     472,508              7.5 %    472,508
                150 East 52nd Street
                New York,
                NY 10022
               Leonard Pearlman,
                JAM Capital
                Assoc. LLC and
                New Giles LLC                55,468 (20)            2.5 %       1,130,137                 1.8 %            —               —         1,000,000                 5.9 %       326,413                 2.1 %     158,981              2.5 %    158,981
                 112 W 56 th Street
                New York,
                NY 10019
              William Freas                  30,918                 1.4 %                —                —          2,941,177            38.0 %            —                  —                —                  —         110,954              1.8 %    110,954
                c/o Joseph
                Gunnar & Co.
                30 Broad Street
                New York,
                NY 10004
               James J. O'Donnell            87,281 (21)            3.9 %        780,655                  1.2 %            —               —           900,000                 5.3 %       708,619                 4.6 %     212,160              3.4 %    212,160
                 845 UN Plaza
                New York,
                NY 10017
              Hamir Realty Co.               14,014                   *                  —                —                —               —         1,070,000                 6.3 %            —                  —          60,102              1.0 %     60,102
                12 E 49 th Street
                New York,
                NY 10017
               Fifty-Ninth Street            12,566                   *                  —                —                —               —         1,000,000                 5.9 %            —                  —          55,640               *        55,640
 Investors LLC
  110 E 59th Street
 New York,
 NY 10022
Ross Irvine                13,162          *             —             —       1,000,000   12.9 %    200,000         1.2 %         —           —         48,988       *        48,988
 c/o Sky Capital LLC
 110 Wall Street
 New York,
 NY 10005
 All directors and
 executive officers as
 a group
 (8 persons)(22)         1,103,109       45.1 %   44,855,443          71.3 %         —      —       4,520,000       26.5 %   5,755,142        37.7 %   3,035,522    46.8 %   3,035,522




*
              Represents less than 1% of class or combined classes.


(1)
              Except as otherwise indicated above, the address of each stockholder identified is c/o Xplore Technologies Corp., 14000 Summit Drive, Suite 900, Austin, Texas
              78728. Except as indicated in the other footnotes to this table, each person named in this table has sole voting and investment power with respect to all shares of
              stock beneficially owned by that person.

                                                                                   59
Table of Contents

             (2)
                    Shares issuable pursuant to options and warrants that are exercisable, or convertible securities that are convertible, within 60 days of September 13, 2012 are
                    deemed outstanding for the purposes of computing the percentage of shares owned by the beneficial owner, but are not deemed outstanding for purposes of
                    computing the percentage of shares owned by any other person.


             (3)
                    Based upon 2,195,234 shares of our common stock, including 752,168 shares outstanding as of September 13, 2012 and assuming the conversion of 62,873,781
                    shares of our Series A Preferred Stock that are convertible into common stock at a conversion ratio of approximately 0.0057 as of September 13, 2012, 7,732,040
                    shares of our Series B Preferred Stock that are convertible into common stock at a conversion ratio of approximately 0.0055 as of September 13, 2012, 17,074,000
                    shares of our Series C Preferred Stock that are convertible into common stock at a conversion ratio of 0.0050 as of September 13, 2012 and 15,275,252 shares of
                    our Series D Preferred Stock that are convertible into common stock at a conversion ratio of 0.0625 as of September 13, 2012, each issued and outstanding as of
                    September 13, 2012. The shares of our preferred stock vote with our common stock on an as converted basis.


             (4)
                    Based on 62,873,781 shares of Series A Preferred Stock issued and outstanding as of September 13, 2012.


             (5)
                    Based on 7,732,040 shares of Series B Preferred Stock issued and outstanding as of September 13, 2012.


             (6)
                    Based on 17,074,000 shares of Series C Preferred Stock issued and outstanding as of September 13, 2012.


             (7)
                    Based on 15,275,252 shares of Series D Preferred Stock issued and outstanding as of September 13, 2012.


             (8)
                    Gives effect to (i) our 1-for-400 reverse stock split, and (ii) the automatic conversion of all our preferred stock into common stock upon consummation of the
                    offering at the following conversion rates: Series A Preferred Stock at 0.0327, Series B Preferred Stock at 0.0327, Series C Preferred Stock at 0.0481 and Series D
                    Preferred Stock at 0.1543.


             (9)
                    Gives effect to the pro forma adjustments and assumes the sale of 1,700,000 shares of common stock in the offering.


             (10)
                    Includes 48,755 shares of common stock issuable upon conversion of shares of Series A Preferred Stock, 5,004 shares of common stock issuable upon conversion
                    of shares of Series C Preferred Stock and 110,319 shares of common stock issuable upon conversion of shares of Series D Preferred Stock owned of record by
                    Mr. Sassower, 28,625 shares of common stock that Mr. Sassower has the right to acquire upon exercise of outstanding warrants within 60 days after
                    September 13, 2012, 3,051 shares of common stock that Mr. Sassower has the right to acquire upon exercise of outstanding options within 60 days after
                    September 13, 2012, 12,229 shares of common stock owned of record, 29,649 shares of common stock issuable upon conversion of shares of Series A Preferred
                    Stock and 60,152 shares of common stock issuable upon conversion of shares of Series D Preferred Stock owned of record by Phoenix Enterprises Family
                    Fund, LLC, an entity controlled by Mr. Sassower, 23,048 shares of common stock that Phoenix Enterprises Family Fund LLC has the right to acquire upon
                    exercise of outstanding warrants within 60 days after September 13, 2012, 9,772 shares of common stock issuable upon conversion of shares of Series D Preferred
                    Stock owned of record by SG Phoenix LLC, an entity in which Mr. Sassower and Mr. Goren share voting and dispositive power, and 26,875 shares of common
                    stock that SG Phoenix LLC has the right to acquire upon exercise of outstanding warrants within 60 days after September 13, 2012. Also includes 624,031 shares
                    of common stock beneficially owned by Phoenix, for which Mr. Sassower and Mr. Goren are the co-managers of the managing member. Mr. Sassower disclaims
                    any beneficial ownership of the shares held by Phoenix, except to the extent of his pecuniary interest, if any, in such shares.


             (11)
                    Includes 16,250 shares of common stock that Mr. Holleran has the right to acquire upon exercise of outstanding options within 60 days after September 13, 2012,
                    3,125 shares of common stock that Mr. Holleran has the right to acquire upon exercise of an outstanding warrant within 60 days after September 13, 2012 and
                    3,596 shares of common stock issuable upon conversion of shares of Series D Preferred Stock owned of record by Mr. Holleran.


             (12)
                    Includes 6,250 shares of common stock that Mr. Rapisand has the right to acquire upon exercise of outstanding options within 60 days after September 13, 2012,
                    1,875 shares of common stock that Mr. Rapisand has the right to acquire upon exercise of an outstanding warrant within 60 days after September 13, 2012, 843
                    shares of common stock issuable upon conversion of shares of Series A Preferred Stock owned of record by Mr. Rapisand and 2,158 shares of common stock
                    issuable upon conversion of shares of Series D Preferred Stock owned of record by Mr. Rapisand.


             (13)
                    Includes 2,923 shares of common stock that Mr. Usher-Jones has the right to acquire upon exercise of outstanding options within 60 days after September 13,
                    2012, 6,250 shares of common stock that Mr. Usher-Jones has the right to acquire upon exercise of an outstanding warrant within 60 days after September 13,
                    2012 and 7,914 shares of common stock issuable upon conversion of shares of Series D Preferred Stock owned of record by Mr. Usher-Jones.


             (14)
                    Includes 1,359 shares of common stock owned of record, 1,001 shares of common stock issuable upon conversion of shares of Series C Preferred Stock and 3,594
                    shares of common stock issuable upon conversion of shares of Series D Preferred Stock owned of record by Andax, LLC, for which Mr. Goren is the manager,
                    625 shares of common stock that Andax LLC has the right to acquire upon exercise of outstanding warrants within 60 days after September 13, 2012, 3,051
                    shares of common stock that Mr. Goren has the right to acquire upon exercise of outstanding options within 60 days after September 13, 2012, 9,772 shares of
                    common stock issuable upon conversion of shares of Series D Preferred Stock owned of record by SG Phoenix LLC, an entity in which Mr. Sassower and
                    Mr. Goren share voting and dispositive power, and 26,875 shares of common stock that SG Phoenix LLC has the right to acquire upon exercise of outstanding
       warrants within 60 days after September 13, 2012. Also includes 624,031 shares of common stock beneficially owned by Phoenix, for which Mr. Sassower and
       Mr. Goren are the co-managers of the managing member. Mr. Goren disclaims any beneficial ownership of the shares held by Phoenix, except to the extent of his
       pecuniary interest, if any, in such shares.


(15)
       Includes 3,051 shares of common stock that Mr. Leonardis has the right to acquire upon exercise of outstanding options within 60 days after September 13, 2012
       and 650 shares of common stock issuable upon conversion of shares of Series D Preferred Stock owned of record by Mr. Leonardis.


(16)
       Includes 417 shares of common stock that Mr. Misemer has the right to acquire upon exercise of outstanding options within 60 days after September 13, 2012,
       260 shares of common stock issuable upon conversion of shares of Series D Preferred Stock owned of record by Mr. Misemer and 11,937 shares of common stock
       issuable upon conversion of shares of Series D Preferred Stock owned of record by The Kent A. Misemer Revocable Trust (12/24/92), for which Mr. Misemer is a
       trustee.


(17)
       Includes 2,376 shares of common stock that Mr. Irwin has the right to acquire upon exercise of outstanding options within 60 days after September 13, 2012 and
       651 shares of common stock issuable upon conversion of shares of Series D Preferred Stock owned of record by Mr. Irwin.


(18)
       Includes 86,000 shares of common stock that Phoenix has the right to acquire upon exercise of outstanding warrants within 60 days after September 13, 2012,
       177,902 shares of common stock issuable upon conversion of shares of Series A Preferred Stock, 16,612 shares of common stock issuable upon conversion of
       shares of Series C Preferred Stock and 146,353 shares of common stock issuable upon conversion of shares of Series D Preferred Stock owned of record by
       Phoenix. Voting and dispositive power over these shares is held equally by Philip Sassower and Andrea Goren. Messrs. Sassower and Goren disclaim any
       beneficial ownership of the shares held by Phoenix, except to the extent of their respective pecuniary interest, if any, in such shares.


(19)
       Consists of 30,993 shares of common stock owned of record, 18,687 shares of common stock issuable upon conversion of shares of Series A Preferred Stock
       owned of record, 4,003 shares of common stock issuable upon conversion of shares of Series C Preferred Stock and 89,641 shares of common stock issuable upon
       conversion of shares of Series D Preferred Stock owned of record by JAG Multi Investment LLC, 30,923 shares of common stock that JAG Multi
       Investment LLC has the right to acquire upon exercise of outstanding warrants within 60 days after September 13, 2012 and 8,330 shares of common stock owned
       of record and 6,295 shares of common stock issuable upon conversion of shares of Series A Preferred Stock owned of record by Goren Brothers LP. Voting and
       dispositive power over these shares is held equally by Alex Goren and James Goren.


(20)
       Includes 6,750 shares of common stock that Mr. Pearlman and JAM Capital Associates LLC, an entity controlled by Mr. Pearlman, have the right to acquire upon
       exercise of outstanding warrants within 60 days after September 13, 2012, 6,479 shares of common stock issuable upon conversion of shares of Series A Preferred
       Stock owned of record by Mr. Pearlman 5,004 shares of common stock issuable upon conversion of shares of Series C Preferred Stock owned of record by
       Mr. Pearlman and 20,401 shares of common stock issuable upon conversion of shares of Series D Preferred Stock owned of record by Mr. Pearlman and JAM
       Capital Associates LLC.


(21)
       Includes 20,000 shares of common stock that Mr. O'Donnell has the right to acquire upon exercise of outstanding warrants within 60 days after September 13,
       2012, 4,475 shares of common stock issuable upon conversion of shares of Series A Preferred Stock, 4,503 shares of common stock issuable upon conversion of
       shares of Series C Preferred Stock and 44,289 shares of common stock issuable upon conversion of shares of Series D Preferred Stock owned of record by
       Mr. O'Donnell.


(22)
       Includes 45,701 shares of common stock our directors and executive officers have the right to acquire upon exercise of outstanding options within 60 days after
       September 13, 2012, 86,048 shares of common stock our directors and executive officers have the right to acquire upon exercise of outstanding warrants within
       60 days after September 13, 2012, 79,248 shares of common stock issuable upon conversion of shares of Series A Preferred Stock owned of record by our
       directors and executive officers, or entities controlled by them, 6,004 shares of common stock issuable upon conversion of shares of Series C Preferred Stock
       owned of record by our directors and executive officers, or entities controlled by them and 213,343 shares of common stock issuable upon conversion of shares of
       Series D Preferred Stock owned of record by our directors and executive officers, or entities controlled by them. Also includes 624,031 shares of common stock
       beneficially owned by Phoenix, in which Mr. Sassower and Mr. Goren are the co-managers of the managing member. Mr. Sassower and Mr. Goren each disclaim
       any beneficial ownership of the shares held by Phoenix, except to the extent of their respective pecuniary interest, if any, in such shares.


(23)
       Includes 5,171,847 shares of Series A Preferred Stock owned of record by Phoenix Enterprises Family Fund, LLC, an entity controlled by Mr. Sassower. Also
       includes 31,032,014 shares of Series A Preferred Stock owned of record by Phoenix, in which Mr. Sassower is the co-manager of the managing member.
       Mr. Sassower disclaims any beneficial ownership of the shares held by Phoenix, except to the extent of his pecuniary interest, if any, in such shares.


(24)
       Consists of 31,032,014 shares of Series A Preferred Stock owned of record by Phoenix. Voting and dispositive power over these shares is held equally by Philip
       Sassower and Andrea Goren. Messrs. Sassower and Goren disclaim any beneficial ownership of the shares held by Phoenix, except to the extent of their
       respective pecuniary interest, if any, in such shares.


(25)
       Consists of 3,259,723 shares of Series A Preferred Stock owned of record by JAG Multi Investment LLC and 1,097,985 shares of Series A Preferred Stock owned
       of record by Goren Brothers LP. Voting and dispositive power over these shares is held equally by Alex Goren and James Goren.


(26)
       Consists of 3,320,000 shares of Series C Preferred Stock owned of record by Phoenix, for which Mr. Sassower is the co-manager of the managing member.
       Mr. Sassower disclaims any beneficial ownership of the shares held by Phoenix, except to the extent of his pecuniary interest, if any, in such shares.
60
Table of Contents

             (27)
                    Consists of 200,000 shares of Series C Preferred Stock owned of record by Andax LLC, for which Mr. Goren is the manager. Also includes 3,320,000 shares of
                    Series C Preferred Stock owned of record by Phoenix, for which Mr. Goren is the co-manager of the managing member. Mr. Goren disclaims any beneficial
                    ownership of the shares held by Phoenix, except to the extent of his pecuniary interest, if any, in such shares.


             (28)
                    Consists of 3,320,000 shares of Series C Preferred Stock owned of record by Phoenix. Voting and dispositive power over these shares is held equally by Philip
                    Sassower and Andrea Goren. Messrs. Sassower and Goren disclaim any beneficial ownership of the shares held by Phoenix, except to the extent of their
                    respective pecuniary interest, if any, in such shares.


             (29)
                    Consists of 800,000 shares of Series C Preferred Stock owned of record by JAG Multi Investment LLC. Voting and dispositive power over these shares is held
                    equally by Alex Goren and James Goren.


             (30)
                    Includes 962,431 shares of Series D Preferred Stock owned of record by Phoenix Enterprises Family Fund, LLC, an entity controlled by Mr. Sassower, and
                    156,350 shares of Series D Preferred Stock owned of record by SG Phoenix LLC, an entity in which Mr. Sassower and Mr. Goren share voting and dispositive
                    power. Also includes 2,341,655 shares of Series D Preferred Stock owned of record by Phoenix, for which Mr. Sassower is the co-manager of the managing
                    member. Mr. Sassower disclaims any beneficial ownership of the shares held by Phoenix, except to the extent of his pecuniary interest, if any, in such shares.


             (31)
                    Consists of 57,505 shares of Series D Preferred Stock owned of record by Andax LLC, for which Mr. Goren is the manager, and 156,350 shares of Series D
                    Preferred Stock owned of record by SG Phoenix LLC, an entity in which Mr. Sassower and Mr. Goren share voting and dispositive power. Also includes
                    2,341,655 shares of Series D Preferred Stock owned of record by Phoenix, for which Mr. Goren is the co-manager of the managing member. Mr. Goren disclaims
                    any beneficial ownership of the shares held by Phoenix, except to the extent of his pecuniary interest, if any, in such shares.


             (32)
                    Consists of 4,168 shares of Series D Preferred Stock owned of record by Mr. Misemer and 190,996 shares of Series D Preferred Stock owned of record by The
                    Kent A. Misemer Revocable Trust (12/24/92), for which Mr. Misemer is a trustee.


             (33)
                    Consists of 2,341,655 shares of Series D Preferred Stock owned of record by Phoenix. Voting and dispositive power over these shares held equally by Philip
                    Sassower and Andrea Goren. Messrs. Sassower and Goren disclaim any beneficial ownership of the shares held by Phoenix, except to the extent of their
                    respective pecuniary interest, if any, in such shares.


             (34)
                    Consists of 1,434,259 shares of Series D Preferred Stock owned of record by JAG Multi Investment LLC. Voting and dispositive power over these shares is held
                    equally by Alex Goren and James Goren.

                                                                                   61
Table of Contents


                                                TRANSACTIONS WITH RELATED PERSONS

Certain Relationships and Related Transactions

Our Fiscal Year Ended March 31, 2010

     On April 30, 2009, our board of directors granted options to our executive officers to purchase an aggregate of 7,712 shares of common
stock, to our other employees to purchase an aggregate of 4,451 shares of common stock and to our directors to purchase an aggregate of 1,241
shares of common stock. The options are exercisable for five years, have an exercise price of $40.00 per share and vest annually in equal
installments over three years beginning on the first anniversary of the date of grant.

     On May 29, 2009, we entered into the twelfth amendment to our revolving credit facility (which we refer to as the twelfth amendment)
with our commercial lender at the time. Pursuant to the twelfth amendment, among other things, we arranged for our commercial lender to
provide up to $1 million of additional availability in excess of our borrowing base, based on a supporting irrevocable standby letter of credit
(which we refer to as the Supporting Letter of Credit) issued by a bank (which we refer to as the Issuing Bank), and supported by an account
owned by Philip Sassower, our Chairman and Chief Executive Officer, and Susan Sassower, the wife of Philip Sassower (which we refer to as
the Supporting Letter of Credit Applicants) in favor of the commercial lender, in the amount of $1,000,000.

      In order to induce the Supporting Letter of Credit Applicants to cause the Issuing Bank to issue the Supporting Letter of Credit, we entered
into a Credit Reimbursement, Compensation and Security Agreement, dated as of May 29, 2009 (which we refer to as the Letter of Credit
Agreement), with the Supporting Letter of Credit Applicants whereby we agreed to (i) reimburse the Supporting Letter of Credit Applicants for
all costs and expenses incurred by the Supporting Letter of Credit Applicants in connection with the issuance of the Supporting Letter of Credit
and the entry into the Letter of Credit Agreement and the Twelfth Amendment, (ii) reimburse the Supporting Letter of Credit Applicants for all
payments made by the Supporting Letter of Credit Applicants to the Issuing Bank in connection with any drawings made our lender under the
Supporting Letter of Credit; (iii) provide certain compensation to the Supporting Letter of Credit Applicants in connection with the issuance of
the Supporting Letter of Credit, including the issuance by us to the Supporting Letter of Credit Applicants of a three-year warrant to purchase
12,500 shares of our common stock at an exercise price of $40.00 per share; and (iv) grant to the Supporting Letter of Credit Applicants a
security interest in all of our assets to secure our obligations to the Supporting Letter of Credit Applicants. The security interest granted by us to
the Supporting Letter of Credit Applicants is subordinated to the rights and security interest of our commercial lender under the Loan
Agreement and senior to the rights and security interest of the other note holders. Upon an event of default, as set forth in the Letter of Credit
Agreement, the Supporting Letter of Credit Applicants could exercise all remedies permitted by the Letter of Credit Agreement or at law or in
equity, subject to the subordination agreement with our commercial lender.

      On June 10, 2009, we granted to each of our directors options to purchase 375 shares of common stock, at an exercise price of $60.00 per
share, in lieu of cash compensation payable to the directors for their service to us for the fiscal year ended March 31, 2009. Such options were
fully vested as of the date of grant and are exercisable for five years. On June 10, 2009, we also granted to each director options to purchase
375 shares of common stock, at an exercise price of $60.00 per share, for services to be rendered to us for the 2010 fiscal year. Those options
fully vested on March 31, 2010 and are exercisable for five years.

     On June 10, 2009, we issued to SG Phoenix LLC, which is co-managed by Mr. Sassower (our Chairman and Chief Executive Officer) and
Andrea Goren (a director), a warrant to purchase up to 3,750 shares of our common stock, with an exercise price of $60.00 per share, in lieu of
cash compensation payable to SG Phoenix LLC for its services to us for our fiscal year ended March 31, 2009. Such warrant was fully vested
on the date of grant. On June 10, 2009, we also issued to SG Phoenix LLC a warrant to

                                                                         62
Table of Contents

purchase up to 3,750 shares of our common stock, with an exercise price of $60.00 per share, for services to be rendered to us for our fiscal
year ended March 31, 2010. Such warrant vested on March 31, 2010. Mr. Sassower and Mr. Goren share voting and dispositive power over the
shares held by SG Phoenix LLC.

     On July 27, 2009, we issued to note purchasers three-year warrants to purchase an aggregate of up to 10,225 shares of our common stock
at an exercise price of $40.00 per share as consideration for the note purchasers subordinating their security interests in favor of the Supporting
Letter of Credit Applicants. As a result, Phoenix received a warrant to purchase an additional 2,350 shares of our common stock, Phoenix
Enterprises Family Fund LLC received a warrant to purchase an additional 1,794 shares of our common stock and JAG Multi
Investments LLC, a principal stockholder of the Company, received a warrant to purchase an additional 1,794 shares of our common stock. The
warrants are fully vested.

     On September 30, 2009, we raised $300,000 in a private placement with JAG Multi Investments LLC through the issuance of a secured
demand note and warrants to purchase up to 3,750 shares of our common stock at $40.00 per share. On October 13, 2009, we raised $170,000
in a private placement with Philip Sassower, our Chairman and Chief Executive Officer, through the issuance of a secured demand note and
warrants to purchase up to 2,125 shares of our common stock at $40.00 per share.

     On November 5, 2009, we entered into a note purchase agreement pursuant to which we could issue up to $3,300,000 of senior secured
subordinated promissory notes (which we refer to as the Senior Notes) and warrants (which we refer to as the Warrants) to purchase up to
82,500 shares of our common stock at an exercise price of $40.00 per share. Pursuant to the note purchase agreement, we issued Senior Notes
in the aggregate principal amount of $3,210,000 and Warrants to purchase 80,250 shares of our common stock in two separate closings on
November 5, 2009 and November 9, 2009. The Senior Notes were due and payable in full on December 31, 2011 and bore interest at the rate of
10% per annum. Interest on the Senior Notes could be paid in cash or, at our option, in shares of our common stock. The Senior Notes were
secured by all of our assets. The indebtedness under the Senior Notes and the security interest granted to the holders of the Senior Notes were
subordinated to the rights and security interest of our senior lender at the time, but were senior to the indebtedness held by the note purchasers
who purchased notes in the Fall of 2008 and the Spring of 2009. The Warrants issued to the Senior Note purchasers were exercisable beginning
on January 15, 2010 and expire on January 14, 2013. Mr. Sassower, our Chairman and Chief Executive Officer, purchased $1,000,000 of the
Senior Notes and Warrants to purchase 25,000 shares of common stock in the November 2009 private placement of Senior Notes. The Senior
Note and Warrant issued to Mr. Sassower were purchased with $830,000 in cash and the conversion of the demand note issued to him in
October 2009.

     On November 5, 2009, we and a majority-in-interest of the purchasers in a Fall 2008 financing and a Spring 2009 financing, including
Phoenix, agreed to extend the maturity date of the secured subordinated promissory notes issued to them from December 31, 2010 to
December 31, 2011 and extend the expiration date of warrants to purchase 100,225 shares of our common stock issued in connection with such
notes from February 27, 2012 to January 14, 2013. In addition, on November 5, 2009, Philip S. Sassower and Susan Sassower reduced the total
number of warrants issued to them in connection with the Letter of Credit, Agreement from 12,500 warrants to 3,500 warrants. On
November 5, 2009, Mr. Sassower also reduced the total number of warrants issued to him in connection with the demand note issued to him in
October 2009 from 2,125 warrants to 125 warrants. On November 5, 2009, JAG Multi Investments LLC also reduced the total number of
warrants issued to it in connection with the secured demand note in the principal amount of $300,000 issued to it on September 30, 2009 from
3,750 warrants to 375 warrants.

     At March 31, 2010, outstanding promissory notes previously to Phoenix were in the aggregate principal amount of $3,700,000. For the
years ended March 31, 2010 and 2009, interest expense of $340,000 and $121,000, respectively, was recognized and paid through the issuance
of an aggregate of 9,387 and 4,033, respectively, shares of our common stock.

                                                                        63
Table of Contents

Our Fiscal Year ended March 31, 2011

     On August 18, 2010, in connection with an interim financing, which we refer to as the Bridge Financing, we entered into an amendment to
the Note Purchase Agreement dated as of November 5, 2009. Pursuant to the amendment, we could issue and sell to Phoenix and other
purchasers, in the sole discretion of Phoenix, up to an additional $2,000,000 of principal amount of our senior secured subordinated promissory
notes and warrants to purchase up to 71,429 shares of our common stock at an exercise price of $28.00 per share. Between August 18, 2010
and November 3, 2010, we issued notes with the principal amount of $850,000, and warrants to purchase 53,125 shares of our common stock,
to Phoenix in the Bridge Financing. We received $850,000 in gross proceeds for the notes and warrants.

     On August 18, 2010, the Company and its wholly owned subsidiary Xplore Technologies Corporation of America (which we refer to,
together with the Company, as the Borrowers) entered into an amendment to the Note Purchase Agreement dated November 5, 2009, which
amended a previously executed note purchase agreement. Such amendment provided that upon the approval of Phoenix in its sole discretion,
the Borrowers may issue up to an additional $2,000,000 in aggregate principal amount of senior secured promissory notes (which we refer to as
the Bridge Notes), and three-year warrants to purchase up to 71,429 shares of Common Stock at an exercise price of $28.00 per share (which
we refer to as the Bridge Warrants) under the original Note Purchase Agreement. The Bridge Notes and Bridge Warrants may be issued by the
Borrowers in multiple closings.

    On September 2, 2010, we issued a senior secured subordinated promissory note in the original principal amount of $600,000, and a
warrant to purchase 21,429 shares of common stock to Phoenix pursuant to an amendment to the Note Purchase Agreement dated as of
November 5, 2009, which was executed on August 18, 2010.

      On November 3, 2010, we increased the total additional principal amount of our senior secured subordinated notes that we could issue and
sell in the Bridge Financing to $3,000,000 and reduced the exercise price of the warrants to purchase shares of our common stock issued in the
Bridge Financing from $28.00 to $16.00. In addition, we agreed that all of the warrants previously issued in the Bridge Financing would be
amended to reduce their exercise price from $28.00 per share to $16.00 per share.

    On November 3, 2010, we also entered into an exchange agreement with Phoenix, our principal stockholder, Philip Sassower, our Chief
Executive Officer, and entities controlled by Mr. Sassower, and other parties representing a majority in interest of our then outstanding secured
subordinated indebtedness pursuant to which we agreed to exchange all of our outstanding senior secured subordinated and secured
subordinated indebtedness, including the notes issued in the Bridge Financing, at the time of closing into shares of our Series D Preferred
Stock, at an exchange price of $1.00 per share for each $1.00 of such indebtedness.

     On December 16, 2010, pursuant to the exchange agreement, Phoenix exchanged $1,940,000 in principal amount of our promissory notes
for shares of our Series D Preferred Stock. For the year ended March 31, 2011, interest expense of $112,000 was recognized and paid to
Phoenix through the issuance of 37,760 shares of our Series D Preferred Stock and 2,533 shares of our common stock.

     On December 16, 2010, immediately prior to the issuance of the Series D Preferred Stock pursuant to the exchange agreement, the
Borrowers issued a promissory note in the principal amount of $1,177,500 to Phoenix, together with warrants to purchase 73,594 shares of
Common Stock. The Borrowers received $1,177,500 in gross proceeds therefor. Phoenix had previously purchased bridge notes in the
aggregate principal amount of $850,000. In connection with the financing, Phoenix issued participation interests in one or more bridge notes in
the aggregate principal amount of $1,027,500 and one or more bridge warrants to purchase an aggregate amount of 64,219 shares of Common
Stock. The bridge notes were exchanged for shares of Series D Preferred Stock pursuant to the exchange agreement.

                                                                       64
Table of Contents

     On December 16, 2010, pursuant to the exchange agreement, JAG Multi Investments LLC, exchanged $1,018,000 in principal amount of
our promissory notes for shares of our Series D Preferred Stock. For the year ended March 31, 2011, interest expense of $91,000 was
recognized and paid to JAG Multi Investments LLC through the issuance of 21,464 shares of the Company's Series D Preferred Stock and
2,342 shares of the Company's common stock.

     On December 16, 2010, pursuant to the exchange agreement, Mr. Sassower exchanged $1,000,000 in principal amount of our promissory
notes for shares of our Series D Preferred Stock. For the year ended March 31, 2011, interest expense of $90,000 was recognized and paid to
Mr. Sassower through the issuance of 21,095 shares of our Series D Preferred Stock and 2,301 shares of our common stock, respectively.

     On December 16, 2010, pursuant to the exchange agreement, Phoenix Enterprises Family Fund LLC, an entity controlled by
Mr. Sassower, exchanged $718,000 in principal amount of our promissory notes for shares of our Series D Preferred Stock. For the year ended
March 31, 2011, interest expense of $64,000 was recognized and paid to Phoenix Enterprises Family Fund LLC through the issuance of 15,136
shares of our Series D Preferred Stock and 1,651 shares of our common stock.

     In connection with our exchange of approximately 9.4 million of outstanding subordinated secured promissory notes for our Series D
Preferred Stock on December 16, 2010, we paid SG Phoenix LLC a structuring fee of $100,000 in cash and issued SG Phoenix LLC a
three-year warrant to purchase 6,250 shares of our common stock at an exercise price of $16.00 per share.

     On February 23, 2011, in connection with our issuance of 1,000,000 shares of our Series D Preferred Stock and warrants in a private
placement, we paid SG Phoenix LLC, an affiliate of our principal stockholder, a structuring fee of $50,000 in cash and issued SG Phoenix LLC
a three-year warrant to purchase 3,125 shares of our common stock at an exercise price of $16.00 per share. The Series D Preferred Stock and
warrants, and the shares of Common Stock issuable thereunder, were offered and sold to 23 investors, including Brian Usher-Jones, a director
of the Company, and Phoenix Enterprises Family Fund LLC, an entity affiliated with Philip S. Sassower, the Company's Chairman of the
Board and Chief Executive Officer.

Our Fiscal Year Ended March 31, 2012

     On August 4, 2011, our board of directors approved an award of 150,000 shares of Series D Preferred Stock, which fully vested on
March 31, 2012, to SG Phoenix LLC, an affiliate of our principal stockholder, for services rendered during the year ended March 31, 2012. The
fair value of the Series D Preferred Stock was $150,000 and stock compensation expense of $150,000 was recorded for the year ended
March 31, 2012.

     On October 14, 2011, we raised net proceeds of $2,182,000 in a private placement through the issuance of 2,320,000 shares of our
Series D Preferred Stock. Philip Sassower, our Chairman of the Board and Chief Executive Officer, purchased 500,000 shares of our Series D
Preferred Stock in the private placement and The Kent A. Misemer Revocable Trust (12/24/92) for which Kent Misemer, who became a
member of our board of directors in November 2011, serves as trustee purchased 175,000 shares of our Series D Preferred Stock in the private
placement. In connection with the private placement of the Series D Preferred Stock, we paid SG Phoenix LLC an administrative fee of
$100,000 in cash and a warrant to purchase 6,250 shares of our common stock at an initial exercise price of $16.00 per share. The warrant
expires on October 13, 2014.

     During the fiscal year ended March 31, 2012, we purchased approximately $503,000 in components for our tablet PCs from Ember
Industries, Inc., a contract electronics manufacturer. Thomas F. Leonardis, a member of our board of directors, is the Chief Executive Officer,
and the majority shareholder, of Ember Industries. We purchase the components from Ember Industries pursuant to standard purchase orders at
Ember Industries' standard prices. A special committee of disinterested members of our board of directors

                                                                      65
Table of Contents

reviewed, approved and ratified our purchase of component parts from Ember Industries on the described terms.

Other

    On June 12, 2012, our board of directors approved the payment of $150,000 in fees, to be paid monthly in the amount of $12,500, to SG
Phoenix LLC, an affiliate of our principal stockholder, for services to be rendered during the year ending March 31, 2013.

     During the three months ended June 30, 2012 and 2011, the Company purchased approximately $176,000 and $63,000, respectively, in
components for the Company's tablet PCs from Ember Industries, Inc., a contract manufacturer. Thomas F. Leonardis, a member of the
Company's Board of Directors, is the Chief Executive Officer, and the majority shareholder, of Ember Industries. The Company purchased the
components from Ember Industries pursuant to standard purchase orders at Ember Industries' standard prices. The disinterested members of the
Company's Board of Directors reviewed, approved and ratified the Company's purchase of component parts from Ember Industries on the
described terms.

                                                                    66
Table of Contents


                                                   DESCRIPTION OF CAPITAL STOCK

      Except as otherwise indicated, all share and per share information included under this "Description of Capital Stock" heading does not
give effect to the automatic conversion of all our preferred stock into common stock, which will occur upon consummation of the offering.

     As of September 13, 2012, there were 752,168 shares of common stock, 62,873,781 shares of Series A Preferred Stock, 7,732,040 shares
of Series B Preferred Stock, 17,074,000 shares of Series C Preferred Stock and 15,275,252 shares of Series D Preferred Stock issued and
outstanding. Immediately following the consummation of the offering, the conversion of our preferred stock into common stock, and the sale
by us of 1,700,000 shares of common stock in this offering, we expect to have approximately 7,966,036 shares of common stock outstanding
and no shares of preferred stock outstanding. Immediately following the offering, we expect to have 15,000,000 shares of common stock
authorized and approximately 7,966,036 shares issued and outstanding (excluding shares of common stock issuable in connection with
dividends with respect to our preferred stock from September 14, 2012 through the consummation of this offering) and 5,000,000 shares of
preferred stock authorized and none outstanding.

Common Stock

     We are currently authorized to issue one billion three hundred fifty million (1,350,000,000) shares, par value $0.001 per share, of common
stock (of which 752,168 shares are outstanding as of September 13, 2012). Holders of common stock are entitled to one vote for each share
held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. Holders of common stock are entitled to
receive proportionately any dividends as may be declared by our board of directors, provided that all accrued and unpaid dividends have been
paid to the holders of our preferred stock.

      So long as our current preferred stock is outstanding, upon liquidation, dissolution or winding up, the holders of common stock are
entitled to receive, after payment of any liquidation preference to our holders of preferred stock, proportionately with the holders of our
Series D Preferred Stock, our net assets available after the payment of all debts and other liabilities. Holders of common stock have no
pre-emptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of common stock are subject to,
and may be impacted by, the rights of the holders of shares of our Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and any other series of preferred stock that we may designate or issue in the future. Each series of our outstanding
preferred stock will be converted into shares of our common stock automatically upon consummation of this offering.

Series A, B and C Preferred Stock

     Our board of directors is authorized to issue up to sixty four million (64,000,000) shares of Series A Preferred Stock (of which 62,873,781
shares are issued and outstanding as of September 13, 2012), ten million (10,000,000) shares of Series B Preferred Stock (of which 7,732,040
shares are issued and outstanding as of September 13, 2012) and twenty million (20,000,000) shares of Series C Preferred Stock (of which
17,074,000 shares are issued and outstanding as of September 13, 2012). So long as our current preferred stock is outstanding, our Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, respectively, have the following rights and privileges:

     Voting. Each share of Series A Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock, respectively, is entitled to vote
together with our other shareholders on an as-converted basis, and not as a separate class, except as required by law or our amended and
restated certificate of incorporation. In addition, with respect to our Series A Preferred Stock only, so long as at least 10% of the shares of
Series A Preferred Stock originally issued remain outstanding (approximately 6,347,289 shares), our holders of our Series A Preferred Stock
are entitled to vote, separately as a class, to designate two members of our board of directors (which we refer to as the Preferred Directors).

                                                                      67
Table of Contents

     So long as at least 10% of the shares of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock (approximately
6,347,289 shares of Series A Preferred Stock, 998,851 shares of Series B Preferred Stock and 1,527,400 shares of Series C Preferred Stock)
originally issued remain outstanding, we may not, without the consent of the holders of a majority of the voting power of each of the Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock, respectively, take any of the following actions:

     (1)
            amend, alter or repeal any provision of our amended and restated certificate of incorporation or By-laws in a manner adverse to the
            respective holders of the Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock;

     (2)
            create, authorize or issue any class or series of shares unless the same ranks junior to the Series A Preferred Stock, Series B
            Preferred Stock, or Series C Preferred Stock, respectively, with respect to liquidation and dividends;

     (3)
            increase the authorized number of shares of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock; or

     (4)
            purchase or redeem or pay or declare any dividend on any shares of capital stock other than dividends on Series A Preferred Stock,
            Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock as authorized in our amended and restated
            certificate of incorporation.

     In addition, with respect to Series A Preferred Stock only, so long as at least 10% of the shares of Series A Preferred Stock originally
issued remain outstanding, we may not, without the consent of the holders of a majority of the voting power of the Series A Preferred Stock,
take any of the following actions:

     (1)
            liquidate, dissolve or wind-up the affairs of our Company, or effect any deemed liquidation event (as that term is defined below);

     (2)
            create or authorize any debt security unless such debt security has received the prior approval of our board of directors, including
            the Preferred Directors;

     (3)
            increase or decrease the size of our board of directors; or

     (4)
            terminate the employment of our Chief Executive Officer, President or Chief Financial Officer or hire or appoint anyone to such
            offices.

     Dividends. The Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock carry an annual 7.5% per annum
dividend, payable quarterly, subject to the approval of the stock exchange or securities exchange or quotation system which on the date of
determination constitutes the principal securities market for our common stock, in cash or the number of shares of common stock determined
by dividing (i) the aggregate amount of the dividend then payable by (ii) the volume weighted average trading price of the common stock over
the 10 trading days ending on the third trading day immediately preceding the dividend payment date, less a discount of 25% of the volume
weighted average trading price of the common stock.

     Liquidation Preference. In the event of any liquidation, dissolution or winding up of our Company (which we refer to as a Liquidation),
the holders of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, respectively, will be entitled to receive, in
preference to the holders of our common stock, but junior to the holders of our Series D Preferred Stock, and pari passu with the other holders
of our Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, an amount equal to the greater of $0.34 per each share
of Series A Preferred Stock, $0.34 per each share of Series B Preferred Stock or $0.50 per each share of Series C Preferred Stock, respectively
(plus an amount equal to any accrued and unpaid dividends, or such amount per share as would have been payable had each share of Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred stock, respectively, been converted into a share of common stock immediately
prior to the Liquidation) (which we refer to

                                                                          68
Table of Contents

respectively as the Series A Liquidation Preference, Series B Liquidation Preference or Series C Liquidation Preference). A merger or
consolidation (other than one in which shareholders of our Company own a majority by voting power of the outstanding shares of the surviving
or acquiring corporation) and a sale, lease, transfer or other disposition of all or substantially all of our assets will be treated as a liquidation
event (which we refer to as a deemed liquidation event) and will also trigger the payment of the Series A Liquidation Preference, Series B
Liquidation Preference or Series C Liquidation Preference, respectively, unless the holders of the applicable Series of Preferred Stock elect
otherwise.

