Table of ~~these consolidated financial statements.~~

Contents~~MODUSLINK GLOBAL SOLUTIONS, INC. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(in thousands)~~

   Twelve Months Ended July 31,
   2017 2016 2015
Cash flows from operating activities:

Net loss
   $ (25,827 ) $ (61,281 ) $ (18,429 )
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation
   8,206 8,119 8,668
Amortization of intangible assets
   —   —   667
Amortization of deferred financing costs
   566 733 557
Accretion of debt discount
   3,919 4,967 4,473
Impairment of goodwill and long-lived assets
   261 305 3,360
Share-based compensation
   681 1,126 1,757
Non-cash (gains) losses, net
   (3,200 ) 4,519 (15,005 )
(Gains) losses on investments in affiliates and impairments
   (1,278 ) (747 ) 7,087
Changes in operating assets and liabilities:

Trade accounts receivable, net
   31,102 19,130 (14,970 )
Inventories
   6,852 7,752 11,839
Prepaid expenses and other current assets
   1,572 10,763 (26,580 )
Accounts payable, accrued restructuring and accrued expenses
   (45,314 ) (4,245 ) 22,258
Refundable and accrued income taxes, net
   (1,014 ) 2,660 367
Other assets and liabilities
   (971 ) (13,589 ) 33,145


Net cash used in operating activities
   (24,445 ) (19,788 ) 19,194


Cash flows from investing activities:

Additions to property and equipment
   (4,730 ) (7,936 ) (8,518 )
Proceeds from the disposition of property and equipment
   187 1,318 —
Proceeds from the termination of defined benefit pension plan
   905 —   —
Purchase of Trading Securities
   —   (1,220 ) (69,221 )
Proceeds from the sale of Trading Securities
   7,998 59,327 2,325
Investments in affiliates
   —   (42 ) (323 )
Proceeds from investments in affiliates
   1,278 789 408


Net cash provided by investing activities
   5,638 52,236 (75,329 )


Cash flows from financing activities:

Purchase of the Company’s Convertible Notes
   (1,763 ) (20,257 ) —
Repayments on capital lease obligations
   (171 ) (228 ) (216 )
Net proceeds from revolving line of credit
   —   —   (4,453 )
Proceeds from issuance of common stock
   18 51 113
Repurchase of common stock
   —   (127 ) —


Net cash used in financing activities
   (1,916 ) (20,561 ) (4,556 )


Net effect of exchange rate changes on cash and cash equivalents
   603 (528 ) (3,393 )


Net increase (decrease) in cash and cash equivalents
   (20,120 ) 11,359 (64,084 )
Cash and cash equivalents at beginning of period
   130,790 119,431 183,515


Cash and cash equivalents at end of period
   $ 110,670 $ 130,790 $ 119,431

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

~~MODUSLINK GLOBAL SOLUTIONS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(1)~~

~~NATURE OF OPERATIONS~~

ModusLink Global Solutions, Inc. (together with its consolidated subsidiaries, “ModusLink Global Solutions” or the “Company”), through its wholly owned subsidiaries, ModusLink Corporation (“ModusLink”) and ModusLink PTS, Inc. (“ModusLink PTS”), is a leader in global supply chain business process management serving clients in markets such as consumer electronics, communications, computing, medical devices, software, and retail. The Company designs and executes critical elements in its clients’ global supply chains to improve speed to market, product customization, flexibility, cost, quality and service. These benefits are delivered through a combination of industry expertise, innovative service solutions, integrated operations, proven business processes, expansive global footprint and world-class technology.

The Company has an integrated network of strategically located facilities in various countries, including numerous sites throughout North America, Europe and Asia. The Company previously operated under the names CMGI, Inc. and CMG Information Services, Inc. and was incorporated in Delaware in 1986.

~~(2)~~

~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

~~The accompanying consolidated financial statements reflect the application of certain significant accounting policies described below.~~

~~Principles of Consolidation~~

The accompanying consolidated financial statements of the Company include the results of its wholly-owned and majority- owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The Company accounts for investments in businesses in which it owns between 20% and 50% of the voting interest using the equity method, if the Company has the ability to exercise significant influence over the investee company. All other investments in privately held businesses over which the Company does not have the ability to exercise significant influence, or for which there is not a readily determinable market value, are accounted for under the cost method of accounting.