     Optional Conversion. As of September 13, 2012, our shares of Series A Preferred Stock will convert at a 0.0057-for-1 basis, shares of
our Series B Preferred Stock will convert at a 0.0055-for-1 basis and shares of our Series C Preferred Stock will convert on a 0.0050-for-1 basis
into shares of common stock at any time at the option of the holder, subject to adjustment for stock dividends, splits, combinations and similar
events.

    Mandatory Conversion. Each share of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock, respectively, will
automatically be converted into shares of common stock at the then applicable conversion rate upon:

     (1)
            the closing of a firm commitment public offering of our common stock with a price of not less than $340.00 per share (subject to
            adjustment for dividends, splits, combinations and similar events) and net proceeds to our Company of not less than $20,000,000;

     (2)
            the vote or written consent of the holders of a majority of the then outstanding shares of Series A Preferred Stock, Series B
            Preferred Stock or Series C Preferred Stock; or

     (3)
            in the case of our Series B Preferred Stock and Series C Preferred Stock, the conversion of 100% of the Series A Preferred Stock.

     On September 13, 2012, we received a written consent from holders representing a majority of the voting power of the outstanding shares
of Series A Preferred Stock consenting to the conversion, upon consummation of this offering, of each share of Series A Preferred Stock then
outstanding into shares of common stock. As a result of such consent, upon consummation of this offering each series of our outstanding
preferred stock will automatically convert into shares of common stock at the following conversion rates: Series A Preferred Stock (0.0327-to-1
basis); Series B Preferred Stock (0.0327-to-1 basis); Series C Preferred Stock (0.0481-to-1 basis) and Series D Preferred Stock (0.1543-to-1
basis).

Series D Preferred Stock

     Our board of directors is authorized to issue up to twenty million (20,000,000) shares of Series D Preferred Stock (of which 15,275,252
shares are issued and outstanding as of September 13, 2012). So long as our Series D Preferred Stock is outstanding, our Series D Preferred
Stock has the following rights and privileges:

      Voting. Each share of Series D Preferred Stock is entitled to vote together with our other shareholders on an as-converted basis, and not
as a separate class, except as required by law or our amended and restated certificate of incorporation. In addition, so long as at least 10% of the
shares of Series D Preferred Stock originally issued remain outstanding (approximately 949,837 shares of Series D Preferred Stock), we may
not, without the consent of the holders of a majority of the voting power of the Series D Preferred Stock, take any of the following actions:

     (1)
            amend, alter or repeal any provision of our amended and restated certificate of incorporation or By-laws in a manner adverse to
            holders of the Series D Preferred Stock;

                                                                         69
Table of Contents

     (2)
             create, authorize or issue any class or series of shares unless the same ranks junior to the Series D Preferred Stock with respect to
             liquidation and dividends or increase the authorized number of shares of Series D Preferred Stock;

     (3)
             increase the number of authorized shares of Series D Preferred Stock; or

     (4)
             purchase or redeem or pay or declare any dividend on any shares of capital stock other than dividends on Series A Preferred Stock,
             Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock as authorized in our amended and restated
             certificate of incorporation;

     Dividends. The dividend rate for the Series D Preferred Stock is 10% per annum of the original issue price of the Series D Preferred
Stock. The dividends for the Series D Preferred Stock are paid at the Company's option, in cash or additional shares of Series D Preferred Stock
valued at $1.00 per share. No dividends will be paid on the Company's Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock or common stock so long as any dividends on the Series D Preferred Stock remain unpaid.

     Liquidation Preference. In the event our Company voluntarily or involuntarily liquidates, dissolves or winds up, the holders of the
Series D Preferred Stock will be entitled to receive liquidating distributions in the amount of $1.00 per share plus any accrued and unpaid
dividends. After receipt of the liquidation preference, the shares of Series D Preferred Stock will participate with our common stock in
remaining liquidation proceeds (after payment of the Series A Liquidation Preference, Series B Liquidation Preference and Series C
Liquidation Preference, including accrued and unpaid dividends) pro rata on an as-converted basis. A merger or consolidation (other than one
in which shareholders of our Company own a majority by voting power of the outstanding shares of the surviving or acquiring corporation) and
a sale, lease, transfer or other disposition of all or substantially all of our assets will be treated as a liquidation event and will also trigger the
payment of the Series D Liquidation Preference, unless the holders of the Series D Preferred Stock elect otherwise.

     Optional Conversion. Our shares of Series D Preferred Stock will convert at a 0.0625-for-1 basis into shares of common stock at any
time at the option of the holder, subject to adjustment for stock dividends, splits, combinations and similar events.

     Mandatory Conversion. Each share of Series D Preferred Stock will automatically be converted into shares of common stock at the
then applicable conversion rate upon:

     (1)
             the closing of a firm commitment public offering of our common stock with a price of not less than $340.00 per share (subject to
             adjustment for dividends, splits, combinations and similar events) and net proceeds to our Company of not less than $20,000,000;

     (2)
             the conversion of 100% of the Series A Preferred Stock; or

     (3)
             the vote or written consent of the holders of a majority of the then outstanding shares of Series D Preferred Stock.

     On September 13, 2012, we received a written consent from holders representing a majority of the voting power of the outstanding shares
of Series A Preferred Stock consenting to the conversion, upon consummation of this offering, of each share of Series A Preferred Stock then
outstanding into shares of common stock. As a result of such consent, upon consummation of this offering each series of our outstanding
preferred stock will automatically convert into shares of common stock at the following conversion rates: Series A Preferred Stock (0.0327-to-1
basis); Series B Preferred Stock (0.0327-to-1 basis); Series C Preferred Stock (0.0481-to-1 basis) and Series D Preferred Stock (0.1543-to-1
basis).

Options/Warrants

   As of September 13, 2012, options to purchase a total of 151,639 shares of common stock were issued and outstanding under our
Amended Share Option Plan and 2009 Stock Plan, of which 70,034 are

                                                                          70
Table of Contents

exercisable at a weighted average exercise price of $30.26 per share, and warrants to purchase an aggregate of 419,356 shares of our common
stock were issued and outstanding, with exercise prices ranging from $16.00 to $36.04 and expiration dates ranging from July 2012 through
May 13, 2015. The warrants have cashless exercise provisions and standard provisions for the adjustment of the exercise price to prevent
dilution, including in the event we issue additional securities at a purchase price less than the then current exercise price of the warrants.

Anti-Takeover Provisions of our Amended and Restated Certificate of Incorporation and Bylaws

     Our amended and restated certificate of incorporation and bylaws contain provisions that could have the effect of discouraging potential
acquisition proposals or making a tender offer or delaying or preventing a change in control, including changes a stockholder might consider
favorable. In particular, the amended and restated certificate of incorporation and bylaws, as applicable, among other things:

    •
            provide our board of directors with the ability to alter our bylaws without stockholder approval;

    •
            provide that vacancies on our board of directors may be filled by a majority of directors in office, although less than a quorum;

    •
            provide our board of directors with the ability to issue additional shares of preferred stock without stockholder approval; and

    •
            provide that we must elect two board designees nominated by the holders of our Series A Preferred Stock.

      Such provisions may have the effect of discouraging a third-party from acquiring us, even if doing so would be beneficial to our
stockholders. These provisions are intended to enhance the likelihood of continuity and stability in the composition of our board of directors
and in the policies formulated by them, and to discourage some types of transactions that may involve an actual or threatened change in control
of our Company. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal and to discourage some
tactics that may be used in proxy fights. We believe that the benefits of increased protection of our potential ability to negotiate with the
proponent of an unfriendly or unsolicited proposal to acquire or restructure our Company outweigh the disadvantages of discouraging such
proposals because, among other things, negotiation of such proposals could result in an improvement of their terms.

     However, these provisions could have the effect of discouraging others from making tender offers for our shares that could result from
actual or rumored takeover attempts. These provisions also may have the effect of preventing changes in our management.

                                                                       71
Table of Contents


                                                                    UNDERWRITING

      Aegis Capital Corp. is acting as the sole manager of the offering and as representative of the underwriters (the "Representative"). We have
entered into an underwriting agreement dated • , 2012 with the Representative. Subject to the terms and conditions of the underwriting
agreement, we have agreed to sell to each underwriter named below, and each underwriter named below has severally agreed to purchase, at
the public offering price less the underwriting discounts set forth on the cover page of this prospectus, the number of shares of common stock
listed next to its name in the following table:


                                                                                                               Number of
                      Name of Underwriter                                                                       Shares
                      Aegis Capital Corp.                                                                                  •
                      Total                                                                                                •


     The underwriters are committed to purchase all the shares of common stock offered by us other than those covered by the option to
purchase additional shares described below, if they purchase any shares. The obligations of the underwriters may be terminated upon the
occurrence of certain events specified in the underwriting agreement. Furthermore, pursuant to the underwriting agreement, the underwriters'
obligations are subject to customary conditions, representations and warranties contained in the underwriting agreement, such as receipt by the
underwriters of officers' certificates and legal opinions.

     We have agreed to indemnify the underwriters against specified liabilities, including liabilities under the Securities Act, and to contribute
to payments the underwriters may be required to make in respect thereof.

     The underwriters are offering the shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal
matters by their counsel and other conditions specified in the underwriting agreement. The underwriters reserve the right to withdraw, cancel or
modify offers to the public and to reject orders in whole or in part.

     We have granted the underwriters an over-allotment option. This option, which is exercisable for up to 45 days after the date of this
prospectus, permits the underwriters to purchase a maximum of • additional shares (15% of the shares sold in this offering) from us to cover
over-allotments, if any. If the underwriters exercise all or part of this option, they will purchase shares covered by the option at the public
offering price that appears on the cover page of this prospectus, less the underwriting discount. If this option is exercised in full, the total price
to the public will be $ • and the total net proceeds, before expenses, to us will be $ • .

Discounts

     The following table shows the public offering price, underwriting discount and proceeds, before expenses, to us. The information assumes
either no exercise or full exercise by the underwriters of their over-allotment option.


                                                                          Total Without                 Total With Full
                                                                          Over-Allotment                Over-Allotment
                                                        Per Share            Option                         Option
                      Public offering price         $               •      $                 •          $                  •
                      Underwriting discount         $               •      $                 •          $                  •
                      Non-accountable
                        expense allowance           $               •      $                 •          $                  •
                      Proceeds, before
                        expenses, to us             $               •      $                 •          $                  •

     The underwriters propose to offer the shares offered by us to the public at the public offering price set forth on the cover of this
prospectus. In addition, the underwriters may offer some of the shares to other

                                                                         72
Table of Contents

securities dealers at such price less a concession of $ • per share. If all of the shares offered by us are not sold at the public offering price,
the Representative may change the offering price and other selling terms by means of a supplement to this prospectus.

     We have agreed to pay the Representative a non-accountable expense allowance of 1% of the public offering price (not including the
over-allotment option) at the closing. We have paid an expense deposit of $50,000 to the Representative, which will be applied against such
non-accountable expense allowance.

      We have also agreed to pay the following expenses of the Representative relating to the offering: (a) all fees, expenses and disbursements
relating to background checks of our officers and directors in an aggregate amount of approximately $14,200; (b) all fees incurred in clearing
this offering with FINRA; (c) all fees, expenses and disbursements relating to the registration, qualification or exemption of securities offered
under the securities laws of foreign jurisdictions designated by the Representative, including the reasonable fees and expenses of the
Representative's blue sky counsel up to $10,000; (d) $20,000 for the underwriters' use of Ipreo's book-building, prospectus tracking and
compliance software for this offering; and (e) $20,000 of Aegis's actual accountable road show expenses for the offering.

    We estimate that the total expenses of the offering payable by us, excluding the total underwriting discount, will be approximately
$1,294,804.

Discretionary Accounts

     Aegis does not intend to confirm sales of the securities offered hereby to any accounts over which they have discretionary authority.

Lock-Up Agreements

     Pursuant to certain "lock-up" agreements, we, our executive officers and directors, and certain of our stockholders, have agreed, subject to
certain exceptions, not to offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of, enter into any swap, hedge or similar
arrangement that transfers to another, in whole or in part, the economic risk of ownership of, directly or indirectly engage in any short selling of
any common stock or securities convertible into or exchangeable or exercisable for, any common stock, without the prior written consent of the
Representative, for a period of ninety (90) days from the date of this prospectus.

Underwriters' Warrants

     We have agreed to issue to the underwriters warrants to purchase up to a total of 85,000 shares of common stock (5% of the shares of
common stock sold in this offering, excluding the over-allotment option). The warrants will be exercisable at any time, and from time to time,
in whole or in part, during the four-year period commencing one year from the effective date of the offering, which period shall not extend
further than five years from the effective date of the offering in compliance with FINRA Rule 5110(f)(2)(H)(i). The warrants are exercisable at
a per share price equal to 125% of the public offering price per share in the offering. The warrants have been deemed compensation by FINRA
and are therefore subject to a 180 day lock-up pursuant to Rule 5110(g)(1) of FINRA. The underwriters (or permitted assignees under
Rule 5110(g)(1)) will not sell, transfer, assign, pledge, or hypothecate these warrants or the securities underlying these warrants, nor will they
engage in any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the warrants or
the underlying securities for a period of 180 days from the effective date of the offering.

     The exercise price and number of shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the
event of a stock dividend, extraordinary cash dividend or recapitalization, reorganization, merger or consolidation. However, the warrant
exercise price or

                                                                        73
Table of Contents

underlying shares will not be adjusted for issuances of shares of common stock at a price below the warrant exercise price.

Right of First Refusal

     Until twelve months after the effective date of the offering, the Representative will have a right of first refusal to act as lead underwriter
for any future public or private equity offering during such twelve month period, provided that if the Representative fails to accept our
financing proposal within 15 days, the Representative will have no further claim or right of first refusal with respect to such financing proposal
unless we subsequently modify the proposal in any material respect, in which case the Representative will have a 15-day right of first refusal
with respect to any materially modified proposal. If the Representative accepts our financing proposal but fails to complete the financing within
the agreed upon period, the Representative will lose its right of first refusal with respect to any future equity offering by us.

Electronic Offer, Sale and Distribution of Shares

      A prospectus in electronic format may be made available on the websites maintained by one or more of the underwriters or selling group
members. The Representative may agree to allocate a number of shares to underwriters and selling group members for sale to its online
brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make internet
distributions on the same basis as other allocations. Other than the prospectus in electronic format, the information on these websites is not part
of, nor incorporated by reference into, this prospectus or the registration statement of which this prospectus forms a part, has not been approved
or endorsed by us, and should not be relied upon by investors.

Stabilization

     In connection with this offering, the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate-covering
transactions, penalty bids and purchases to cover positions created by short sales.

     •
            Stabilizing transactions permit bids to purchase shares so long as the stabilizing bids do not exceed a specified maximum, and are
            engaged in for the purpose of preventing or retarding a decline in the market price of the shares while the offering is in progress.

     •
            Over-allotment transactions involve sales by the underwriters of shares in excess of the number of shares the underwriters are
            obligated to purchase. This creates a syndicate short position which may be either a covered short position or a naked short
            position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of
            shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than
            the number of shares in the over-allotment option. The underwriters may close out any short position by exercising their
            over-allotment option and/or purchasing shares in the open market.

     •
            Syndicate covering transactions involve purchases of shares in the open market after the distribution has been completed in order
            to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will
            consider, among other things, the price of shares available for purchase in the open market as compared with the price at which
            they may purchase shares through exercise of the over-allotment option. If the underwriters sell more shares than could be covered
            by exercise of the over-allotment option and, therefore, have a naked short position, the position can be closed out only by buying
            shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that after pricing
            there could be downward pressure on the price of the shares in the open market that could adversely affect investors who purchase
            in the offering.

                                                                        74
Table of Contents

     •
             Penalty bids permit the Representative to reclaim a selling concession from a syndicate member when the shares originally sold by
             that syndicate member are purchased in stabilizing or syndicate covering transactions to cover syndicate short positions.

     These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market
price of our shares or common stock or preventing or retarding a decline in the market price of our shares or common stock. As a result, the
price of our common stock in the open market may be higher than it would otherwise be in the absence of these transactions. Neither we nor
the underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of our
common stock. These transactions may be effected on the NASDAQ Capital Market, in the over-the-counter market or otherwise and, if
commenced, may be discontinued at any time.

Passive market making

     In connection with this offering, underwriters and selling group members may engage in passive market making transactions in our
common stock on The NASDAQ Capital Market or on the OTCQB in accordance with Rule 103 of Regulation M under the Exchange Act,
during a period before the commencement of offers or sales of the shares and extending through the completion of the distribution. A passive
market maker must display its bid at a price not in excess of the highest independent bid of that security. However, if all independent bids are
lowered below the passive market maker's bid, then that bid must then be lowered when specified purchase limits are exceeded.

Other Relationships

     Certain of the underwriters and their affiliates may in the future provide various investment banking, commercial banking and other
financial services for us and our affiliates for which they may in the future receive customary fees.

Offer restrictions outside the United States

     Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities
offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be
offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and
sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the
applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves
about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is
unlawful.

     Australia

     This prospectus is not a disclosure document under Chapter 6D of the Australian Corporations Act, has not been lodged with the
Australian Securities and Investments Commission and does not purport to include the information required of a disclosure document under
Chapter 6D of the Australian Corporations Act. Accordingly, (i) the offer of the securities under this prospectus is only made to persons to
whom it is lawful to offer the securities without disclosure under Chapter 6D of the Australian Corporations Act under one or more exemptions
set out in section 708 of the Australian Corporations Act, (ii) this prospectus is made available in Australia only to those persons as set forth in
clause (i) above, and (iii) the offeree must be sent a notice stating in substance that by accepting this offer, the offeree represents that the
offeree is such a person as set forth in clause (i) above, and, unless permitted under the

                                                                         75
Table of Contents

Australian Corporations Act, agrees not to sell or offer for sale within Australia any of the securities sold to the offeree within 12 months after
its transfer to the offeree under this prospectus.

     China

     The information in this document does not constitute a public offer of the securities, whether by way of sale or subscription, in the
People's Republic of China (excluding, for purposes of this paragraph, Hong Kong Special Administrative Region, Macau Special
Administrative Region and Taiwan). The securities may not be offered or sold directly or indirectly in the PRC to legal or natural persons other
than directly to "qualified domestic institutional investors."

     European Economic Area—Belgium, Germany, Luxembourg and Netherlands

     The information in this document has been prepared on the basis that all offers of securities will be made pursuant to an exemption under
the Directive 2003/71/EC ("Prospectus Directive"), as implemented in Member States of the European Economic Area (each, a "Relevant
Member State"), from the requirement to produce a prospectus for offers of securities.

     An offer to the public of securities has not been made, and may not be made, in a Relevant Member State except pursuant to one of the
following exemptions under the Prospectus Directive as implemented in that Relevant Member State:

         (a) to legal entities that are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose
     corporate purpose is solely to invest in securities;

          (b) to any legal entity that has two or more of (i) an average of at least 250 employees during its last fiscal year; (ii) a total balance
     sheet of more than €43,000,000 (as shown on its last annual unconsolidated or consolidated financial statements) and (iii) an annual net
     turnover of more than €50,000,000 (as shown on its last annual unconsolidated or consolidated financial statements);

          (c) to fewer than 100 natural or legal persons (other than qualified investors within the meaning of Article 2(1)(e) of the Prospectus
     Directive) subject to obtaining the prior consent of the Company or any underwriter for any such offer; or

          (d) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of securities shall
     result in a requirement for the publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Directive.

     France

     This document is not being distributed in the context of a public offering of financial securities (offre au public de titres financiers) in
France within the meaning of Article L.411-1 of the French Monetary and Financial Code (Code monétaire et financier) and Articles 211-1 et
seq. of the General Regulation of the French Autorité des marchés financiers ("AMF"). The securities have not been offered or sold and will
not be offered or sold, directly or indirectly, to the public in France.

     This document and any other offering material relating to the securities have not been, and will not be, submitted to the AMF for approval
in France and, accordingly, may not be distributed or caused to distributed, directly or indirectly, to the public in France.

      Such offers, sales and distributions have been and shall only be made in France to (i) qualified investors (investisseurs qualifiés) acting for
their own account, as defined in and in accordance with Articles L.411-2-II-2° and D.411-1 to D.411-3, D. 744-1, D.754-1 and D.764-1 of the
French Monetary and Financial Code and any implementing regulation and/or (ii) a restricted number of non-qualified investors (cercle
restreint d'investisseurs) acting for their own account, as defined in and in accordance with

                                                                         76
Table of Contents

Articles L.411-2-II-2° and D.411-4, D.744-1, D.754-1 and D.764-1 of the French Monetary and Financial Code and any implementing
regulation.

     Pursuant to Article 211-3 of the General Regulation of the AMF, investors in France are informed that the securities cannot be distributed
(directly or indirectly) to the public by the investors otherwise than in accordance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 to
L.621-8-3 of the French Monetary and Financial Code.

     Ireland

      The information in this document does not constitute a prospectus under any Irish laws or regulations and this document has not been filed
with or approved by any Irish regulatory authority as the information has not been prepared in the context of a public offering of securities in
Ireland within the meaning of the Irish Prospectus (Directive 2003/71/EC) Regulations 2005 (the "Prospectus Regulations"). The securities
have not been offered or sold, and will not be offered, sold or delivered directly or indirectly in Ireland by way of a public offering, except to
(i) qualified investors as defined in Regulation 2(l) of the Prospectus Regulations and (ii) fewer than 100 natural or legal persons who are not
qualified investors.

     Israel

     The securities offered by this prospectus have not been approved or disapproved by the Israeli Securities Authority (the ISA), or ISA, nor
have such securities been registered for sale in Israel. The shares may not be offered or sold, directly or indirectly, to the public in Israel, absent
the publication of a prospectus. The ISA has not issued permits, approvals or licenses in connection with the offering or publishing the
prospectus; nor has it authenticated the details included herein, confirmed their reliability or completeness, or rendered an opinion as to the
quality of the securities being offered. Any resale in Israel, directly or indirectly, to the public of the securities offered by this prospectus is
subject to restrictions on transferability and must be effected only in compliance with the Israeli securities laws and regulations.

     Italy

     The offering of the securities in the Republic of Italy has not been authorized by the Italian Securities and Exchange Commission
(Commissione Nazionale per le Societ—$$—Aga e la Borsa, "CONSOB" pursuant to the Italian securities legislation and, accordingly, no
offering material relating to the securities may be distributed in Italy and such securities may not be offered or sold in Italy in a public offer
within the meaning of Article 1.1(t) of Legislative Decree No. 58 of 24 February 1998 ("Decree No. 58"), other than:

     •
              to Italian qualified investors, as defined in Article 100 of Decree no.58 by reference to Article 34-ter of CONSOB Regulation
              no. 11971 of 14 May 1999 ("Regulation no. 1197l") as amended ("Qualified Investors"); and

     •
              in other circumstances that are exempt from the rules on public offer pursuant to Article 100 of Decree No. 58 and Article 34-ter of
              Regulation No. 11971 as amended.

    Any offer, sale or delivery of the securities or distribution of any offer document relating to the securities in Italy (excluding placements
where a Qualified Investor solicits an offer from the issuer) under the paragraphs above must be:

     •
              made by investment firms, banks or financial intermediaries permitted to conduct such activities in Italy in accordance with
              Legislative Decree No. 385 of 1 September 1993 (as amended), Decree No. 58, CONSOB Regulation No. 16190 of 29 October
              2007 and any other applicable laws; and

                                                                          77
Table of Contents

     •
             in compliance with all relevant Italian securities, tax and exchange controls and any other applicable laws.

     Any subsequent distribution of the securities in Italy must be made in compliance with the public offer and prospectus requirement rules
provided under Decree No. 58 and the Regulation No. 11971 as amended, unless an exception from those rules applies. Failure to comply with
such rules may result in the sale of such securities being declared null and void and in the liability of the entity transferring the securities for
any damages suffered by the investors.

     Japan

     The securities have not been and will not be registered under Article 4, paragraph 1 of the Financial Instruments and Exchange Law of
Japan (Law No. 25 of 1948), as amended (the "FIEL") pursuant to an exemption from the registration requirements applicable to a private
placement of securities to Qualified Institutional Investors (as defined in and in accordance with Article 2, paragraph 3 of the FIEL and the
regulations promulgated thereunder). Accordingly, the securities may not be offered or sold, directly or indirectly, in Japan or to, or for the
benefit of, any resident of Japan other than Qualified Institutional Investors. Any Qualified Institutional Investor who acquires securities may
not resell them to any person in Japan that is not a Qualified Institutional Investor, and acquisition by any such person of securities is
conditional upon the execution of an agreement to that effect.

     Portugal

      This document is not being distributed in the context of a public offer of financial securities (oferta pública de valores mobiliários) in
Portugal, within the meaning of Article 109 of the Portuguese Securities Code (Código dos Valores Mobiliários). The securities have not been
offered or sold and will not be offered or sold, directly or indirectly, to the public in Portugal. This document and any other offering material
relating to the securities have not been, and will not be, submitted to the Portuguese Securities Market Commission (Comissão do Mercado de
Valores Mobiliários) for approval in Portugal and, accordingly, may not be distributed or caused to distributed, directly or indirectly, to the
public in Portugal, other than under circumstances that are deemed not to qualify as a public offer under the Portuguese Securities Code. Such
offers, sales and distributions of securities in Portugal are limited to persons who are "qualified investors" (as defined in the Portuguese
Securities Code). Only such investors may receive this document and they may not distribute it or the information contained in it to any other
person.

     Sweden

     This document has not been, and will not be, registered with or approved by Finansinspektionen (the Swedish Financial Supervisory
Authority). Accordingly, this document may not be made available, nor may the securities be offered for sale in Sweden, other than under
circumstances that are deemed not to require a prospectus under the Swedish Financial Instruments Trading Act (1991:980) (Sw. lag
(1991:980) om handel med finansiella instrument). Any offering of securities in Sweden is limited to persons who are "qualified investors" (as
defined in the Financial Instruments Trading Act). Only such investors may receive this document and they may not distribute it or the
information contained in it to any other person.

     Switzerland

     The securities may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange ("SIX") or on any other stock
exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance
prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff.
of the SIX Listing Rules or the listing rules of any other stock exchange or regulated

                                                                        78
Table of Contents

trading facility in Switzerland. Neither this document nor any other offering material relating to the securities may be publicly distributed or
otherwise made publicly available in Switzerland.

     Neither this document nor any other offering material relating to the securities have been or will be filed with or approved by any Swiss
regulatory authority. In particular, this document will not be filed with, and the offer of securities will not be supervised by, the Swiss Financial
Market Supervisory Authority (FINMA).

     This document is personal to the recipient only and not for general circulation in Switzerland.

     United Arab Emirates

      Neither this document nor the securities have been approved, disapproved or passed on in any way by the Central Bank of the United Arab
Emirates or any other governmental authority in the United Arab Emirates, nor has the Company received authorization or licensing from the
Central Bank of the United Arab Emirates or any other governmental authority in the United Arab Emirates to market or sell the securities
within the United Arab Emirates. This document does not constitute and may not be used for the purpose of an offer or invitation. No services
relating to the securities, including the receipt of applications and/or the allotment or redemption of such shares, may be rendered within the
United Arab Emirates by the Company.

     No offer or invitation to subscribe for securities is valid or permitted in the Dubai International Financial Centre.

     United Kingdom

     Neither the information in this document nor any other document relating to the offer has been delivered for approval to the Financial
Services Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Markets Act
2000, as amended ("FSMA")) has been published or is intended to be published in respect of the securities. This document is issued on a
confidential basis to "qualified investors" (within the meaning of section 86(7) of FSMA) in the United Kingdom, and the securities may not be
offered or sold in the United Kingdom by means of this document, any accompanying letter or any other document, except in circumstances
which do not require the publication of a prospectus pursuant to section 86(1) FSMA. This document should not be distributed, published or
reproduced, in whole or in part, nor may its contents be disclosed by recipients to any other person in the United Kingdom.

      Any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) received in connection with
the issue or sale of the securities has only been communicated or caused to be communicated and will only be communicated or caused to be
communicated in the United Kingdom in circumstances in which section 21(1) of FSMA does not apply to the Company.

     In the United Kingdom, this document is being distributed only to, and is directed at, persons (i) who have professional experience in
matters relating to investments falling within Article 19(5) (investment professionals) of the Financial Services and Markets Act 2000
(Financial Promotions) Order 2005 ("FPO"), (ii) who fall within the categories of persons referred to in Article 49(2)(a) to (d) (high net worth
companies, unincorporated associations, etc.) of the FPO or (iii) to whom it may otherwise be lawfully communicated (together "relevant
persons"). The investments to which this document relates are available only to, and any invitation, offer or agreement to purchase will be
engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

                                                                         79
Table of Contents


                                                  TRANSFER AGENT AND REGISTRAR

      The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC, Operations Center, 6201 15
th
     Avenue, Brooklyn, New York 11219, telephone number (800) 937-5449.


                                                             LEGAL MATTERS

    The validity of the securities offered hereby has been passed upon for us by Pillsbury Winthrop Shaw Pittman LLP, New York, New
York. Certain legal matters in connection with this offering have been passed upon for the underwriters by Kramer Levin Naftalis &
Frankel LLP.


                                                                  EXPERTS

     The consolidated balance sheets of Xplore Technologies Corp. as of March 31, 2012 and 2011, and the related consolidated statements of
operations, statements of stockholders' equity (deficit), and statements of cash flows for each of the years in the two-year period ended
March 31, 2012 and 2011 have been audited by PMB Helin Donovan, LLP, an independent registered public accounting firm, as set forth in its
report appearing herein and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.


                                            WHERE YOU CAN FIND MORE INFORMATION

     We have filed with the SEC a registration statement on Form S-1 under the Securities Act of 1933 with respect to the shares offered
hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information in the registration
statement and the exhibits of the registration statement. For further information with respect to us and the securities being offered under this
prospectus, we refer you to the registration statement, including the exhibits and schedules thereto.

     You may read and copy the registration statement of which this prospectus is a part at the SEC's Public Reference Room, which is located
at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of the registration statement by writing to the SEC and paying a fee for
the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the SEC's Public Reference Room. In
addition, the SEC maintains an Internet web site, which is located at www.sec.gov , which contains reports, proxy and information statements
and other information regarding issuers that file electronically with the SEC. You may access the registration statement of which this
prospectus is a part at the SEC's Internet web site. We are subject to the information reporting requirements of the Securities Exchange Act of
1934, and we will file reports, proxy statements and other information with the SEC.

                                                                      80
Table of Contents


                                                 XPLORE TECHNOLOGIES CORP.

                                             Index to Consolidated Financial Statements

                                                       TABLE OF CONTENTS


                                                                                          PAGES
             As of and for the fiscal years ended March 31, 2012 and March 31, 2011
             Report of Independent Registered Public Accountants
                                                                                              F-2
             Consolidated Balance Sheets                                                      F-3
             Consolidated Statements of Operations                                            F-4
             Consolidated Statements of Stockholders' Equity (Deficit)                        F-5
             Consolidated Statements of Cash Flows                                            F-6
             Notes to the Consolidated Financial Statements                                   F-7
             As of and for the three months ended June 30, 2012 and June 30, 2011
             Consolidated Balance Sheets—Unaudited
                                                                                             F-27
             Consolidated Statements of Income (Loss)—Unaudited                              F-28
             Consolidated Statements of Cash Flows—Unaudited                                 F-29
             Notes to the Unaudited Consolidated Financial Statements                        F-30

                                                                  F-1
Table of Contents


                                 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

To the Board of Directors and
Stockholders of Xplore Technologies Corp.:

      We have audited the accompanying consolidated balance sheets of Xplore Technologies Corp. and its subsidiary (collectively the
"Company") as of March 31, 2012 and 2011 as well as the related consolidated statements of operations, stockholders' equity (deficit) 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 of
America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.

    In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Xplore Technologies
Corp. and its subsidiary as of March 31, 2012 and 2011, including the results of its operations and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of America.

/s/ PMB Helin Donovan, LLP

Austin, TX
June 25, 2012, except for the effects of the reverse stock split
discussed in Note 15 to the consolidated financial
statements, as to which the date is September 14, 2012

                                                                      F-2
Table of Contents


                                                 XPLORE TECHNOLOGIES CORP.

                                               CONSOLIDATED BALANCE SHEETS

                                                            (in thousands)


                                                                                          March 31,            March 31,
                                                                                           2012                 2011
                                          ASSETS
             CURRENT ASSETS:
              Cash and cash equivalents                                               $            199     $            168
              Accounts receivable, net                                                           8,393                2,682
              Inventory, net                                                                     3,969                3,754
              Prepaid expenses and other current assets                                             99                  201

             Total current assets                                                              12,660                 6,805
             Fixed assets, net                                                                    363                   467

                                                                                      $        13,023      $          7,272

               LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
             CURRENT LIABILITIES:
              Short-term indebtedness                                                 $             —      $            566
              Accounts payable and accrued liabilities                                           6,583                2,908

             Total current liabilities                                                           6,583                3,474
             Commitments and contingencies                                                          —                    —
             STOCKHOLDERS' EQUITY (DEFICIT):
               Series A Preferred Stock, par value $0.001 per share; authorized
                  64,000; shares issued 62,874 and 62,874, respectively                               63                   63
               Series B Preferred Stock, par value $0.001 per share; authorized
                  10,000; shares issued 7,732 and 8,232, respectively                                 8                    8
               Series C Preferred Stock, par value $0.001 per share; authorized
                  20,000; shares issued 17,074 and 17,074, respectively                               17                   17
               Series D Preferred Stock, par value $0.001 per share; authorized
                  20,000; shares issued 14,334 and 10,692, respectively                               14                   11
               Common Stock, par value $0.001 per share; authorized 1,350,000;
                  shares issued 588 and 446, respectively                                           1                   —
               Additional paid-in capital                                                     141,957              134,107
               Accumulated deficit                                                           (135,620 )           (130,408 )
                                                                                                 6,440                3,798

                                                                                      $        13,023      $          7,272




                                      See accompanying notes to consolidated financial statements.

                                                                  F-3
Table of Contents


                                                  XPLORE TECHNOLOGIES CORP.

                                        CONSOLIDATED STATEMENTS OF OPERATIONS

                                          (in thousands, except shares and per share amounts)


                                                                                                 Year Ended March 31,
                                                                                               2012                2011
             Revenue                                                                       $     27,528        $     17,759
             Cost of revenue                                                                     19,140              12,338

             Gross profit                                                                          8,388              5,421
             Expenses:
             Sales, marketing and support                                                          3,763              2,995
             Product research, development and engineering                                         1,525              2,063
             General administration                                                                3,337              2,974

                                                                                                   8,625              8,032

             Loss from operations                                                                     (237 )          (2,611 )

             Other expenses:
             Interest expense                                                                         (221 )          (3,735 )
             Other                                                                                     (65 )             (43 )

                                                                                                      (286 )          (3,778 )

             Net loss                                                                      $        (523 )     $      (6,389 )
             Dividends attributable to Preferred Stock                                            (4,601 )            (2,858 )

             Net loss attributable to common stockholders                                  $      (5,124 )     $      (9,247 )

             Loss per common share                                                         $       (1.02 )     $      (16.71 )
             Dividends attributable to Preferred Stock                                             (8.98 )             (7.48 )

             Loss per share attributable to common stockholders, basic and fully diluted   $      (10.00 )     $      (24.19 )

             Weighted average number of common shares outstanding, basic and fully
              diluted                                                                           512,252             382,308




                                       See accompanying notes to consolidated financial statements.

                                                                    F-4
Table of Contents


                                               XPLORE TECHNOLOGIES CORP.

                    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

                                               (in thousands, except share amounts)



                                               Preferred Series A        Preferred Series B       Preferred Series C        Preferred Series D        Common Shares
                                                                                                                                                                          Additional
                                                                                                                                                                           Paid-in      Acc
                                                                                                                                                                           Capital         D
                                                             Amoun                       Amoun                    Amoun                   Amoun                  Amoun
                                               Number          t         Number            t      Number            t       Number          t         Number       t
                          Balances,
                           March 31, 2010       62,873,781     $    63     8,382,041      $   8    17,124,000      $   17            —      $    —     324,907    $ —     $   119,287   $

                          Value assigned to
                            warrants issued             —           —             —           —            —           —             —           —         —          —           530
                          Shares issued for
                            services                    —           —             —           —            —           —             —           —       2,608        —           210
                          Shares issued in
                            settlement of
                            liability                   —           —             —           —            —           —        170,886          —      22,845        —           874
                          Shares issued for
                            ESPP                        —           —             —           —            —           —             —           —       1,176        —            28
                          Stock-based
                            compensation                —           —             —           —            —           —             —           —       3,177        —           906
                          Preferred Series A
                            dividends                   —           —             —           —            —           —             —           —      59,030        —         1,344
                          Preferred Series B
                            dividends                   —           —             —           —            —           —             —           —       8,022        —           186
                          Preferred Series C
                            dividends                   —           —             —           —            —           —             —           —      23,578        —           537
                          Preferred Series D
                            dividends                   —           —             —           —            —           —        193,889          —         —          —           388
                          Conversion of
                            promissory
                            notes to
                            Series D
                            Preferred Stock,
                            net of issuance
                            costs of $437               —           —             —           —            —           —      9,327,500          10        —          —         8,881
                          Sale of Series D
                            Preferred Stock,
                            net of issuance
                            costs of $63                —           —             —           —            —           —      1,000,000           1        —          —           936
                          Conversion of
                            Series B
                            Preferred Stock
                            into Common
                            Stock                       —           —       (150,001 )        —            —           —             —           —        678         —            —
                          Conversion of
                            Series C
                            Preferred Stock
                            into Common
                            Stock                       —           —             —           —       (50,000 )        —             —           —        156         —            —
                          Net loss                      —           —             —           —            —           —             —           —         —          —            —

                          Balances,
                           March 31, 2011       62,873,781     $    63     8,232,040      $   8    17,074,000      $   17    10,692,255     $    11    446,177    $ —     $   134,107   $

                          Shares issued for
                            services                    —           —             —           —            —           —             —           —       2,125        —            50
                          Shares issued for
                            ESPP                        —           —             —           —            —           —             —           —       1,330        —            37
                          Stock-based
                            compensation                —           —             —           —            —           —        109,445          —       1,090        —           872
                          Preferred Series A
                            dividends                   —           —             —           —            —           —             —           —      88,466        1         1,950
                          Preferred Series B
                            dividends                   —           —             —           —            —           —             —           —      11,240        —           251
                          Preferred Series C
                            dividends                   —           —             —           —            —           —             —           —      35,334        —           779
                          Preferred Series D
                            dividends                   —           —             —           —            —           —      1,212,098           1        —          —         1,731
                          Sale of Series D
                            Preferred Stock,
                            net of issuance
                            costs of $138               —           —             —           —            —           —      2,320,000           2        —          —         2,180
                          Conversion of
                            Series B
                            Preferred Stock
                            into Common                 —           —       (500,000 )        —            —           —             —           —       2,533        —            —
 Stock
Net loss                 —         —           —         —          —         —           —         —        —         —           —

Balances,
 March 31, 2012   62,873,781   $   63    7,732,040   $   8   17,074,000   $   17   14,333,798   $   14   588,295   $   1   $   141,957   $




    See accompanying notes to consolidated financial statements.

                                        F-5
Table of Contents


                                                    XPLORE TECHNOLOGIES CORP.

                                          CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                 (in thousands)


                                                                                                       Years Ended
                                                                                                        March 31,
                                                                                                2012                 2011
             CASH FLOWS FROM OPERATING ACTIVITIES:
             Cash used in operations:
               Net loss                                                                    $           (523 )   $      (6,389 )
               Items not affecting cash:
                  Depreciation and amortization                                                        647                310
                  Provision for doubtful accounts                                                       (5 )             (111 )
                  Amortization of deferred financing costs                                              —               2,458
                  Stock-based compensation expense                                                     790              1,055
                  Equity instruments issued in exchange for services                                   200                225
             Changes in operating assets and liabilities:
               Accounts receivable                                                                (5,706 )              1,501
               Inventory                                                                            (215 )             (1,460 )
               Prepaid expenses and other current assets                                             102                  390
               Accounts payable and accrued liabilities                                            3,631                  (87 )

                     Net cash used in operating activities                                        (1,079 )             (2,108 )

             CASH FLOWS FROM INVESTING ACTIVITIES:
              Additions to fixed assets                                                                (543 )               (682 )

                     Net cash used in investing activities                                             (543 )               (682 )

             CASH FLOWS FROM FINANCING ACTIVITIES:
              Proceeds from short-term borrowings                                                 14,550               16,895
              Repayment of short-term indebtedness                                               (15,116 )            (16,884 )
              Net proceeds from issuance of promissory notes                                          —                 1,593
              Net proceeds on issuance of Series D Preferred Stock                                 2,182                  937
              Net proceeds on issuance of Common Stock                                                37                   28

                     Net cash provided by financing activities                                     1,653                2,569

             CHANGE IN CASH AND CASH EQUIVALENTS                                                        31                  (221 )
             CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                            168                   389

             CASH AND CASH EQUIVALENTS, END OF PERIOD                                      $           199      $           168

             SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:
               Payments for interest                                                       $           221      $           152

                Payments for income taxes                                                  $             —      $             —

                Preferred Stock dividends issued in the form of stock                      $       4,689        $       2,425

                Payments for interest satisfied with issuance of stock                     $             —      $           874

                Conversion of promissory notes to stock                                    $             —      $       9,328




                                        See accompanying notes to consolidated financial statements.
F-6
Table of Contents


                                                    XPLORE TECHNOLOGIES CORP.