~~Use of Estimates~~

The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates including those related to revenue recognition, allowance for doubtful accounts, inventories, fair value of its trading and available-for-sale securities, intangible assets, income taxes, restructuring, valuation of long-lived assets, impairments, contingencies, restructuring charges, litigation, pension obligations and the fair value of stock options and share bonus awards granted under the Company’s stock based compensation plans. Accounting estimates are based on historical experience and various assumptions that are considered reasonable under the circumstances. However, because these estimates inherently involve judgments and uncertainties, actual results could differ materially from those estimated.

~~Revenue Recognition~~

The Company’s revenue primarily comes from the sale of supply chain management services to its clients. Amounts billed to clients under these arrangements include revenue attributable to the services performed as well as for materials procured on the Company’s clients’ behalf as part of its service to them. Other sources of revenue include the sale of products and other services. Revenue is recognized for services when the services are performed and for product sales when the products are shipped or in certain cases when products are built and title had transferred, if the client has also contracted with us for warehousing and/or logistics services for a separate fee, assuming all other applicable revenue recognition criteria are met.

The Company recognizes revenue in accordance with the provisions of the Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition” (“ASC Topic 605”). Specifically, the Company recognizes revenue when persuasive evidence of an arrangement exists, title and risk of loss have passed or services have been rendered, the sales price is fixed or determinable and collection of the related receivable is reasonably assured. The Company’s shipping terms vary by client and can include FOB

shipping point, which means that risk of loss passes to the client when it is shipped from the Company’s location, as well as other terms such as ex-works, meaning that title and risk of loss transfer upon delivery of product to the customer’s designated carrier. The Company also evaluates the terms of each major client contract relative to a number of criteria that management considers in making its determination with respect to gross versus net reporting of revenue for transactions with its clients. Management’s criteria for making these judgments place particular emphasis on determining the primary obligor in a transaction and which party bears general inventory risk. The Company records all shipping and handling fees billed to clients as revenue, and related costs as cost of sales, when incurred.

The Company applies the provisions of ASC Topic 985, “Software” (“ASC Topic 985”), with respect to certain transactions involving the sale of software products by the Company’s e-Business operations.

The Company applies the guidance of Accounting Standards Codification (“ASC”) 605-25 “Revenue – Multiple-Element Arrangements” for determining whether an arrangement involving more than one deliverable contains more than one unit of accounting and how the arrangement consideration should be measured and allocated to the separate units of accounting. Under this guidance, when vendor specific objective evidence or third party evidence for deliverables in an arrangement cannot be determined, a best estimate of the selling price is required to separate deliverables and allocate arrangement consideration using the relative selling price method. For those contracts which contain multiple deliverables, management must first determine whether each service, or deliverable, meets the separation criteria. In general, a deliverable (or a group of deliverables) meets the separation criteria if the deliverable has standalone value to the client. Each deliverable that meets the separation criteria is considered a “separate unit of accounting.” Management allocates the total arrangement consideration to each separate unit of accounting based on the relative selling price of each separate unit of accounting. After the arrangement consideration has been allocated to each separate unit of accounting, management applies the appropriate revenue recognition method for each separate unit of accounting as described previously based on the nature of the arrangement. In general, revenue is recognized upon completion of the last deliverable. All deliverables that do not meet the separation criteria are combined into one unit of accounting and the appropriate revenue recognition method is applied.

~~Accounts Receivable and Allowance for Doubtful Accounts~~

The Company’s unsecured accounts receivable are stated at original invoice amount less an estimate made for doubtful receivables based on a monthly review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering each customer’s financial condition, credit history and current economic conditions. The Company writes off accounts receivable when management deems them uncollectible and records recoveries of accounts receivable previously written off when received. When accounts receivable are considered past due, the Company generally does not charge interest on past due balances.

~~Foreign Currency Translation~~

All assets and liabilities of the Company’s foreign subsidiaries, whose functional currency is the local currency, are translated to U.S. dollars at the rates in effect at the balance sheet date. All amounts in the Consolidated Statements of Operations are translated using the average exchange rates in effect during the year. Resulting translation adjustments are reflected in the accumulated other comprehensive income (loss) component of stockholders’ equity. Settlement of receivables and payables in a foreign currency that is not the functional currency result in foreign currency transaction gains and losses. Foreign currency transaction gains and losses are included in “Other gains (losses), net” in the Consolidated Statements of Operations.