                                    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                             (In thousands, except share and per share amounts)

1. DESCRIPTION OF BUSINESS

      Xplore Technologies Corp. (the "Company"), incorporated under the laws of the State of Delaware, is engaged in the business of the
development, integration and marketing of rugged mobile wireless PC computing systems. The Company's products enable the extension of
traditional computing systems to a range of field and on-site personnel, regardless of location or environment. Using a range of wireless
communication mediums together with the Company's rugged computing products, the Company's end-users are able to receive, collect,
analyze, manipulate and transmit information in a variety of environments not suited to traditional non-rugged computing devices. The
Company's end-users are in the following markets: utilities, telecommunications, warehousing/logistics, public safety, field service,
transportation, oil and gas, manufacturing, route delivery, military and homeland security.

2. SIGNIFICANT ACCOUNTING POLICIES

     The consolidated financial statements were prepared using accounting principles generally accepted in the United States of America and
reflect the following significant accounting policies:

     a)
            Basis of consolidation and presentation

    The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Xplore Technologies
Corporation of America.

      The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company has accumulated significant losses as it has been developing its current
and next generation rugged computer products. The Company has had recurring losses. The Company believes that cash flow from operations,
together with borrowings from its senior lender and, if needed financial support from Phoenix Venture Fund LLC, a principal stockholder
("Phoenix") together with affiliates, will be sufficient to fund the anticipated operations for fiscal 2013. These financial statements do not
include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of
liabilities that might be necessary should the Company be unable to continue as a going concern for a reasonable period of time.

      Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. These estimates and assumptions are affected by
management's application of accounting policies. Estimates are deemed critical when a different estimate could have reasonably been used or
where changes in the estimates are reasonably likely to occur from period to period, and would materially impact the Company's financial
condition, changes in financial condition or results of operations. On an ongoing basis, the Company evaluates the estimates, including those
related to its revenue recognition, allowance for doubtful accounts, inventory valuation, warranty reserves, tooling amortization, financial
instruments, stock-based compensation and income taxes. The estimates are based on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources. Actual results may differ from management's estimates and
assumptions.

                                                                       F-7
Table of Contents


                                                    XPLORE TECHNOLOGIES CORP.

                              NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                             (In thousands, except share and per share amounts)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

     b)
            Cash and cash equivalents

     Cash and cash equivalents comprise cash and highly liquid investments with original maturities of less than ninety days.

     c)
            Allowance for Doubtful Accounts

     The Company recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable losses net of
recoveries. The allowance is based on an analysis of historical bad debt experience, current receivables aging, and expected future write-offs, as
well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The expense associated with the allowance
for doubtful accounts is recognized as general administration expense

     d)
            Inventory

     Inventory is recorded at the lower of average cost or net realizable value. The valuation of inventory requires the use of estimates
regarding the amount of current inventory that will be sold and the prices at which it will be sold based on an assessment of expected orders for
these products from the Company's customers. Additionally, the estimates reflect changes in the Company's products or changes in demand
because of various factors including the market for the Company's products, obsolescence, product discontinuation, technology changes and
competition.

     e)
            Fixed assets

     Fixed assets are recorded at cost. The straight line depreciation method is used to depreciate the recorded value of fixed assets over their
estimated useful lives.


                     Fixed Asset                                                     Estimated Useful Lives
                     Tooling and fixtures                        2 years
                     Office equipment                            5 years
                     Machine equipment                           2 years
                     Leasehold improvements                      lesser of 5 years or remaining lease term
                     Computer equipment                          2 years
                     Computer software                           2 years
                     Demonstration units                         6 months

    The Company performs reviews for the impairment of fixed assets whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be fully recoverable.

     f)
            Revenue recognition

     The Company's revenue is derived from the sale of rugged, mobile technology which includes rugged mobile computers and related
accessories. The Company's customers are predominantly resellers. However, the Company also sells directly to end-users. Revenue is
recognized, net of an allowance for estimated returns, when title and risks of ownership are transferred to the customer, all significant
contractual obligations have been satisfied, the sales price is fixed or determinable and the ability to collect is reasonably assured. The
Company's revenue recognition criteria have generally been met when the

                                                                       F-8
Table of Contents


                                                     XPLORE TECHNOLOGIES CORP.

                              NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                             (In thousands, except share and per share amounts)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

product has been shipped. Shipments are based on firm purchase orders from customers with stated terms. The shipping terms are F.O.B.
shipping point. The Company does not have installation, training or other commitments subsequent to shipment that are other than incidental.
Prices are determined based on negotiations with the Company's customers and are not subject to adjustment. Generally, the Company does not
hold inventory at its resellers and does not expect resellers to hold inventories of the Company's products other than in limited circumstances
where such inventory is monitored by the Company. As a result, the Company expects returns to be minimal. The allowance for returns is
calculated and regularly reviewed based on historical experience. The Company has not had material adjustments as returns have been
minimal. Warranty obligations related to recognized revenue are generally covered by warranty coverage agreements provided by a third party.

     g)
            Cost of revenue

     The Company's cost of revenue consists of the costs associated with manufacturing, assembling and testing its products, related overhead
costs, maintenance, compensation, freight and other costs related to manufacturing support, including the depreciation of tooling assets. The
Company uses contract manufacturers to manufacture its products and supporting components, and the significant majority of the Company's
cost of revenue is attributable to component costs and payments to these contract manufacturers.

     Cost of revenue also includes warranty costs. The Company records warranty liabilities at the time of sale for the estimated costs that may
be incurred under its warranty. The specific warranty terms and conditions generally included are technical support, repair parts, and labor for a
period that is generally three years. The Company re-evaluates its estimates to assess the adequacy of its recorded warranty liabilities and
adjusts the amounts as necessary and any change, based on current information, is recorded as a change in estimate.

     The changes to the warranty liability are as follows:


                                                                                                           Year ended
                                                                                                            March 31,
                                                                                                       2012           2011
                      Beginning balance                                                            $       88      $      —
                      Aggregate changes for accrual related to guarantees issued                          124            126
                      Aggregate changes to preexisting accruals                                            —              —
                      Aggregate reductions for payments made                                              (46 )          (38 )

                      Ending balance                                                               $      166      $         88


     h)
            Income taxes

      The Company accounts for income taxes in accordance with the asset and liability method. The determination of future tax assets and
liabilities is based on the difference between financial statement and income tax bases of assets and liabilities, using enacted tax rates in effect
for the period in which the differences are expected to occur. Future tax assets are recorded to recognize tax benefits only to the extent that,
based on available evidence, it is more likely than not that they will be realized.

                                                                        F-9
Table of Contents


                                                    XPLORE TECHNOLOGIES CORP.

                             NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                            (In thousands, except share and per share amounts)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

     The Company periodically assesses uncertain tax positions that the Company has taken or expects to take on a tax return (including a
decision whether to file or not to file a return in a particular jurisdiction). The Company evaluated its tax positions and determined that there
were no uncertain tax positions for the years ended March 31, 2012 and 2011.

     i)
            Stock-based compensation

    The Company applies the fair value method of accounting for all of its employee stock-based compensation. The Company uses the
Black-Scholes option pricing model to determine the fair value of stock option awards at the date of the issuance of the award. The value is
expensed over the vesting period which is generally three years. See Note 9 to these consolidated financial statements for required disclosures.

     j)
            Financial instruments and credit risk

     Financial instruments that potentially subject the Company to credit risk include cash and cash equivalents, accounts receivable and
unbilled receivables from customers. Cash is deposited in demand accounts in federally insured domestic institutions to minimize risk.
Accounts receivables are generally unsecured. With respect to accounts receivables, the Company performs ongoing credit evaluations of
customers and generally does not require collateral.

    Receivables are concentrated with a small number of customers. The Company maintains an allowance for doubtful accounts when
deemed necessary. The allowance for doubtful accounts at March 31, 2012 and March 31, 2011 was $33 and $38, respectively.

     The amounts reported for cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, bank indebtedness and
promissory notes payable are considered to approximate their fair values based on comparable market information available at the respective
balance sheet dates and their short-term nature.

     k)
            Loss per share attributable to common stockholders

     Loss per share attributable to common stockholders has been computed based on the weighted-average number of common shares issued
and outstanding during the period, and is calculated by dividing net loss and net loss attributable to common stockholders by the weighted
average number of common shares outstanding during the period. The effects of the options granted under the Company's share option plan, the
exercise of outstanding options, the exercise of outstanding warrants, the conversion of the convertible Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, and other common stock equivalents were excluded from the loss per
share attributable to common stockholders calculations for the years presented as their inclusion is anti-dilutive. Accordingly, diluted loss per
share attributable to common stockholders has not been presented.

                                                                      F-10
Table of Contents


                                                  XPLORE TECHNOLOGIES CORP.

                            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                           (In thousands, except share and per share amounts)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

    The following securities were not considered in the earnings per share calculation at their common stock equivalent:


                                                                                    March 31, 2012                 March 31, 2011
             Series A Preferred Stock                                                          360,446                      343,912
             Series B Preferred Stock                                                           42,374                       43,012
             Series C Preferred Stock                                                           85,433                       80,956
             Series D Preferred Stock                                                          895,862                      668,266
             Warrants                                                                          429,581                      434,236
             Options                                                                           140,870                      144,401
             Other Common Stock Equivalents                                                     12,750                        7,556

                                                                                           1,967,316                       1,722,339


    l)
           Recent accounting pronouncements

     The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial
statements. The Company does not believe that there are any new accounting pronouncements that have been issued that might have a material
impact on its consolidated financial position or results of operations.

3. INVENTORY


                                                                                                       March 31,
                                                                                                2012                2011
                    Finished goods                                                         $      2,915       $        2,486
                    Computer components                                                           1,054                1,268

                    Total inventory                                                        $      3,969       $        3,754


                                                                    F-11
Table of Contents


                                                   XPLORE TECHNOLOGIES CORP.

                            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                           (In thousands, except share and per share amounts)

4. FIXED ASSETS


                                                                                                      March 31,
                                                                                               2012               2011
                     Cost
                     Tooling and fixtures                                                  $       897       $        818
                     Office equipment and leasehold improvements                                 1,273              1,097
                     Computer equipment and demonstration units                                    248                619
                     Computer software                                                             654                654

                                                                                                 3,072              3,188

                     Accumulated depreciation
                     Tooling and fixtures                                                          629                400
                     Office equipment and leasehold improvements                                 1,231              1,096
                     Computer equipment and demonstration units                                    197                576
                     Computer software                                                             652                649

                                                                                                 2,709              2,721

                     Total fixed assets, net                                               $          363    $           467


    Depreciation and amortization expense was $647 and $310 during the years ended March 31, 2012 and 2011, respectively.

5. SHORT-TERM INDEBTEDNESS

      On December 10, 2009, the Company's wholly-owned subsidiary entered into an Accounts Receivable Purchasing Agreement (the
"ARPA") with DSCH Capital Partners, LLC d/b/a Far West Capital ("FWC"). Pursuant to the ARPA, as amended to date FWC may purchase,
in its sole discretion, eligible accounts receivable of the Company's subsidiary on a revolving basis, up to a maximum of $8,500. Under the
terms of the ARPA, FWC purchases eligible receivables from the subsidiary with full recourse for the face amount of such eligible receivables,
less a discount of 0.52%. FWC retains 15% of the purchase price of the purchased receivables as a reserve amount. The subsidiary is required
to pay FWC a monthly cost of funds fee equal to the net funds employed by FWC (i.e., the daily balance of the purchase price of all purchased
receivables less the reserve amount, plus any unpaid fees and expenses due from the subsidiary to FWC under the ARPA) multiplied by the
annual prime lending rate reported in The Wall Street Journal plus 11.50%, which fees accrue daily. Prior to February 29, 2012, the ARPA
provided that advances of up to $1,200 may be based upon eligible accounts receivable resulting from sales outside North America, provided
that total funds advanced on such accounts receivable does not exceed 55% of total funds advanced by FWC under the facility and provided
further that no single account balance with the Company's subsidiary for an account debtor outside North America may exceed $60 unless the
Company's subsidiary purchases credit insurance to cover the amount exceeding $60 for such account debtor. Effective with the February 29,
2012 amendment to the ARPA, accounts receivable resulting from sales outside North America are no longer considered eligible accounts
receivable according to the ARPA. On August 26, 2011, the Company's subsidiary and FWC entered into an inventory finance rider to the
ARPA (the "Rider") to provide for advances up to $700 based upon eligible finished goods Tablet PC inventory, provided that total funds
advanced on such inventory does not exceed 30% of all eligible inventory and

                                                                    F-12
Table of Contents


                                                     XPLORE TECHNOLOGIES CORP.

                              NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                             (In thousands, except share and per share amounts)

5. SHORT-TERM INDEBTEDNESS (Continued)

provided further that the advances shall at no time exceed 40% of the sum of (1) total funds advanced by FWC under the ARPA and
(2) products scheduled to be shipped in satisfaction of customer purchase orders within 90 days. Eligible inventory is valued at the lower of
cost or market value. Prior to the execution of the Rider, which gave the Company's subsidiary the ability to receive advances on its inventory,
FWC had the ability to purchase eligible purchase orders from the subsidiary, less a discount of 1.00%, under the ARPA. In the December 30,
2011 amendment to the ARPA, the maximum amount of the eligible accounts receivable and purchase orders that FWC may purchase was
increased from $4,750 to $8,500.

     The ARPA also provides that FWC has the right to require the subsidiary to repurchase any purchased accounts receivable: (a) if there is a
dispute as to the validity of such receivable by the account debtor, (b) if certain covenants, warranties or representations made by the subsidiary
with respect to such receivables are breached, (c) upon and during the continuance of an event of default under the ARPA or upon the
termination of the ARPA, or (d) if such receivable remains unpaid 90 days after the invoice date. The ARPA has an initial term of one year
with automatic renewals for successive one-year periods. Notwithstanding that, FWC may terminate the ARPA at any time upon 150 days prior
written notice or without prior notice upon and during the continuance of an event of default.

     The ARPA contains standard representations, warranties, covenants, indemnities and releases for agreements governing financing
arrangements of this type. The Company has guaranteed the obligations of its subsidiary under the ARPA pursuant to a corporate guaranty and
suretyship. In addition, pursuant to the ARPA, the subsidiary's obligations under the ARPA are secured by a first priority security interest on all
assets of the subsidiary. On March 31, 2012, there were no borrowings under the ARPA.

6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES


                                                                                                         March 31,
                                                                                                  2012               2011
                      Accounts payable                                                        $     5,219       $      1,407
                      Engineering accrual                                                              30                500
                      Other accrued liabilities                                                     1,334              1,001

                      Total                                                                   $     6,583       $      2,908


      The Company's accrued liabilities as of March 31, 2011 included an estimated $398,000 in engineering services related to the
development of a rugged notebook PC by an outside supplier during fiscal 2009. The Company was never billed for the services, and the
related statutory period lapsed in fiscal 2012. In the fourth quarter of fiscal 2012, the Company eliminated the engineering accrual of $398,000,
resulting in a reduction in product research, development and engineering expense.

                                                                       F-13
Table of Contents


                                                    XPLORE TECHNOLOGIES CORP.

                               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                            (In thousands, except share and per share amounts)

7. PROMISSORY NOTES


                                                                             Exchanged
                                                                 Value          for        Accretion
                                         Balance                Assigned      Series D         of       Balance
                    Promissory Note     March 31,      New         to        Preferred     Non-Cash    March 31,
                    Issuance Date         2010      Issuances   Warrants       Stock        Interest     2011
                    September 5, 2008   $     825   $      —    $     — $ (1,000 ) $   175                $   —
                    October 21, 2008        1,624          —          —    (2,000 )    376                    —
                    February 27, 2009         410          —          —      (555 )    145                    —
                    March 5, 2009              74          —          —      (100 )     26                    —
                    March 11, 2009            221          —          —      (300 )     79                    —
                    May 26, 2009               69          —          —      (100 )     31                    —
                    June 15, 2009              13          —          —       (20 )      7                    —
                    July 1, 2009               10          —          —       (15 )      5                    —
                    November 5, 2009        2,110          —          —    (3,210 )  1,100                    —
                    August 18, 2010            —          250       (151 )   (250 )    151                    —
                    September 2, 2010          —          600       (363 )   (600 )    363                    —
                    December 16,
                      2010                     —        1,178         —         (1,178 )          —           —

                                        $ 5,356     $ 2,028     $ (514 ) $ (9,328 ) $ 2,458               $   —


     On December 16, 2010, all of the Company's senior secured subordinated promissory notes and secured subordinated promissory notes
and related accrued interest were exchanged for shares of the Company's Series D Preferred Stock, at an exchange rate of one share for each
$1.00 of such indebtedness. The exchange resulted in the issuance of 9,498,366 shares of the Company's Series D Preferred Stock. Prior to their
exchange, the Company's senior secured subordinated promissory notes and secured subordinated promissory notes bore interest at the rate of
10% per annum. Interest was payable quarterly and could be paid in cash or, at the option of the Company, in shares of the Company's common
stock. The Company elected to pay the interest on the promissory notes with shares of common stock, and therefore, the effective interest rate
under the notes was increased by approximately 2.5%. Interest expense for the year ended March 31, 2011 was $677. Payment for the year
ended March 31, 2011 was rendered with the issuance of 9,133 and 7,924 shares of common stock in October 2010 and July 2010, respectively,
and with the issuance of 170,866 shares of the Company's Series D Preferred stock upon the exchange of the notes in December 2010.

     Warrants issued by the Company prior to fiscal year 2011 in connection with the issuance of the Company's senior secured subordinated
promissory notes and secured subordinated promissory notes have been valued separately using the Black Scholes methodology. The fair value
calculations assumed a discount rate of approximately 1.40%, volatility of approximately 125%, no dividends and that all of the shares will
vest. The relative fair value of the warrants, as compared to the notes, resulted in a value of $3,333 assigned to the warrants issued to the
promissory note holders, which was recorded as additional paid-in capital and a discount to the promissory notes. The modifications of the
expiration dates of the warrants resulted in recalculations of fair value, which are reflected in the value of $3,333. The discounts were
amortized over the terms of the senior secured subordinated promissory notes and secured subordinated promissory notes. Interest expense for
the year ended March 31, 2011 attributable to the warrants was $1,944. In connection with the Company's recapitalization, the Company's
senior secured subordinated promissory notes and secured subordinated promissory notes were exchanged for equity in

                                                                      F-14
Table of Contents


                                                     XPLORE TECHNOLOGIES CORP.

                             NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                             (In thousands, except share and per share amounts)

7. PROMISSORY NOTES (Continued)

December 2010 and the amortization period of the discounts accordingly reduced, resulting in an additional $1,458 of interest expense for the
year ended March 31, 2011.

     On August 18, 2010, the Borrowers entered into Amendment No. 1 to the Note Purchase Agreement dated as of November 5, 2009,
pursuant to which Phoenix and other purchasers, in the sole discretion of Phoenix, could purchase up to $2,000 of principal amount of
additional Senior Notes, and warrants to purchase up to 71,429 shares of the Company's common stock at an exercise price of $28.00 per share
(the "Bridge Financing"). On August 18, 2010, pursuant to the amendment, the Borrowers raised $250 in a private placement with Phoenix
through the issuance of a Senior Note in the principal amount of $250 and warrants to purchase 8,929 shares of the Company's common stock.
On September 2, 2010, the Borrowers raised $600 in a second private placement with Phoenix through the issuance of another Senior Note in
the principal amount of $600 and warrants to purchase 21,429 shares of the Company's common stock.

     On November 3, 2010, the Borrowers entered into Amendment No. 2 to the Note Purchase Agreement dated as of November 5, 2009
which provided that, upon Phoenix's approval, the Borrowers would issue up to an aggregate principal amount of $3,000 in additional Senior
Notes in the Bridge Financing and that the exercise price of the warrants issued in connection with the Bridge Financing would be $16.00 per
share. In addition, under the amendment the warrants to purchase 30,357 shares of the Company's common stock at $28.00 per share previously
issued in the Bridge Financing were replaced with warrants to purchase 53,125 shares of the Company's at $16.00 per share. On December 16,
2010, the Borrowers raised $1,178 in a third private placement with Phoenix through the issuance of another Senior Note in the principal
amount of $1,178 and warrants to purchase 73,594 shares of the Company's common stock. In connection with the Bridge Financing, Phoenix
issued participation interests in one or more of the Senior Notes in the aggregate principal amount of $1,028 and warrants to purchase an
aggregate number of 64,219 shares of the Company's common stock.

     The warrants issued in connection with the Bridge Financing have been valued separately using the Black-Scholes methodology. The fair
value calculations assumed a discount rate of approximately 0.77%, volatility of approximately 158%, no dividends and that all of the shares
will vest. The relative fair value of the warrants as compared to the notes resulted in a value of $514 assigned to the warrants issued to the note
holders that was recorded as additional paid in capital and a discount of the promissory notes. The discounts were amortized over four months.
The entire fair value of the warrants issued in the Bridge Financing of $514 was recognized as interest expense during the year ended
March 31, 2011.

8. SHARE CAPITAL

    On December 16, 2010, the Company filed an amended and restated certificate of incorporation with the Secretary of State of the State of
Delaware. As a result, the Company is now authorized to issue 1,500,000,000 shares of capital stock, consisting of 1,350,000,000 shares of
common stock, $.001 par value, and 150,000,000 shares of preferred stock, $.001 par value.

Year-ended March 31, 2012

     On October 14, 2011, the Company raised net proceeds of $2,182 in a private placement through the issuance of 2,320,000 shares of its
Series D Preferred Stock. Philip S. Sassower, the Company's Chairman of the Board and Chief Executive Officer, purchased 500,000 shares of
Series D Preferred Stock in the

                                                                       F-15
Table of Contents


                                                    XPLORE TECHNOLOGIES CORP.

                             NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                            (In thousands, except share and per share amounts)

8. SHARE CAPITAL (Continued)

private placement. In connection with the private placement of the Series D Preferred Stock, the Company paid SG Phoenix LLC, an affiliate
of our principal stockholder, an administrative fee of $100 in cash and a warrant to purchase 6,250 shares of common stock at an initial
exercise price of $16.00 per share. The warrant is substantially similar to the warrants issued with the private placement of 1,000,000 shares of
the Series D Preferred Stock on February 23, 2011, except that the warrant expires on October 13, 2014 rather than December 15, 2013.

     During the year ended March 31, 2012, 500,000 shares of Series B Preferred Stock were exchanged for 2,533 shares of common stock.

Year-ended March 31, 2011

     On December 16, 2010, the Company raised $1,178 in private placements through the issuance of secure promissory notes and warrants to
purchase up to 73,594 shares of the Company's common stock at $16.00 per share. The terms of the warrants are consistent with the terms of
the warrants issued to purchasers of the secured promissory notes previously issued.

      On December 16, 2010, the Company also issued 9,498,366 shares of the Company's Series D Preferred Stock in exchange for all of the
Company's outstanding Senior Notes and secured subordinated promissory notes and related accrued interest, at an exchange rate of one share
of Series D Preferred Stock for each $1.00 of such indebtedness. The Series D Preferred Stock has a par value of $0.001 and was recorded net
of issuance costs of $437.

     On February 23, 2011, the Company raised $1,000 in a private placement through the issuance of 1,000,000 shares of the Company's
Series D Preferred Stock and warrants to purchase 62,500 shares of the Company's common stock at $16.00 per share. The terms of the
warrants are consistent with the terms of the warrants issued to purchasers of the secured promissory notes previously issued. The Series D
Preferred Stock has a par value of $0.001 and was recorded net of issuance costs of $63.

     During the year ended March 31, 2011, 150,001 shares of Series B Preferred Stock were exchanged for 678 shares of common stock, and
50,000 shares of Series C Preferred Stock were exchanged for 156 shares of common stock.

Preferred Stock Dividends and Liquidation Preferences

    Our outstanding shares of Preferred Stock accrue cumulative dividends which are paid quarterly on the first day of June, September,
December and March.

     The dividend rate for the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock was 5% per annum of the
original issue price of the Preferred Stock through November 30, 2010 and the dividend rate was increased to 7.5% per annum of the original
issue price for periods after November 30, 2010. The dividends for the Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock are paid in the number of shares of common stock determined by dividing (i) the aggregate amount of the dividend then
payable by (ii) the volume weighted average trading price of the common stock over the 10 trading days ending on the third trading day
immediately preceding the dividend payment date, less a discount of 25% of the volume weighted average trading price of the common stock.

                                                                      F-16
Table of Contents


                                                    XPLORE TECHNOLOGIES CORP.

                             NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                             (In thousands, except share and per share amounts)

8. SHARE CAPITAL (Continued)

     The dividend rate for the Series D Preferred Stock is 10% per annum of the original issue price of the Series D Preferred Stock. The
dividends for the Series D Preferred Stock are paid at the Company's option, in cash or additional shares of Series D Preferred Stock valued at
$1.00 per share. No dividends will be paid on the Company's Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or
common stock so long as any dividends on the Series D Preferred Stock remain unpaid.

     The values for dividends paid and dividends accrued and unpaid are determined based on the market prices of the Company's common
stock as of the dates of share issuances and accrual multiplied by the equivalent common shares.

    A summary of paid dividends for the years ended March 31, 2012 and 2011 and accrued and unpaid dividends as of March 31, 2012 and
2011 is as follows:


                                                                                           Dividends
                                                                                                              Accrued and
                                                                          Paid For Years                      Unpaid as of
                                                                          Ended March 31                        March 31
                                                                       2012              2011              2012           2011
                     Series A Preferred Stock                      $     1,940      $      1,330       $      201      $     262
                     Series B Preferred Stock                              243               176               25             35
                     Series C Preferred Stock                              774               531               80            105
                     Series D Preferred Stock                            1,732               388              178            170

      In the event the Company voluntarily or involuntarily liquidates, dissolves or winds up, the holders of the Series D Preferred Stock will be
entitled to receive liquidating distributions in the amount of $1.00 per share plus any accrued and unpaid dividends. After receipt of the
liquidation preference, the shares of Series D Preferred Stock will participate with the common stock in remaining liquidation proceeds (after
payment of the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock liquidation preferences, including
accrued and unpaid dividends) pro rata on an as-converted basis. A merger or consolidation (other than one in which the then current
stockholders own a majority of the voting power in the surviving or acquiring corporation) or a sale, lease transfer, exclusive license or other
disposition of all or substantially all of the Company's assets will be treated as a liquidation event triggering the liquidation preference. Each
series of Series A, Series B and Series C Preferred Stock ranks on parity with each other series of Series A, Series B and Series C Preferred
Stock with respect to dividends and liquidation. At March 31, 2012, the liquidation preference values of the Series A, Series B, Series C and
Series D Preferred Stock were $21,377, $2,629, $8,537 and $14,334, respectively.

    At March 31, 2012, the conversion rates into common stock for the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock were approximately 0.0057, 0.0055, 0.0050 and 0.0625, respectively.

                                                                       F-17
Table of Contents


                                                    XPLORE TECHNOLOGIES CORP.

                             NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                            (In thousands, except share and per share amounts)

8. SHARE CAPITAL (Continued)

Warrants outstanding

     There were warrants to purchase 429,581 shares of common stock outstanding and fully exercisable at March 31, 2012 as detailed in the
table below:


                     Number of Warrants                             Exercise Price(1)            Expiration Date
                     10,225                                     $                  27.49                July 27, 2012
                     9,375                                      $                  31.43             January 30, 2013
                     186,503                                    $                  27.47             January 14, 2013
                     205,978                                    $                  16.00           December 15, 2013
                     6,250                                      $                  16.00            October 13, 2014
                     7,500                                      $                  36.04                June 10, 2014
                     3,750                                      $                  29.50                May 13, 2015


                     (1)
                             Exercise price may change subject to anti-dilutive terms.

9. STOCK-BASED COMPENSATION PLAN

     a)
            Stock Options

     In 1995, the Company's board of directors approved a Share Option Plan, which was amended and restated in December 2004, and
amended thereafter (as amended, the "Amended Share Option Plan"). The Amended Share Option Plan is administered by the Board of
Directors and provides that options may be granted to employees, officers, directors and consultants to the Company. The exercise price of an
option is determined at the date of grant and is based on the closing price of the Company's common stock on the stock exchange or quotation
system where the common stock is listed or traded on the day preceding the grant. Unless otherwise provided for, the options are exercisable
only during the term of engagement of the employee, officer or consultant or during the period of service as a director of the Company.

     On July 28, 2009, the Company's board of directors adopted a 2009 Stock Incentive Plan (as amended, the "2009 Stock Plan"), subject to
the approval of the Company's stockholders. The 2009 Stock Plan provides for equity-based awards in the form of incentive stock options and
non-statutory options, restricted shares, stock appreciation rights and restricted stock units. Awards are made to selected employees, directors
and consultants to promote stock ownership among award recipients, to encourage their focus on strategic long-range corporate objectives, and
to attract and retain exceptionally qualified personnel. The 2009 Stock Plan became effective as of June 10, 2009, was amended on
November 10, 2009 by the Company's board of directors to increase in the number of shares of the Company's common stock that may be
issued under the 2009 Stock Plan to 62,750, and was approved by the Company's stockholders on January 14, 2010. On November 3, 2010, the
Company's board of directors amended the 2009 Stock Plan again to increase in the number of shares of the Company's common stock that
may be issued under the 2009 Stock Plan to 187,500, subject to the approval of the Company's stockholders, which was received on
December 16, 2010.

     At March 31, 2012, the maximum aggregate number of shares of common stock reserved for issuance upon the exercise of all options
granted under the Amended Share Option Plan and 2009 Stock Plan may

                                                                      F-18
Table of Contents


                                                    XPLORE TECHNOLOGIES CORP.

                                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                            (In thousands, except share and per share amounts)

9. STOCK-BASED COMPENSATION PLAN (Continued)

not exceed an aggregate of 191,848 shares. This amount consists of 187,500 shares under the 2009 Stock Plan and 4,348 under the Amended
Share Option Plan, which was the number of shares issuable under outstanding options under the Amended Share Option Plan on the date the
2009 Stock Plan was adopted. The options under the plans generally vest over a 3-year period in equal annual amounts and expire five years
after the issuance date.

    A summary of the activity in the Company's Amended Share Option Plan and 2009 Stock Plan during the years ended March 31, 2012 and
2011 is as follows:


                                                                                Year ended March 31,
                                                              2012                                                 2011
                                                                           Weighted                                             Weighted
                                                                           Average                                              Average
                                                                         Exercise Price                                       Exercise Price
                                                Options                     (USD$)                  Options                      (USD$)
              Outstanding at
                beginning of year                    144,401         $              40.00                 42,810          $               172.00
              Granted                                 26,500         $              24.00                122,662          $                24.00
              Exercised                                   —                            —                      —                               —
              Forfeited                              (30,031 )       $              84.00                (21,071 )        $               132.00

              Outstanding and
                expected to vest at
                end of year                          140,870         $              28.00                144,401          $                40.00


     At March 31, 2012, the total number of shares of common stock issued in connection with the exercise of options since the inception of
the Amended Share Option Plan is 1,678 and the total number of shares of common stock issued in connection with the vesting of restricted
stock awards under the 2009 Stock Plan is 4,268.

     A summary of the options outstanding and exercisable as at March 31, 2012 is as follows:


                                             Options Outstanding and
                                                 Expected to Vest                                 Options Exercisable
                                                                 Weighted                                           Weighted
                                                                  Average                                            Average
                     Range of                                   Remaining                                          Remaining
                     Exercise           Number                 Contractual                 Number                  Contractual
                     Prices            Outstanding                 Life                   Exercisable                 Life
                     $16.00 -
                       23.99                  15,813                          4.8                      189                          4.8
                     $24.00 -
                       26.99                 113,163                          4.0                56,715                             4.0
                     $27.00 -
                       220.84                 11,894                          3.3                  9,194                            3.2
                                             140,870                          4.0                66,098                             3.9


     At March 31, 2012, the weighted average exercise price of options exercisable is $28.00.

      On May 14, 2010, the Company's board of directors granted an aggregate of 4,588 restricted share awards to certain employees, including
all of the Company's executive officers other than the Chief Executive Officer, in lieu of a portion of their cash compensation for fiscal year
2011. On February 23, 2011, the Company's board of directors modified certain awards to the Company's executive officers, replacing the
pending grant of 2,750 shares of common stock with 110,000 shares of Series D Preferred

                                                                 F-19
Table of Contents


                                                    XPLORE TECHNOLOGIES CORP.

                             NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                            (In thousands, except share and per share amounts)

9. STOCK-BASED COMPENSATION PLAN (Continued)

Stock. On March 31, 2011, 1,314 shares of common stock and 110,000 shares of Series D Preferred Stock fully vested. The market value of the
common stock was $44.00 on the date of grant and the intrinsic value of the restricted shares of approximately $149 was recognized as
compensation expense in fiscal 2011.

      On March 29, 2011, the Company's board of directors granted options to purchase an aggregate of 119,213 shares of common stock were
to all employees, directors and certain consultants at an exercise price of $24.00 per share. One-fourth of each grant vested immediately and the
remainder will vest annually over three years. In connection with the grant, all of the Company's executive officers other than the Chief
Executive Officer voluntarily terminated all rights to outstanding grants aggregating 15,503 shares of common stock. The fair value of the
grants with immediate vesting reduced by the voluntarily terminated shares that were not vested resulted in the recognition of approximately
$466 of stock compensation expense in the fourth quarter of the year ended March 31, 2011.

     The options have been valued using the Black-Scholes methodology and the calculations for issuances in fiscal 2012 and 2011 assumed
discount rates of approximately 0.8% and 1.3%, respectively, volatility of approximately 184% and 184%, respectively, expected terms of
approximately three years and no dividends for both years. The Company recorded stock compensation cost of $730 and $1,055 for the years
ended March 31, 2012 and 2011, respectively. This expense was recorded in the employee related functional classification.

      Compensation expense has been determined based on the fair value at the grant date for options granted. The weighted-average grant-date
fair value of equity options granted during the years ended March 31, 2012 and 2011 was $24.00 per share and $20.00 per share, respectively.
The aggregate intrinsic value of options outstanding and options exercisable at March 31, 2012 was $35 and $1, respectively. The future
compensation expense to be recognized for unvested option grants at March 31, 2012 is $1,471 which is to be recognized over the next three
years.

     b)   Stock Compensation

     On August 4, 2011, the Company's board of directors approved an award of 10,000 shares of the Company's Series D Preferred Stock,
which fully vested on March 31, 2012, to each director for services to be rendered during the year ended March 31, 2012. The total fair value of
the Series D Preferred Stock was $60 and stock compensation expense of $60 was recorded for the year ended March 31, 2012. The shares of
Series D Preferred Stock were issued in April 2012.

     c)   2009 Employee Stock Purchase Plan

    The Company's board of directors approved an employee stock purchase plan that was implemented on January 1, 2009 and approved by
the Company's stockholders on November 4, 2009 (the "ESPP"). The offering price per common share and number of common shares
purchased for the years ended March 31, 2012 and 2011 are as follows:


                                                                                            Year Ended March 31,
                                                                                          2012                2011
                     Offering Price per Common Share                                 $        28.49     $            32.33
                     Common Shares Purchased                                                  1,719                    478

                                                                      F-20
Table of Contents


                                                     XPLORE TECHNOLOGIES CORP.

                             NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                             (In thousands, except share and per share amounts)

10. INCOME TAXES

     The tax effect of temporary differences that give rise to future income tax assets are as follows:


                                                                                                Year ended March 31,
                                                                                              2012                2011
                      Deferred income tax assets:
                        Net operating losses                                             $      30,731         $        29,018
                        Accrued liabilities                                                         61                     374
                        Inventory allowance                                                        260                     212
                        Other items                                                                 42                      13
                      Valuation allowance                                                      (31,094 )               (29,617 )

                      Deferred tax asset                                                 $            —        $               —


     The provision for income taxes varies from the expected provision at statutory rates for the following reasons:


                                                                                                          Year ended
                                                                                                          March 31,
                                                                                                   2012                2011
                      Combined basic US and Canadian statutory rates, respectively                   35%                      35%

                      Recovery of income taxes based on the above rates                        $     (183 )        $     (2,236 )
                      Increase in income taxes resulting from:
                        Permanent difference—stock compensation                                       255                   359
                        Permanent difference—meals & entertainment                                     13                    10
                        Permanent difference—financing fees                                            —                    860
                        Change in valuation allowance                                                 (85 )               1,007

                                                                                               $          —        $           —


     The Company has accumulated net operating losses for income tax purposes totaling approximately $87,803, which under certain
conditions, may be carried forward and applied to reduce future year's taxable income. Such losses may be subject to limitation under IRC
Section 382 if there was a change in control as defined by the Internal Revenue Service. The potential benefit associated with these losses is not
reflected in these statements as management does not believe that recovery is more likely than not. The right to claim these losses will expire
beginning 2018.

     Tax years that remain open for examination by the Internal Revenue Service include 2008, 2009, 2010, and 2011. In addition, tax years
from 1997 to 2011 may be subject to examination by the Internal Revenue Service to the extent that the Company utilizes the net operating
losses from those years in its current or future year tax returns.

                                                                       F-21
Table of Contents


                                                            XPLORE TECHNOLOGIES CORP.

                              NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                              (In thousands, except share and per share amounts)

11. FINANCIAL INSTRUMENTS AND CREDIT RISK

     Interest rate risk

    At March 31, 2012, the ARPA with FWC has a cost of funds fee interest rate with a variable component based on the Wall Street Journal's
prime rate. If the Company borrowed 100% of the facility's available line for a full year and the bank's prime lending rate increased by 1%, the
Company's costs under the ARPA will increase by approximately $85.

     Foreign exchange risk

    All of the Company's revenue is, and the significant majority of the Company's expenses are, in United States dollars, and foreign
exchange is limited to non-U.S. dollar denominated expenditures in Canadian dollars, which are immaterial in each of the years ended
March 31, 2012 and 2011.

     Credit risk

     Information regarding the Company's accounts receivable credit risk is as follows:


                                                                  Number of
                                                                Customers with        Customer
                                                                  Receivable         Share as a           Percentage
                                        Accounts                Balance >10%         Percent of            Share of
                      As of            Receivable                  of Total            Total                Total
                      March 31,       (in millions)              Receivables         Receivables          Receivables
                      2012           $                8.4                        1                 71 %                 71 %
                      2011           $                2.7                        3                 37 %                 34 %

     The receivable representing 71% of the accounts receivable balance at March 31, 2012 was subsequently collected.

     Supplier Risk

    The Company relies on a single supplier for the majority of its finished goods. At March 31, 2012 and 2011, the Company owed this
supplier $3,858 and $971, respectively, recorded as accounts payable and accrued liabilities. The inventory purchases and engineering services
from this supplier for the years ended March 31, 2012 and 2011 were $13,687 and $10,453, respectively.

12. SEGMENTED INFORMATION

     The Company operates in one segment, the sale of rugged mobile wireless PC computing systems. Approximately 63% of the Company's
revenue for fiscal 2012 was derived from sales in the United States and Canada had approximately 11% of the revenue. For the fiscal year
ended March 31, 2011, the United States accounted for 40% of the revenue, Germany had approximately 13% of the revenue and Canada had
approximately 12% of the revenue.

                                                                          F-22
Table of Contents


                                                         XPLORE TECHNOLOGIES CORP.