~~Cash, Cash Equivalents and Short-term Investments~~

The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. Investments with maturities greater than three months to twelve months at the time of purchase are considered short- term investments. Cash and cash equivalents consisted of the following:

   July 31,
2017    July 31,
2016
   (In thousands)
Cash and bank deposits
   $ 24,987    $ 29,566
Money market funds
   85,683    101,224




   $ 110,670    $ 130,790

~~Fair Value of Financial Instruments~~

The carrying value of cash and cash equivalents, accounts receivable, accounts payable, current liabilities and the revolving line of credit approximate fair value because of the short maturity of these instruments. The carrying value of capital lease obligations approximates fair value, as estimated by using discounted future cash flows based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The fair values of the Company’s Trading Securities are estimated using quoted market prices. The fair value of the Company’s Notes payable is $63.9 million as of July 31, 2017, which represents the value at which its lenders could trade its debt with in the financial markets, and does not represent the settlement value of these long-term debt liabilities to us. The fair value of the Notes payable could vary each period based on fluctuations in market interest rates, the Company’s stock price, as well as changes to the Company’s credit ratings. The Notes payable are traded and their fair values are based upon traded prices as of the reporting dates.

The defined benefit plans have assets invested in insurance contracts and bank managed portfolios. Conservation of capital with some conservative growth potential is the strategy for the plans. The Company’s pension plans are outside the United States, where asset allocation decisions are typically made by an independent board of trustees. Investment objectives are aligned to generate returns that will enable the plans to meet their future obligations. The Company acts in a consulting and governance role in reviewing investment strategy and providing a recommended list of investment managers for each plan, with final decisions on asset allocation and investment manager made by local trustees.

ASC Topic 820 provides that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC Topic 820 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:

~~Level 1:~~

~~Observable inputs such as quoted prices for identical assets or liabilities in active markets~~

~~Level 2:~~

~~Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities or market-corroborated inputs~~

~~Level 3:~~

~~Unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions about how market participants would price the assets or liabilities~~

~~Investments~~

Marketable securities held by the Company which meet the criteria for classification as trading securities or available-for-sale are carried at fair value. Gains and losses on securities classified as trading are reflected in other income (expense) in the Company’s Consolidated Statements of Operations. Unrealized holding gains and losses on securities classified as available-for-sale are carried net of income taxes, when applicable, as a component of accumulated other comprehensive income (loss) in the Consolidated Statements of Stockholders’ Equity.

The Company maintained interests in a small number of privately held companies primarily through its various venture capital funds. The Company’s venture capital investment portfolio, @Ventures, invested in early-stage technology companies. These investments are generally made in connection with a round of financing with other third-party investors. Investments in which the Company’s interest is less than 20% and which are not classified as available-for-sale securities, are accounted for under the cost method of accounting, and are carried at the lower of cost or net realizable value. Under this method, the investment balance, originally recorded at is cost, is only adjusted for impairments to the investment. Gains and losses realized upon the sale of the investment are reflected in “Gains on investments in affiliates, net of tax” in the Company’s Consolidated Statements of Operations. If it is determined that the Company exercises significant influence over the investee company, then the equity method of accounting is used. For those investments in which the Company’s voting interest is between 20% and 50%, the equity method of accounting is generally used. Under this method, the investment balance, originally recorded at cost, is adjusted to recognize the Company’s share of net earnings or losses of the investee company as they occur, limited to the extent of the Company’s investment in, advances to and commitments for the investee.

The Company assesses the need to record impairment losses on its investments and records such losses when the impairment of an investment is determined to be other than temporary in nature. The process of assessing whether a particular equity investment’s net realizable value is less than its carrying cost requires a significant amount of judgment. This valuation process is based primarily on information that the Company obtains from these privately held companies who are not subject to the same disclosure and audit requirements as the reports required of U.S. public companies. As such, the timeliness and completeness of the

data may vary. Based on the Company’s evaluation, it recorded impairment charges related to its investments in privately held companies of approximately $42 thousand and $7.3 million for the fiscal years ended July 31, 2016 and 2015, respectively. These impairment losses are reflected in “Impairment of investments in affiliates” in the Company’s Consolidated Statements of Operations.

At the time an equity method investee issues its stock to unrelated parties, the Company accounts for that share issuance as if the Company has sold a proportionate share of its investment. The Company records any gain or loss resulting from an equity method investee’s share issuance in its Consolidated Statements of Operations.

~~Funds held for clients~~

Funds held for clients represent assets that are restricted for use solely for the purposes of satisfying the obligations to remit client’s customer funds to the Company’s clients. These funds are classified as a current asset and a corresponding other current liability on the Company’s Consolidated Balance Sheets.

~~Inventory~~

Inventories are stated at the lower of cost or market. Cost is determined by both the moving average and the first-in, first-out methods. Materials that the Company typically procures on behalf of its clients that are included in inventory include materials such as compact discs, printed materials, manuals, labels, hardware accessories, hard disk drives, consumer packaging, shipping boxes and labels, power cords and cables for client-owned electronic devices.

~~Inventories consisted of the following:~~

   July 31,
2017    July 31,
2016
   (In thousands)
Raw materials
   $ 24,129    $ 28,506
Work-in-process
   713    590
Finished goods
   9,527    11,174




   $ 34,369    $ 40,270

The Company continuously monitors inventory balances and records inventory provisions for any excess of the cost of the inventory over its estimated market value. The Company also monitors inventory balances for obsolescence and excess quantities as compared to projected demands. The Company’s inventory methodology is based on assumptions about average shelf life of inventory, forecasted volumes, forecasted selling prices, contractual provisions with its clients, write-down history of inventory and market conditions. While such assumptions may change from period to period, in determining the net realizable value of its inventories, the Company uses the best information available as of the balance sheet date. If actual market conditions are less favorable than those projected, or the Company experiences a higher incidence of inventory obsolescence because of rapidly changing technology and client requirements, additional inventory provisions may be required. Once established, write-downs of inventory are considered permanent adjustments to the cost basis of inventory and cannot be reversed due to subsequent increases in demand forecasts. Accordingly, if inventory previously written down to its net realizable value is subsequently sold, gross profit margins may be favorably impacted.

~~Long-Lived Assets, Goodwill and Other Intangible Assets~~

The Company follows ASC Topic 360, “Property, Plant, and Equipment” (“ASC Topic 360”). Under ASC Topic 360, the Company tests certain long-lived assets or group of assets for recoverability whenever events or changes in circumstances indicate that the Company may not be able to recover the asset’s carrying amount. ASC Topic 360 defines impairment as the condition that exists when the carrying amount of a long-lived asset or group, including property and equipment and other definite-lived intangible assets, exceeds its fair value. The Company evaluates recoverability by determining whether the undiscounted cash flows expected to result from the use and eventual disposition of that asset or group cover the carrying value at the evaluation date. If the undiscounted cash flows are not sufficient to cover the carrying value, the Company measures an impairment loss as the excess of the carrying amount of the long-lived asset or group over its fair value. Management may use third party valuation experts to assist in its determination of fair value.

The Company is required to test goodwill for impairment annually or if a triggering event occurs in accordance with the provisions of ASC Topic 350, “Goodwill and Other” (“ASC Topic 350”). The Company’s policy is to perform its annual impairment testing for all reporting units with goodwill on July 31 of each fiscal year. As a result of the annual impairment analysis and in connection with the preparation of its annual financial statements for the fiscal year ended July 31, 2015, the Company concluded that its remaining goodwill was fully impaired and recorded a $3.1 million non-cash goodwill impairment charge.

The Company’s valuation methodology for assessing impairment of long-lived assets, goodwill and other intangible assets requires management to make judgments and assumptions based on historical experience and on projections of future operating performance. Management may use third party valuation advisors to assist in its determination of the fair value of reporting units subject to impairment testing. The Company operates in highly competitive environments and projections of future operating results and cash flows may vary significantly from actual results. If the assumptions used in estimating the valuations of the Company’s reporting units for purposes of impairment testing differ materially from actual future results, the Company may record impairment charges in the future and our financial results may be materially adversely affected.

~~Restructuring Expenses~~

The Company follows the provisions of ASC Topic 420, “Exit or Disposal Cost Obligations”, which addresses financial accounting and reporting for costs associated with exit or disposal activities. The statement requires companies to recognize costs associated with exit or disposal activities when a liability has been incurred rather than at the date of a commitment to an exit or disposal plan. The Company records liabilities that primarily include estimated severance and other costs related to employee benefits and certain estimated costs related to equipment and facility lease obligations and other service contracts. These contractual obligations principally represent future obligations under non-cancelable real estate leases. Restructuring estimates relating to real estate leases involve consideration of a number of factors including: potential sublet rental rates, estimated vacancy period for the property, brokerage commissions and certain other costs. Estimates relating to potential sublet rates and expected vacancy periods are most likely to have a material impact on the Company’s results of operations in the event that actual amounts differ significantly from estimates. These estimates involve judgment and uncertainties, and the settlement of these liabilities could differ materially from recorded amounts.