                              NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                               (In thousands, except share and per share amounts)

12. SEGMENTED INFORMATION (Continued)

    The distribution of revenue by country is segmented as follows:


                                                                                                    Year ended
                                                                                                    March 31,
                                                                                             2012                2011
                     Revenue by country:
                       United States                                                    $        17,363     $       7,096
                       Canada                                                                     3,022             2,123
                       Germany                                                                    2,455             2,228
                       All other countries                                                        4,688             6,312

                                                                                        $        27,528     $     17,759


     The Company has a variety of customers and in any given year a single customer can account for a significant portion of sales. For the
year ended March 31, 2012, the Company had one customer that had sales that were greater than 10% of total revenue and the customer was
located in the United States of America. For the year ended March 31, 2011, the Company had one customer that had sales that were greater
than 10% of total revenue and the customer was located in Germany. The percentages of total revenue from these customers are as follows:


                                                               Number of
                                                             Customers with         Customer
                                                               Revenue of           Share as a             Percentage
                                          Total              10% or greater         Percent of              Share of
                     Fiscal             Revenue                 of Total              Total                  Total
                     Year             (in millions)             Revenue              Revenue                Revenue
                     2012         $               27.5                        1                  37 %                   37 %
                     2011         $               17.8                        1                  11 %                   11 %

     Substantially all of the Company's capital assets are owned by its wholly-owned subsidiary, Xplore Technologies Corporation of America,
a Delaware corporation. No more than 10% of the Company's assets were located in any country, other than the United States, during each of
the years ended March 31, 2012 and 2011.

13. COMMITMENTS AND CONTINGENT LIABILITIES

    a)
            Premises

    The Company leases facilities in Austin, Texas. The current annual lease commitment is $228 and the lease maturity date is August 31,
2014. Rent expense for the years ended March 31, 2012 and 2011 was $232 and $243, respectively.

                                                                       F-23
Table of Contents


                                                    XPLORE TECHNOLOGIES CORP.

                             NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                             (In thousands, except share and per share amounts)

13. COMMITMENTS AND CONTINGENT LIABILITIES (Continued)

     Minimum annual payments by fiscal year required under all of the Company's operating leases are:


                     2013                                                                                      $    260
                     2014                                                                                           264
                     2015                                                                                           124
                     2016                                                                                            15

                                                                                                               $    663


     b)
            Purchase commitment

    At March 31, 2012, the Company had purchase obligations extending into fiscal 2013 of approximately $12,674 related to inventory and
product development items.

     c)
            Litigation

      The Company and its subsidiaries are involved in litigation, arising in the ordinary course of business. None of these actions, individually
or in the aggregate, are expected to have a material adverse effect on the Company's consolidated financial position or results of operations.

14. RELATED PARTY TRANSACTIONS

    On May 14, 2010, the Company's board of directors approved the issuance of a warrant to purchase 3,750 shares of the Company's
common stock at an exercise price of $44.00 per share, which fully vested on March 31, 2011, to SG Phoenix LLC, an affiliate of the
Company, for services rendered during the year ending March 31, 2011. The fair value of the warrant was approximately $137 and expense of
$137 was recorded for the year ended March 31, 2011.

     In connection with the Company's issuance of its Series D Preferred Stock in exchange for its outstanding subordinated secured
promissory notes on December 16, 2010, the Company paid SG Phoenix LLC, an affiliate of our principal stockholder, a structuring fee of
$100 in cash and issued SG Phoenix LLC a three-year warrant to purchase 6,250 shares of common stock at an exercise price of $16.00 per
share.

     On December 16, 2010, Phoenix exchanged $1,940 in principal amount of the Company's promissory notes for shares of the Company's
Series D Preferred Stock. For the year ended March 31, 2011, interest expense of $112 was recognized and paid to Phoenix through the
issuance of 37,760 shares of the Company's Series D Preferred Stock and 2,533 shares of the Company's common stock in fiscal 2011.

     On December 16, 2010, Phoenix Enterprises Family Fund LLC, an affiliate, exchanged $718 in principal amount of the Company's
promissory notes for shares of the Company's Series D Preferred Stock. For the year ended March 31, 2011, interest expense of $64 was
recognized and paid to Phoenix Enterprises Family Fund LLC through the issuance of 15,136 shares of the Company's Series D Preferred
Stock and 1,651 shares of the Company's common stock in fiscal 2011.

     On December 16, 2010, JAG Multi Investments LLC, an affiliate, exchanged $1,018 in principal amount of the Company's promissory
notes for shares of the Company's Series D Preferred Stock. For the

                                                                      F-24
Table of Contents


                                                    XPLORE TECHNOLOGIES CORP.

                             NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                            (In thousands, except share and per share amounts)

14. RELATED PARTY TRANSACTIONS (Continued)

year ended March 31, 2011, interest expense of $91 was recognized and paid to JAG Multi Investments LLC through the issuance of 21,464
shares of the Company's Series D Preferred Stock and 2,342 shares of the Company's common stock in fiscal 2011.

     On December 16, 2010, Philip S. Sassower, the Company's Chairman and Chief Executive Officer, exchanged $1,000 in principal amount
of the Company's promissory notes for shares of the Company's Series D Preferred Stock. For the year ended March 31, 2011, interest expense
of $90 was recognized and paid to Mr. Sassower through the issuance of 21,095 shares of the Company's Series D Preferred Stock and 2,301
shares of the Company's common stock in fiscal 2011.

     On February 23, 2011, Phoenix Enterprises Family Fund LLC, an affiliate, purchased 81,750 shares of Series D Preferred Stock and a
three-year warrant to purchase 5,122 shares of common stock at an exercise price of $16.00 per share for $81 and Brian Usher-Jones, a member
of the Company's Board of Directors, purchased 100,000 shares of the Series D Preferred Stock and a three year warrant to purchase 6,250
shares of common stock at an exercise price of $16.00 per share for $100.

     On August 4, 2011, the Company's board of directors approved an award of 150,000 shares of Series D Preferred Stock, which fully
vested on March 31, 2012, to SG Phoenix LLC, an affiliate of our principal stockholder, for services rendered during the year ended March 31,
2012. The fair value of the Series D Preferred Stock was $150 and stock compensation expense of $150 recorded for the year ended March 31,
2012.

     On October 14, 2011, the Company raised net proceeds of $2,182 in a private placement through the issuance of 2,320,000 shares of its
Series D Preferred Stock. Philip Sassower, the Company's Chairman of the Board and Chief Executive Officer, purchased 500,000 shares of
Series D Preferred Stock in the private placement. In connection with the private placement of the Series D Preferred Stock, the Company paid
SG Phoenix LLC, an affiliate of our principal stockholder, an administrative fee of $100 in cash and a warrant to purchase 6,250 shares of
common stock at an initial exercise price of $16.00 per share. The warrant is substantially similar to the warrants issued with the private
placement of 1,000,000 shares of the Series D Preferred Stock on February 23, 2011, except that the warrant expires on October 13, 2014 rather
than December 15, 2013.

     On October 14, 2011, The Kent A. Misemer Revocable Trust (12/24/92), for which Mr. Misemer, a member of the Company's Board of
Directors, is a trustee, purchased in a private placement 175,000 shares of the Series D Preferred Stock for an aggregate purchase price of $175.

      During the fiscal year ended March 31, 2012, the Company purchased approximately $503 in components for the Company's tablet PCs
from Ember Industries, Inc., a contract manufacturer. Thomas F. Leonardis, a member of the Company's Board of Directors, is the Chief
Executive Officer, and the majority shareholder, of Ember Industries. The Company purchased the components from Ember Industries pursuant
to standard purchase orders at Ember Industries' standard prices. The disinterested members of the Company's Board of Directors reviewed,
approved and ratified the Company's purchase of component parts from Ember Industries on the described terms.

                                                                      F-25
Table of Contents


                                                    XPLORE TECHNOLOGIES CORP.

                             NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                            (In thousands, except share and per share amounts)

15. SUBSEQUENT EVENTS (UNAUDITED)

     On June 12, 2012, the Company's Board of Directors approved $10 of fees, to be paid quarterly in the amount of $2.5, to each director for
services to be rendered during the year ending March 31, 2013.

    On June 12, 2012, the Company's Board of Directors approved $150 of fees, to be paid monthly in the amount of $12.5, to SG
Phoenix LLC, an affiliate of our principal stockholder, for services to be rendered during the year ending March 31, 2013.

     On June 29, 2012, the Company's wholly-owned subsidiary entered into the Fifth Amendment to the ARPA. The Fifth Amendment
reduced the discount rate of 0.52% charged on purchased receivables to 0.00%. The Fifth Amendment also lowered the monthly cost of funds
fee under the ARPA from the prime rate plus 11.50% to the prime rate plus 10.00%; provided, however, that the fee will increase to the prime
lending rate plus 16.00% if our net worth falls below $4,000 as of the end of any fiscal quarter.

    On July 26, 2012, the Company filed a Registration Statement on Form S-1 with respect to a firm commitment public offering of
$10 million in shares of common stock, excluding the underwriters' over-allotment option.

      On September 12, 2012, the Company held a special meeting of stockholders to consider and vote upon proposals to approve, among other
matters, (i) an amendment to the amended and restated certificate of incorporation to effect a reverse stock split of outstanding common stock
in a range of not less than 1-for-325 and not more than 1-for-425 and (ii) amendments to the amended and restated certificate of incorporation
to (a) reduce the conversion price of each series of preferred stock and (b) make inapplicable an anti-dilution adjustment that may otherwise be
triggered by the reduction of the conversion price of each other series of preferred stock. Each of the proposals were approved by the requisite
number of stockholders entitled to vote thereon.

     On September 13, 2012, the Company filed a certificate of amendment to the amended and restated certificate of incorporation with the
Secretary of State of the State of Delaware to effect a 1-for-400 reverse split of common stock. The reverse split became effective at 12:01 a.m.
on September 13, 2012. In addition, on September 13, 2012, the Company received a written consent from holders representing a majority of
the voting power of the outstanding shares of Series A Preferred Stock consenting to the conversion, upon consummation of the proposed
public offering, of each share of Series A Preferred Stock then outstanding into shares of common stock. As a result of such consent, upon
consummation of the proposed public offering, each series of outstanding preferred stock will automatically convert into shares of common
stock at the following reduced conversion rates: Series A Preferred Stock (0.0327-to-1 basis); Series B Preferred Stock (0.0327-to-1 basis);
Series C Preferred Stock (0.0481-to-1 basis) and Series D Preferred Stock (0.1543-to-1 basis).

   All of the common stock share numbers, common stock share prices and exercise prices with respect to options and warrants to purchase
common stock have been adjusted within these consolidated financial statements, on a retroactive basis, to reflect the 1-for-400 reverse split of
common stock but have not been adjusted for the conversion of preferred stock.

     Upon consummation of the proposed offering, the Company's authorized shares will consist of 15,000,000 shares of common stock and
5,000,000 shares of preferred stock.

                                                                      F-26
Table of Contents


                                                   XPLORE TECHNOLOGIES CORP.

                                         CONSOLIDATED BALANCE SHEETS—UNAUDITED

                                                               (in thousands)


                                                                                               June 30,             March 31,
                                                                                                2012                 2012
                                                                                             (unaudited)
                                          ASSETS
             CURRENT ASSETS:
              Cash and cash equivalents                                                  $           2,893      $            199
              Accounts receivable, net                                                               2,469                 8,393
              Inventory, net                                                                         5,475                 3,969
              Prepaid expenses and other current assets                                                 88                    99

             Total current assets                                                                  10,925                12,660
             Fixed assets, net                                                                        385                   363
             Deferred charges                                                                          36                    —

                                                                                         $         11,346       $        13,023

                     LIABILITIES AND STOCKHOLDERS' EQUITY
             CURRENT LIABILITIES:
              Short-term indebtedness                                                    $              —       $             —
              Accounts payable and accrued liabilities                                               3,686                 6,583

             Total current liabilities                                                               3,686                 6,583

             Commitments and contingencies
             STOCKHOLDERS' EQUITY:
               Series A Preferred Stock, par value $0.001 per share; authorized
                 64,000; shares issued 62,874 and 62,874, respectively                                     63                   63
               Series B Preferred Stock, par value $0.001 per share; authorized
                 10,000; shares issued 7,732 and 7,732, respectively                                       8                    8
               Series C Preferred Stock, par value $0.001 per share; authorized
                 20,000; shares issued 17,074 and 17,074 respectively                                      17                   17
               Series D Preferred Stock, par value $0.001 per share; authorized
                 20,000; shares issued 14,902 and 14,334 respectively                                      15                   14
               Common Stock, par value $0.001 per share; authorized 1,350,000;
                 shares issued 641 and 588, respectively                                                1                     1
               Additional paid-in capital                                                         143,560               141,957
               Accumulated deficit                                                               (136,004 )            (135,620 )

                                                                                                     7,660                 6,440

                                                                                         $         11,346       $        13,023




                                    See accompanying notes to unaudited consolidated financial statements.

                                                                    F-27
Table of Contents


                                                  XPLORE TECHNOLOGIES CORP.

                                CONSOLIDATED STATEMENTS OF INCOME (LOSS)—UNAUDITED

                                     (In thousands of dollars, except share and per share amounts)


                                                                                       Three Months Ended June 30,
                                                                                      2012                      2011
             Revenue                                                          $              9,950     $                 2,678
             Cost of revenue                                                                 6,645                       2,105

             Gross profit                                                                    3,305                        573
             Expenses:
             Sales, marketing and support                                                      963                        799
             Product research, development and engineering                                     551                        486
             General administration                                                            886                        702

                                                                                             2,400                       1,987

             Income (loss) from operations                                                     905                      (1,414 )

             Other expenses:
             Interest expense                                                                  (62 )                       (34 )
             Other                                                                             (24 )                       (15 )

                                                                                               (86 )                       (49 )

             Net income (loss)                                                $                819     $                (1,463 )
             Dividends attributable to Preferred Stock                                      (1,137 )                    (1,043 )

             Net loss attributable to common stockholders                                     (318 )                    (2,506 )

             Income (loss) per common share                                                   1.35                       (3.20 )
             Dividends attributable to Preferred Stock                                       (1.88 )                     (2.28 )

             Loss per share attributable to common stockholders, basic and
               fully diluted                                                  $              (0.53 )   $                 (5.48 )

             Weighted average number of common shares outstanding,
              basic and fully diluted                                                     605,381                      457,186




                                  See accompanying notes to unaudited consolidated financial statements.

                                                                   F-28
Table of Contents


                                                     XPLORE TECHNOLOGIES CORP.

                                  CONSOLIDATED STATEMENTS OF CASH FLOWS—UNAUDITED

                                                                   (in thousands)


                                                                                                        Three Months
                                                                                                       Ended June 30,
                                                                                                   2012               2011
             CASH FLOWS FROM OPERATING ACTIVITIES:
             Cash provided by (used in) operations:
               Net income (loss)                                                               $        819      $      (1,463 )
               Items not affecting cash:
                  Depreciation and amortization                                                         130                  118
                  Allowance for doubtful accounts                                                        11                  (13 )
                  Stock-based compensation expense                                                      186                  202
                  Equity instruments issued in exchange for services                                     —                    23
             Changes in operating assets and liabilities:
               Accounts receivable                                                                    5,913             1,348
               Inventory                                                                             (1,506 )             163
               Prepaid expenses and other assets                                                        (25 )            (124 )
               Accounts payable and accrued liabilities                                              (2,693 )            (205 )

                      Net cash provided by operating activities                                       2,835                    49

             CASH FLOWS FROM INVESTING ACTIVITIES:
              Additions to fixed assets                                                                (152 )                (136 )

                      Net cash used in investing activities                                            (152 )                (136 )

             CASH FLOWS FROM FINANCING ACTIVITIES:
              Proceeds from short-term borrowings                                                     9,455              4,105
              Repayment of short-term indebtedness                                                   (9,455 )           (4,053 )
              Net proceeds from issuance of Common Stock                                                 11                 —

                    Net cash provided by financing activities                                            11                    52

             CHANGE IN CASH AND CASH EQUIVALENTS                                                      2,694                  (35 )
             CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                             199                  168

             CASH AND CASH EQUIVALENTS, END OF PERIOD                                          $      2,893      $           133

             SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:
               Payments for interest                                                           $         62      $             34

                Payments for income taxes                                                      $         —       $             —

                Payment of liabilities through issuance of stock                               $        204      $           160

                Preferred Stock dividends issued in the form of stock                          $      1,203      $      1,313




                                    See accompanying notes to unaudited consolidated financial statements.

                                                                       F-29
Table of Contents


                                                     XPLORE TECHNOLOGIES CORP.

                            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                                        (In thousands of dollars, except share and per share amounts)

1. DESCRIPTION OF BUSINESS

      Xplore Technologies Corp. (the "Company"), incorporated under the laws of the State of Delaware, is engaged in the business of the
development, integration and marketing of rugged mobile wireless PC computing systems. The Company's products enable the extension of
traditional computing systems to a range of field and on-site personnel, regardless of location or environment. Using a range of wireless
communication mediums together with the Company's rugged computing products, the Company's end-users are able to receive, collect,
analyze, manipulate and transmit information in a variety of environments not suited to traditional non-rugged computing devices. The
Company's end-users are in the following markets: utilities, telecommunications, warehousing/logistics, public safety, field service,
transportation, oil and gas, manufacturing, route delivery, military and homeland security.

2. SIGNIFICANT ACCOUNTING POLICIES

     The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States and in accordance with the instructions for Form 10-Q. Accordingly, they do not include all of the
information and disclosures required by accounting principles generally accepted in the United States for complete financial statements. In the
opinion of management, these financial statements contain all normal and recurring adjustments considered necessary to present fairly the
financial position, results of operations and cash flows for the periods presented. The results for the three month period ended June 30, 2012 are
not necessarily indicative of the results to be expected for the full year.

     The consolidated balance sheet at March 31, 2012 has been derived from the audited consolidated financial statements at that date but
does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
These accompanying unaudited consolidated financial statements should be read in conjunction with Management's Discussion and Analysis of
Financial Condition and Results of Operations and the audited consolidated financial statements and related notes, included in the Company's
fiscal 2012 Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 25, 2012.

     Basis of consolidation and presentation

      The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Xplore Technologies
Corporation of America. The accompanying financial statements have been prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course of business. The Company has accumulated significant losses as it
has been developing its current and next generation rugged computer products. The Company has had recurring losses. Management believes
that the Company's current cash and cash flow from operations, together with borrowings from its senior lender will be sufficient to fund its
anticipated operations, working capital and capital spending for the next 12 months. These financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern for a reasonable period of time.

      Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. These estimates and assumptions are affected by
management's application of

                                                                       F-30
Table of Contents


                                                     XPLORE TECHNOLOGIES CORP.

                     NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                        (In thousands of dollars, except share and per share amounts)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

accounting policies. Estimates are deemed critical when a different estimate could have reasonably been used or where changes in the estimates
are reasonably likely to occur from period to period, and would materially impact the Company's financial condition, changes in financial
condition or results of operations. On an ongoing basis, the Company evaluates the estimates, including those related to its revenue recognition,
allowance for doubtful accounts, inventory valuation, warranty reserves, tooling amortization, financial instruments, stock-based compensation
and income taxes. The estimates are based on historical experience and on various other assumptions that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from management's estimates and assumptions.

3. INVENTORY


                                                                                                June 30,         March 31,
                                                                                                 2012              2012
                      Finished goods                                                        $       2,767    $         2,915
                      Computer components                                                           2,708              1,054

                      Total inventory                                                       $       5,475    $         3,969


4. LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS

     Loss per share attributable to common stockholders has been computed based on the weighted-average number of shares of common stock
issued and outstanding during the period, and is calculated by dividing net loss and net loss attributable to common shareholders by the
weighted average number of common shares outstanding during the period. The effects of the options granted under the Company's option
plans, the exercise of outstanding options, the exercise of outstanding warrants and the conversion of the convertible Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock were excluded from the loss per share attributable to common
stockholders calculations for the periods presented as their inclusion is anti-dilutive. Accordingly, diluted loss per share attributable to common
stockholders has not been presented.

    The following securities were not considered in the loss per share attributable to common stockholders calculations for the three months
ended:


                                                                                    June 30, 2012           June 30, 2011
                      Series A Preferred Shares                                            360,446                  343,912
                      Series B Preferred Shares                                             42,374                   40,400
                      Series C Preferred Shares                                             85,433                   80,956
                      Series D Preferred Shares                                            931,400                  691,679
                      Warrants                                                             429,581                  434,236
                      Options                                                              141,677                  161,369

                                                                                         1,990,911                1,752,552


                                                                       F-31
Table of Contents


                                                     XPLORE TECHNOLOGIES CORP.

                     NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                       (In thousands of dollars, except share and per share amounts)

5. SHORT-TERM INDEBTEDNESS

      On December 10, 2009, the Company's wholly-owned subsidiary entered into an Accounts Receivable Purchasing Agreement including
its amendments, (the "ARPA") with DSCH Capital Partners, LLC d/b/a Far West Capital ("FWC"). Pursuant to the ARPA, FWC may
purchase, in its sole discretion, eligible accounts receivable of the Company's subsidiary on a revolving basis, up to a maximum of $8,500.
Under the terms of the ARPA, FWC purchases eligible receivables from the subsidiary with full recourse for the face amount of such eligible
receivables. FWC retains 15% of the purchase price of the purchased receivables as a reserve amount. The subsidiary is required to pay FWC a
monthly cost of funds fee equal to the net funds employed by FWC (i.e., the daily balance of the purchase price of all purchased receivables
less the reserve amount, plus any unpaid fees and expenses due from the subsidiary to FWC under the ARPA) multiplied by the annual prime
lending rate reported in The Wall Street Journal plus 10.00%, which fees accrue daily. In June 2012, in connection with the reduction of the
cost of funds rate and the elimination of the discount to FWC in connection with its purchase of eligible receivables, the Company agreed to a
financial covenant requiring that, as of the last day of each fiscal quarter, the Company's subsidiary's net worth (defined as assets minus
liabilities) will not be less than $4,000. In the event the Company is unable to maintain the minimum net worth requirement, the monthly cost
of funds fee required to be paid to FWC will be increased to equal the net funds employed by FWC multiplied by the lesser of (a) the maximum
rate allowed under applicable law and (b) the annual prime lending rate reported in The Wall Street Journal plus 16.0%, which fees accrue
daily. On August 26, 2011, the Company's subsidiary and FWC entered into an inventory finance rider to the ARPA (the "Rider") to provide
for advances up to $700 based upon eligible finished goods Tablet PC inventory, provided that total funds advanced on such inventory does not
exceed 30% of all eligible inventory and provided further that the advances shall at no time exceed 40% of the sum of (1) total funds advanced
by FWC under the ARPA and (2) products scheduled to be shipped in satisfaction of customer purchase orders within 90 days. Eligible
inventory is valued at the lower of cost or market value. Prior to the execution of the Rider which gave the Company's subsidiary the ability to
receive advances on its inventory, FWC had the ability to purchase eligible purchase orders from the subsidiary, less a discount of 1.00% under
the ARPA.

     The ARPA also provides that FWC has the right to require the subsidiary to repurchase any purchased accounts receivable: (a) if there is a
dispute as to the validity of such receivable by the account debtor, (b) if certain covenants, warranties or representations made by the subsidiary
with respect to such receivables are breached, (c) upon and during the continuance of an event of default under the ARPA or upon the
termination of the ARPA, or (d) if such receivable remains unpaid 90 days after the invoice date. The ARPA has an initial term of one year
with automatic renewals for successive one-year periods. Notwithstanding that, FWC may terminate the ARPA at any time upon 150 days prior
written notice or without prior notice upon and during the continuance of an event of default.

     The ARPA contains standard representations, warranties, covenants, indemnities and releases for agreements governing financing
arrangements of this type. The Company has guaranteed the obligations of its subsidiary under the ARPA pursuant to a corporate guaranty and
suretyship. In addition, pursuant to the ARPA, the subsidiary's obligations under the ARPA are secured by a first priority security interest on all
assets of the subsidiary. On June 30, 2012, there were no borrowings under the ARPA.

                                                                       F-32
Table of Contents


                                                    XPLORE TECHNOLOGIES CORP.

                     NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                       (In thousands of dollars, except share and per share amounts)

6. SHARE CAPITAL

    On December 16, 2010, the Company filed an amended and restated certificate of incorporation with the Secretary of State of the State of
Delaware. As a result, the Company is now authorized to issue 1,500,000,000 shares of capital stock, consisting of 1,350,000,000 shares of
common stock, $0.001 par value, and 150,000,000 shares of preferred stock, $0.001 par value.

     Preferred Stock Dividends and Liquidation Preferences

      The Company's outstanding shares of Preferred Stock accrue cumulative dividends which are paid quarterly on the first day of June,
September, December and March. The dividend rate for the Company's Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock is 7.5% per annum of the original issue price of the Preferred Stock. The dividends for the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock are paid in the number of shares of common stock determined by dividing (i) the aggregate
amount of the dividend then payable by (ii) the volume weighted average trading price of the common stock over the 10 trading days ending on
the third trading day immediately preceding the dividend payment date, less a discount of 25% of the volume weighted average trading price of
the common stock.

     The dividend rate for the Series D Preferred Stock is 10% per annum of the original issue price of the Series D Preferred Stock. The
dividends for the Series D Preferred Stock are paid at the Company's option in cash or additional shares of Series D Preferred Stock valued at
$1.00 per share. The Company has paid the dividends in shares of Series D Preferred Stock. No dividends will be paid on the Company's
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or common stock so long as any dividends on the Series D
Preferred Stock remain unpaid.

     The values for dividends paid and dividends accrued and unpaid are determined based on the market prices of the Company's common
stock as of the dates of share issuances and accrual multiplied by the respective equivalent common shares.

     A summary of paid dividends for the three months ended June 30, 2012 and 2011 and accrued and unpaid dividends as of June 30, 2012
and 2011 is as follows:


                                                                                             Dividends
                                                                              Paid For Qtr                Accrued and
                                                                                 Ended                    Unpaid as of
                                                                                June 30,                    June 30,
                                                                           2012           2011         2012           2011
                     Series A Preferred Stock                          $      551     $     526      $    194      $     133
                     Series B Preferred Stock                                  68            69            24             16
                     Series C Preferred Stock                                 220           210            78             53
                     Series D Preferred Stock                                 364           508           122            100

      In the event the Company voluntarily or involuntarily liquidates, dissolves or winds up, the holders of the Series D Preferred Stock will be
entitled to receive liquidating distributions in the amount of $1.00 per share plus any accrued and unpaid dividends. After receipt of the
liquidation preference, the shares of Series D Preferred Stock will participate with the common stock in remaining liquidation proceeds (after
payment of the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock liquidation preferences, including
accrued and unpaid dividends) pro rata on an as-converted basis. A

                                                                      F-33
Table of Contents


                                                       XPLORE TECHNOLOGIES CORP.

                      NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                           (In thousands of dollars, except share and per share amounts)

6. SHARE CAPITAL (Continued)

merger or consolidation (other than one in which the then current stockholders own a majority of the voting power in the surviving or acquiring
corporation) or a sale, lease transfer, exclusive license or other disposition of all or substantially all of the Company's assets will be treated as a
liquidation event triggering the liquidation preference. Each series of Series A, Series B and Series C Preferred Stock ranks on parity with each
other series of Series A, Series B and Series C Preferred Stock with respect to dividends and liquidation. At June 30, 2012, the liquidation
preference values of the Series A, Series B, Series C and Series D Preferred Stock were $21,377, $2,629, $8,537 and $14,902, respectively.

    At June 30, 2012, the conversion rates into common stock for the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock were approximately 0.0057, 0.0055, 0.0050 and 0.0625, respectively.

     During the three months ended June 30, 2011, 500,000 shares of Series B Preferred stock were converted into 2,533 shares of common
stock.

Warrants Outstanding

     There were warrants to purchase an aggregate of 429,581 shares of common stock outstanding and fully exercisable at June 30, 2012 as
detailed in the table below:


                      Number of Warrants                               Exercise Price(1)              Expiration Date
                      10,225                                       $                  27.49                  July 27, 2012
                      9,375                                        $                  31.43               January 30, 2013
                      186,503                                      $                  27.47               January 14, 2013
                      205,978                                      $                  16.00             December 15, 2013
                      6,250                                        $                  16.00              October 13, 2014
                      7,500                                        $                  36.04                  June 10, 2014
                      3,750                                        $                  29.50                  May 13, 2015


                      (1)
                              Exercise price may change subject to anti-dilutive terms.

7. STOCK-BASED COMPENSATION PLAN

      a)   Stock Options

     In 1995, the Board of Directors approved a Share Option Plan, which was amended and restated in December 2004, and amended
thereafter (which is referred to as the "Amended Share Option Plan"). The Amended Share Option Plan is administered by the Board of
Directors and provides that options may be granted to employees, officers, directors and consultants to the Company. The exercise price of an
option is determined at the date of grant and is based on the closing price of the common stock on the stock exchange or quotation system
where the common stock is listed or traded, on the day preceding the grant. Unless otherwise provided for, the options are exercisable only
during the term of engagement of the employee, officer or consultant or during the period of service as a director of the Company.

     On July 28, 2009, the Board of Directors adopted the 2009 Stock Incentive Plan, which is referred to as the 2009 Stock Plan. The 2009
Stock Plan provides for equity-based awards in the form of incentive stock options and non-statutory options, restricted shares, stock
appreciation rights and restricted stock

                                                                         F-34
Table of Contents


                                                     XPLORE TECHNOLOGIES CORP.

                     NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                       (In thousands of dollars, except share and per share amounts)

7. STOCK-BASED COMPENSATION PLAN (Continued)

units. Awards are made to selected employees, directors and consultants to promote stock ownership among award recipients, encourage their
focus on strategic long-range corporate objectives, and attract and retain exceptionally qualified personnel. The 2009 Stock Plan became
effective as of June 10, 2009 and was approved by the Company's stockholders on January 14, 2010.

     At June 30, 2012, the maximum aggregate number of shares of common stock reserved for issuance upon the exercise of all options
granted under the Amended Share Option Plan and 2009 Stock Plan may not exceed an aggregate of 191,636 shares. This amount consists of
187,500 shares under the 2009 Stock Plan and 4,136 under the Amended Share Option Plan, which shares are issuable under outstanding
options under the Amended Share Option Plan on the date the 2009 Stock Plan was adopted. The options under the plans generally vest over a
3-year period in equal annual amounts and expire five years after the issuance date.

    A summary of the activity in the Company's Amended Share Option Plan and 2009 Stock Plan during the three months ended June 30,
2012 is as follows:


                                                                                                   Three months ended
                                                                                                      June 30, 2012
                                                                                                                    Weighted
                                                                                                                    Average
                                                                                                                    Exercise
                                                                                              Options             Price (US$)
                      Outstanding at March 31, 2012                                              140,870          $        28.00
                      Granted                                                                      1,375          $        16.00
                      Exercised                                                                       —           $           —
                      Forfeited                                                                     (568 )        $        95.94

                      Outstanding at end of period                                               141,677          $        28.00


     At June 30, 2012, the total number of shares of common stock issued in connection with the exercise of options is 1,678 since the
inception of the Amended Share Option Plan.

    A summary of the options outstanding and exercisable as at June 30, 2012 is as follows:


                                       Options Outstanding and
                                           Expected to Vest                                 Options Exercisable
              Range of                               Weighted Average                                   Weighted Average
              Exercise          Number                  Remaining              Number                      Remaining
              Prices US$       Outstanding           Contractual Life         Exercisable               Contractual Life
              $16.00 -
                23.99                17,188                             4.5           3,523                                4.5
              $24.00 -
                26.99               112,808                             3.8         56,360                                 3.8
              $27.00 -
                220.84               11,681                             3.1         10,188                                 2.8

                                    141,677                             3.8         70,071                                 3.6


    The weighted average exercise price of options exercisable at June 30, 2012 was $30.24.

     On June 12, 2012, the Company's board of directors approved the grant of options to purchase 1,375 shares of the Company's common
stock to non-executive employees with an exercise price of $15.20 per share. The fair value of these option grants to be recognized as stock
compensation expense is $9.
F-35
Table of Contents


                                                   XPLORE TECHNOLOGIES CORP.

                    NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                      (In thousands of dollars, except share and per share amounts)

7. STOCK-BASED COMPENSATION PLAN (Continued)

     The options have been valued separately using the Black-Scholes methodology and the calculations for issuances in fiscal 2013 and 2012
assumed discount rates of approximately 0.35% and 0.81%, respectively, and volatility of approximately 62% and 184%, respectively,
expected terms of approximately three years and no dividends for both years. The Company recorded stock compensation cost of $186 and
$202 for the three months ended June 30, 2012 and 2011, respectively. This expense was recorded in the employee related functional
classification.

      Compensation expense has been determined based on the fair value at the grant date for options granted in the current fiscal year. The
aggregate intrinsic value of options exercisable at June 30, 2012 was zero as the fair value of the Company's common stock was less than the
exercise prices of the options. The future compensation expense to be recognized for unvested option grants at June 30, 2012 was $1,294 which
is to be recognized over the next three years.

    b)
            Stock Compensation

     On August 4, 2011, the Company's board of directors approved an award of 10,000 shares of the Company's Series D Preferred Stock,
which fully vested on March 31, 2012 and were issued in November 2011 and April 2012, to each director for services rendered and to be
rendered during the year ended March 31, 2012. The total fair value of the Series D Preferred Stock was $60 and stock compensation expense
of $15 was recorded for the three months ended June 30, 2011.

    c)
            2009 Employee Stock Purchase Plan

    The Company's board of directors approved an employee stock purchase plan that was implemented on January 1, 2009 and approved by
the Company's stockholders on November 4, 2009 (the "ESPP"). The offering price per common share and number of common shares
purchased for the periods ended June 30, 2012 and 2011are as follows:


                                                                                               Three Months Ended
                                                                                                     June 30,
                                                                                              2012            2011
                     Offering Price per Common Share                                      $     22.23     $     28.49

                     Common Shares Purchased                                                      669                439

8. RELATED PARTY TRANSACTIONS

     On August 4, 2011, the Company's board of directors approved an award of 150,000 shares of Series D Preferred Stock, which fully
vested on March 31, 2012, to SG Phoenix LLC, an affiliate of our principal stockholder, for services rendered for the year ended March 31,
2012. The fair value of the Series D Preferred Stock was $150 and stock compensation expense of $15 was recorded for the three months ended
June 30, 2011.

     On October 14, 2011, the Company raised net proceeds of $2,182 in a private placement through the issuance of 2,320,000 shares of its
Series D Preferred Stock. Philip Sassower, the Company's Chairman of the Board and Chief Executive Officer, purchased 500,000 shares of
Series D Preferred Stock in the private placement. In connection with the private placement of the Series D Preferred Stock, the Company

                                                                    F-36
Table of Contents


                                                   XPLORE TECHNOLOGIES CORP.

                     NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                      (In thousands of dollars, except share and per share amounts)

8. RELATED PARTY TRANSACTIONS (Continued)

paid SG Phoenix LLC, an affiliate of our principal stockholder, an administrative fee of $100 in cash and a warrant to purchase 6,250 shares of
common stock at an initial exercise price of $16.00 per share.

      On October 14, 2011, The Kent A. Misemer Revocable Trust (12/24/92), for which Mr. Misemer, a member of the Board of Directors, is a
trustee, purchased in a private placement 175,000 shares of the Series D Preferred Stock for an aggregate purchase price of $175.

      On June 12, 2012, the Company's Board of Directors approved $10 of fees, to be paid quarterly in the amount of $2.5, to each director for
services rendered and to be rendered during the year ending March 31, 2013. General administration expense includes an expense of $15 for
the three months ended June 30, 2012.

    On June 12, 2012, the Company's Board of Directors approved $150 of fees, to be paid monthly in the amount of $12.5, to SG
Phoenix LLC, an affiliate of our principal stockholder, for services to be rendered during the year ending March 31, 2013. General
administration expense includes an expense of $37.5 for the three months ended June 30, 2012.

     During the three months ended June 30, 2012 and 2011, the Company purchased approximately $176 and $63, respectively, in
components for the Company's tablet PCs from Ember Industries, Inc., a contract manufacturer. Thomas F. Leonardis, a member of the
Company's Board of Directors, is the Chief Executive Officer and the majority shareholder, of Ember Industries. The Company purchased the
components from Ember Industries pursuant to standard purchase orders at Ember Industries' standard prices. The disinterested members of the
Company's Board of Directors reviewed, approved and ratified the Company's purchase of component parts from Ember Industries on the
described terms.

9. SEGMENTED INFORMATION

      The Company operates in one segment, the sale of rugged mobile wireless Tablet PC computing systems. The United States of America
and Canada accounted for approximately 61% and 25%, respectively, of the Company's total revenue for the three months ended June 30,
2012. The United States of America, Germany and Canada accounted for 41%, 19% and 16%, respectively of the Company's total revenue for
the three months ended June 30, 2011.

    The distribution of revenue by country is segmented as follows:


                                                                                                   Three Months
                                                                                                  Ended June 30,
                                                                                               2012             2011
                     Revenue by country:
                       United States of America                                            $     6,056      $     1,088
                       Canada                                                                    2,454              432
                       Germany                                                                     375              518
                       Other                                                                     1,065              640
                                                                                           $     9,950      $     2,678


     The Company has a variety of customers, and in any given year a single customer can account for a significant portion of sales. For the
three months ended June 30, 2012, the Company had two customers

                                                                      F-37
Table of Contents


                                                     XPLORE TECHNOLOGIES CORP.

                    NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                         (In thousands of dollars, except share and per share amounts)

9. SEGMENTED INFORMATION (Continued)

located in the United States of America and Canada who accounted for more than 10% of total revenue. For the three months ended June 30,
2011, the Company had two customers located in Germany and Canada who accounted for more than 10% of total revenue.


                                                                                                  Number of
                                                                                                  Customers             Customer
                                                                                                     with                 Share
                                                                                                   Revenue                 as a
                                                                            Total                  > 10% of             Percent of
                                                                          Revenue                    Total                Total
                    Three Months Ended                                  (in millions)              Revenue               Revenue
                    June 30, 2012                                  $                10.0                          2                   59 %
                    June 30, 2011                                  $                 2.7                          2                   30 %

    At June 30 2012, the Company had one customer that accounted for more than 10% of the outstanding net receivables.


                                                                                          Number of
                                                                                          Customers
                                                                                             with                      Customer
                                                                                        Account Balance               Share as a
                                                          Accounts                         > 10% of                   Percent of
                                                         Receivable                          Total                      Total
                    Three Months Ended                  (in millions)                     Receivables                 Receivables
                    June 30, 2012                   $                   2.5                                   1                       11 %

    The Company relies on a single supplier for the majority of its finished goods. At June 30, 2012 and 2011, the Company owed this
supplier $2,451 and $664, respectively, recorded in accounts payable and accrued liabilities.

    Substantially all of the Company's capital assets are owned by its wholly-owned subsidiary, Xplore Technologies Corporation of America,
a Delaware corporation. No country, other than the United States, had more than 10% of the Company's assets for each of the three months
ended June 30, 2012 and 2011.

10. COMMITMENTS AND CONTINGENT LIABILITIES

    a)
            Premises

     The Company leases facilities in Austin, Texas. The current annual lease commitment is $228 and the lease expires on August 31, 2014.
Rent expense for the three months ended June 30, 2012 and 2011 was $63 and $56, respectively.

    Minimum annual payments by fiscal year required under all of the Company's operating leases are:


                    2013                                                                                                    $        196
                    2014                                                                                                             264
                    2015                                                                                                             124
                    2016                                                                                                              16

                                                                                                                            $        600


                                                                               F-38
Table of Contents


                                                    XPLORE TECHNOLOGIES CORP.

                     NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                       (In thousands of dollars, except share and per share amounts)

10. COMMITMENTS AND CONTINGENT LIABILITIES (Continued)

     b)
            Purchase commitment

    At June 30, 2012, the Company had purchase obligations in fiscal 2013 of approximately $6,231 related to inventory and product
development items.

     c)
            Litigation

     The Company and its subsidiaries are involved in various claims and legal actions arising in the ordinary course of business. None of these
actions, individually or in the aggregate, are expected to have a material adverse effect on the Company's consolidated financial position or
results of operations.

11. SUBSEQUENT EVENTS

    On July 26, 2012, the Company filed a Registration Statement on Form S-1 with respect to a firm commitment public offering of
$10 million in shares of common stock, excluding the underwriters' over-allotment option.