~~Property and Equipment~~

Property, plant and equipment are stated at cost. The costs of additions and improvements are capitalized, while maintenance and repairs are charged to expense as incurred. Depreciation and amortization is provided on the straight-line basis over the estimated useful lives of the respective assets. The Company capitalizes certain computer software development costs when incurred in connection with developing or obtaining computer software for internal use. The estimated useful lives are as follows:


~~Buildings~~		~~32 years~~
~~Machinery & equipment~~		~~3 to 5 years~~
~~Furniture & fixtures~~		~~5 to 7 years~~
~~Automobiles~~		~~5 years~~
~~Software~~		~~3 to 8 years~~
~~Leasehold improvements~~		~~Shorter of the remaining lease term or the estimated useful life of the asset~~

~~Income Taxes~~

Income taxes are accounted for under the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”), using the asset and liability method whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. ASC Topic 740 also requires that the deferred tax assets be reduced by a valuation allowance, if based on the weight of available evidence, it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. This methodology is subjective and requires significant estimates and judgments in the determination of the recoverability of deferred tax assets and in the calculation of certain tax liabilities.

In accordance with ASC Topic 740, the Company applies the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company’s financial statements. ASC Topic 740 prescribes a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in

order for those tax positions to be recognized in the financial statements. In accordance with the Company’s accounting policy, interest and penalties related to uncertain tax positions is included in the “income tax expense” line of the Consolidated Statements of Operations. See Note 14, “Income Taxes,” for additional information.

~~Earnings (Loss) Per Share~~

~~The following table reconciles earnings per share for the fiscal years ended July 31, 2017, 2016 and 2015.~~

   Twelve Months Ended
   July 31,
   2017    2016    2015
   (In thousands, except per share data)
Net loss
   $ (25,827 )    $ (61,281 )    $ (18,429 )
Weighted average common shares outstanding
   55,134    51,934    51,940
Weighted average common equivalent shares arising from dilutive stock options and restricted stock
   —      —      —






Weighted average number of common and potential common shares
   55,134    51,934    51,940






Basic and diluted net loss per share
   $ (0.47 )    $ (1.18 )    $ (0.35 )

Approximately 14.2 million, 21.1 million and 21.6 million common stock equivalent shares relating to the effects of outstanding stock options and restricted stock were excluded from the denominator in the calculation of diluted earnings per share for the fiscal years ended July 31, 2017, 2016 and 2015, respectively, as their effect would be anti-dilutive due to the fact that the Company recorded a net loss for those periods. Approximately 11.4 million and 16.5 million and 16.6 million common shares outstanding associated with the convertible Notes, using the if-converted method, were excluded from the denominator in the calculation of diluted earnings (loss) per share for the fiscal years ended July 31, 2017, 2016 and 2015, respectively.

~~Share-Based Compensation Plans~~

The Company recognizes share-based compensation in accordance with the provisions of ASC Topic 718, “Compensation— Stock Compensation” (“ASC Topic 718”) which requires the measurement and recognition of compensation expense for all share- based payment awards made to employees and directors including employee stock options and employee stock purchases based on estimated fair values.

The Company estimates the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods. The Company estimates forfeitures at the time of grant and revises those estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The Company uses a binomial-lattice option-pricing model (“binomial-lattice model”) for valuation of share-based awards with time-based vesting. The Company believes that the binomial-lattice model is an accurate model for valuing employee stock options since it reflects the impact of stock price changes on option exercise behavior. For performance-based awards, stock-based compensation expense is recognized over the expected performance achievement period of individual performance milestones when the achievement of each individual performance milestone becomes probable. For share-based awards based on market conditions, specifically, the Company’s stock price, the compensation cost and derived service periods are estimated using the Monte Carlo valuation method. The Company uses third party analyses to assist in developing the assumptions used in its binomial-lattice model and Monte Carlo valuations and the resulting fair value used to record compensation expense. The Company’s determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. Any significant changes in these assumptions may materially affect the estimated fair value of the share-based award.