      On September 12, 2012, the Company held a special meeting of stockholders to consider and vote upon proposals to approve, among other
matters, (i) an amendment to the amended and restated certificate of incorporation to effect a reverse stock split of outstanding common stock
in a range of not less than 1-for-325 and not more than 1-for-425 and (ii) amendments to the amended and restated certificate of incorporation
to (a) reduce the conversion price of each series of preferred stock and (b) make inapplicable an anti-dilution adjustment that may otherwise be
triggered by the reduction of the conversion price of each other series of preferred stock. Each of the proposals were approved by the requisite
number of stockholders entitled to vote thereon.

     On September 13, 2012, the Company filed a certificate of amendment to the amended and restated certificate of incorporation with the
Secretary of State of the State of Delaware to effect a 1-for-400 reverse split of common stock. The reverse split became effective at 12:01 a.m.
on September 13, 2012. In addition, on September 13, 2012, the Company received a written consent from holders representing a majority of
the voting power of the outstanding shares of Series A Preferred Stock consenting to the conversion, upon consummation of the proposed
public offering, of each share of Series A Preferred Stock then outstanding into shares of common stock. As a result of such consent, upon
consummation of the proposed public offering, each series of outstanding preferred stock will automatically convert into shares of common
stock at the following reduced conversion rates: Series A Preferred Stock (0.0327-to-1 basis); Series B Preferred Stock (0.0327-to-1 basis);
Series C Preferred Stock (0.0481-to-1 basis) and Series D Preferred Stock (0.1543-to-1 basis).

   All of the common stock share numbers, common stock share prices and exercise prices with respect to options and warrants to purchase
common stock have been adjusted within these consolidated financial statements, on a retroactive basis, to reflect the 1-for-400 reverse split of
common stock but have not been adjusted for the conversion of preferred stock.

     Upon consummation of the proposed offering, the Company's authorized shares will consist of 15,000,000 shares of common stock and
5,000,000 shares of preferred stock.

                                                                      F-39
Table of Contents
Table of Contents




                                                                   • Shares
                                                                Common Stock




                                                                 PROSPECTUS




                                                        Aegis Capital Corp
                                                                 September 14, 2012

You should rely only on the information contained in this prospectus. No dealer, salesperson or other person is authorized to give information
that is not contained in this prospectus. This prospectus is not an offer to sell nor is it seeking an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted. The information contained in this prospectus is correct only as of the date of this prospectus, regardless
of the time of the delivery of this prospectus or any sale of these securities.

Through and including • , 2012 (the 40th day after the date of this offering), all dealers effecting transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus
when acting as an underwriter and with respect to an unsold allotment or subscription.
Table of Contents


                                                                      PART II

                                            INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.   Other Expenses of Issuance and Distribution

    The following table sets forth the costs and expenses, other than underwriting discounts and commissions, to be paid by the Registrant in
connection with the issuance and distribution of the common stock being registered. All amounts other than the SEC registration fees and
FINRA fees are estimates.


                      SEC Registration Fees                                                               $          1,390
                      FINRA Fees                                                                                     2,414
                      Printing and Engraving Expenses                                                               86,000
                      Legal Fees and Expenses                                                                      790,000
                      Accounting Fees and Expenses                                                                  60,000
                      Miscellaneous                                                                                355,000

                      Total                                                                               $      1,294,804


Item 14.   Indemnification of Directors and Officers

     Our officers and directors are indemnified as provided by the General Corporation Law of the State of Delaware ("DGCL"), our amended
and restated certificate of incorporation and our bylaws.

     Section 145 of the DGCL authorizes a court to award or a corporation's board of directors to grant indemnification to directors and
officers in terms that are sufficiently broad to permit indemnification under certain circumstances for liabilities (including reimbursement for
expenses incurred) arising under the Securities Act of 1933. Our bylaws provide that we must indemnify and hold harmless each person who
was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or she is or was a director or an officer of the Company or is or was serving at the
request of the Company as a director, officer or trustee of another corporation or partnership, joint venture, trust or other enterprise, including
service with respect to an employee benefit plan (which we refer to as an indemnitee), whether the basis of such proceeding is alleged action in
an official capacity as a director, officer or trustee or in any other capacity while serving as a director, officer or trustee, to the fullest extent
permitted by Delaware law. In addition to such right of indemnification, our bylaws provide that we must advance all expenses incurred to any
such indemnitee incurred in defending any such proceeding prior to the final disposition of the proceeding. If required by the DGCL, an
advancement of expenses incurred by such indemnitee in his or her capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) will be made upon receipt of
an undertaking by or on behalf of such indemnitee to repay said amounts should it be ultimately determined that the person was not entitled to
be indemnified under our bylaws or otherwise. Our bylaws also give us the power to indemnify our employees and agents.

   Our amended and restated certificate of incorporation also contains a provision eliminating the personal liability of our directors to the
Company or its stockholders for breach of fiduciary duty as a director to the fullest extent permitted under Delaware law, except for liability:

     (1)
             for any breach of such director's duty of loyalty to the Company or its stockholders;

     (2)
             for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

     (3)
             under Section 174 of the DGCL; or

     (4)
             for any transaction from which the director derived any improper personal benefit.

                                                                         II-1
Table of Contents

Item 15.   Recent Sales of Unregistered Securities

2009

     On July 15, 2009 and September 30, 2009, we issued secured subordinated promissory and demand notes in the aggregate principal
amount of $315,000 and issued warrants to purchase up to 4,125 shares of common stock of the Company at an exercise price of $40.00 per
share to purchasers. The issuance of the notes was exempt from the registration requirements of the Securities Act of 1933, as amended,
pursuant to Section 4(2) as the transaction did not involve a public offering.

     On July 27, 2009, we issued to note purchasers three-year warrants to purchase an aggregate of up to 10,225 shares of our common stock
at an exercise price of $40.00 per share as consideration for the note purchasers subordinating their security interests in favor of the Supporting
Letter of Credit Applicants. As a result, Phoenix, the Company's principal stockholder ("Phoenix") received a warrant to purchase an additional
2,350 shares of our common stock, Phoenix Enterprises Family Fund LLC received a warrant to purchase an additional 1,794 shares of our
common stock and JAG Multi Investments LLC, a principal stockholder of the Company ("JAG Multi Investments LLC"), received a warrant
to purchase an additional 1,794 shares of our common stock. The warrants are fully vested. The issuance of the note and warrants was exempt
from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(2) as the transaction did not involve a
public offering.

     On September 30, 2009, we raised $300,000 in a private placement with JAG Multi Investments LLC through the issuance of a secured
demand note and warrants to purchase up to 3,750 shares of our common stock at $40.00 per share. The issuance of the note and warrants was
exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(2) as the transaction did not involve
a public offering.

     On October 13, 2009, we issued a demand note in the principal amount of $170,000 and warrants to purchase up to 2,125 shares of
common stock of the Company at an exercise price of $40.00 per share to Philip Sassower, our Chief Executive Officer and Chairman of the
Board and co-manager of the managing member of Phoenix ("Mr. Sassower"). The issuance of the note and warrants was exempt from the
registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(2) as the transaction did not involve a public
offering.

     On November 5, 2009, the Company and its wholly owned subsidiary Xplore Technologies Corporation of America ("Subsidiary",
together with the Company, the "Borrowers"), entered into a note purchase agreement (the "Note Purchase Agreement") pursuant to which the
Borrowers of senior secured subordinated promissory notes in the aggregate principal amount of $3,210,000 (the "Senior Notes") and warrants
(the "Warrants") to purchase up to 80,250 shares of the Company's common stock at an exercise price of $40.00 per share in two separate
closings on November 5, 2009 and November 9, 2009. Mr. Sassower purchased $1.0 million of the Senior Notes and Warrants to purchase
25,000 shares in the private placement. The Senior Note and Warrant issued to Mr. Sassower were purchased with $830,000 in cash and the
conversion of a secured demand note in the principal amount of $170,000 issued by the Borrowers to Mr. Sassower on October 13, 2009 (the
"Sassower Demand Note"). The Warrants became exercisable beginning on January 15, 2010 and expire on January 14, 2013. The Warrants
may be exercised in whole or in part and contain a cashless exercise provision.

     In addition, on November 5, 2009, the Borrowers entered into an amendment to the Note Purchase Agreement dated September 5, 2008
(the "Fall 2008 Note Purchase Agreement") with a majority-in-interest of the purchasers thereunder (such party being Phoenix) and an
amendment to the Note Purchase Agreement dated February 27, 2009 (the "Spring 2009 Note Purchase Agreement") with a majority-in-interest
of the purchasers thereunder, pursuant to which the maturity date of the secured subordinated promissory notes in the aggregate principal
amount of $4.09 million issued under the Fall 2008 Note Purchase Agreement and the Spring 2009 Note Purchase Agreement was extended
from

                                                                       II-2
Table of Contents

December 31, 2010 to December 31, 2011 and the expiration date of the warrants to purchase 100,225 shares of the Company's common stock
issued under the Fall 2008 Note Purchase Agreement and the Spring 2009 Note Purchase Agreement was extended from February 27, 2012 to
January 14, 2013.

     The Senior Notes and Warrants were issued in a private placement exempt from registration pursuant to Section 4(2) of the Securities Act
of 1933, as amended ("Securities Act") and Regulation D promulgated under the Securities Act.

     During 2009, we issued a total of 1,500 shares of common stock to Martin Janis & Company, Inc. in return for approximately $88,000 of
investor relations services provided to us during the year. The issuance of the shares was exempt from the registration requirements of the
Securities Act of 1933, as amended, pursuant to Section 4(2) as the transaction did not involve a public offering.

2010

     On August 18, 2010, the Borrowers entered into an amendment to the Note Purchase Agreement dated November 5, 2009, which amended
a previously executed Note Purchase Agreement (the "Original NPA"). The amendment provided that upon the approval of Phoenix in its sole
discretion, the Borrowers may issue up to an additional $2,000,000 in aggregate principal amount of senior secured promissory notes (the
"Bridge Notes"), and three-year warrants to purchase up to 71,429 shares of Common Stock at an exercise price of $28.00 per share (the
"Bridge Warrants") under the Original NPA. The Bridge Notes and Bridge Warrants may be issued by the Borrowers in multiple closings.

     On August 18, 2010, in connection with the initial closing pursuant to the amendment agreement, the Borrowers issued a Bridge Note in
the principal amount of $250,000 to Phoenix, with a Bridge Warrant to purchase 8,929 shares of Common Stock. The Borrowers received
$250,000 in cash from Phoenix for the Bridge Note and the Bridge Warrant issued at the initial closing.

     The Bridge Note and Bridge Warrant, and the shares of Common Stock issuable upon exercise of the Bridge Warrant, were offered and
sold to Phoenix, which the Company reasonably believes is an "accredited investor," as such term is defined in Rule 501 under the Securities
Act. The offer and sale was made without registration under the Securities Act, or the securities laws of certain states, in reliance on the
exemptions provided by Section 4(2) of the Securities Act and Regulation D under the Securities Act and in reliance on similar exemptions
under applicable state laws.

     On September 2, 2010, we issued a senior secured subordinated promissory note in the original principal amount of $600,000, and a
warrant to purchase 21,429 shares of common stock to Phoenix pursuant to an amendment to the note purchase agreement dated as of
November 5, 2009, which was executed on August 18, 2010. We reasonably believe that Phoenix is an "accredited investor," as such term is
defined in Rule 501 under the Securities Act. The offer and sale was made without registration under the Securities Act, or the securities laws
of certain states, in reliance on the exemptions provided by Section 4(2) of the Securities Act and Regulation D under the Securities Act and in
reliance on similar exemptions under applicable state laws.

     On November 3, 2010, the Borrowers entered into an Exchange Agreement with Phoenix, Mr. Sassower, and entities controlled by
Mr. Sassower, and other parties representing a majority in interest of the Company's outstanding senior secured subordinated indebtedness
(collectively, the "Noteholders"), pursuant to which the Noteholders agreed to exchange all of the Company's outstanding senior secured
subordinated indebtedness and secured subordinated indebtedness for shares of the Company's Series D Participating Convertible Preferred
Stock, par value $0.001 (the "Series D Preferred Stock"), at an exchange price of $1.00 per share for each $1.00 of such indebtedness (the
"Recapitalization"). On December 16, 2010, the Company consummated the Recapitalization, issuing 9,498,364 shares of Series D Preferred
Stock under the Exchange Agreement. The Series D Preferred Stock issued under the Exchange Agreement is convertible into Common Stock
at an initial conversion price of $16.00 per share.

                                                                      II-3
Table of Contents

     The offer and sale of the shares of Series D Preferred Stock pursuant to the Exchange Agreement were made without registration under the
Securities Act, or the securities laws of certain states, in reliance on the exemptions provided by Section 3(a)(9) of the Securities Act and in
reliance on similar exemptions under applicable state laws. No commission or other remuneration was paid or given directly or indirectly for
soliciting the exchange of the Company's indebtedness for shares of Series D Preferred Stock.

     On December 16, 2010, immediately prior to the issuance of the Series D Preferred Stock pursuant to the Exchange Agreement, the
Borrowers issued a promissory note in the principal amount of $1,177,500 to Phoenix, together with warrants to purchase 73,594 shares of
Common Stock. The Borrowers received $1,177,500 in gross proceeds therefor. Phoenix had previously purchased bridge notes in the
aggregate principal amount of $850,000. In connection with the financing, Phoenix issued participation interests in one or more bridge notes in
the aggregate principal amount of $1,027,500 and one or more bridge warrants to purchase an aggregate amount of 64,219 shares of Common
Stock. The bridge notes were exchanged for shares of Series D Preferred Stock pursuant to the Exchange Agreement.

     The bridge note and bridge warrants, and the shares of Common Stock issuable upon exercise of the bridge warrants, were offered and
sold to Phoenix in reliance on the exemptions provided by Section 4(2) of the Securities Act and Regulation D under the Securities Act and in
reliance on similar exemptions under applicable state laws.

     On December 16, 2010, pursuant to the exchange agreement, Phoenix exchanged $1,940,000 in principal amount of our promissory notes
for shares of our Series D Preferred Stock. For the year ended March 31, 2011, interest expense of $112,000 was recognized and paid to
Phoenix through the issuance of 37,760 shares of our Series D Preferred Stock and 2,533 shares of our common stock.

     On December 16, 2010, pursuant to the exchange agreement, JAG Multi Investments LLC, exchanged $1,018,000 in principal amount of
our promissory notes for shares of our Series D Preferred Stock. For the year ended March 31, 2011, interest expense of $91,000 and was
recognized and paid to JAG Multi Investments LLC through the issuance of 21,464 shares of the Company's Series D Preferred Stock and
2,342 shares of the Company's common stock.

     On December 16, 2010, pursuant to the exchange agreement, Mr. Sassower exchanged $1,000,000 in principal amount of our promissory
notes for shares of our Series D Preferred Stock. For the year ended March 31, 2011, interest expense of $90,000 was recognized and paid to
Mr. Sassower through the issuance of 21,095 shares of our Series D Preferred Stock and 2,301 shares of our common stock, respectively.

     On December 16, 2010, pursuant to the exchange agreement, Phoenix Enterprises Family Fund LLC, an entity controlled by
Mr. Sassower, exchanged $718,000 in principal amount of our promissory notes for shares of our Series D Preferred Stock. For the year ended
March 31, 2011, interest expense of $64,000 was recognized and paid to Phoenix Enterprises Family Fund LLC through the issuance of 15,136
shares of our Series D Preferred Stock and 1,651 shares of our common stock.

     The offer and sale of the shares of Series D Preferred Stock pursuant to the Exchange Agreement were made without registration under the
Securities Act, or the securities laws of certain states, in reliance on the exemptions provided by Section 3(a)(9) of the Securities Act and in
reliance on similar exemptions under applicable state laws. No commission or other remuneration was paid or given directly or indirectly for
soliciting the exchange of the Company's indebtedness for shares of Series D Preferred Stock.

     In connection with our exchange of approximately $9.4 million of outstanding subordinated secured promissory notes for our Series D
Preferred Stock on December 16, 2010, we paid SG Phoenix LLC a structuring fee of $100,000 in cash and issued SG Phoenix LLC a
three-year warrant to purchase 6,250 shares of our common stock at an exercise price of $16.00 per share.

     During 2010, we issued a total of 2,318 shares of common stock to Martin Janis & Company, Inc. in return for approximately $66,455 of
investor relations services provided to us during the year. The issuance

                                                                      II-4
Table of Contents

of the shares was exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(2) as the
transaction did not involve a public offering. We issued such shares of common stock to Martin Janis & Company, Inc., as follows: (i) we
issued 773 shares of common stock during the three months ended March 31, 2010 and (ii) we issued 193 shares of common stock, at a price
per share of $44.00, on each of the following dates in 2010: April 15, May 14, June 15, July 15, August 14, September 15, October 15 and
November 15.

2011

     On February 23, 2011, the Company completed a private placement of 1,000,000 shares of Series D Preferred Stock, and detachable
three-year warrants (the "Series D Warrants") to purchase a total of 62,500 shares of Common Stock. The Series D Preferred Stock issued in
the private placement is convertible into shares of Common Stock at an initial conversion price of $16.00 per share. The Series D Preferred
Stock ranks senior to all outstanding shares of the Company's capital stock in terms of dividends, liquidation preferences and other special
rights. The Series D Warrants have an initial exercise price of $16.00 per share. The Company received $1,000,000 in gross proceeds for the
Series D Preferred Stock and Series D Warrants.

     The Series D Preferred Stock and Series D Warrants, and the shares of Common Stock issuable thereunder, were offered and sold to 23
investors, including Brian Usher-Jones, a director of the Company, and Phoenix Enterprises Family Fund LLC, an entity affiliated with
Mr. Sassower, all of which the Company reasonably believes are "accredited investors," as such term is defined in Rule 501 under the
Securities Act. The offers and sales were made without registration under the Securities Act, or the securities laws of certain states, in reliance
on the exemptions provided by Section 4(2) of the Securities Act and Regulation D under the Securities Act and in reliance on similar
exemptions under applicable state laws.

     In connection with the private placement of the Series D Preferred Stock and Series D Warrants, the Company paid SG Phoenix LLC an
administrative fee of $50,000 in cash and a warrant to purchase 3,125 shares of Common Stock at an initial exercise price of $16.00 per share
(the "SG Phoenix Warrant"). SG Phoenix LLC is an entity controlled by Mr. Sassower and Andrea Goren, a director of the Company. The
offers and issuance of the SG Phoenix Warrant was made without registration under the Securities Act, or the securities laws of certain states,
in reliance on the exemptions provided by Section 4(2) of the Securities Act and Regulation D under the Securities Act and in reliance on
similar exemptions under applicable state laws.

     On August 4, 2011, our board of directors approved an award of 150,000 shares of Series D Preferred Stock, which fully vested on
March 31, 2012, to SG Phoenix LLC, an affiliate of our principal stockholder, for services rendered during the fiscal year ended March 31,
2012. The fair value of the Series D Preferred Stock was $150,000 and stock compensation expense of $150,000 was recorded for the year
ended March 31, 2012. The issuance of the shares was made without registration under the Securities Act of 1933, as amended, or the securities
laws of certain states, in reliance on the exemptions provided by Section 4(2) of the Securities Act and Regulation D under the Securities Act,
as the transaction did not involve a public offering, and in reliance on similar exemptions under applicable state laws.

     On October 14, 2011, the Company completed a private placement of 2,320,000 shares of Series D Preferred Stock. The Series D
Preferred Stock issued in the private placement is convertible into shares of Common Stock at an initial conversion price of $16.00 per share.
The Series D Preferred Stock ranks senior to all outstanding shares of the Company's capital stock in terms of dividends, liquidation
preferences and other special rights. The Company received $2,320,000 in gross proceeds for the Series D Preferred Stock.

     The Series D Preferred Stock, and the shares of Common Stock issuable upon conversion of the Series D Preferred Stock, were offered
and sold to 40 investors, including Mr. Sassower, and Andax LLC,

                                                                       II-5
Table of Contents

an entity affiliated with Andrea Goren, a director of the Company. The Company reasonably believes all such investors are "accredited
investors," as such term is defined in Rule 501 under the Securities Act. The offers and sales were made without registration under the
Securities Act, or the securities laws of certain states, in reliance on the exemptions provided by Section 4(2) of the Securities Act and
Regulation D under the Securities Act and in reliance on similar exemptions under applicable state laws.

     In connection with the private placement of the Series D Preferred Stock, the Company paid SG Phoenix LLC an administrative fee of
$100,000 in cash and a warrant to purchase 6,250 shares of Common Stock at an initial exercise price of $16.00 per share (the "SG Phoenix
Warrant"). The SG Phoenix Warrant is substantially similar to the warrants issued with the private placement of 1,000,000 shares of the
Series D Preferred Stock on February 23, 2011 (the "Series D Warrants"), except that the SG Phoenix Warrant expires on October 13, 2014,
rather than December 15, 2013. SG Phoenix LLC is an entity controlled by Mr. Sassower and Mr. Goren. The offer and issuance of the SG
Phoenix Warrant was made without registration under the Securities Act, or the securities laws of certain states, in reliance on the exemptions
provided by Section 4(2) of the Securities Act and Regulation D under the Securities Act and in reliance on similar exemptions under
applicable state laws.

     During the year ended December 31, 2011, we issued a total of 3,188 shares of common stock to Martin Janis & Company, Inc., who we
reasonably believe is an "accredited investor," as such term is defined in Rule 501 under the Securities Act, in return for approximately $78,626
of investor relations services provided to us from December 15, 2010 to November 14, 2011. The issuance of the shares was made without
registration under the Securities Act of 1933, as amended, or the securities laws of certain states, in reliance on the exemptions provided by
Section 4(2) of the Securities Act and Regulation D under the Securities Act, as the transaction did not involve a public offering, and in reliance
on similar exemptions under applicable state laws. We issued such shares of common stock to Martin Janis & Company, Inc., as follows: (i) we
issued 1,063 shares of common stock during the three months ended March 31, 2011 and (ii) we issued 266 shares of common stock, at a price
per share of $31.99, on each of the following dates in 2011: April 15, May 14, June 15, July 15, August 14, September 15, October 15 and
November 15.

                                                                       II-6
Table of Contents

Item 16.   Exhibits and Financial Statement Schedules

(a) EXHIBITS

    We have filed the exhibits listed on the accompanying Exhibit Index of this registration statement:


                    Exhibit
                    Number                                                       Description
                               1.1 *   Form of Underwriting Agreement

                               3.1     Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit A of
                                       the Company's Proxy Statement on Schedule 14A, filed on November 10, 2010)

                               3.2     Certificate of Amendment of Amended and Restated Certificate of Incorporation of Xplore
                                       Technologies Corp. (incorporated by reference to Exhibit 3.2 of the Company's Annual Report
                                       on Form 10-K, filed on June 25, 2012)

                               3.3     Bylaws (incorporated by reference to Exhibit 3.2 of the Company's Annual Report on
                                       Form 10-K, filed on June 27, 2007)

                               3.4     Certificate of Amendment of Amended and Restated Certificate of Incorporation of Xplore
                                       Technologies Corp. (incorporated by reference to Exhibit 3.1 of the Company's Current
                                       Report on Form 8-K, filed on September 13, 2012)

                               4.1     Specimen Stock Certificate for Common Stock (incorporated by reference to Exhibit 4.1 of
                                       the Company's Registration Statement on Form S-4, filed on February 8, 2007, Registration
                                       Statement No. 333-138675)

                               4.2     Specimen Stock Certificate for Series A Preferred Stock (incorporated by reference to
                                       Exhibit 4.2 of the Company's Registration Statement on Form S-4, filed on February 8, 2007,
                                       Registration Statement No. 333-138675)

                               4.3     Specimen Stock Certificate for Series B Preferred Stock (incorporated by reference to
                                       Exhibit 4.3 of the Company's Registration Statement on Form S-4, filed on February 8, 2007,
                                       Registration Statement No. 333-138675)

                               4.4     Specimen Stock Certificate for Series C Preferred Stock (incorporated by reference to
                                       Exhibit 4.4 of the Company's Registration Statement on Form S-1, filed on October 10, 2007,
                                       Registration Statement No. 333-146611)

                               4.5     Specimen Stock Certificate for Series D Preferred Stock (incorporated by reference to
                                       Exhibit 4.5 of the Company's Annual Report on Form 10-K, filed on June 24, 2011)

                               4.6 *   Form of Underwriter Warrant (included in Exhibit 1.1)

                               5.1 *   Opinion of Pillsbury Winthrop Shaw Pittman LLP

                              10.1 †   Turnkey Design and Manufacturing Agreement, by and between Xplore Technologies Corp.
                                       and Wistron Corporation (incorporated by reference to Exhibit 10.1 of the Company's
                                       Registration Statement on Form S-4, filed on February 8, 2007, Registration Statement
                                       No. 333-138675)

                              10.2     Exchange Agreement, dated November 3, 2010 (incorporated by reference to Exhibit 10.1 of
                                       the Company's Current Report on Form 8-K, filed on November 4, 2010)

                              10.3     Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.3 of the
                                       Company's Current Report on Form 8-K, filed on September 25, 2007)

                              10.4     Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.2 of the
Company's Current Report on Form 8-K, filed on November 4, 2010)

                                II-7
Table of Contents


                    Exhibit
                    Number                                                    Description
                              10.5   Amendment No. 1 to Registration Rights Agreement (incorporated by reference to
                                     Exhibit 10.2 of the Company's Current Report on Form 8-K, filed on February 25, 2011)

                              10.6   Form of Warrant to purchase shares of Company's common stock (incorporated by reference
                                     to Exhibit 10.3 of the Company's Current Report on Form 8-K, filed on September 11, 2008)

                              10.7   Form of Warrant to purchase shares of Company's common stock (incorporated by reference
                                     to Exhibit 10.3 of the Company's Current Report on Form 8-K, filed on March 5, 2009)

                              10.8   Form of Warrant to purchase shares of Company's common stock (incorporated by reference
                                     to Exhibit 10.3 of the Company's Current Report on Form 8-K, filed on November 10, 2009)

                              10.9   Form of Series D Warrant (incorporated by reference to Exhibit 10.3 of the Company's
                                     Current Report on Form 8-K, filed on February 25, 2011)

                         10.10       Accounts Receivable Purchase Agreement, dated December 10, 2009, by and between Xplore
                                     Technologies Corporation of America and DSCH Capital Partners, LLC d/b/a Far West
                                     Capital (incorporated by reference to Exhibit 10.1 of the Company's Current Report on
                                     Form 8-K, filed on December 15, 2009)

                         10.11       Corporate Guaranty and Suretyship, dated December 10, 2009, by and between Xplore
                                     Technologies Corp. and DSCH Capital Partners, LLC d/b/a Far West Capital (incorporated by
                                     reference to Exhibit 10.2 of the Company's Current Report on Form 8-K, filed on
                                     December 15, 2009)

                         10.12       First Amendment and Purchase Order Finance Rider to Accounts Receivable Purchase
                                     Agreement, dated December 10, 2009, by and between Xplore Technologies Corporation of
                                     America and DSCH Capital Partners, LLC d/b/a Far West Capital (incorporated by reference
                                     to Exhibit 10.23 of the Company's Annual Report on Form 10-K, filed on June 9, 2010)

                         10.13       Second Amendment to Accounts Receivable Purchasing Agreement (incorporated by
                                     reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed on February 25,
                                     2011)

                         10.14       Third Amendment to Accounts Receivable Purchasing Agreement (incorporated by reference
                                     to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed on January 3, 2012)

                         10.15       Fourth Amendment to Accounts Receivable Purchasing Agreement (incorporated by reference
                                     to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed on March 5, 2012)

                         10.16       Lease Agreement, dated April 10, 2003, between Summit Tech L.P. and Xplore Technologies
                                     Corp. (incorporated by reference to Exhibit 10.11 of the Company's Registration Statement on
                                     Form S-4, filed on November 14, 2006, Registration Statement No. 333-138675)

                         10.17       Fourth Amendment to Lease Agreement, dated April 10, 2003, between Bailard Austin II,
                                     Limited Partnership and Xplore Technologies Corp. (incorporated by reference to
                                     Exhibit 10.23 of the Company's Annual Report on Form 10-K, filed on August 14, 2009)

                         10.18 †     Purchase and Distribution Agreement between Xplore Technologies Corp. and Pegatron
                                     Corporation dated as of December 7, 2007 (incorporated by reference to Exhibit 10.14 of the
                                     Company's Annual Report on Form 10-K, filed on June 5, 2008)

                                                                       II-8
Table of Contents


                    Exhibit
                    Number                                                       Description
                           10.19       Employment Agreement, dated as of June 30, 2006, by and between Xplore Technologies
                                       Corp. and Mark Holleran (incorporated by reference to Exhibit 10.10 of the Company's
                                       Registration Statement on Form S-4, filed on November 14, 2006, Registration Statement
                                       No. 333-138675)

                           10.20       Amended and Restated Share Option Plan (incorporated by reference to Exhibit A of the
                                       Company's Proxy Statement on Schedule 14A, filed on December 21, 2007)

                           10.21       Xplore Technologies Corp. 2009 Stock Incentive Plan (incorporated by reference to
                                       Exhibit 10.31 of the Company's Annual Report on Form 10-K, filed on August 14, 2009)

                           10.22       Xplore Technologies Corp. Employee Stock Purchase Plan (incorporated by reference to
                                       Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q, filed on February 13, 2009)

                           10.23       Fifth Amendment to Accounts Receivable Purchasing Agreement (incorporated by reference
                                       to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed on July 3, 2012)

                              21.1     Subsidiaries of Xplore Technologies Corp. (incorporated by reference to Exhibit 21.1 of the
                                       Company's Registration Statement on Form S-4, filed on November 14, 2006, Registration
                                       Statement No. 333-138675)

                              23.1 *   Consent of PMB Helin Donovan, LLP

                              23.2 *   Consent of Pillsbury Winthrop Shaw Pittman LLP (included in Exhibit 5.1)

                              24.1 ** Power of Attorney (contained in the signature page of the Registration Statement)

                      101.INS *        XBRL Instance Document

                     101.SCH *         Taxonomy Extension Schema Document

                     101.CAL *         Taxonomy Extension Calculation Linkbase Document

                      101.DEF *        Taxonomy Extension Definition Linkbase Document

                     101.LAB *         Taxonomy Extension Labels Linkbase Document

                      101.PRE *        Taxonomy Extension Presentation Linkbase Document


*
       Filed herewith.

**
       Previously filed.

†
       Portions of this agreement have been omitted pursuant to a request for confidential treatment, which was granted by the SEC on
       May 14, 2007.

Item 17.   Undertakings

     The undersigned registrant hereby undertakes:

      (1) To file, during any period in which offers or sales are being made pursuant to this Registration Statement, a post-effective amendment
to this registration statement:
      (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933.

      (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value
of securities offered would not exceed that which was registered) and any

                                                                  II-9
Table of Contents

     deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the
     Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the
     maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.

          (iii) to include any material information with respect to the plan of distribution not previously disclosed in this Registration
     Statement or any material change to such information in this registration statement.

    (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

      (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at
the termination of the offering.

     (4) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore
unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such
issue.

      (5) That for the purpose of determining any liability under the Securities Act of 1933 in a primary offering of securities of the
undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser,
if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

           (i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to
     Rule 424;

           (ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to
     by the undersigned registrant;

          (iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned
     registrant or its securities provided by or on behalf of the undersigned registrant; and

          (iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

     (6) The undersigned registrant hereby undertakes that:

            (i) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus
     filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant
     to Rule 424(b)(I) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was
     declared effective; and

           (ii) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a
     form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such
     securities at that time shall be deemed to be the initial bona fide offering thereof.

                                                                      II-10
Table of Contents


                                                                SIGNATURES

    Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of New York, State of New York, on September 14, 2012.


                                                                    XPLORE TECHNOLOGIES CORP.
                                                                    By:  /s/ PHILIP S. SASSOWER

                                                                             Name:     Philip S. Sassower
                                                                             Title:    Chief Executive Officer

    Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the
capacities and on the dates indicated:


                              Signature                              Title                               Date



                      /s/ PHILIP S. SASSOWER             Chief Executive Officer                 September 14, 2012
                                                         and Director (Principal
                                                         Executive Officer)
                         Philip S. Sassower

                    /s/ MICHAEL J. RAPISAND              Chief Financial Officer                 September 14, 2012
                                                         (Principal Accounting and
                                                         Financial Officer)
                        Michael J. Rapisand

                                 *                       Director                                September 14, 2012


                        Brian E. Usher-Jones

                                 *                       Director                                September 14, 2012

                           Andrea Goren

                                 *                       Director                                September 14, 2012

                        Thomas F. Leonardis

                                 *                       Director                                September 14, 2012


                           Kent Misemer

                                 *                       Director                                September 14, 2012

                            F. Ben Irwin

               *By:      /s/ MICHAEL J. RAPISAND

                            Michael J. Rapisand, as
                           Attorney-in-Fact pursuant
                           to the Power of Attorney
                          previously provided as part
                         of the Registration Statement
Table of Contents


                                                                  EXHIBIT INDEX


                    Exhibit
                    Number                                                       Description
                               1.1 *   Form of Underwriting Agreement

                               3.1     Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit A of
                                       the Company's Proxy Statement on Schedule 14A, filed on November 10, 2010)

                               3.2     Certificate of Amendment of Amended and Restated Certificate of Incorporation of Xplore
                                       Technologies Corp. (incorporated by reference to Exhibit 3.2 of the Company's Annual Report
                                       on Form 10-K, filed on June 25, 2012)

                               3.3     Bylaws (incorporated by reference to Exhibit 3.2 of the Company's Annual Report on
                                       Form 10-K, filed on June 27, 2007)

                               3.4     Certificate of Amendment of Amended and Restated Certificate of Incorporation of Xplore
                                       Technologies Corp. (incorporated by reference to Exhibit 3.1 of the Company's Current
                                       Report on Form 8-K, filed on September 13, 2012)

                               4.1     Specimen Stock Certificate for Common Stock (incorporated by reference to Exhibit 4.1 of
                                       the Company's Registration Statement on Form S-4, filed on February 8, 2007, Registration
                                       Statement No. 333-138675)

                               4.2     Specimen Stock Certificate for Series A Preferred Stock (incorporated by reference to
                                       Exhibit 4.2 of the Company's Registration Statement on Form S-4, filed on February 8, 2007,
                                       Registration Statement No. 333-138675)

                               4.3     Specimen Stock Certificate for Series B Preferred Stock (incorporated by reference to
                                       Exhibit 4.3 of the Company's Registration Statement on Form S-4, filed on February 8, 2007,
                                       Registration Statement No. 333-138675)

                               4.4     Specimen Stock Certificate for Series C Preferred Stock (incorporated by reference to
                                       Exhibit 4.4 of the Company's Registration Statement on Form S-1, filed on October 10, 2007,
                                       Registration Statement No. 333-146611)

                               4.5     Specimen Stock Certificate for Series D Preferred Stock (incorporated by reference to
                                       Exhibit 4.5 of the Company's Annual Report on Form 10-K, filed on June 24, 2011)

                               4.6 *   Form of Underwriter Warrant (included in Exhibit 1.1)

                               5.1 *   Opinion of Pillsbury Winthrop Shaw Pittman LLP

                              10.1 †   Turnkey Design and Manufacturing Agreement, by and between Xplore Technologies Corp.
                                       and Wistron Corporation (incorporated by reference to Exhibit 10.1 of the Company's
                                       Registration Statement on Form S-4, filed on February 8, 2007, Registration Statement
                                       No. 333-138675)

                              10.2     Exchange Agreement, dated November 3, 2010 (incorporated by reference to Exhibit 10.1 of
                                       the Company's Current Report on Form 8-K, filed on November 4, 2010)

                              10.3     Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.3 of the
                                       Company's Current Report on Form 8-K, filed on September 25, 2007)

                              10.4     Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.2 of the
                                       Company's Current Report on Form 8-K, filed on November 4, 2010)

                              10.5     Amendment No. 1 to Registration Rights Agreement (incorporated by reference to
       Exhibit 10.2 of the Company's Current Report on Form 8-K, filed on February 25, 2011)

10.6   Form of Warrant to purchase shares of Company's common stock (incorporated by reference
       to Exhibit 10.3 of the Company's Current Report on Form 8-K, filed on September 11, 2008)
Table of Contents


                    Exhibit
                    Number                                                    Description
                              10.7   Form of Warrant to purchase shares of Company's common stock (incorporated by reference
                                     to Exhibit 10.3 of the Company's Current Report on Form 8-K, filed on March 5, 2009)

                              10.8   Form of Warrant to purchase shares of Company's common stock (incorporated by reference
                                     to Exhibit 10.3 of the Company's Current Report on Form 8-K, filed on November 10, 2009)

                              10.9   Form of Series D Warrant (incorporated by reference to Exhibit 10.3 of the Company's
                                     Current Report on Form 8-K, filed on February 25, 2011)

                         10.10       Accounts Receivable Purchase Agreement, dated December 10, 2009, by and between Xplore
                                     Technologies Corporation of America and DSCH Capital Partners, LLC d/b/a Far West
                                     Capital (incorporated by reference to Exhibit 10.1 of the Company's Current Report on
                                     Form 8-K, filed on December 15, 2009)

                         10.11       Corporate Guaranty and Suretyship, dated December 10, 2009, by and between Xplore
                                     Technologies Corp. and DSCH Capital Partners, LLC d/b/a Far West Capital (incorporated by
                                     reference to Exhibit 10.2 of the Company's Current Report on Form 8-K, filed on
                                     December 15, 2009)

                         10.12       First Amendment and Purchase Order Finance Rider to Accounts Receivable Purchase
                                     Agreement, dated December 10, 2009, by and between Xplore Technologies Corporation of
                                     America and DSCH Capital Partners, LLC d/b/a Far West Capital (incorporated by reference
                                     to Exhibit 10.23 of the Company's Annual Report on Form 10-K, filed on June 9, 2010)

                         10.13       Second Amendment to Accounts Receivable Purchasing Agreement (incorporated by
                                     reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed on February 25,
                                     2011)

                         10.14       Third Amendment to Accounts Receivable Purchasing Agreement (incorporated by reference
                                     to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed on January 3, 2012)

                         10.15       Fourth Amendment to Accounts Receivable Purchasing Agreement (incorporated by reference
                                     to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed on March 5, 2012)

                         10.16       Lease Agreement, dated April 10, 2003, between Summit Tech L.P. and Xplore Technologies
                                     Corp. (incorporated by reference to Exhibit 10.11 of the Company's Registration Statement on
                                     Form S-4, filed on November 14, 2006, Registration Statement No. 333-138675)

                         10.17       Fourth Amendment to Lease Agreement, dated April 10, 2003, between Bailard Austin II,
                                     Limited Partnership and Xplore Technologies Corp. (incorporated by reference to
                                     Exhibit 10.23 of the Company's Annual Report on Form 10-K, filed on August 14, 2009)

                         10.18 †     Purchase and Distribution Agreement between Xplore Technologies Corp. and Pegatron
                                     Corporation dated as of December 7, 2007 (incorporated by reference to Exhibit 10.14 of the
                                     Company's Annual Report on Form 10-K, filed on June 5, 2008)

                         10.19       Employment Agreement, dated as of June 30, 2006, by and between Xplore Technologies
                                     Corp. and Mark Holleran (incorporated by reference to Exhibit 10.10 of the Company's
                                     Registration Statement on Form S-4, filed on November 14, 2006, Registration Statement
                                     No. 333-138675)

                         10.20       Amended and Restated Share Option Plan (incorporated by reference to Exhibit A of the
                                     Company's Proxy Statement on Schedule 14A, filed on December 21, 2007)

                         10.21       Xplore Technologies Corp. 2009 Stock Incentive Plan (incorporated by reference to
                                     Exhibit 10.31 of the Company's Annual Report on Form 10-K, filed on August 14, 2009)
Table of Contents


                    Exhibit
                    Number                                                       Description
                         10.22         Xplore Technologies Corp. Employee Stock Purchase Plan (incorporated by reference to
                                       Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q, filed on February 13, 2009)

                         10.23         Fifth Amendment to Accounts Receivable Purchasing Agreement (incorporated by reference
                                       to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed on July 3, 2012)

                              21.1     Subsidiaries of Xplore Technologies Corp. (incorporated by reference to Exhibit 21.1 of the
                                       Company's Registration Statement on Form S-4, filed on November 14, 2006, Registration
                                       Statement No. 333-138675)

                              23.1 *   Consent of PMB Helin Donovan, LLP

                              23.2 *   Consent of Pillsbury Winthrop Shaw Pittman LLP (included in Exhibit 5.1)

                              24.1 ** Power of Attorney (contained in the signature page of the Registration Statement)

                      101.INS *        XBRL Instance Document

                     101.SCH *         Taxonomy Extension Schema Document

                     101.CAL *         Taxonomy Extension Calculation Linkbase Document

                      101.DEF *        Taxonomy Extension Definition Linkbase Document

                     101.LAB *         Taxonomy Extension Labels Linkbase Document

                      101.PRE *        Taxonomy Extension Presentation Linkbase Document


             *
                       Filed herewith.