~~Major Clients and Concentration of Credit Risk~~

For the fiscal year ended July 31, 2017, 2016 and 2015, the Company’s 10 largest clients accounted for approximately 70%, 71% and 76% of consolidated net revenue, respectively. Sales to a consumer electronics client (“Client A”) accounted for approximately 15%, 13%, and 10% of the Company’s consolidated net revenue for the fiscal years ended July 31, 2017, 2016 and

2015, respectively. Sales to another consumer electronics client (“Client B”) accounted for approximately 10%, 13%, and 19% of the Company’s consolidated net revenue for the fiscal years ended July 31, 2017, 2016 and 2015, respectively. The Europe reportable segment reports revenue associated with Client A. All four reportable segments report revenues associated with Client B. A computing market client accounted for approximately 13% and 3% of the Company’s Net Accounts Receivable balance as of July 31, 2017 and 2016, respectively. A consumer electronics client accounted for approximately 11% and 16% of the Company’s Net Accounts Receivable balance as of July 31, 2017 and 2016, respectively. To manage risk, the Company performs ongoing credit evaluations of its clients’ financial condition. The Company generally does not require collateral on accounts receivable. The Company maintains an allowance for doubtful accounts based on its assessment of the collectability of accounts receivable.

Financial instruments which potentially subject the Company to concentrations of credit risk are cash, cash equivalents and accounts receivable. The Company’s cash equivalent portfolio is diversified and consists primarily of short-term investment grade securities placed with high credit quality financial institutions. Cash and cash equivalents are maintained at accredited financial institutions, and those and the balances associated with Funds Held for Clients are at times without and in excess of federally insured limits. The Company has never experienced any losses related to these balances and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with financial institutions.

~~Recent Accounting Pronouncements~~

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The effective date will be the first quarter of fiscal year 2019 using one of two retrospective application methods or a cumulative effect approach. The Company is evaluating the potential effects on the consolidated financial statements.

~~In August 2014, the FASB issued ASU No. 2014-15 Presentation of Financial Statements—Going Concern (Subtopic205-40),~~ which amends the accounting guidance related to the evaluation of an entity’s ability to continue as a going concern. The amendment establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern in connection with preparing financial statements for each annual and interim reporting period. The update also gives guidance to determine whether to disclose information about relevant conditions and events when there is substantial doubt about an entity’s ability to continue as a going concern. This guidance will be effective for the Company as of the first quarter of fiscal year 2018. The new guidance is not anticipated to have an effect on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30)—Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the debt liability rather than as an asset. The Company adopted this guidance beginning in the first quarter of fiscal year 2017. Upon adoption, an entity must apply the guidance retrospectively to all prior periods presented in the financial statements. As such, the prior year consolidated balance sheets were also adjusted.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (Topic 330), which provides guidance related to inventory measurement. The new standard requires entities to measure inventory at the lower of cost and net realizable value thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The new standard is effective for the Company beginning in the first quarter of fiscal year 2018. The adoption of the guidance is not expected to have material impact on the Company’s financial statement disclosures, results of operations and financial position.

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, which requires companies to classify all deferred tax assets and liabilities as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. This guidance allowed for adoption on either a prospective or retrospective basis. The Company had elected to early adopt this guidance on a prospective basis and, as a result, prior consolidated balance sheets were not retrospectively adjusted. The adoption of this guidance did increase the assets and liabilities balance on the Company’s consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to today’s accounting. This ASU will be effective for

the Company beginning in the first quarter of fiscal year 2020. The Company is currently evaluating the effect the guidance will have on the Company’s financial statement disclosures, results of operations and financial position.

In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The amendments in this update relate to when another party, along with the Company, are involved in providing a good or service to a customer and are intended to improve the operability and understandability of the implementation guidance on principal versus agent. Revenue recognition guidance requires companies to determine whether the nature of its promise is to provide that good or service to the customer (i.e., the Company is a principal) or to arrange for the good or service to be provided to the customer by the other party (i.e., the Company is an agent). This ASU will be effective for the Company beginning in the first quarter of fiscal year 2019. The Company is currently in the process of assessing what impact this new update may have on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. This ASU will be effective for the Company beginning in the first quarter of fiscal year 2018. The adoption of the guidance is not expected to have material impact on the Company’s financial statement disclosures, results of operations and financial position.

In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, the new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet. Entities will also have to disclose the nature of their restricted cash and restricted cash equivalent balances, which is similar to what is required today for Securities and Exchange Commission Registrants. This ASU will be effective for the Company beginning in the first quarter of fiscal year 2019. The Company is currently in the process of assessing what impact this new standard may have on its combined financial statements but does not believe that implementing this standard will have a significant impact on the Company’s current presentation and disclosures.