             **
                       Previously filed.

             †
                       Portions of this agreement have been omitted pursuant to a request for confidential treatment, which was granted by the
                       SEC on May 14, 2007.
                                                Exhibit 1.1

     UNDERWRITING AGREEMENT

                  between

    XPLORE TECHNOLOGIES CORP.

                    and

         AEGIS CAPITAL CORP.,

as Representative of the Several Underwriters
                                                      XPLORE TECHNOLOGIES CORP

                                                       UNDERWRITING AGREEMENT

                                                                                                                               New York, New York
                                                                                                                                         [  ], 2012

Aegis Capital Corp.
810 Seventh Avenue, 11 th Floor
New York, New York 10019

Ladies and Gentlemen:

          The undersigned, Xplore Technologies Corp., a Delaware corporation (collectively with its subsidiaries and affiliates, including,
without limitation, all entities disclosed or described in the Registration Statement (as hereinafter defined) as being subsidiaries or affiliates of
Xplore Technologies Corp., the “ Company ”), hereby confirms its agreement (this “ Agreement ”) with Aegis Capital Corp. (hereinafter
referred to as “you” (including its correlatives) or the “ Representative ”) and with the other underwriters named on Schedule 1 hereto for
which the Representative is acting as representative (the Representative and such other underwriters being collectively called the “
Underwriters ” or, individually, an “ Underwriter ”) as follows:

1.              Purchase and Sale of Shares .

         1.1        Firm Shares .

                  1.1.1.      Nature and Purchase of Firm Shares .

                            (i)      On the basis of the representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to the several Underwriters, an aggregate of [  ] shares of the Company’s
common stock (“ Firm Shares ”), par value $0.001 per share (the “ Shares ”).

                            (ii)       The Underwriters, severally and not jointly, agree to purchase from the Company the number of Firm
Shares set forth opposite their respective names on Schedule 1 attached hereto and made a part hereof at a purchase price of $[  ] per Share
([93]% of the per Firm Share offering price). The Firm Shares are to be offered initially to the public at the offering price set forth on the cover
page of the Prospectus (as defined in Section 2.1.1 hereof).

                  1.1.2.      Shares Payment and Delivery .

                           (i)        Delivery and payment for the Firm Shares shall be made at 10:00 a.m., Eastern time, on the third (3 rd )
Business Day following the effective date (the “ Effective Date ”) of this Agreement (or the fourth (4 th ) Business Day following the Effective
Date if the Firm Shares are priced after 4:01 p.m., Eastern time) or at such earlier time as shall be agreed upon by the Representative and the
Company, at the offices of Kramer Levin Naftalis & Frankel LLP, 1177 Avenue of the Americas, New York, NY 10036 (“ Representative
Counsel ”), or at such other place (or remotely by facsimile or other electronic transmission) as shall be agreed upon by the Representative and
the Company. The hour and date of delivery and payment for the Firm Shares is called the “ Closing Date .”

                            (ii)     Payment for the Firm Shares shall be made on the Closing Date by wire transfer in Federal (same day)
funds, payable to the order of the Company upon delivery of the
certificates (in form and substance satisfactory to the Underwriters) representing the Firm Shares (or through the facilities of the Depository
Trust Company (“ DTC ”)) for the account of the Underwriters. The Firm Shares shall be registered in such name or names and in such
authorized denominations as the Representative may request in writing at least two (2) full Business Days prior to the Closing Date. The
Company shall not be obligated to sell or deliver the Firm Shares except upon tender of payment by the Representative for all of the Firm
Shares. The term “ Business Day ” means any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions are
authorized or obligated by law to close in New York, New York.

         1.2       Over-allotment Option .

                   1.2.1.      Option Shares . For the purposes of covering any over-allotments in connection with the distribution and sale of
the Firm Shares, the Company hereby grants to the Underwriters an option to purchase up to [  ] additional Shares, representing fifteen percent
(15%) of the Firm Shares sold in the offering, from the Company (the “ Over-allotment Option ”). Such [  ] additional Shares are hereinafter
referred to as “ Option Shares .” The purchase price to be paid per Option Share shall be equal to the price per Firm Share set forth in
Section 1.1.1 hereof. The Firm Shares and the Option Shares are hereinafter referred to together as the “ Public Securities .” The offering and
sale of the Public Securities is hereinafter referred to as the “ Offering .”

                   1.2.2.      Exercise of Option . The Over-allotment Option granted pursuant to Section 1.2.1 hereof may be exercised by the
Representative as to all (at any time) or any part (from time to time) of the Option Shares within 45 days after the Effective Date. The
Underwriters shall not be under any obligation to purchase any Option Shares prior to the exercise of the Over-allotment Option. The
Over-allotment Option granted hereby may be exercised by the giving of oral notice to the Company from the Representative, which must be
confirmed in writing by overnight mail or facsimile or other electronic transmission setting forth the number of Option Shares to be purchased
and the date and time for delivery of and payment for the Option Shares (the “ Option Closing Date ”), which shall not be later than five
(5) full Business Days after the date of the notice or such other time as shall be agreed upon by the Company and the Representative, at the
offices of Representative Counsel or at such other place (including remotely by facsimile or other electronic transmission) as shall be agreed
upon by the Company and the Representative. If such delivery and payment for the Option Shares does not occur on the Closing Date, the
Option Closing Date will be as set forth in the notice. Upon exercise of the Over-allotment Option with respect to all or any portion of the
Option Shares, subject to the terms and conditions set forth herein, (i) the Company shall become obligated to sell to the Underwriters the
number of Option Shares specified in such written notice and (ii) each of the Underwriters, acting severally and not jointly, shall purchase that
proportion of the total number of Option Shares then being purchased which the number of Firm Shares set forth in Schedule 1 opposite the
name of such Underwriter bears to the total number of Firm Shares, subject, in each case, to such adjustments as the Representative, in its sole
discretion, shall determine.

                   1.2.3.    Payment and Delivery . Payment for the Option Shares shall be made on the Option Closing Date by wire transfer
in Federal (same day) funds, payable to the order of the Company upon delivery to you of certificates (in form and substance satisfactory to the
Underwriters) representing the Option Shares (or through the facilities of DTC) for the account of the Underwriters. The Option Shares shall be
registered in such name or names and in such authorized denominations as the Representative may request in writing at least two (2) full
Business Days prior to the Option Closing Date. The Company shall not be obligated to sell or deliver the Option Shares except upon tender of
payment by the Representative for applicable Option Shares.

                                                                        2
         1.3        Representative’s Warrants .

                    1.3.1.      Purchase Warrants . The Company hereby agrees to issue to the Representative (and/or its designees) on the
Closing Date an option (“ Representative’s Warrant ”) for the purchase of an aggregate of [  ] Shares, representing 5% of the Firm Shares.
The Representative’s Warrant agreement, in the form attached hereto as Exhibit A (the “ Representative’s Warrant Agreement ”), shall be
exercisable, in whole or in part, commencing on a date which is one (1) year after the effective date of the Offering and expiring on the
five-year anniversary of the effective date of the Offering at an initial exercise price per Share of $[  ], which is equal to 125% of the initial
public offering price of the Firm Shares. The Representative’s Warrant Agreement and the Shares issuable upon exercise thereof are sometimes
hereinafter referred to together as the “ Representative’s Securities .” The Representative understands and agrees that there are significant
restrictions pursuant to FINRA Rule 5110 against transferring the Representative’s Warrant Agreement and the underlying Shares during the
first year after the effective date of the Offering and by its acceptance thereof shall agree that it will not sell, transfer, assign, pledge or
hypothecate the Representative’s Warrant Agreement, or any portion thereof, or be the subject of any hedging, short sale, derivative, put or call
transaction that would result in the effective economic disposition of such securities for a period of 180 days following the effective date of the
Offering to anyone other than (i) an Underwriter or a selected dealer in connection with the Offering, or (ii) a bona fide officer or partner of the
Representative or of any such Underwriter or selected dealer; and only if any such transferee agrees to the foregoing lock-up restrictions.

                  1.3.2.    Delivery . Delivery of the Representative’s Warrant Agreement shall be made on the Closing Date and shall be
issued in the name or names and in such authorized denominations as the Representative may request.

2.        Representations and Warranties of the Company . The Company represents and warrants to the Underwriters as of the Applicable
Time (as defined below), as of the Closing Date and as of the Option Closing Date, if any, as follows:

         2.1        Filing of Registration Statement .

                   2.1.1.     Pursuant to the Act . The Company has filed with the U.S. Securities and Exchange Commission (the “
Commission ”) a registration statement, and an amendment or amendments thereto, on Form S-1 (File No. 333-182860, including any related
prospectus or prospectuses, for the registration of the Public Securities under the Securities Act of 1933, as amended (the “ Act ”), which
registration statement and amendment or amendments have been prepared by the Company in all material respects in conformity with the
requirements of the Act and the rules and regulations of the Commission under the Act (the “ Regulations ”) and will contain all material
statements that are required to be stated therein in accordance with the Act and the Regulations. Except as the context may otherwise require,
such registration statement, as amended, on file with the Commission at the time the registration statement became effective (including the
Preliminary Prospectus included in the registration statement, financial statements, schedules, exhibits and all other documents filed as a part
thereof or incorporated therein and all information deemed to be a part thereof as of the Effective Date pursuant to paragraph (b) of Rule 430A
of the Regulations (the “ Rule 430A Information ”)), is referred to herein as the “ Registration Statement .” If the Company files any
registration statement pursuant to Rule 462(b) of the 1933 Act Regulations, then after such filing, the term “ Registration Statement ” shall
include such registration statement filed pursuant to Rule 462(b). The Registration Statement has been declared effective by the Commission on
the date hereof.

        Each prospectus used prior to the effectiveness of the Registration Statement, and each prospectus that omitted the Rule 430A
Information that was used after such effectiveness and prior to the execution and delivery of this Agreement, is herein called a “ Preliminary
Prospectus .” The Preliminary

                                                                         3
Prospectus, subject to completion, dated [  ], 2012, that was included in the Registration Statement immediately prior to the Applicable Time
is hereinafter called the “ Pricing Prospectus .” The final prospectus in the form first furnished to the Underwriters for use in the Offering is
hereinafter called the “ Prospectus .” Any reference to the “most recent Preliminary Prospectus” shall be deemed to refer to the latest
Preliminary Prospectus included in the Registration Statement.

         “ Applicable Time ” means [TIME] [a.m./p.m.], Eastern time, on the date of this Agreement.

         “ Issuer Free Writing Prospectus ” means any “issuer free writing prospectus,” as defined in Rule 433 of the Regulations (“
Rule 433 ”), including without limitation any “free writing prospectus” (as defined in Rule 405 of the Regulations) relating to the Public
Securities that is (i) required to be filed with the Commission by the Company, (ii) a “road show that is a written communication” within the
meaning of Rule 433(d)(8)(i), whether or not required to be filed with the Commission, or (iii) exempt from filing with the Commission
pursuant to Rule 433(d)(5)(i) because it contains a description of the Public Securities or of the Offering that does not reflect the final terms, in
each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s
records pursuant to Rule 433(g).

         “ Issuer General Use Free Writing Prospectus ” means any Issuer Free Writing Prospectus that is intended for general distribution
to prospective investors (other than a “ bona fide electronic road show,” as defined in Rule 433 (the “ Bona Fide Electronic Road Show ”)), as
evidenced by its being specified in Schedule 2-B hereto.

        “ Issuer Limited Use Free Writing Prospectus ” means any Issuer Free Writing Prospectus that is not an Issuer General Use Free
Writing Prospectus.

         “ Pricing Disclosure Package ” means any Issuer General Use Free Writing Prospectus issued at or prior to the Applicable Time, the
Pricing Prospectus and the information included on Schedule 2-A hereto, all considered together.

                   2.1.2.     Reporting Company under the Exchange Act . The Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act and files reports with the Commission on the EDGAR system. The Shares are registered pursuant to
Section 12(b) or 12(g) of the Exchange Act. The Company has taken no action designed to, or likely to have the effect of, terminating the
registration of the Shares under the Exchange Act, nor has the Company received any notification that the Commission is contemplating
terminating such registration except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

         2.2       Stock Exchange Listing . The Shares have been approved for listing on The Nasdaq Capital Market (the “ NasdaqCM ”)
subject to the completion of the Offering, and the Company has taken no action designed to, or likely to have the effect of, delisting the Shares
from the NasdaqCM, nor has the Company received any notification that the NasdaqCM is contemplating terminating such listing except as
described in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

         2.3        No Stop Orders, etc . Neither the Commission nor, to the Company’s knowledge, any state regulatory authority has issued
any order preventing or suspending the use of the Registration Statement, any Preliminary Prospectus or the Prospectus or has instituted or, to
the Company’s knowledge, threatened to institute, any proceedings with respect to such an order. The Company has complied with each
request (if any) from the Commission for additional information.

                                                                          4
         2.4        Disclosures in Registration Statement .

                  2.4.1.     Compliance with Act and 10b-5 Representation .

                             (i)       Each of the Registration Statement and any post-effective amendment thereto, at the time it became
effective, complied in all material respects with the requirements of the Act and the Regulations. Each Preliminary Prospectus, including the
prospectus filed as part of the Registration Statement as originally filed or as part of any amendment or supplement thereto, and the Prospectus,
at the time each was filed with the Commission, complied in all material respects with the requirements of the Act and the Regulations. Each
Preliminary Prospectus delivered to the Underwriters for use in connection with this Offering and the Prospectus was or will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

                           (ii)        Neither the Registration Statement nor any amendment thereto, at its effective time, as of the date of this
Agreement, at the Closing Date or at any Option Closing Date (if any), contained, contains or will contain an untrue statement of a material fact
or omitted, omits or will omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

                            (iii)      The Pricing Disclosure Package, as of the Applicable Time, as of the date of this Agreement, at the
Closing Date or at any Option Closing Date (if any), did not, does not and will not include an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
and each Issuer Limited Use Free Writing Prospectus hereto does not conflict with the information contained in the Registration Statement, any
Preliminary Prospectus, the Pricing Prospectus or the Prospectus, and each such Issuer Limited Use Free Writing Prospectus, as supplemented
by and taken together with the Pricing Prospectus as of the Applicable Time, did not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty shall not apply to statements made or statements omitted in reliance upon
and in conformity with written information furnished to the Company with respect to the Underwriters by the Representative expressly for use
in the Registration Statement, the Pricing Prospectus or the Prospectus or any amendment thereof or supplement thereto. The parties
acknowledge and agree that the information provided by or on behalf of any Underwriter consists solely of the disclosure contained in the last
paragraph of the cover page of the Prospectus, and the following sentences or paragraphs in the “Underwriting” section of the Prospectus: the
second paragraph, second sentence under the heading “Discounts”; the first paragraph under the heading “Stabilization” and each paragraph
under the heading “Offer restrictions outside the United States” (collectively, the “ Underwriters’ Information ”).

                              (iv)        Neither the Prospectus nor any amendment or supplement thereto (including any prospectus wrapper), as
of its issue date, at the time of any filing with the Commission pursuant to Rule 424(b), at the Closing Date or at any Option Closing Date,
included, includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to the Underwriters’ Information.

                   2.4.2.    Disclosure of Agreements . The agreements and instruments to which the Company is a party or by which it is or
may be bound described in the Registration Statement, the Pricing Disclosure Package and the Prospectus conform in all material respects to
the descriptions thereof contained therein and there are no agreements or other instruments required by the Act and the

                                                                         5
Regulations to be described in the Registration Statement, the Pricing Disclosure Package and the Prospectus or to be filed with the
Commission as exhibits to the Registration Statement, that have not been so described or filed. Each agreement or other instrument (however
characterized or described) to which the Company is a party or by which it is or may be bound or affected and (i) that is referred to in the
Registration Statement, the Pricing Disclosure Package and the Prospectus, or (ii) is material to the Company’s business, has been duly
authorized and validly executed by the Company, is in full force and effect in all material respects and is enforceable against the Company and,
to the Company’s knowledge, the other parties thereto, in accordance with its terms, except (x) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, (y) as enforceability of any indemnification or
contribution provision may be limited under the federal and state securities laws, and (z) that the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding
therefor may be brought. None of such agreements or instruments has been assigned by the Company, and neither the Company nor, to the
Company’s knowledge, any other party is in default thereunder and, to the best of the Company’s knowledge, no event has occurred that, with
the lapse of time or the giving of notice, or both, would constitute a default thereunder. To the Company’s knowledge, performance by the
Company of the material provisions of such agreements or instruments will not result in a violation of any existing applicable law, rule,
regulation, judgment, order or decree of any governmental agency or court, domestic or foreign, having jurisdiction over the Company or any
of its assets or businesses (each, a “ Governmental Entity ”), including, without limitation, those relating to environmental laws and
regulations.

                   2.4.3.      Prior Securities Transactions . No securities of the Company have been sold by the Company or by or on behalf
of, or for the benefit of, any person or persons controlling, controlled by or under common control with the Company, except as disclosed in the
Registration Statement.

                  2.4.4.     Regulations . The disclosures in the Registration Statement, the Pricing Disclosure Package and the Prospectus
concerning the effects of federal, state, local and all foreign regulation on the Company’s business as currently contemplated are correct in all
material respects and no other such regulations are required to be disclosed in the Registration Statement, the Pricing Disclosure Package and
the Prospectus under the Act and Regulations which are not so disclosed.

         2.5        Changes After Dates in Registration Statement .

                   2.5.1.      No Material Adverse Change . Since the respective dates as of which information is given in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, except as otherwise specifically stated therein: (i) there has been no material
adverse change in the financial position or results of operations of the Company and its subsidiaries, taken as a whole, nor any change or
development that, singularly or in the aggregate, would involve a material adverse change or a prospective material adverse change, in or
affecting the condition (financial or otherwise), results of operations, business, assets or prospects of the Company and its subsidiaries, taken as
a whole (a “ Material Adverse Effect ”); (ii) neither the Company nor any of its subsidiaries has entered into any transaction or agreement
(whether or not in the ordinary course of business) that is material to the Company and its subsidiaries taken as a whole or incurred any liability
or obligation, direct or contingent, that is material to the Company and its subsidiaries taken as a whole; (iii) neither the Company nor any of its
subsidiaries has sustained any loss or interference with its business that is material to the Company and its subsidiaries taken as a whole and
that is either from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor disturbance or dispute or any
action, order or decree of any court or arbitrator or governmental or regulatory authority; and(iv) no officer or director of the Company has
resigned from any position with the Company.

                                                                         6
                  2.5.2.      Recent Securities Transactions, etc . Subsequent to the respective dates as of which information is given in the
Registration Statement, the Pricing Disclosure Package and the Prospectus, and except as may otherwise be indicated or contemplated herein or
disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus or otherwise provided in Schedule 2.5.2, the
Company has not: (i) issued any securities or incurred any liability or obligation, direct or contingent, for borrowed money; or (ii) declared or
paid any dividend or made any other distribution on or in respect to its capital stock.

          2.6        Independent Accountants . To the knowledge of the Company, PMB Helin Donovan, LLP (the “ Auditor ”), whose report
is filed with the Commission as part of the Registration Statement, is an independent registered public accounting firm as required by the Act
and the Regulations and the Public Company Accounting Oversight Board. The Auditor has not, during the periods covered by the financial
statements included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, provided to the Company any non-audit
services that are prohibited by Section 10A(g) of the Exchange Act.

          2.7        Financial Statements, etc . The financial statements, including the notes thereto, included in the Registration Statement, the
Pricing Disclosure Package and the Prospectus, fairly present the financial position and the results of operations of the Company at the dates
and for the periods to which they apply; and such financial statements have been prepared in conformity with U.S. generally accepted
accounting principles (“ GAAP ”), consistently applied throughout the periods involved. Each of the Registration Statement, the Pricing
Disclosure Package and the Prospectus discloses all material off-balance sheet transactions, arrangements, obligations (including contingent
obligations), and other relationships of the Company with unconsolidated entities or other persons that may have a material current or future
effect on the Company’s financial condition, changes in financial condition, results of operations, liquidity, capital expenditures or capital
resources. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus (a) neither the Company nor
any of its direct and indirect subsidiaries, including each entity disclosed or described in the Registration Statement as being a subsidiary of the
Company (each, a “ Subsidiary ” and, collectively, the “ Subsidiaries ”), has incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions other than in the ordinary course of business, (b) the Company has not declared or paid any
dividends or made any distribution of any kind with respect to its capital stock, (c) there has not been any change in the capital stock of the
Company or any of its Subsidiaries or any grants under any stock compensation plan, and (d) there has not been any material adverse change in
the Company’s long-term or short-term debt.

         2.8        Authorized Capital; Options, etc . The Company had, at the date or dates indicated in the Registration Statement, the
Pricing Disclosure Package and the Prospectus, the duly authorized, issued and outstanding capitalization as set forth therein. Based on the
assumptions stated in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company will have on the Closing
Date the adjusted stock capitalization set forth therein. Except as set forth in, or contemplated by, the Registration Statement, the Pricing
Disclosure Package and the Prospectus, on the Effective Date and on the Closing Date, there will be no stock options, warrants, or other rights
to purchase or otherwise acquire any authorized, but unissued Shares of the Company or any security convertible or exercisable into Shares of
the Company, or any contracts or commitments to issue or sell Shares or any such options, warrants, rights or convertible securities.

                                                                         7
         2.9        Valid Issuance of Securities, etc.

                   2.9.1.      Outstanding Securities . All issued and outstanding securities of the Company issued prior to the transactions
contemplated by this Agreement have been duly authorized and validly issued and are fully paid and non-assessable; the holders thereof have
no rights of rescission with respect thereto, and no holder of the Public Securities is or will be subject to personal liability by reason of being
such a holder; and none of such securities were issued in violation of the preemptive rights of any holders of any security of the Company or
similar contractual rights granted by the Company. The authorized Shares conform in all material respects to all statements relating thereto
contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus. The offers and sales of the outstanding Shares were
at all relevant times either registered under the Act and the applicable state securities or “blue sky” laws or, based in part on the representations
and warranties of the purchasers of such Shares, exempt from such registration requirements.

                    2.9.2.    Securities Sold Pursuant to this Agreement . The Public Securities and Representative’s Securities have been duly
authorized for issuance and sale and, when issued and paid for, will be validly issued, fully paid and non-assessable; the holders thereof are not
and will not be subject to personal liability by reason of being such holders; the Public Securities and Representative’s Securities are not and
will not be subject to the preemptive rights of any holders of any security of the Company or similar contractual rights granted by the
Company; and all corporate action required to be taken by the Company for the authorization, issuance and sale of the Public Securities and
Representative’s Securities has been duly and validly taken. The Public Securities and Representative’s Securities conform in all material
respects to all statements with respect thereto contained in the Registration Statement, the Pricing Disclosure Package and the
Prospectus. When paid for and issued in accordance with the Representative’s Warrant Agreement, the underlying Shares will be validly
issued, fully paid and non-assessable; the holders thereof are not and will not be subject to personal liability by reason of being such holders;
the underlying Shares are not and will not be subject to the preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company; and all corporate action required to be taken by the Company for the authorization, issuance and
sale of the Representative’s Warrant Agreement has been duly and validly taken.

         2.10        Registration Rights of Third Parties . Except as set forth in the Registration Statement, the Pricing Disclosure Package and
the Prospectus or as otherwise waived, no holders of any securities of the Company or any rights exercisable for or convertible or exchangeable
into securities of the Company have the right to require the Company to register any such securities of the Company under the Act or to include
any such securities in a registration statement to be filed by the Company.

         2.11       Validity and Binding Effect of Agreements . This Agreement and the Representative’s Warrant Agreement have been duly
and validly authorized by the Company, and, when executed and delivered, will constitute, the valid and binding agreements of the Company,
enforceable against the Company in accordance with their respective terms, except: (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights generally; (ii) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws; and (iii) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may
be brought.

          2.12        No Conflicts, etc . The execution, delivery and performance by the Company of this Agreement, the Representative’s
Warrant Agreement and all ancillary documents, the consummation by the Company of the transactions herein and therein contemplated and
the compliance by the Company with the terms hereof and thereof do not and will not, with or without the giving of notice or the lapse of time
or both: (i) result in a material breach of, or conflict with any of the terms and provisions of, or

                                                                         8
constitute a material default under, or result in the creation, modification, termination or imposition of any lien, charge or encumbrance upon
any property or assets of the Company pursuant to the terms of any agreement or instrument to which the Company is a party; (ii) result in any
violation of the provisions of the Company’s Certificate of Incorporation (as the same may be amended or restated from time to time, the “
Charter ”) or the by-laws of the Company; or (iii) violate any existing applicable law, rule, regulation, judgment, order or decree of any
governmental agency or court, domestic or foreign, having jurisdiction over the Company or any of its properties or business constituted as of
the date hereof.

         2.13      No Defaults; Violations . No material default exists in the due performance and observance of any term, covenant or
condition of any material license, contract, indenture, mortgage, deed of trust, note, loan or credit agreement, or any other agreement or
instrument evidencing an obligation for borrowed money, or any other material agreement or instrument to which the Company is a party or by
which the Company may be bound or to which any of the properties or assets of the Company is subject. The Company is not in violation of
any term or provision of its Charter, or in violation of any franchise, license, permit, applicable law, rule, regulation, judgment or decree of any
Governmental Entity material to the Company’s business.

         2.14       Corporate Power; Licenses; Consents .

                   2.14.1.     Conduct of Business . Except as described in the Registration Statement, the Pricing Disclosure Package and the
Prospectus, the Company has all requisite corporate power and authority, and has all necessary authorizations, approvals, orders, licenses,
certificates and permits of and from all governmental regulatory officials and bodies that it needs as of the date hereof to conduct its business
purpose as described in the Prospectus. The disclosures in the Registration Statement, the Pricing Disclosure Package and the Prospectus
concerning the effects of federal, state, local and foreign regulation on the Offering and the Company’s business as currently contemplated are
correct in all material respects.

                   2.14.2.    Transactions Contemplated Herein . The Company has all corporate power and authority to enter into this
Agreement and to carry out the provisions and conditions hereof, and all consents, authorizations, approvals and orders required by the
Company to be obtained prior to the Closing Date have been obtained. No consent, authorization or order applicable to the Company, and no
filing with, any court, government agency or other body by the Company is required for the valid issuance, sale and delivery of the Shares and
the consummation by the Company of the transactions and agreements contemplated by this Agreement and the Representative’s Warrant
Agreement and as contemplated by the Registration Statement, the Pricing Disclosure Package and the Prospectus, except with respect to
applicable federal and state securities laws and the rules and regulations of the Financial Industry Regulatory Authority, Inc. (“ FINRA ”).

          2.15       D&O Questionnaires . To the Company’s knowledge, all information contained in the questionnaires (the “
Questionnaires ”) completed by each of the Company’s directors and officers immediately prior to the Offering (the “ Insiders ”) as
supplemented by all information concerning the Company’s directors, officers and principal shareholders as described in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, as well as in the Lock-Up Agreement, provided to the Underwriters is true and
correct in all respects and the Company has not become aware of any information which would cause the information disclosed in the
Questionnaires to become inaccurate and incorrect.

       2.16       Litigation; Governmental Proceedings . There is no action, suit, proceeding, inquiry, arbitration, investigation, litigation or
governmental proceeding pending or, to the Company’s knowledge, threatened against, or involving the Company or, to the Company’s
knowledge, any executive officer or director which has not been disclosed in the Registration Statement, the Pricing Disclosure Package and

                                                                         9



the Prospectus or in connection with the Company’s listing application for the trading of the Shares on the NasdaqCM.

          2.17           Good Standing . The Company has been duly organized and is validly existing as a corporation and is in good standing
under the laws of the State of Delaware as of the date hereof, and is duly qualified to do business and is in good standing in each other
jurisdiction in which its ownership or lease of property or the conduct of business requires such qualification, except where the failure to
qualify, singularly or in the aggregate, would not have a material adverse effect on the assets, business or operations of the Company.

         2.18            Insurance . The Company carries or is entitled to the benefits of insurance, with reputable insurers, in such amounts
and covering such risks which the Company believes are adequate, and all such insurance is in full force and effect. The Company has no
reason to believe that it will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain
comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that
would not result in a material adverse change in the condition, financial or otherwise, or business prospects of the Company.

         2.19           Transactions Affecting Disclosure to FINRA .
                  2.19.1.      Finder’s Fees . Except as described in the Registration Statement, the Pricing Disclosure Package and the
Prospectus, there are no claims, payments, arrangements, agreements or understandings relating to the payment of a finder’s, consulting or
origination fee by the Company or any Insider with respect to the sale of the Shares hereunder or any other arrangements, agreements or
understandings of the Company or, to the Company’s knowledge, any of its shareholders that may affect the Underwriters’ compensation, as
determined by FINRA.

                  2.19.2.       Payments Within Twelve (12) Months . Except as described in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, during the one year period ending on the Effective Date, the Company has not made any direct or
indirect payments (in cash, securities or otherwise) to: (i) any person, as a finder’s fee, consulting fee or otherwise, in consideration of such
person raising capital for the Company or introducing to the Company persons who raised or provided capital to the Company; (ii) any FINRA
member; or (iii) any person or entity that has any direct or indirect affiliation or association with any FINRA member other than the payment
to the Underwriters as provided hereunder in connection with the Offering.

                  2.19.3.        Use of Proceeds . None of the net proceeds of the Offering will be paid by the Company to any FINRA
member or its affiliates participating in the Offering, except as described in the Registration Statement, the Pricing Disclosure Package or the
Prospectus or as specifically contemplated or authorized herein.

                   2.19.4.       FINRA Affiliation . No officer, director or any beneficial owner holding at least 5% of the Company’s
unregistered securities has any direct or indirect affiliation or association with any FINRA member (as determined in accordance with the
rules and regulations of FINRA). For 180 days following the Effective Date, the Company will advise the Representative and Representative
Counsel if it learns that any officer, director or owner of at least 5% of the Company’s outstanding Shares (or securities convertible or
exercisable into Shares) is or becomes an affiliate or associated person of a FINRA member participating in the Offering.

                   2.19.5.     Information . All information provided by the Company in its FINRA Questionnaire to Representative Counsel
specifically for use by Representative Counsel in connection

                                                                        10
with its COBRADesk filings (and related disclosure) with FINRA is true, correct and complete in all material respects.

          2.20            Foreign Corrupt Practices Act . None of the Company and its Subsidiaries or, to the Company’s knowledge, any
director, officer, agent, employee or affiliates of the Company and its Subsidiaries or any other person acting on behalf of the Company and its
Subsidiaries, has, directly or indirectly, given or agreed to give any money, gift or similar benefit (other than legal price concessions to
customers in the ordinary course of business) to any customer, supplier, employee or agent of a customer or supplier, or official or employee of
any governmental agency or instrumentality of any government (domestic or foreign) or any political party or candidate for office (domestic or
foreign) or other person who was, is, or may be in a position to help or hinder the business of the Company (or assist it in connection with any
actual or proposed transaction) that (i) would subject the Company to any damage or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, might have had Material Adverse Effect as reflected in any of the financial statements contained in the
Prospectus or (iii) if not continued in the future, might have a Material Adverse Effect. The Company has taken reasonable steps to ensure that
its accounting controls and procedures are sufficient to cause the Company to comply in all material respects with the Foreign Corrupt
Practices Act of 1977, as amended.

          2.21           Compliance with OFAC . None of the Company and its Subsidiaries or, to the Company’s knowledge, any director,
officer, agent, employee or affiliate of the Company and its Subsidiaries or any other person acting on behalf of the Company and its
Subsidiaries, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the
Treasury (“ OFAC ”), and the Company will not, directly or indirectly, use the proceeds of the Offering hereunder, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions administered by OFAC.

         2.22            Money Laundering Laws . The operations of the Company and its Subsidiaries are and have been conducted at all times
in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any Governmental Entity (collectively, the “ Money Laundering Laws ”); and
no action, suit or proceeding by or before any Governmental Entity involving the Company with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company, threatened.

         2.23           [ Intentionally Omitted .]

        2.24          Officers’ Certificate . Any certificate signed by any duly authorized officer of the Company and delivered to you or to
Representative Counsel shall be deemed a representation and warranty by the Company to the Underwriters as to the matters covered thereby.

         2.25           Lock-Up Agreements.

                   2.25.1.       Schedule 3 hereto contains a complete and accurate list of the Company’s officers, directors and each owner of
at least 5% of the Company’s outstanding Shares (or securities convertible or exercisable into Shares) (collectively, the “ Lock-Up Parties
”). The Company has caused each of the Lock-Up Parties to deliver to the Representative executed Lock-Up Agreements, in the form attached
hereto as Exhibit B , prior to the execution of this Agreement.

                  2.25.2.         The Company, on behalf of itself and any successor entity, has agreed that, without the prior written consent of
the Representative, it will not, for a period of 90 days after the

                                                                        11
effective date of the Registration Statement (the “ Lock-Up Period ”), (i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of
capital stock of the Company; (ii) file or cause to be filed any registration statement with the Commission relating to the offering of any shares
of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company; or
(iii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of
capital stock of the Company, whether any such transaction described in clause (i), (ii) or (iii) above is to be settled by delivery of shares of
capital stock of the Company or such other securities, in cash or otherwise.

                   The restrictions contained in this Section 2.25.2 shall not apply to (i) the Shares to be sold hereunder, (ii) the issuance by the
Company of Shares upon the exercise of a stock option or warrant or the conversion of a security outstanding on the date hereof, of which the
Representative has been advised in writing or (iii) the issuance by the Company of stock options or shares of capital stock of the Company
under any equity compensation plan of the Company.

                   2.25.3.      Notwithstanding the foregoing, if (i) during the last 17 days of the Lock-Up Period, the Company issues an
earnings release or material news or a material event relating to the Company occurs, or (ii) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results or becomes aware that material news or a material event will occur during the 16-day
period beginning on the last day of the Lock-Up Period, the restrictions imposed by the foregoing Section 2.25.2 shall continue to apply until
the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of such material news or material event,
as applicable, unless the Representative waives, in writing, such extension.

         2.26           Subsidiaries . All direct and indirect Subsidiaries of the Company are duly organized and in good standing under the
laws of the place of organization or incorporation, and each Subsidiary is in good standing in each jurisdiction in which its ownership or lease
of property or the conduct of business requires such qualification, except where the failure to qualify would not have a Material Adverse
Effect. The Company’s ownership and control of each Subsidiary is as described in the Registration Statement, the Pricing Disclosure Package
and the Prospectus.

         2.27          Related Party Transactions . There are no business relationships or related party transactions involving the Company or
any other person required to be described in the Registration Statement, the Pricing Disclosure Package and the Prospectus pursuant to the Act
and Regulations that have not been described as required.

          2.28          Board of Directors . The Board of Directors of the Company is comprised of the persons set forth under the heading of
the Pricing Prospectus and the Prospectus captioned “Management.” The qualifications of the persons serving as board members and the
overall composition of the board comply with the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder (the “ Sarbanes-Oxley
Act ”) applicable to the Company and the listing rules of the Nasdaq Stock Market LLC. At least one member of the Audit Committee of the
Board of Directors of the Company qualifies as a “financial expert,” as such term is defined under the Sarbanes-Oxley Act and the listing
rules of the Nasdaq Stock Market LLC. In addition, at least a majority of the persons serving on the Board of Directors qualify as
“independent,” as defined under the listing rules of the Nasdaq Stock Market LLC.

         2.29           Sarbanes-Oxley Compliance .

                  2.29.1.     Disclosure Controls . The Company has developed and currently maintains disclosure controls and procedures
that will comply with Rule 13a-15 or 15d-15 under the Exchange Act, and such controls and procedures are effective to ensure that all material
information concerning the

                                                                         12
Company will be made known on a timely basis to the individuals responsible for the preparation of the Company’s Exchange Act filings and
other public disclosure documents.

                 2.29.2.      Compliance . The Company is, or on the Effective Date will be, in material compliance with the provisions of
the Sarbanes-Oxley Act applicable to it, and has implemented or will implement such programs and taken reasonable steps to ensure the
Company’s future compliance (not later than the relevant statutory and regulatory deadlines therefor) with all of the material provisions of the
Sarbanes-Oxley Act applicable to the Company.

          2.30           Accounting Controls . The Company and its Subsidiaries maintain systems of “internal control over financial reporting”
(as defined under Rules 13-a15 and 15d-15 under the Exchange Act) that comply with the requirements of the Exchange Act and have been
designed by, or under the supervision of, their respective principal executive and principal financial officers, or persons performing similar
functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with GAAP, including, but not limited to, internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only
in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as disclosed in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, the Company is not aware of any material weaknesses in its internal
controls. The Company’s auditors and the Audit Committee of the Board of Directors of the Company have been advised of: (i) all significant
deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are known to the Company’s
management and that have adversely affected or are reasonably likely to adversely affect the Company’ ability to record, process, summarize
and report financial information; and (ii) any fraud known to the Company’s management, whether or not material, that involves management
or other employees who have a significant role in the Company’s internal controls over financial reporting.

        2.31           No Investment Company Status . The Company is not and, after giving effect to the Offering and the application of the
proceeds thereof as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, will not be, an “investment
company,” as defined in the Investment Company Act of 1940, as amended.

       2.32          No Labor Disputes . No labor dispute with the employees of the Company or any of its Subsidiaries exists or, to the
knowledge of the Company, is imminent.

          2.33           Intellectual Property . The Company and each of its Subsidiaries owns or possesses or has valid rights to use all
patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses,
inventions, trade secrets and similar rights (“ Intellectual Property ”) necessary for the conduct of the business of the Company and its
Subsidiaries as currently carried on and as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus. To the
knowledge of the Company, no action or use by the Company or any of its Subsidiaries will involve or give rise to any infringement of, or
license or similar fees for, any Intellectual Property of others. Neither the Company nor any of its Subsidiaries has received any notice
alleging or is otherwise aware of any such infringement or fee with respect to any Intellectual property which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company or any of its Subsidiaries therein, other than such notices that would not
reasonably be expected to result in a Material Adverse Effect.

                                                                        13
          2.34           Taxes . Each of the Company and its Subsidiaries has filed all returns (as hereinafter defined) required to be filed with
taxing authorities prior to the date hereof or has duly obtained extensions of time for the filing thereof. Each of the Company and its
Subsidiaries has paid all taxes (as hereinafter defined) shown as due on such returns that were filed and has paid all taxes imposed on or
assessed against the Company or such respective Subsidiary. The provisions for taxes payable, if any, shown on the financial statements filed
with or as part of the Registration Statement are sufficient for all accrued and unpaid taxes, whether or not disputed, and for all periods to and
including the dates of such consolidated financial statements. Except as disclosed in writing to the Underwriters, (i) no issues have been raised
(and are currently pending) by any taxing authority in connection with any of the returns or taxes asserted as due from the Company or its
Subsidiaries, and (ii) no waivers of statutes of limitation with respect to the returns or collection of taxes have been given by or requested from
the Company or its Subsidiaries. The term “ taxes ” mean all federal, state, local, foreign and other net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatever,
together with any interest and any penalties, additions to tax or additional amounts with respect thereto. The term “ returns ” means all
returns, declarations, reports, statements and other documents required to be filed in respect to taxes.

          2.35           Environmental Matters . Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the
Prospectus, the Company and its Subsidiaries (i) are in compliance in all material respects with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health and safety, including, without limitation, those relating to occupational
safety and health, the environment or hazardous or toxic substances or wastes, pollutants or contaminants, including, without limitation, those
relating to the storage, handling or transportation of hazardous or toxic materials (collectively, “ Environmental Laws ”) and (ii) are in
compliance in all material respects with all terms and conditions of any such permit, license or approval relating thereto. The Company, in its
reasonable judgment, has concluded that any costs or liabilities associated with Environmental Laws (including, without limitation, any capital
or operating expenditures required for cleanup, closure of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential liabilities to third parties) would not, singly or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.