In March 2017, the FASB issued ASU No. 2017-07, Compensation—Retirement Benefits (Topic 715), which requires that the service cost component of net periodic pension and postretirement benefit cost be presented in the same line item as other employee compensation costs, while the other components be presented separately as non-operating income (expense). This ASU will be effective for the Company beginning in the first quarter of fiscal year 2019. The Company is currently in the process of assessing what impact this new standard may have on its consolidated financial statements.

~~(3)~~

~~ACCOUNTS RECEIVABLE~~

   July 31,
   2017    2016    2015
   (In thousands)
Balance at beginning of year
   $ 489    $ 57    $ 63
Provisions charged to expense
   132    458    —
Accounts written off
   (5 )    (26 )    (6 )






   $ 616    $ 489    $ 57

During the fourth quarter of fiscal 2013, as a part of its working capital management, the Company entered into a factoring agreement with a third party financial institution for the sale of certain accounts receivables without recourse. The activity under this agreement is accounted for as a sale of accounts receivable under ASC 860 “Transfers and Servicing”. This agreement relates exclusively to the accounts receivables of one of the Company’s significant clients. The amount sold varies each month based on the amount of underlying receivables and cash flow requirements of the Company. The factoring agreement is permitted under the Company’s Credit Facility agreement.

The total amount of accounts receivable factored was $41.1 million and $0.9 million for the years ended July 31, 2017 and 2016, respectively. The cost incurred on the sale of these receivables was immaterial for years ended July 31, 2017 and 2016, respectively. The cost of selling these receivable is dependent upon the number of days between the sale date of the receivable and the date the client’s invoice is due and the interest rate. The interest rate associated with the sale of these receivables is equal to LIBOR plus 0.85%. The expense associated with the sale of these receivables is recorded as a component of selling, general and administrative expense in the accompanying consolidated statements of operations.

~~(4)~~

~~PROPERTY AND EQUIPMENT~~

~~Property and equipment at cost, consists of the following:~~

   July 31,
   2017    2016
   (In thousands)
Buildings
   $ 24,476    $ 24,344
Machinery and equipment
   24,504    24,676
Leasehold improvements
   14,815    14,735
Software
   48,536    44,579
Other
   22,126    24,156




   134,457    132,490
Less: Accumulated depreciation and amortization
   (115,902 )    (110,219 )




Property and equipment, net
   $ 18,555    $ 22,271

~~Assets under capital leases which are included in the amounts above are summarized as follows:~~

   July 31,
   2017    2016
   (In thousands)
Machinery and equipment
   $ 492    $ 370
Other
   13    118




   505    488
Less: Accumulated depreciation and amortization
   (431 )    (455 )




   $ 74    $ 33

The Company recorded depreciation expense of $8.2 million, $8.1 million and $8.7 million for the fiscal years ended July 31, 2017, 2016 and 2015, respectively. Depreciation expense within the Americas, Asia, Europe, and e-Business was $1.2 million, $1.9 million, $1.8 million, and $0.6 million, respectively, for the year ended July 31, 2017, $1.5 million, $3.2 million, $2.6 million, and $0.8 million, respectively, for the year ended July 31, 2016, and $2.3 million, $3.2 million, $2.5 million, and $0.6 million, respectively, for the year ended July 31, 2015. Amortization of assets recorded under capital leases is included in the depreciation expense amounts.

During the year ended, July 31, 2017, the Company recorded impairment charges totaling $0.2 million across multiple segments. During the year ended, July, 2016, the Company recorded an impairment charge of $0.3 million to adjust the carrying value of its building in Kildare, Ireland to its estimated fair value. During the year ended July 31, 2015, the Company recorded $0.3 million in impairment charges related to the write-down of leasehold improvements associated with the planned closure of a facility. These charges are reflected in “impairment of goodwill and long-lived assets” in the Consolidated Statements of Operations.

~~(5)~~

~~INVESTMENTS~~

~~Trading securities~~

During the year ended July 31, 2017, the Company received $8.0 million in proceeds associated with the sale of publicly traded securities (“Trading Securities”), which included a $0.9 million cash gain. During the year ended July 31, 2017, the Company recognized $2.2 million in net non-cash net gains associated with its Trading Securities. During the year ended July 31,

2016, the Company sold $57.2 million in publicly traded securities, with a realized gain of $6.4 million. During the year ended July 31, 2016, the Company received proceeds of $59.3 million associated with the sale of publicly traded securities. However, $2.1 million of these proceeds are related to trades executed during the year ended July 31, 2015. During the year ended July 31, 2016, the Company acquired publicly traded securities of $1.2 million. During the year ended July 31, 2016, the Company recognized $12.3 million in net non-cash losses associated with its Trading Securities.