        2.36          Ineligible Issuer . As of the time of filing of the Registration Statement, as of the date of this Agreement and as of the
Closing Date or any Option Closing Date, the Company was not, is not, and will not be, an “ineligible issuer” as defined in Rule 405 under the
Act.

         2.37         Smaller Reporting Company . As of the time of filing of the Registration Statement, the Company was a “smaller
reporting company,” as defined in Rule 12b-2 of the Exchange Act.

          2.38          Industry Data . The statistical and market-related data included in each of the Registration Statement, the Pricing
Disclosure Package and the Prospectus are based on or derived from sources that the Company reasonably and in good faith believes are
reliable and accurate or represent the Company’s good faith estimates that are made on the basis of data derived from such sources.

        2.39            Reverse Stock Split . The Company has taken all necessary corporate action to effectuate a reverse stock split of the
Shares on the basis of one (1) such Share for each [  ] ([  ]) issued and outstanding Shares thereof (the “ Reverse Stock Split ”).

        2.40           Conversion of Preferred Stock . The Company has received the necessary stockholder approval and has taken all
necessary corporate action to effectuate a conversion of all of the issued and outstanding preferred stock of the Company into Shares (the “
Preferred Conversion ”).

                                                                        14
3.              Covenants of the Company . The Company covenants and agrees as follows:

         3.1             Amendments to Registration Statement . The Company shall deliver to the Representative, prior to filing, any
amendment or supplement to the Registration Statement or Prospectus proposed to be filed after the Effective Date and, except as otherwise
required by law, not file any such amendment or supplement to which the Representative shall reasonably object in writing.

         3.2            Federal Securities Laws .

                    3.2.1.          Compliance . The Company, subject to Section 3.2.2, shall comply with the requirements of Rule 430A of the
Regulations, and will notify the Representative promptly, and confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective or any amendment or supplement to the Prospectus shall have been filed; (ii) of the receipt of
any comments from the Commission; (iii) of any request by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information; (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or any post-effective amendment or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, or of the suspension of the qualification of the Public Securities and Representative’s Securities for
offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes or of any examination
pursuant to Section 8(d) or 8(e) of the Act concerning the Registration Statement and (v) if the Company becomes the subject of a proceeding
under Section 8A of the Act in connection with the Offering of the Public Securities and Representative’s Securities. The Company shall effect
all filings required under Rule 424(b) of the Regulations, in the manner and within the time period required by Rule 424(b) (without reliance on
Rule 424(b)(8)), and shall take such steps as it deems necessary to ascertain promptly whether the form of prospectus transmitted for filing
under Rule 424(b) was received for filing by the Commission and, in the event that it was not, it will promptly file such prospectus. The
Company shall use its best efforts to prevent the issuance of any stop order, prevention or suspension and, if any such order is issued, to obtain
the lifting thereof at the earliest possible moment.

                    3.2.2.        Continued Compliance . The Company shall comply with the Act and the Regulations so as to permit the
completion of the distribution of the Public Securities as contemplated in this Agreement and in the Registration Statement, the Pricing
Disclosure Package and the Prospectus. If at any time when a prospectus relating to the Public Securities is (or, but for the exception afforded
by Rule 172 of the Regulations (“ Rule 172 ”), would be) required by the Act to be delivered in connection with sales of the Public Securities,
any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the
Company, to (i) amend the Registration Statement in order that the Registration Statement will not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) amend or
supplement the Pricing Disclosure Package or the Prospectus in order that the Pricing Disclosure Package or the Prospectus, as the case may
be, will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is delivered to a purchaser or (iii) amend the Registration Statement or amend
or supplement the Pricing Disclosure Package or the Prospectus, as the case may be, in order to comply with the requirements of the Act or the
Regulations, the Company will promptly (A) give the Representatives notice of such event; (B) prepare any amendment or supplement as may
be necessary to correct such statement or omission or to make the Registration Statement, the Pricing Disclosure Package or the Prospectus
comply with such requirements and, a reasonable amount of time prior to any proposed filing or use, furnish the Representatives with copies of
any such amendment or supplement and (C) file with the Commission any such amendment or supplement; provided that the Company shall
not file or use any such amendment or supplement to which the Representatives or counsel for the Underwriters shall reasonably object. The
Company will furnish to

                                                                        15
the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request. The Company has
given the Representatives notice of any filings made pursuant to the Exchange Act or the regulations promulgated thereunder within 48 hours
prior to the Applicable Time; the Company will give the Representatives notice of its intention to make any such filing from the Applicable
Time to the Closing Date and will furnish the Representatives with copies of any such documents a reasonable amount of time prior to such
proposed filing, as the case may be, and will not file or use any such document to which the Representatives or counsel for the Underwriters
shall reasonably object.

                 3.2.3.      Filing of Final Prospectus . The Company shall file the Prospectus (in form and substance satisfactory to the
Representative) with the Commission pursuant to the requirements of Rule 424 of the Regulations.

                   3.2.4.         Exchange Act Registration . For a period of three (3) years after the Effective Date, the Company (a) shall use
its best efforts to maintain the registration of the Shares and (b) shall not voluntarily deregister the Shares under the Exchange Act without the
prior written consent of the Representative.

                   3.2.5.       Free Writing Prospectuses . The Company agrees that, unless it obtains the prior written consent of the
Representative, it shall not make any offer relating to the Public Securities that would constitute an Issuer Free Writing Prospectus or that
would otherwise constitute a “free writing prospectus,” or a portion thereof, required to be filed by the Company with the Commission or
retained by the Company under Rule 433; provided that the Representative shall be deemed to have consented to each Issuer General Use Free
Writing Prospectus hereto and any “road show that is a written communication” within the meaning of Rule 433(d)(8)(i) that has been
reviewed by the Representative. The Company represents that it has treated or agrees that it will treat each such free writing prospectus
consented to, or deemed consented to, by the Underwriters as an “issuer free writing prospectus,” as defined in Rule 433, and that it has
complied and will comply with the applicable requirements of Rule 433 with respect thereto, including timely filing with the Commission
where required, legending and record keeping. If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs
an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in
the Registration Statement or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances existing at that subsequent time, not misleading, the
Company will promptly notify the Underwriters and will promptly amend or supplement, at its own expense, such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement or omission.

         3.3             Delivery to the Underwriters of Registration Statements . The Company has delivered or made available or shall
deliver or make available to the Representative and counsel for the Representatives, without charge, signed copies of the Registration
Statement as originally filed and each amendment thereto (including exhibits filed therewith) and signed copies of all consents and certificates
of experts, and will also deliver to the Underwriters, without charge, a conformed copy of the Registration Statement as originally filed and
each amendment thereto (without exhibits) for each of the Underwriters. The copies of the Registration Statement and each amendment thereto
furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR,
except to the extent permitted by Regulation S-T.

         3.4           Delivery to the Underwriters of Prospectuses . The Company has delivered or made available or will deliver or make
available to each Underwriter, without charge, as many copies of each Preliminary Prospectus as such Underwriter reasonably requested, and
the Company hereby consents to the use of such copies for purposes permitted by the Act. The Company will furnish to each Underwriter,

                                                                        16
without charge, during the period when a prospectus relating to the Public Securities is (or, but for the exception afforded by Rule 172 of the
Regulations, would be) required to be delivered under the Act, such number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.

           3.5             Effectiveness and Events Requiring Notice to the Representative . The Company shall use its best efforts to cause the
Registration Statement to remain effective with a current prospectus for at least nine (9) months after the Applicable Time, and shall notify the
Representative immediately and confirm the notice in writing: (i) of the effectiveness of the Registration Statement and any amendment
thereto; (ii) of the issuance by the Commission of any stop order or of the initiation, or the threatening, of any proceeding for that purpose;
(iii) of the issuance by any state securities commission of any proceedings for the suspension of the qualification of the Shares for offering or
sale in any jurisdiction or of the initiation, or the threatening, of any proceeding for that purpose; (iv) of the mailing and delivery to the
Commission for filing of any amendment or supplement to the Registration Statement or Prospectus; (v) of the receipt of any comments or
request for any additional information from the Commission; and (vi) of the happening of any event during the period described in this
Section 3.5 that, in the judgment of the Company, makes any statement of a material fact made in the Registration Statement, the Pricing
Disclosure Package or the Prospectus untrue or that requires the making of any changes in (a) the Registration Statement in order to make the
statements therein not misleading, or (b) in the Pricing Disclosure Package or the Prospectus in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. If the Commission or any state securities commission shall enter a stop order
or suspend such qualification at any time, the Company shall make every reasonable effort to obtain promptly the lifting of such order.

         3.6              Review of Financial Statements. For a period of five (5) years after the Effective Date, the Company, at its expense,
shall cause its regularly engaged independent registered public accounting firm to review (but not audit) the Company’s financial statements
for each of the three fiscal quarters immediately preceding the announcement of any quarterly financial information.

        3.7              Listing . The Company shall use its best efforts to maintain the listing of the Shares (including the Public Securities)
on the NasdaqCM.

          3.8            Secondary Market Trading and Standard & Poor’s . The Company shall apply to be included in Standard & Poor’s
Daily News and Corporation Records Corporate Descriptions for a period of five (5) years immediately after the Effective Date. Additionally,
the Company shall take such steps as may be necessary to obtain a secondary market trading exemption for the Company’s securities in such
jurisdictions as may be requested by the Representative; provided, however, that no qualification shall be required in any jurisdiction where, as
a result thereof, the Company would be subject to service of general process or to taxation as a foreign corporation doing business in such
jurisdiction. The Company shall also take such other action as may be reasonably requested by the Representative to obtain a secondary
market trading exemption in such other states as may be requested by the Representative.

          3.9            Financial Public Relations Firm . As of the Effective Date, the Company shall have retained a financial public
relations firm reasonably acceptable to the Representative and the Company, which shall initially be Martin E. Janis & Company, Inc., which
firm shall be experienced in assisting issuers in initial public offerings of securities and in their relations with their security holders, and shall
retain such firm or another firm reasonably acceptable to the Representative for a period of not less than two (2) years after the Effective Date.

                                                                          17
         3.10           Reports to the Representative .

                   3.10.1.       Periodic Reports, etc . For a period of three (3) years after the Effective Date, the Company shall furnish to the
Representative copies of such financial statements and other periodic and special reports as the Company from time to time furnishes generally
to holders of any class of its securities and also promptly furnish to the Representative: (i) a copy of each periodic report the Company shall be
required to file with the Commission; (ii) a copy of every press release which was released by the Company; (iii) a copy of each Form 8-K
prepared and filed by the Company; (iv) five copies of each registration statement filed by the Company under the Act; and (v) such additional
documents and information with respect to the Company and the affairs of any future subsidiaries of the Company as the Representative may
from time to time reasonably request; provided the Representative shall sign, if requested by the Company, a Regulation FD compliant
confidentiality agreement which is reasonably acceptable to the Company and the Representative and Representative Counsel in connection
with the Representative’s receipt of such information. Documents filed with the Commission pursuant to its EDGAR system or made available
on the Company’s website shall be deemed to have been delivered to the Representative pursuant to this Section 3.10.1.

                    3.10.2.      Transfer Agent; Transfer Sheets . For a period of three (3) years after the Effective Date, the Company shall
retain a transfer agent and registrar acceptable to the Representative (the “ Transfer Agent ”) and shall furnish to the Representative at the
Company’s sole cost and expense such transfer sheets of the Company’s securities as the Representative may reasonably request, including the
daily and monthly consolidated transfer sheets of the Transfer Agent and DTC. American Stock Transfer & Trust Company, LLC is
acceptable to the Representative to act as Transfer Agent for the Shares.

                   3.10.3.      Trading Reports . During such time as the Public Securities are listed on the NasdaqCM, the Company shall
provide to the Representative, at the Company’s expense, such reports published by NasdaqCM relating to price trading of the Public
Securities, as the Representative shall reasonably request.

         3.11           Payment of Expenses

                    3.11.1.      General Expenses Related to the Offering . The Company hereby agrees to pay on each of the Closing Date
and the Option Closing Date, if any, to the extent not paid at the Closing Date, all expenses incident to the performance of the obligations of the
Company under this Agreement, including, but not limited to: (a) all filing fees and communication expenses of the Company relating to the
registration of the Shares to be sold in the Offering (including the Option Shares) with the Commission; (b) all COBRADesk filing fees
associated with the review of the Offering by FINRA; (c) all fees and expenses relating to the listing of such Shares on the NasdaqCM and such
other stock exchanges as the Company and the Representative together determine; (d) all fees, expenses and disbursements relating to
background checks of the Company’s officers and directors in an amount not to exceed $5,000 per individual (or $[              ] in the aggregate);
(e) all fees, expenses and disbursements relating to the registration or qualification of such Shares under the “blue sky” securities laws of such
states and other jurisdictions as the Representative may reasonably designate (including, without limitation, all filing and registration fees, and
the reasonable fees and disbursements of “blue sky” counsel, it being agreed that such fees and expenses will be limited to $10,000 in the
aggregate); (f) all fees, expenses and disbursements relating to the registration, qualification or exemption of such Shares under the securities
laws of such foreign jurisdictions as the Representative may reasonably designate; (g) the costs of all mailing and printing of the underwriting
documents (including, without limitation, the Underwriting Agreement, any Blue Sky Surveys and, if appropriate, any Agreement Among
Underwriters, Selected Dealers’ Agreement, Underwriters’ Questionnaire and Power of Attorney), Registration Statements, Prospectuses and
all amendments, supplements and exhibits thereto and as many preliminary and final Prospectuses as the Representative may reasonably deem
necessary; (h) the costs and expenses of the public relations firm referred to in Section 3.9 hereof; (i) the costs of preparing, printing and
delivering

                                                                        18
certificates representing the Shares; (j) fees and expenses of the transfer agent for the Shares; (k) stock transfer and/or stamp taxes, if any,
payable upon the transfer of securities from the Company to the Underwriters; (l) the costs associated with public commemorative mementos
and lucite tombstones, each of which the Company or its designee shall provide within a reasonable time after the Closing in such quantities as
the Representative may reasonably request; (m) the fees and expenses of the Company’s accountants; (n) the fees and expenses of the
Company’s legal counsel and other agents and representatives; (o) the $20,000 cost associated with the Underwriter’s use of Ipreo’s
book-building, prospectus tracking and compliance software for the Offering; and (p) up to $20,000 of the Underwriter’s actual accountable
“road show” expenses for the Offering. The Representative may, with the Company’s prior written consent, deduct from the net proceeds of
the Offering payable to the Company on the Closing Date, or the Option Closing Date, if any, the expenses set forth herein to be paid by the
Company to the Underwriters.

                  3.11.2.       Non-accountable Expenses . The Company further agrees that, in addition to the expenses payable pursuant to
Section 3.11.1, on the Closing Date it shall pay to the Representative, by deduction from the net proceeds of the Offering contemplated herein,
a non-accountable expense allowance equal to one percent (1%) of the gross proceeds received by the Company from the sale of the Firm
Shares, less $50,000, provided, however, that in the event that the Offering is terminated, the Company agrees to reimburse the Underwriters
pursuant to Section 8.3 hereof.

         3.12           Application of Net Proceeds . The Company shall apply the net proceeds from the Offering received by it in a manner
consistent with the application thereof described under the caption “Use of Proceeds” in the Prospectus.

         3.13            Delivery of Earnings Statements to Security Holders . The Company shall make generally available to its security
holders as soon as practicable, but not later than the first day of the fifteenth (15 th ) full calendar month following the Effective Date, an
earnings statement (which need not be certified by independent registered public accountants unless required by the Act or the Regulations, but
which shall satisfy the provisions of Rule 158(a) under Section 11(a) of the Act) covering a period of at least twelve (12) consecutive months
beginning after the Effective Date.

         3.14           Stabilization . Neither the Company nor, to its knowledge, any of its employees, directors or shareholders (without the
consent of the Representative) has taken or shall take, directly or indirectly, any action designed to or that has constituted or that might
reasonably be expected to cause or result in, under Regulation M of the Exchange Act, or otherwise, stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the Shares.

          3.15            Internal Controls . The Company shall maintain a system of internal accounting controls sufficient to provide
reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions
are recorded as necessary in order to permit preparation of financial statements in accordance with GAAP and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

         3.16          Accountants . As of the Effective Date, the Company shall retain an independent registered public accounting firm
reasonably acceptable to the Representative, and the Company shall continue to retain a nationally recognized independent registered public
accounting firm for a period of at least three (3) years after the Effective Date. The Representative acknowledges that the Auditor is acceptable
to the Representative.

                                                                        19



         3.17       FINRA . For 180 days following the Effective Date, the Company shall advise the Representative (who shall make an
appropriate filing with FINRA) if it is or becomes aware that (i) any officer or director of the Company, (ii) any beneficial owner of 5% or
more of any class of the Company’s securities or (iii) any beneficial owner of the Company’s unregistered equity securities which were
acquired during the 180-day period immediately preceding the filing of the Registration Statement is or becomes an affiliate or associated
person of a FINRA member participating in the Offering (as determined in accordance with the rules and regulations of FINRA).

         3.18       No Fiduciary Duties . The Company acknowledges and agrees that the Underwriters’ responsibility to the Company is
solely contractual in nature and that none of the Underwriters or their affiliates or any selling agent shall be deemed to be acting in a fiduciary
capacity, or otherwise owes any fiduciary duty to the Company or any of its affiliates in connection with the Offering and the other transactions
contemplated by this Agreement.

          3.19       Release of D&O Lock-up Period . If the Representative, in its sole discretion, agrees to release or waive the restrictions set
forth in the Lock-Up Agreement described in Section 2.25.1 hereof for an officer, director of the Company and provide the Company with
notice of the impending release or waiver at least three (3) Business Days before the effective date of the release or waiver, the Company
agrees to announce the impending release or waiver by a press release substantially in the form of Exhibit C hereto through a major news
service at least two (2) Business Days before the effective date of the release or waiver.
         3.20       Blue Sky Qualifications . The Company shall use its best efforts, in cooperation with the Underwriters, if necessary, to
qualify the Public Securities for offering and sale under the applicable securities laws of such states and other jurisdictions (domestic or
foreign) as the Representative may designate and to maintain such qualifications in effect so long as required to complete the distribution of the
Public Securities; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.

4.         Conditions of Underwriters’ Obligations . The obligations of the Underwriters to purchase and pay for the Shares, as provided
herein, shall be subject to (i) the continuing accuracy of the representations and warranties of the Company as of the date hereof and as of each
of the Closing Date and the Option Closing Date, if any; (ii) the accuracy of the certifications made by officers of the Company pursuant to the
provisions hereof; (iii) the performance by the Company of its obligations hereunder; and (iv) the following conditions:

         4.1        Regulatory Matters .

                    4.1.1.    Effectiveness of Registration Statement; Rule 430A Information . The Registration Statement has become
effective not later than 5:00 p.m., Eastern time, on the date of this Agreement or such later date and time as shall be consented to in writing by
you, and, at each of the Closing Date and any Option Closing Date, no stop order suspending the effectiveness of the Registration Statement or
any post-effective amendment thereto has been issued under the Act, no order preventing or suspending the use of any Preliminary Prospectus
or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to the Company’s
knowledge, contemplated by the Commission. The Company has complied with each request (if any) from the Commission for additional
information. A prospectus containing the Rule 430A Information shall have been filed with the Commission in the manner and within the time
frame required by Rule 424(b) under the Regulations (without reliance on Rule 424(b)(8)) or a post-effective amendment providing such

                                                                           20
information shall have been filed with, and declared effective by, the Commission in accordance with the requirements of Rule 430A under the
Regulations.

               4.1.2.     FINRA Clearance . By the Effective Date, the Representative shall have received clearance from FINRA as to the
amount of compensation allowable or payable to the Underwriters as described in the Registration Statement.

                  4.1.3.    NasdaqCM Stock Market Clearance . On the Closing Date, the Company’s Shares, including the Firm Shares,
shall have been approved for listing on the NasdaqCM. On the first Option Closing Date (if any), the Company’s Shares, including the Option
Shares, shall have been approved for listing on the NasdaqCM.

         4.2       Company Counsel Matters .

                  4.2.1.    Closing Date Opinion of Counsel . On the Closing Date, the Representative shall have received the favorable
opinion of Pillsbury Winthrop Shaw Pittman LLP, dated the Closing Date and addressed to the Representative, covering the matters set forth in
Schedule 4:

                   4.2.2.    Option Closing Date Opinions of Counsel . On the Option Closing Date, if any, the Representative shall have
received the favorable opinion of counsel listed in Section 4.2.1, dated the Option Closing Date, addressed to the Representative and in form
and substance reasonably satisfactory to the Representative, confirming as of the Option Closing Date, the statements made by such counsel in
their respective opinions delivered on the Closing Date.

                    4.2.3.    Reliance . In rendering such opinions, such counsel may rely: (i) as to matters involving the application of laws
other than the laws of the United States and jurisdictions in which they are admitted, to the extent such counsel deems proper and to the extent
specified in such opinion, if at all, upon an opinion or opinions (in form and substance reasonably satisfactory to the Representative) of other
counsel reasonably acceptable to the Representative, familiar with the applicable laws; and (ii) as to matters of fact, to the extent they deem
proper, on certificates or other written statements of officers of the Company and officers of departments of various jurisdictions having
custody of documents respecting the corporate existence or good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to Representative Counsel if requested.

         4.3       Comfort Letters .

                  4.3.1.     Cold Comfort Letter . At the time this Agreement is executed you shall have received a cold comfort letter
containing statements and information of the type customarily included in accountants’ comfort letters with respect to the financial statements
and certain financial information contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus, addressed to the
Representative and in form and substance satisfactory in all respects to you and to the Auditor, dated as of the date of this Agreement.

                  4.3.2.    Bring-down Comfort Letter . At each of the Closing Date and the Option Closing Date, if any, the Representative
shall have received from the Auditor a letter, dated as of the Closing Date or the Option Closing Date, as applicable, to the effect that the
Auditor reaffirms the statements made in the letter furnished pursuant to Section 4.3.1, except that the specified date referred to shall be a date
not more than three (3) business days prior to the Closing Date or the Option Closing Date, as applicable.

                                                                        21
         4.4       Officers’ Certificates .

                    4.4.1.     Officers’ Certificate . The Company shall have furnished to the Representative a certificate, dated the Closing
Date and any Option Closing Date (if such date is other than the Closing Date), of its Chief Executive Officer, its President and Chief
Operating Officer and its Chief Financial Officer stating that (i) such officers have carefully examined the Registration Statement, the Pricing
Disclosure Package, any Issuer Free Writing Prospectus and the Prospectus and, in their opinion, the Registration Statement and each
amendment thereto, as of the Applicable Time and as of the date of this Agreement and as of the Closing Date (or any Option Closing Date if
such date is other than the Closing Date) did not include any untrue statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements therein not misleading, and the Pricing Disclosure Package, as of the
Applicable Time and as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date), any Issuer Free Writing
Prospectus as of its date and as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date), the Prospectus and
each amendment or supplement thereto, as of the respective date thereof and as of the Closing Date, did not include any untrue statement of a
material fact and did not omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances in
which they were made, not misleading, (ii) since the effective date of the Registration Statement, no event has occurred which should have
been set forth in a supplement or amendment to the Registration Statement, the Pricing Disclosure Package or the Prospectus, (iii) to their
knowledge after reasonable investigation, as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date), the
representations and warranties of the Company in this Agreement are true and correct and the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date (or any Option Closing Date if such date
is other than the Closing Date), and (iv) there has not been, subsequent to the date of the most recent audited financial statements included or
incorporated by reference in the Pricing Disclosure Package, any material adverse change in the financial position or results of operations of the
Company, or any change or development that, singularly or in the aggregate, would involve a material adverse change or a prospective material
adverse change, in or affecting the condition (financial or otherwise), results of operations, business, assets or prospects of the Company and its
subsidiaries taken as a whole, except as set forth in the Prospectus.

                    4.4.2.     Secretary’s Certificate . At each of the Closing Date and the Option Closing Date, if any, the Representative shall
have received a certificate of the Company signed by the Secretary of the Company, dated the Closing Date or the Option Date, as the case may
be, respectively, certifying: (i) that each of the Charter and Bylaws is true and complete, has not been modified and is in full force and effect;
(ii) that the resolutions of the Company’s Board of Directors relating to the Offering are in full force and effect and have not been modified;
(iii) as to the accuracy and completeness of all correspondence between the Company or its counsel and the Commission; and (iv) as to the
incumbency of the officers of the Company. The documents referred to in such certificate shall be attached to such certificate.

           4.5       No Material Changes . Prior to and on each of the Closing Date and each Option Closing Date, if any: (i) there shall have
been Material Adverse Effect or development involving a prospective Material Adverse Effect from the latest dates as of which such condition
is set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus; (ii) no action, suit or proceeding, at law or in
equity, shall have been pending or threatened against the Company or any Insider before or by any court or federal or state commission, board
or other administrative agency wherein an unfavorable decision, ruling or finding would reasonably be expected to materially adversely affect
the business, operations, prospects or financial condition or income of the Company and its subsidiaries taken as a whole, except as set forth in
the Registration Statement, the Pricing Disclosure Package and the Prospectus; (iii) no stop order shall have been issued under the Act with
respect to the Registration Statement and no proceedings therefor shall have been initiated or threatened by the Commission; and (iv) the
Registration Statement, the Pricing Disclosure Package and the Prospectus and any amendments or supplements thereto shall contain all
material statements which are required to be stated therein in

                                                                        22
accordance with the Act and the Regulations and shall conform in all material respects to the requirements of the Act and the Regulations, and
neither the Registration Statement, the Pricing Disclosure Package nor the Prospectus nor any amendment or supplement thereto shall contain
any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading.

         4.6       Delivery of Agreements .

                 4.6.1.     Effective Date Deliveries . On the Effective Date, the Company shall have delivered to the Representative
executed copies of this Agreement and the Lock-Up Agreements from each of the persons listed in Schedule 3 hereto.

                  4.6.2.    Closing Date Deliveries . On the Closing Date, the Company shall have delivered to the Representative executed
copies of the Representative’s Warrant Agreement.

         4.7        Additional Documents . At the Closing Date and at each Option Closing Date (if any) Representative Counsel shall have
been furnished with such documents and opinions as they may reasonably require for the purpose of enabling Representative Counsel to pass
upon the issuance and sale of the Public Securities or in order to evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of the
Public Securities and the Representative’s Securities as herein contemplated shall be reasonably satisfactory in form and substance to the
Representative and Representative Counsel.

         4.8       Reverse Stock Split . At or prior to the Applicable Time, the Company shall have effectuated the Reverse Stock Split.

5.             Indemnification .

         5.1       Indemnification of the Underwriters .

                   5.1.1.      General . Subject to the conditions set forth below, the Company agrees to indemnify and hold harmless each of
the Underwriters, and each dealer selected by the Representative that participates in the offer and sale of the Public Securities (each a “
Selected Dealer ”) and each of their respective directors, officers and employees and each person, if any, who controls any such Underwriter (“
Controlling Person ”) within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, against any and all loss, liability, claim,
damage and expense whatsoever (including but not limited to any and all legal or other out-of-pocket expenses reasonably incurred in
investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, whether arising out of any
action between any of the Underwriters and the Company or between any of the Underwriters and any third party, or otherwise) to which they
or any of them may become subject under the Act, the Exchange Act or any other statute or at common law or otherwise or under the laws of
foreign countries, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in (i) the
Registration Statement, the Pricing Disclosure Package, the Prospectus or in any Issuer Free Writing Prospectus (as from time to time each may
be amended and supplemented); (ii) any materials or information provided to investors by, or with the approval of, the Company in connection
with the marketing of the Offering, including any “road show” or investor presentations made to investors by the Company (whether in person
or electronically); or (iii) any application or other document or written communication (in this Section 5, collectively called “ application ”)
executed by the Company or based upon written information furnished by the Company in any jurisdiction in order to qualify the Public
Securities and Representative’s Securities under the securities laws thereof or filed with the Commission, any state securities commission or
agency, the Nasdaq Stock Market LLC or any national securities

                                                                      23
exchange; or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading, unless such statement or omission was made in reliance
upon, and in conformity with, the Underwriters’ Information. With respect to any untrue statement or omission or alleged untrue statement or
omission made in the Pricing Disclosure Package, the indemnity agreement contained in this Section 5.1.1 shall not inure to the benefit of any
Underwriter to the extent that any loss, liability, claim, damage or expense of such Underwriter results from the fact that a copy of the
Prospectus was not given or sent to the person asserting any such loss, liability, claim or damage at or prior to the written confirmation of sale
of the Shares to such person as required by the Act and the Regulations, and if the untrue statement or omission has been corrected in the
Prospectus, unless such failure to deliver the Prospectus was a result of non-compliance by the Company with its obligations under Section 3.4
hereof. The Company agrees promptly to notify the Representative of the commencement of any litigation or proceedings against the Company
or any of its officers, directors or Controlling Persons in connection with the issuance and sale of the Public Securities or in connection with the
Registration Statement the Pricing Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus.

                   5.1.2.     Procedure . If any action is brought against an Underwriter, a Selected Dealer or a Controlling Person in respect of
which indemnity may be sought against the Company pursuant to Section 5.1.1, such Underwriter, such Selected Dealer or Controlling Person,
as the case may be, shall promptly notify the Company in writing of the institution of such action and the Company shall assume the defense of
such action, including the employment and fees of counsel (subject to the reasonable approval of such Underwriter or such Selected Dealer, as
the case may be) and payment of actual expenses. Such Underwriter, such Selected Dealer or Controlling Person shall have the right to employ
its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such Underwriter, such Selected
Dealer or Controlling Person unless (i) the employment of such counsel at the expense of the Company shall have been authorized in writing
by the Company in connection with the defense of such action, or (ii) the Company shall not have employed counsel to have charge of the
defense of such action, or (iii) such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or
them which are different from or additional to those available to the Company (in which case the Company shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of which events the reasonable fees and expenses of not more than
one additional firm of attorneys selected by the Underwriter (in addition to local counsel), Selected Dealer and/or Controlling Person shall be
borne by the Company. Notwithstanding anything to the contrary contained herein, if any Underwriter, Selected Dealer or Controlling Person
shall assume the defense of such action as provided above, the Company shall have the right to approve the terms of any settlement of such
action, which approval shall not be unreasonably withheld.

         5.2        Indemnification of the Company . Each Underwriter, severally and not jointly, agrees to indemnify and hold harmless the
Company, its directors, its officers who signed the Registration Statement and persons who control the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any and all loss, liability, claim, damage and expense described in the
foregoing indemnity from the Company to the several Underwriters, as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions made in the Registration Statement, any Preliminary Prospectus, the Pricing Disclosure Package or
Prospectus or any amendment or supplement thereto or in any application, in reliance upon, and in strict conformity with, the Underwriters’
Information. In case any action shall be brought against the Company or any other person so indemnified based on any Preliminary Prospectus,
the Registration Statement, the Pricing Disclosure Package or Prospectus or any amendment or supplement thereto or any application, and in
respect of which indemnity may be sought against any Underwriter, such Underwriter shall have the rights and duties given to the Company,
and the Company and each other person so indemnified shall have the rights and duties given to the several Underwriters by the provisions of
Section 5.1.2.

                                                                        24
         5.3        Contribution .

                    5.3.1.     Contribution Rights . If the indemnification provided for in this Section 5 shall for any reason be unavailable to or
insufficient to hold harmless an indemnified party under Section 5.1 or 5.2 in respect of any loss, claim, damage or liability, or any action in
respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion
as shall be appropriate to reflect the relative benefits received by the Company, on the one hand, and the Underwriters, on the other, from the
Offering of the Public Securities, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand,
and the Underwriters, on the other, with respect to the statements or omissions that resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and
the Underwriters, on the other, with respect to such Offering shall be deemed to be in the same proportion as the total net proceeds from the
Offering of the Public Securities purchased under this Agreement (before deducting expenses) received by the Company, as set forth in the
table on the cover page of the Prospectus, on the one hand, and the total underwriting discounts and commissions received by the Underwriters
with respect to the shares of the Public Securities purchased under this Agreement, as set forth in the table on the cover page of the Prospectus
and in this Agreement, on the other hand. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters,
the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 5.3.1 were
to be determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of
allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party
as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 5.3.1 shall be deemed to include,
for purposes of this Section 5.3.1, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this Section 5.3.1 in no event shall an Underwriter be required to
contribute any amount in excess of the amount by which the total underwriting discounts and commissions received by such Underwriter with
respect to the Offering of the Shares exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

                   5.3.2.     Contribution Procedure . Within fifteen (15) days after receipt by any party to this Agreement (or its
representative) of notice of the commencement of any action, suit or proceeding, such party will, if a claim for contribution in respect thereof is
to be made against another party (“contributing party”), notify the contributing party of the commencement thereof, but the failure to so notify
the contributing party will not relieve it from any liability which it may have to any other party other than for contribution hereunder. In case
any such action, suit or proceeding is brought against any party, and such party notifies a contributing party or its representative of the
commencement thereof within the aforesaid 15 days, the contributing party will be entitled to participate therein with the notifying party and
any other contributing party similarly notified. Any such contributing party shall not be liable to any party seeking contribution on account of
any settlement of any claim, action or proceeding affected by such party seeking contribution on account of any settlement of any claim, action
or proceeding affected by such party seeking contribution without the written consent of such contributing party. The contribution provisions
contained in this Section 5.3.2 are intended to supersede, to the extent

                                                                         25
permitted by law, any right to contribution under the Act, the Exchange Act or otherwise available. Each Underwriter’s obligations to
contribute pursuant to this Section 5.3 are several and not joint.

6.              Default by an Underwriter .

          6.1        Default Not Exceeding 10% of Firm Shares or Option Shares . If any Underwriter or Underwriters shall default in its or
their obligations to purchase the Firm Shares or the Option Shares, if the Over-allotment Option is exercised hereunder, and if the number of
the Firm Shares or Option Shares with respect to which such default relates does not exceed in the aggregate 10% of the number of Firm Shares
or Option Shares that all Underwriters have agreed to purchase hereunder, then such Firm Shares or Option Shares to which the default relates
shall be purchased by the non-defaulting Underwriters in proportion to their respective commitments hereunder.

           6.2         Default Exceeding 10% of Firm Shares or Option Shares . In the event that the default addressed in Section 6.1 relates to
more than 10% of the Firm Shares or Option Shares, you may in your discretion arrange for yourself or for another party or parties to purchase
such Firm Shares or Option Shares to which such default relates on the terms contained herein. If, within one (1) Business Day after such
default relating to more than 10% of the Firm Shares or Option Shares, you do not arrange for the purchase of such Firm Shares or Option
Shares, then the Company shall be entitled to a further period of three (3) Business Days within which to procure another party or parties
satisfactory to you to purchase said Firm Shares or Option Shares on such terms. In the event that neither you nor the Company arrange for the
purchase of the Firm Shares or Option Shares to which a default relates as provided in this Section 6, this Agreement will automatically be
terminated by you or the Company without liability on the part of the Company (except as provided in Sections 3.11 and 5 hereof) or the
several Underwriters (except as provided in Section 5 hereof); provided, however, that if such default occurs with respect to the Option Shares,
this Agreement will not terminate as to the Firm Shares; and provided, further, that nothing herein shall relieve a defaulting Underwriter of its
liability, if any, to the other Underwriters and to the Company for damages occasioned by its default hereunder.

          6.3       Postponement of Closing Date . In the event that the Firm Shares or Option Shares to which the default relates are to be
purchased by the non-defaulting Underwriters, or are to be purchased by another party or parties as aforesaid, you or the Company shall have
the right to postpone the Closing Date or Option Closing Date for a reasonable period, but not in any event exceeding five (5) Business Days,
in order to effect whatever changes may thereby be made necessary in the Registration Statement, the Pricing Disclosure Package or the
Prospectus or in any other documents and arrangements, and the Company agrees to file promptly any amendment to the Registration
Statement, the Pricing Disclosure Package or the Prospectus that in the opinion of counsel for the Underwriter may thereby be made
necessary. The term “ Underwriter ” as used in this Agreement shall include any party substituted under this Section 6 with like effect as if it
had originally been a party to this Agreement with respect to such Shares.

7.              Additional Covenants .

          7.1        Board Composition and Board Designations . The Company shall ensure that: (i) the qualifications of the persons serving
as members of the Board of Directors and the overall composition of the Board comply with the Sarbanes-Oxley Act and with the listing
rules of the NasdaqCM or any other national securities exchange, as the case may be, in the event the Company seeks to have its Public
Securities listed on another exchange or quoted on an automated quotation system, and (ii) if applicable, at least one member of the Audit
Committee of the Board of Directors qualifies as a “financial expert,” as such term is defined under the Sarbanes-Oxley Act of 2002 and the
listing rules of the NasdaqCM.

                                                                       26
          7.2       Prohibition on Press Releases and Public Announcements . The Company will not issue press releases or engage in any
other publicity, without the Representative’s prior written consent, for a period ending at 5:00 p.m., Eastern time, on the first (1 st ) Business
Day following the forty-fifth (45 th ) day after the Closing Date, other than normal and customary releases issued or other publicity conducted
in the ordinary course of the Company’s business.

           7.3         Right of First Refusal . Provided that the Public Securities are sold in accordance with the terms of this Agreement, the
Representative shall have an irrevocable right of first refusal for a period of twelve (12) months after the effective date the Offering (the “
ROFR Period ”) to act as lead underwriter in connection with a public or private offering of equity securities of the Company or any
subsidiary of or successor to the Company (an “ Equity Offering ”). During the ROFR Period, the Company and any such subsidiary or
successor will provide the Representative with written notice of its intention to consummate an Equity Offering and the material terms relating
thereto. If the Representative fails to accept such proposed financing proposal within fifteen (15) days after receipt of a notice containing the
material terms thereof, then the Representative shall have no further claim or right with respect to the financing proposal contained in such
notice. If, however, the terms of such financing proposal are subsequently modified in any material respect, the right of first refusal referred to
herein shall apply to such modified proposal as if the original proposal had not been made and the Representative shall have fifteen (15) days to
accept such modified proposal. The Representative’s failure to exercise its right of first refusal with respect to any particular proposal shall not
affect its right of first refusal relative to future proposals. If the Representative accepts the Company’s financing proposal and fails to complete
the financing within the period agreed upon by the Representative and the Company in the proposal, the Representative shall have no further
claim or right of first refusal with respect to any future Equity Offering of the Company. The Company shall have the right, at its option, to
designate the Representative as lead underwriter or co-manager of any underwriting group or co-placement agent of any proposed financing in
full and complete satisfaction of its obligations hereunder, and the Representative shall be entitled to receive as its compensation 50% of the
compensation payable to the underwriting or placement agent group when serving as co-manager or co-placement agent and 33% of the
compensation payable to the underwriting or placement agent group when serving as co-manager or co-placement agent with respect to a
proposed financing in which there are three co-managing or lead underwriters or co-placement agents.

8.              Effective Date of this Agreement and Termination Thereof .

        8.1       Effective Date . This Agreement shall become effective when both the Company and the Representative have executed the
same and delivered counterparts of such signatures to the other party.

          8.2         Termination . The Representative shall have the right to terminate this Agreement at any time prior to any Closing Date,
(i) if any domestic or international event or act or occurrence has materially disrupted, or in your opinion will in the immediate future
materially disrupt, general securities markets in the United States; or (ii) if trading on the New York Stock Exchange or the Nasdaq Stock
Market LLC shall have been suspended or materially limited, or minimum or maximum prices for trading shall have been fixed, or maximum
ranges for prices for securities shall have been required by FINRA or by order of the Commission or any other government authority having
jurisdiction; or (iii) if the United States shall have become involved in a new war or an increase in major hostilities which, in the
Representative’s judgment, makes it impractical to proceed with the delivery of the Firm Shares and Option Shares; or (iv) if a banking
moratorium has been declared by a New York State or federal authority; or (v) if a moratorium on foreign exchange trading has been declared
which materially adversely impacts the United States securities markets; or (vi) if the Company shall have sustained a material loss by fire,
flood, accident, hurricane, earthquake, theft, sabotage or other calamity or malicious act which, whether or not such loss shall have been
insured, which, in the Representative’s opinion, is materially and adverse and makes it impracticable to proceed with the delivery of the Firm
Shares or Option Shares; or (vii) if the Company is in material breach of any of its representations, warranties or

                                                                         27
covenants hereunder; or (viii) if the Representative shall have become aware after the date hereof of such a material adverse change in the
conditions or prospects of the Company, or such adverse material change in general market conditions as in the Representative’s judgment
would make it impracticable to proceed with the offering, sale and/or delivery of the Shares or to enforce contracts made by the Underwriters
for the sale of the Shares.