As of July 31, 2017, the Company had $11.9 million in investments in Trading Securities. As of July 31, 2016, the Company had $16.8 million in investments in Trading Securities, $12.6 million of which were the publicly traded convertible debentures. The Company’s purchases of the publicly traded convertible debentures were on the open market. The chairman of the board of the company issuing the publicly traded convertible debentures is also the chairman of the board of ModusLink Global Solutions, Inc. The Trading Securities were classified within Level 1 of the fair value hierarchy.

~~Investments in affiliates~~

The Company maintained interests in a small number of privately held companies. As of July 31, 2017 and 2016, the value of these investments was fully impaired. As of July 31, 2017, the Company is not committed to fund any follow-on investments in any of the portfolio companies. Investments in which the Company’s interest is less than 20% and which are not classified as available-for-sale securities, are accounted for under the cost method of accounting, and are carried at the lower of cost or net realizable value. Under this method, the investment balance, originally recorded at is cost, is only adjusted for impairments to the investment. Gains and losses realized upon the sale of the investment are reflected in “Gains on investments in affiliates, net of tax” in the Company’s Consolidated Statements of Operations. For the fiscal years ended July 31, 2017, 2016 and 2015, the Company recorded gains of $1.3 million, $0.8 million and $0.2 million, respectively, associated with its cost method investments. If it is determined that the Company exercises significant influence over the investee company, then the equity method of accounting is used. For those investments in which the Company’s voting interest is between 20% and 50%, the equity method of accounting is generally used. Under this method, the investment balance, originally recorded at cost, is adjusted to recognize the Company’s share of net earnings or losses of the investee company as they occur, limited to the extent of the Company’s investment in, advances to and commitments for the investee.

During the year ended July 31, 2015, the Company became aware in various quarters that there may be indicators of impairment for certain investments in the portfolio of companies. During the same year, the Company performed evaluations of its portfolio companies and determined that due to market conditions and their recent performance the portfolio companies were unable to secure potential investors or buyers to fund them as a going concern. As a result, these investments were impaired and the Company recorded impairment charges of $7.3 million during the year ended July 31, 2015.

~~(6)~~

~~GOODWILL AND INTANGIBLE ASSETS~~

The Company conducted its annual goodwill impairment test on July 31 of each fiscal year ended July 31, 2015. In addition, if and when events or circumstances changed that would more likely than not reduce the fair value of any of its reporting units below its carrying value, an interim test would be performed. In making this assessment, the Company relied on a number of factors including operating results, business plans, economic projections, anticipated future cash flows, transactions and marketplace data. The Company’s reporting units are the same as the operating segments: Americas, Asia, Europe and e-Business.

If the carrying value of a reporting unit exceeds its fair value, the Company calculates the implied fair value of the reporting unit’s goodwill and compares it to the carrying value. If the carrying value of goodwill exceeds its implied fair value, an impairment charge is recorded for the difference. The fair value of a reporting unit is primarily based on a discounted cash flow (“DCF”) method. The DCF approach requires that the Company forecast future cash flows for the reporting unit and discount the cash flow streams based on a weighted average cost of capital that is derived, in part, from comparable companies within similar industries. The DCF calculations also include a terminal value calculation that is based upon an expected long-term growth rate for the applicable reporting unit. The Company believes that the use of the income approach is appropriate due to lack of comparability to guideline companies and the lack of comparable transactions under the market approach. The income approach incorporates many assumptions including future growth rates, discount factors, expected capital expenditures and income tax cash flows. The carrying values of each reporting unit include assets and liabilities which relate to the reporting unit’s operations. During the fourth quarter of fiscal year 2015, the Company completed its annual impairment analysis of goodwill and determined that the fair value of the reporting unit, derived from forecasted cash flows, did not exceed its carrying value. As a result of the annual impairment analysis and in connection with the preparation of its annual financial statements for the fiscal year ended July 31, 2015, the Company concluded that its remaining goodwill was fully impaired and recorded a $3.1 million non-cash goodwill impairment charge. The impairment charge was not