         8.3        Expenses . Notwithstanding anything to the contrary in this Agreement, except in the case of a default by the Underwriters,
pursuant to Section 6.2 above, in the event that this Agreement shall not be carried out for any reason whatsoever, within the time specified
herein or any extensions thereof pursuant to the terms herein, the Company shall be obligated to pay to the Underwriters their actual and
accountable out-of-pocket expenses to the extent actually incurred related to the transactions contemplated herein then due and payable
(including the fees and disbursements of Representative Counsel) up to $100,000 less the $50,000 advance for non-accountable expenses
previously paid by the Company to the Representative (the “ Advance ”) such advance to be returned to the Company (regardless of whether
this Agreement is terminated) to the extent of any actual out-of-pocket expenses not actually incurred by the Representative; provided,
however, that such expense cap in no way limits or impairs the indemnification and contribution provisions of this Agreement).

         8.4        Indemnification . Notwithstanding any contrary provision contained in this Agreement, any election hereunder or any
termination of this Agreement, and whether or not this Agreement is otherwise carried out, the provisions of Section 5 shall remain in full force
and effect and shall not be in any way affected by, such election or termination or failure to carry out the terms of this Agreement or any part
hereof.

         8.5        Representations, Warranties, Agreements to Survive . All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company delivered to the Underwriters pursuant hereto, shall remain operative and in full force
and effect regardless of (i) any investigation made by or on behalf of any Underwriter or its Affiliates or selling agents, any person controlling
any Underwriter, its officers or directors or any person controlling the Company or (ii) delivery of and payment for the Public Securities.

9.              Miscellaneous .

         9.1        Notices . All communications hereunder, except as herein otherwise specifically provided, shall be in writing and shall be
mailed (registered or certified mail, return receipt requested), personally delivered or sent by facsimile transmission and confirmed and shall be
deemed given when so delivered or faxed and confirmed or if mailed, two (2) days after such mailing.

         If to the Representative (on behalf of the Underwriters):

         Aegis Capital Corp.
         810 Seventh Avenue, 18 th Floor
         New York, New York 10019
         Attn: Mr. David Bocchi, Managing Director of Investment Banking
         Fax No.: (212) 813-1047

         with a copy (which shall not constitute notice) to:

         Kramer Levin Naftalis & Frankel LLP
         1177 Avenue of the Americas
         New York, NY 10036
         Attn: Christopher S. Auguste, Esq.

                                                                        28
         Fax No.: (212) 715-8000

         If to the Company:

         Xplore Technologies Corp.
         14000 Summit Drive, Suite 900
         Austin, TX 78728
         Attention: Philip S. Sassower
         Fax No: (512) 249-5630

         with a copy (which shall not constitute notice) to:

         Pillsbury Winthrop Shaw Pittman LLP
         1540 Broadway
         New York, NY 10036
         Attention: Jonathan J. Russo, Esq.
         Fax No: (212) 858-1500

          9.2        Headings . The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way
limit or affect the meaning or interpretation of any of the terms or provisions of this Agreement.

         9.3        Amendment . This Agreement may only be amended by a written instrument executed by each of the parties hereto.

         9.4        Entire Agreement . This Agreement (together with the schedules and the agreements evidenced by the exhibits being
delivered pursuant hereto) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and thereof, and
supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof. Notwithstanding
anything to the contrary set forth herein, it is understood and agreed by the parties hereto that all the terms and conditions of that certain
engagement letter between the Company and Aegis Capital Corp., dated June 13, 2012, and all of the terms of the confidentiality agreement
dated May 9, 2012 between the Company and the Representative shall remain in full force and effect.

         9.5         Binding Effect . This Agreement shall inure solely to the benefit of and shall be binding upon the Representative, the
Underwriters, the Company and the Controlling Persons, directors and officers referred to in Section 5 hereof, and their respective successors,
legal representatives and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provisions herein contained. The term “successors and assigns” shall not include a
purchaser, in its capacity as such, of securities from any of the Underwriters.

         9.6        Governing Law; Consent to Jurisdiction; Trial by Jury . This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of New York, without giving effect to conflict of laws principles thereof. The Company hereby agrees
that any action, proceeding or claim against it arising out of, or relating in any way to this Agreement shall be brought and enforced in the New
York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, and irrevocably
submits to such jurisdiction, which jurisdiction shall be exclusive. Each of the Company and the Underwriters hereby waives any objection to
such exclusive jurisdiction and that such courts represent an inconvenient forum. Any such process or summons to be served upon the
Company or any Underwriter may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in

                                                                         29



Section 9.1 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company and any Underwriter in
any action, proceeding or claim. Each of the parties hereto agrees that the prevailing party(ies) in any such action shall be entitled to recover
from the other party(ies) all of its reasonable attorneys’ fees and expenses relating to such action or proceeding and/or incurred in connection
with the preparation therefor. The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and
affiliates) and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

          9.7             Execution in Counterparts . This Agreement may be executed in one or more counterparts, and by the different parties
hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the
same agreement, and shall become effective when one or more counterparts has been signed by each of the parties hereto and delivered to each
of the other parties hereto. Delivery of a signed counterpart of this Agreement by facsimile or email/pdf transmission shall constitute valid and
sufficient delivery thereof.
          9.8            Waiver, etc . The failure of any of the parties hereto to at any time enforce any of the provisions of this Agreement
shall not be deemed or construed to be a waiver of any such provision, nor to in any way effect the validity of this Agreement or any provision
hereof or the right of any of the parties hereto to thereafter enforce each and every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Agreement shall be effective unless set forth in a written instrument
executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach,
non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or
non-fulfillment.

                                                          [ Signature Page Follows ]

                                                                      30
        If the foregoing correctly sets forth the understanding between the Underwriters and the Company, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a binding agreement between us.


                                                                       Very truly yours,

                                                                       XPLORE TECHNOLOGIES CORP.


                                                                       By:
                                                                              Name:
                                                                              Title:


Confirmed as of the date first written above, on behalf of itself and as Representative to the several Underwriters named on Schedule I hereto.

AEGIS CAPITAL CORP.


By:
      Name:
      Title:

                                                            [SIGNATURE PAGE]

XPLORE TECHNOLOGIES CORP. – Underwriting Agreement
                      SCHEDULE I

                                   Total Number of
                                   Firm Shares to be
Underwriter                           Purchased
Aegis Capital Corp.

TOTAL


                          1
                                                           SCHEDULE 2-A

                                                          Pricing Information

Number of Firm Shares: [  ]

Number of Option Shares: [  ]

Public Offering Price per Share: $[  ]

Underwriting Discount per Share: $[  ]

Underwriting Non-accountable expense allowance per Share: $[  ]

Proceeds to Company per Share (before expenses): $[  ]

                                                           SCHEDULE 2-B

                                             Issuer General Use Free Writing Prospectuses

None.

                                                                   1
                                                             SCHEDULE 2.5.2

      The Company may from time-to-time have outstanding borrowings under the ARPA.

       The Company is required to pay dividends to holders of its preferred stock pursuant to its Amended and Restated Certificate of
    Incorporation.

        The Company is required to issue common stock upon the conversion of its outstanding preferred stock in accordance with the terms
    of its Amended and Restated Certificate of Incorporation.
                               SCHEDULE 3

                           List of Lock-Up Parties

Philip S. Sassower
Mark Holleran
Michael J. Rapisand
Brian E. Usher-Jones
Andrea Goren
Thomas F. Leonardis
Kent Misemer
F. Ben Irwin
Phoenix Venture Fund LLC
Alex and James Goren

                                     1
                                                                  EXHIBIT A

                                               Form of Representative’s Warrant Agreement

THE REGISTERED HOLDER OF THIS PURCHASE WARRANT BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT
SELL, TRANSFER OR ASSIGN THIS PURCHASE WARRANT EXCEPT AS HEREIN PROVIDED AND THE REGISTERED HOLDER
OF THIS PURCHASE WARRANT AGREES THAT IT WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS
PURCHASE WARRANT FOR A PERIOD OF ONE HUNDRED EIGHTY DAYS FOLLOWING THE EFFECTIVE DATE (DEFINED
BELOW) TO ANYONE OTHER THAN (I) AEGIS CAPITAL CORP. OR AN UNDERWRITER OR A SELECTED DEALER IN
CONNECTION WITH THE OFFERING, OR (II) A BONA FIDE OFFICER OR PARTNER OF AEGIS CAPITAL CORP. OR OF ANY
SUCH UNDERWRITER OR SELECTED DEALER.

THIS PURCHASE WARRANT IS NOT EXERCISABLE PRIOR TO [                ] [ DATE THAT IS ONE YEAR AFTER
EFFECTIVE DATE OF THE OFFERING ]. VOID AFTER 5:00 P.M., EASTERN TIME, [                ] [ DATE THAT IS
FIVE YEARS AFTER EFFECTIVE DATE OF THE OFFERING ].

                                               COMMON STOCK PURCHASE WARRANT

                                                                 ] Shares of Common Stock
                                             For the Purchase of [
                                                                of
                                                     XPLORE TECHNOLOGIES CORP.

1.                Purchase Warrant . THIS CERTIFIES THAT, in consideration of funds duly paid by or on behalf of Aegis Capital Corp. (“
Holder ”), as registered owner of this Purchase Warrant, to Xplore Technologies Corp., a Delaware corporation (the “ Company ”), Holder is
entitled, at any time or from time to time from [                    ] [ DATE THAT IS ONE YEAR AFTER EFFECTIVE DATE OF THE
OFFERING ] (the “ Commencement Date ”), and at or before 5:00 p.m., Eastern time, [                        ] [ DATE THAT IS FIVE YEARS
AFTER EFFECTIVE DATE OF THE OFFERING ] (the “ Expiration Date ”), but not thereafter, to subscribe for, purchase and receive, in
whole or in part, up to [     ] shares of common stock of the Company (representing 5% of the shares of common stock sold in the Offering,
excluding the over-allotment option) , par value $0.001 per share (the “ Shares ”), subject to adjustment as provided in Section 6 hereof. If the
Expiration Date is a day on which banking institutions are authorized by law to close, then this Purchase Warrant may be exercised on the next
succeeding day which is not such a day in accordance with the terms herein. During the period ending on the Expiration Date, the Company
agrees not to take any action that would terminate the Purchase Warrant. This Purchase Warrant is initially exercisable at $[       ] per Share
125% of the price of the Shares sold in the Offering ; provided , however , that upon the occurrence of any of the events specified in
Section 6 hereof, the rights granted by this Purchase Warrant, including the exercise price per Share and the number of Shares to be received
upon such exercise, shall be adjusted as therein specified. The term “ Exercise Price ” shall mean the initial exercise price or the adjusted
exercise price, depending on the context.

                                                                      A-1
2.               Exercise .

          2.1             Exercise Form . In order to exercise this Purchase Warrant, the exercise form attached hereto must be duly executed
and completed and delivered to the Company, together with this Purchase Warrant and payment of the Exercise Price for the Shares being
purchased payable in cash by wire transfer of immediately available funds to an account designated by the Company or by certified check or
official bank check. If the subscription rights represented hereby shall not be exercised at or before 5:00 p.m., Eastern time, on the Expiration
Date, this Purchase Warrant shall become and be void without further force or effect, and all rights represented hereby shall cease and expire.

          2.2             Cashless Exercise . If at any time after the Commencement Date there is no effective registration statement
registering, or no current prospectus available for, the resale of the Shares by the Holder, then in lieu of exercising this Purchase Warrant by
payment of cash or check payable to the order of the Company pursuant to Section 2.1 above, Holder may elect to receive the number of Shares
equal to the value of this Purchase Warrant (or the portion thereof being exercised), by surrender of this Purchase Warrant to the Company,
together with the exercise form attached hereto, in which event the issue to Holder, Shares in accordance with the following formula:

                        Y(A-B)
     X       =            A

                    X      =     The number of Shares to be issued to Holder;
 Where,
                    Y      =     The number of Shares for which the Purchase Warrant is being exercised;
                    A      =     The fair market value of one Share; and
                    B      =     The Exercise Price.

         For purposes of this Section 2.2, the fair market value of a Share is defined as follows:

             (i)       if the Company’s common stock is traded on a securities exchange, the value shall be deemed to be the closing price on
                    such exchange prior to the exercise form being submitted in connection with the exercise of the Purchase Warrant; or

             (ii)       if the Company’s common stock is actively traded over-the-counter, the value shall be deemed to be the closing bid prior
                    to the exercise form being submitted in connection with the exercise of the Purchase Warrant; if there is no active public
                    market, the value shall be the fair market value thereof, as determined in good faith by the Company’s Board of Directors.

        2.3             Legend . Each certificate for the securities purchased under this Purchase Warrant shall bear a legend as follows unless
such securities have been registered under the Securities Act of 1933, as amended (the “ Act ”):

         “The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “ Act ”), or
applicable state law. Neither the securities nor any interest therein may be offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement

                                                                        A-2
under the Act, or pursuant to an exemption from registration under the Act and applicable state law which, in the opinion of counsel to the
Company, is available.”

3.              Transfer .

         3.1               General Restrictions . The registered Holder of this Purchase Warrant agrees by his, her or its acceptance hereof, that
such Holder will not: (a) sell, transfer, assign, pledge or hypothecate this Purchase Warrant for a period of one hundred eighty (180) days
following the Effective Date to anyone other than: (i) Aegis Capital Corp. (“ Aegis ”) or an underwriter or a selected dealer participating in the
Offering, or (ii) a bona fide officer or partner of AEGIS or of any such underwriter or selected dealer, in each case in accordance with FINRA
Conduct Rule 5110(g)(1), or (b) cause this Purchase Warrant or the securities issuable hereunder to be the subject of any hedging, short sale,
derivative, put or call transaction that would result in the effective economic disposition of this Purchase Warrant or the securities hereunder,
except as provided for in FINRA Rule 5110(g)(2). On and after one hundred eighty (180) days following the Effective Date, transfers to others
may be made subject to compliance with or exemptions from applicable securities laws. In order to make any permitted assignment, the Holder
must deliver to the Company the assignment form attached hereto duly executed and completed, together with the Purchase Warrant and
payment of all transfer taxes, if any, payable in connection therewith. The Company shall within five (5) Business Days transfer this Purchase
Warrant on the books of the Company and shall execute and deliver a new Purchase Warrant or Purchase Warrants of like tenor to the
appropriate assignee(s) expressly evidencing the right to purchase the aggregate number of Shares purchasable hereunder or such portion of
such number as shall be contemplated by any such assignment.

           3.2           Restrictions Imposed by the Act . The securities evidenced by this Purchase Warrant shall not be transferred unless and
until: (i) the Company has received the opinion of counsel for the Holder that the securities may be transferred pursuant to an exemption from
registration under the Act and applicable state securities laws, the availability of which is established to the reasonable satisfaction of the
Company, or (ii) a registration statement or a post-effective amendment to the Registration Statement relating to the offer and sale of such
securities has been filed by the Company and declared effective by the U.S. Securities and Exchange Commission (the “ Commission ”) and
compliance with applicable state securities law has been established.

4.              Piggy-Back Registration Right .

          4.1             Grant of Right . The Holder shall have the right, for a period of four (4) years commencing one (1) year after the
Closing Date, to include the Registrable Securities as part of any other registration of securities filed by the Company (other than in connection
with a transaction contemplated by Rule 145 (a) promulgated under the Act or pursuant to Form S-8 or any equivalent form); provided ,
however , that if, solely in connection with any primary underwritten public offering for the account of the Company, the managing
underwriter(s) thereof shall, in its reasonable discretion, impose a limitation on the number of shares of Common Stock which may be included
in the Registration Statement because, in such underwriter(s)’ judgment, marketing or other factors dictate such limitation is necessary to
facilitate public distribution, then the Company shall be obligated to include in such Registration Statement only such limited portion of the
Registrable Securities with respect to which the Holder requested inclusion hereunder as the underwriter shall reasonably permit. Any
exclusion of Registrable Securities shall be made pro rata among the Holders seeking to include Registrable Securities in proportion to the
number of Registrable Securities sought to be included by such Holders; provided , however , that the Company shall not exclude any
Registrable Securities unless the Company has first excluded all outstanding securities, the holders of which are not entitled to inclusion of
such securities in such Registration Statement or are not entitled to pro rata inclusion with the Registrable Securities.

                                                                       A-3
          4.2              Terms . The Company shall bear all fees and expenses attendant to registering the Registrable Securities pursuant to
Section 4.1 hereof, but the Holders shall pay any and all underwriting commissions and the expenses of any legal counsel selected by the
Holders to represent them in connection with the sale of the Registrable Securities. In the event of such a proposed registration, the Company
shall furnish the then Holders of outstanding Registrable Securities with not less than thirty (30) days written notice prior to the proposed date
of filing of such registration statement. Such notice to the Holders shall continue to be given for each registration statement filed by the
Company until such time as all of the Registrable Securities have been sold by the Holder. The holders of the Registrable Securities shall
exercise the “piggy-back” rights provided for herein by giving written notice within ten (10) days of the receipt of the Company’s notice of its
intention to file a registration statement. Except as otherwise provided in this Purchase Warrant, there shall be no limit on the number of times
the Holder may request registration under this Section 4.2; provided , however , that such registration rights shall terminate on the fourth
anniversary of the Commencement Date.

         4.2             General Terms .

                   4.2.1           Indemnification . The Company shall indemnify the Holder(s) of the Registrable Securities to be sold pursuant
to any registration statement hereunder and each person, if any, who controls such Holders within the meaning of Section 15 of the Act or
Section 20 (a) of the Securities Exchange Act of 1934, as amended (“ Exchange Act ”), against all loss, claim, damage, expense or liability
(including all reasonable attorneys’ fees and other out-of-pocket expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under the Act, the Exchange Act or otherwise, arising from such registration
statement but only to the same extent and with the same effect as the provisions pursuant to which the Company has agreed to indemnify the
Underwriters contained in Section 5.1 of the Underwriting Agreement between the Underwriters and the Company, dated as of [                      ],
2012. The Holder(s) of the Registrable Securities to be sold pursuant to such registration statement, and their successors and assigns, shall
severally, and not jointly, indemnify the Company, against all loss, claim, damage, expense or liability (including all reasonable attorneys’ fees
and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from information furnished by or on behalf of such Holders, or their successors
or assigns, in writing, for specific inclusion in such registration statement to the same extent and with the same effect as the provisions
contained in Section 5.2 of the Underwriting Agreement pursuant to which the Underwriters have agreed to indemnify the Company.

                  4.2.2          Exercise of Purchase Warrants . Nothing contained in this Purchase Warrant shall be construed as requiring the
Holder(s) to exercise their Purchase Warrants prior to or after the initial filing of any registration statement or the effectiveness thereof.

                   4.2.3          Documents Delivered to Holders . The Company shall furnish to each Holder participating in any of the
foregoing offerings and to each underwriter of any such offering, if any, a signed counterpart, addressed to such Holder or underwriter, of:
(i) an opinion of counsel to the Company, dated the effective date of such registration statement (and, if such registration includes an
underwritten public offering, an opinion dated the date of the closing under any underwriting agreement related thereto), and (ii) a “cold
comfort” letter dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, a letter
dated the date of the closing under the underwriting agreement) signed by the independent registered public accounting firm which has issued a
report on the Company’s financial statements included in such registration statement, in each case covering substantially the same matters with
respect to such registration statement (and the

                                                                        A-4



prospectus included therein) and, in the case of such accountants’ letter, with respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to underwriters in underwritten
public offerings of securities. The Company shall also deliver promptly to each Holder participating in the offering requesting the
correspondence and memoranda described below and to the managing underwriter, if any, copies of all correspondence between the
Commission and the Company, its counsel or auditors and all memoranda relating to discussions with the Commission or its staff with respect
to the registration statement and permit each Holder and underwriter to do such investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the registration statement as it deems reasonably necessary to comply with applicable securities laws
or rules of FINRA. Such investigation shall include access to books, records and properties and opportunities to discuss the business of the
Company with its officers and independent auditors, all to such reasonable extent and at such reasonable times as any such Holder shall
reasonably request.

                   4.2.4          Underwriting Agreement . The Company shall enter into an underwriting agreement with the managing
underwriter(s), if any, selected by any Holders whose Registrable Securities are being registered pursuant to this Section 4, which managing
underwriter shall be reasonably satisfactory to the Company. Such agreement shall be reasonably satisfactory in form and substance to the
Company, each Holder and such managing underwriters, and shall contain such representations, warranties and covenants by the Company and
such other terms as are customarily contained in agreements of that type used by the managing underwriter. The Holders shall be parties to any
underwriting agreement relating to an underwritten sale of their Registrable Securities and may, at their option, require that any or all the
representations, warranties and covenants of the Company to or for the benefit of such underwriters shall also be made to and for the benefit of
such Holders. Such Holders shall not be required to make any representations or warranties to or agreements with the Company or the
underwriters except as they may relate to such Holders, their Shares and their intended methods of distribution.

                   4.2.5        Documents to be Delivered by Holder(s) . Each of the Holder(s) participating in any of the foregoing offerings
shall furnish to the Company a completed and executed questionnaire provided by the Company requesting information customarily sought of
selling security holders.

                   4.2.6          Damages . Should the registration or the effectiveness thereof required by Sections 4.1 and 4.2 hereof be
delayed by the Company or the Company otherwise fails to comply with such provisions, the Holder(s) shall, in addition to any other legal or
other relief available to the Holder(s), be entitled to obtain specific performance or other equitable (including injunctive) relief against the
threatened breach of such provisions or the continuation of any such breach, without the necessity of proving actual damages and without the
necessity of posting bond or other security.

5.              New Purchase Warrants to be Issued .

          5.1           Partial Exercise or Transfer . Subject to the restrictions in Section 3 hereof, this Purchase Warrant may be exercised or
assigned in whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Purchase Warrant for
cancellation, together with the duly executed exercise or assignment form and funds sufficient to pay any Exercise Price and/or transfer tax if
exercised pursuant to Section 2.1 hereto, the Company shall cause to be delivered to the Holder without charge a new Purchase Warrant of like
tenor to this Purchase Warrant in the name of the Holder evidencing the right of the Holder to purchase the number of Shares purchasable
hereunder as to which this Purchase Warrant has not been exercised or assigned.

                                                                       A-5
          5.2            Lost Certificate . Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation
of this Purchase Warrant and of reasonably satisfactory indemnification or the posting of a bond, the Company shall execute and deliver a new
Purchase Warrant of like tenor and date. Any such new Purchase Warrant executed and delivered as a result of such loss, theft, mutilation or
destruction shall constitute a substitute contractual obligation on the part of the Company.

6.              Adjustments .

        6.1            Adjustments to Exercise Price and Number of Securities . The Exercise Price and the number of Shares underlying the
Purchase Warrant shall be subject to adjustment from time to time as hereinafter set forth:

                   6.1.1         Share Dividends; Split Ups . If, after the date hereof, and subject to the provisions of Section 6.3 below, the
number of outstanding Shares is increased by a stock dividend payable in Shares or by a split up of Shares or other similar event, then, on the
effective day thereof, the number of Shares purchasable hereunder shall be increased in proportion to such increase in outstanding Shares, and
the Exercise Price shall be proportionately decreased.

                   6.1.2         Aggregation of Shares . If, after the date hereof, and subject to the provisions of Section 6.3 below, the number
of outstanding Shares is decreased by a consolidation, combination or reclassification of Shares or other similar event, then, on the effective
date thereof, the number of Shares purchasable hereunder shall be decreased in proportion to such decrease in outstanding Shares, and the
Exercise Price shall be proportionately increased.

                   6.1.3          Replacement of Securities upon Reorganization, etc . In case of any reclassification or reorganization of the
outstanding Shares other than a change covered by Section 6.1.1 or 6.1.2 hereof or that solely affects the par value of such Shares, or in the
case of any share reconstruction or amalgamation or merger or consolidation of the Company with or into another corporation (other than a
merger or consolidation or share reconstruction or amalgamation in which the Company is the continuing corporation and that does not result
in any reclassification or reorganization of the outstanding Shares), or in the case of any sale or conveyance to another corporation or entity of
the property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Holder of this
Purchase Warrant shall have the right thereafter (until the expiration of the right of exercise of this Purchase Warrant) to receive upon the
exercise hereof, for the same aggregate Exercise Price payable hereunder immediately prior to such event, the kind and amount of shares of
stock or other securities or property (including cash) receivable upon such reclassification, reorganization, share reconstruction or
amalgamation, or merger or consolidation, or upon a dissolution following any such sale or transfer, by a Holder of the number of Shares of the
Company obtainable upon exercise of this Purchase Warrant immediately prior to such event; and if any reclassification also results in a change
in Shares covered by Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to Sections 6.1.1, 6.1.2 and this Section 6.1.3. The
provisions of this Section 6.1.3 shall similarly apply to successive reclassifications, reorganizations, share reconstructions or amalgamations, or
consolidations, sales or other transfers.

                   6.1.4         Changes in Form of Purchase Warrant . This form of Purchase Warrant need not be changed because of any
change pursuant to this Section 6.1, and Purchase Warrants issued after such change may state the same Exercise Price and the same number of
Shares as are stated in the Purchase Warrants initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance of new
Purchase Warrants reflecting a required or permissive change shall not be deemed to waive any

                                                                        A-6
rights to an adjustment occurring after the Commencement Date or the computation thereof.

          6.2            Substitute Purchase Warrant . In case of any consolidation of the Company with, or share reconstruction or
amalgamation of the Company with or into, another corporation (other than a consolidation or share reconstruction or amalgamation which
does not result in any reclassification or change of the outstanding Shares), the corporation formed by such consolidation or share
reconstruction or amalgamation shall execute and deliver to the Holder a supplemental Purchase Warrant providing that the holder of each
Purchase Warrant then outstanding or to be outstanding shall have the right thereafter (until the stated expiration of such Purchase Warrant) to
receive, upon exercise of such Purchase Warrant, the kind and amount of shares of stock and other securities and property receivable upon such
consolidation or share reconstruction or amalgamation, by a holder of the number of Shares of the Company for which such Purchase Warrant
might have been exercised immediately prior to such consolidation, share reconstruction or amalgamation, sale or transfer. Such supplemental
Purchase Warrant shall provide for adjustments which shall be identical to the adjustments provided for in this Section 6. The above provision
of this Section shall similarly apply to successive consolidations or share reconstructions or amalgamations.

          6.3              Elimination of Fractional Interests . The Company shall not be required to issue certificates representing fractions of
Shares upon the exercise of the Purchase Warrant, nor shall it be required to issue scrip or pay cash in lieu of any fractional interests, it being
the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up or down, as the case may be, to the nearest
whole number of Shares or other securities, properties or rights.

7.               Reservation and Listing . The Company shall at all times reserve and keep available out of its authorized Shares, solely for the
purpose of issuance upon exercise of the Purchase Warrants, such number of Shares or other securities, properties or rights as shall be issuable
upon the exercise thereof. The Company covenants and agrees that, upon exercise of the Purchase Warrants and payment of the Exercise Price
therefor, in accordance with the terms hereby, all Shares and other securities issuable upon such exercise shall be duly and validly issued, fully
paid and non-assessable and not subject to preemptive rights of any shareholder. The Company further covenants and agrees that upon exercise
of the Purchase Warrants and payment of the exercise price therefor, all Shares and other securities issuable upon such exercise shall be duly
and validly issued, fully paid and non-assessable and not subject to preemptive rights of any shareholder. As long as the Purchase Warrants
shall be outstanding, the Company shall use its commercially reasonable efforts to cause all Shares issuable upon exercise of the Purchase
Warrants to be listed (subject to official notice of issuance) on all national securities exchanges (or, if applicable, on the OTC Bulletin Board or
any successor trading market) on which the Shares issued to the public in the Offering may then be listed and/or quoted.

8.              Certain Notice Requirements .

         8.1              Holder’s Right to Receive Notice . Nothing herein shall be construed as conferring upon the Holders the right to vote
or consent or to receive notice as a shareholder for the election of directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of the Purchase Warrants and their exercise, any of the events
described in Section 8.2 shall occur, then, in one or more of said events, the Company shall give written notice of such event at least fifteen
days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the shareholders entitled to such
dividend, distribution, conversion or exchange of securities or subscription rights, or entitled to vote on such proposed dissolution, liquidation,
winding up or sale. Such notice shall specify such record date or the date of the closing of the transfer books, as the case may be.
Notwithstanding the foregoing, the Company shall deliver to each Holder a copy of each

                                                                         A-7
notice given to the other shareholders of the Company at the same time and in the same manner that such notice is given to the shareholders.

          8.2            Events Requiring Notice . The Company shall be required to give the notice described in this Section 8 upon one or
more of the following events: (i) if the Company shall take a record of the holders of its Shares for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of retained earnings, as
indicated by the accounting treatment of such dividend or distribution on the books of the Company, (ii) the Company shall offer to all the
holders of its Shares any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital
stock of the Company, or any option, right or warrant to subscribe therefor, or (iii) a dissolution, liquidation or winding up of the Company
(other than in connection with a merger, consolidation or share reconstruction or amalgamation) or a sale of all or substantially all of its
property, assets and business shall be proposed.

         8.3            Notice of Change in Exercise Price . The Company shall, promptly after an event requiring a change in the Exercise
Price pursuant to Section 6 hereof, send notice to the Holders of such event and change (“ Price Notice ”). The Price Notice shall describe the
event causing the change and the method of calculating same and shall be certified as being true and accurate by the Company’s Chief
Financial Officer.

         8.4             Transmittal of Notices . All notices, requests, consents and other communications under this Purchase Warrant shall be
in writing and shall be deemed to have been duly made when hand delivered, or mailed by express mail or private courier service: (i) if to the
registered Holder of the Purchase Warrant, to the address of such Holder as shown on the books of the Company, or (ii) if to the Company, to
following address or to such other address as the Company may designate by notice to the Holders:

         If to the Holder:

         Aegis Capital Corp.
         810 Seventh Avenue, 11 th Floor
         New York, New York 10019
         Attn: Mr. David Bocchi, Managing Director of Investment Banking
         Fax No.: (212) 813-1047

         with a copy (which shall not constitute notice) to:

         Kramer Levin Naftalis & Frankel LLP
         1177 Avenue of the Americas
         New York, NY 10036
         Attn: Christopher S. Auguste, Esq.
         Fax No.: (212) 715-8000

         If to the Company:

         Xplore Technologies Corp.
         14000 Summit Drive, Suite 900
         Austin, TX 78728
         Attention: Philip S. Sassower
         Fax No: (512) 249-5630

                                                                       A-8
         with a copy (which shall not constitute notice) to:

         Pillsbury Winthrop Shaw Pittman LLP
         1540 Broadway
         New York, NY 10036
         Attention: Jonathan J. Russo, Esq.
         Fax No: (212) 858-1500

9.              Miscellaneous .

          9.1            Amendments . The Company and Aegis may from time to time supplement or amend this Purchase Warrant without
the approval of any of the Holders in order to cure any ambiguity, to correct or supplement any provision contained herein that may be
defective or inconsistent with any other provisions herein, or to make any other provisions in regard to matters or questions arising hereunder
that the Company and Aegis may deem necessary or desirable and that the Company and Aegis deem shall not adversely affect the interest of
the Holders. All other modifications or amendments shall require the written consent of and be signed by the party against whom enforcement
of the modification or amendment is sought.

        9.2              Headings . The headings contained herein are for the sole purpose of convenience of reference, and shall not in any
way limit or affect the meaning or interpretation of any of the terms or provisions of this Purchase Warrant.

          9.3.          Entire Agreement . This Purchase Warrant (together with the other agreements and documents being delivered pursuant
to or in connection with this Purchase Warrant) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof,
and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.

         9.4            Binding Effect . This Purchase Warrant shall inure solely to the benefit of and shall be binding upon, the Holder and
the Company and their permitted assignees, respective successors, legal representative and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Purchase Warrant or any provisions
herein contained.

         9.5              Governing Law; Submission to Jurisdiction; Trial by Jury . This Purchase Warrant shall be governed by and construed
and enforced in accordance with the laws of the State of New York, without giving effect to conflict of laws principles thereof. The Company
hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Purchase Warrant shall be brought and
enforced in the New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York,
and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. Each of the Company and the Holder hereby waives any
objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any process or summons to be served upon the
Company or the Holder may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid,
addressed to it at the address set forth in Section 8.4 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon
the Company or the Holder, as the case may be, in any action, proceeding or claim. Each of the parties hereto agrees that the prevailing
party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys’ fees and expenses relating to
such action or proceeding and/or incurred in connection with the preparation therefor. The Company (on its behalf and, to the extent permitted
by applicable law, on behalf of its stockholders and affiliates) and the Holder hereby

                                                                       A-9
irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.

         9.6            Waiver, etc . The failure of the Company or the Holder to at any time enforce any of the provisions of this Purchase
Warrant shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Purchase Warrant or
any provision hereof or the right of the Company or any Holder to thereafter enforce each and every provision of this Purchase Warrant. No
waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Purchase Warrant shall be effective unless set forth in
a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such
breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or
non-fulfillment.

         9.7             Execution in Counterparts . This Purchase Warrant may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and
the same agreement, and shall become effective when one or more counterparts has been signed by each of the parties hereto and delivered to
each of the other parties hereto. Such counterparts may be delivered by facsimile transmission or other electronic transmission.

          9.8             Exchange Agreement . As a condition of the Holder’s receipt and acceptance of this Purchase Warrant, Holder agrees
that, at any time prior to the complete exercise of this Purchase Warrant by Holder, if the Company and Aegis enter into an agreement (“
Exchange Agreement ”) pursuant to which they agree that all outstanding Purchase Warrants will be exchanged for securities or cash or a
combination of both, then Holder shall agree to such exchange and become a party to the Exchange Agreement.

                                                            [ Signature Page Follows ]

                                                                        A-10
      IN WITNESS WHEREOF, the Company has caused this Purchase Warrant to be signed by its duly authorized officer as of
the    day of     , 2012.


      XPLORE TECHNOLOGIES CORP.


      By:
            Name:
            Title:

                                                             A-11
                                                [ Form to be used to exercise Purchase Warrant ]

Date:               , 20

          The undersigned hereby elects irrevocably to exercise the Purchase Warrant for            shares of common stock, par value $0.001
per share (the “ Shares ”), of Xplore Technologies Corp., a Delaware corporation (the “ Company ”), and hereby makes payment of $             (at
the rate of $      per Share) in payment of the Exercise Price pursuant thereto. Please issue the Shares as to which this Purchase Warrant is
exercised in accordance with the instructions given below and, if applicable, a new Purchase Warrant representing the number of Shares for
which this Purchase Warrant has not been exercised.

          or

          The undersigned hereby elects irrevocably to convert its right to purchase     Shares of the Company under the Purchase Warrant
for          Shares, as determined in accordance with the following formula:

                                 Y(A-B)
                   X       =       A

 Where,                X   =   The number of Shares to be issued to Holder;
                       Y   =   The number of Shares for which the Purchase Warrant is being exercised;
                       A   =   The fair market value of one Share which is equal to $    ; and
                       B   =   The Exercise Price which is equal to $       per share

        The undersigned agrees and acknowledges that the calculation set forth above is subject to confirmation by the Company and any
disagreement with respect to the calculation shall be resolved by the Company in its sole discretion.

         Please issue the Shares as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if
applicable, a new Purchase Warrant representing the number of Shares for which this Purchase Warrant has not been converted.


Signature


Signature Guaranteed

                                                                      A-12
INSTRUCTIONS FOR REGISTRATION OF SECURITIES

Name:
                            (Print in Block Letters)

Address:




          NOTICE: The signature to this form must correspond with the name as written upon the face of the Purchase Warrant without
alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by
a firm having membership on a registered national securities exchange.

                                                                    A-13
                                                [ Form to be used to assign Purchase Warrant ]

ASSIGNMENT


(To be executed by the registered Holder to effect a transfer of the within Purchase Warrant):


FOR VALUE RECEIVED,                               does hereby sell, assign and transfer unto           the right to purchase shares of
common stock, par value $0.001 per share, of Xplore Technologies Corp., a Delaware corporation (the “ Company ”), evidenced by the
Purchase Warrant and does hereby authorize the Company to transfer such right on the books of the Company.


Dated:              , 20


Signature


Signature Guaranteed


NOTICE: The signature to this form must correspond with the name as written upon the face of the within Purchase Warrant without alteration
or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm
having membership on a registered national securities exchange.

                                                                      A-14



                                                                  EXHIBIT B

                                                        Form of Lock-Up Agreement

                                                                 [Forthcoming]

                                                                      B-1
                                                                EXHIBIT C

                                                           Form of Press Release

[COMPANY]

[Date]

[COMPANY] (the “Company”) announced today that Aegis Capital Corp., acting as representative for the underwriters in the Company’s
recent public offering of            shares of the Company’s common stock, is [waiving] [releasing] a lock-up restriction with respect
to              shares of the Company’s common stock held by [certain officers or directors] [an officer or director] of the Company. The
[waiver] [release] will take effect on             , 20 , and the shares may be sold on or after such date.

This press release is not an offer or sale of the securities in the United States or in any other jurisdiction where such offer or sale is
prohibited, and such securities may not be offered or sold in the United States absent registration or an exemption from registration
under the Securities Act of 1933, as amended.

                                                                    C-1
                                                                                                                                      Exhibit 5.1

                                              PILLSBURY WINTHROP SHAW PITTMAN LLP
                                                           1540 Broadway
                                                      New York, New York 10036

September 14, 2012

Xplore Technologies Corp.
14000 Summit Drive, Suite 900
Austin, Texas 78728

         Re:            Registration Statement on Form S-1

Ladies and Gentlemen:

We are acting as counsel for Xplore Technologies Corp., a Delaware corporation (the “Company”), in connection with the Registration
Statement on Form S-1 (Registration No. 333-182860) relating to the registration under the Securities Act of 1933 (the “Act”) of an aggregate
of $11.5 million in shares of common stock, par value $.001 (the “Common Stock”), of the Company, all of which are authorized but
heretofore unissued shares to be offered and sold by the Company (including shares subject to the underwriters’ over-allotment option). (Such
Registration Statement, as amended, and including any registration statement related thereto and filed pursuant to Rule 462(b) under the Act (a
“Rule 462(b) registration statement”), is herein referred to as the “Registration Statement.”)

We have reviewed and are familiar with such corporate proceedings and other matters as we have deemed necessary for the opinions expressed
in this letter. Based upon the foregoing, we are of the opinion that the shares of Common Stock to be offered and sold by the Company
(including any shares of Common Stock registered pursuant to a Rule 462(b) registration statement) have been duly authorized and, when
issued and sold by the Company in the manner described in the Registration Statement and in accordance with the resolutions adopted by the
Board of Directors of the Company, will be validly issued, fully paid and nonassessable. The opinions set forth in this letter are limited to the
General Corporation Law of the State of Delaware, as in effect on the date hereof.

We hereby consent to the filing of this opinion letter as Exhibit 5.1 to the Registration Statement and to the use of our name under the caption
“Legal Matters” in the Registration Statement and in the Prospectus included therein. In giving this consent, we do not thereby admit that we
are
within the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.

Very truly yours,


/s/ PILLSBURY WINTHROP SHAW PITTMAN LLP

                                                                       2
QuickLinks -- Click here to rapidly navigate through this document


                                                                                                                           Exhibit 23.1




                           CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     We hereby consent to the use in this Amendment No. 1 to the Registration Statement on Form S-1 of our report dated June 25, 2012,
except for the effects of the reverse stock split discussed in Note 15 to the consolidated financial statements, as to which the date is
September 14, 2012, relating to the consolidated financial statements of Xplore Technologies Corp., which appears in such Registration
Statement. We further consent to the reference to our firm under the heading "Experts" in such Registration Statement.

/s/ PMB Helin Donovan, LLP

Austin, Texas
September 14, 2012
QuickLinks

   Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM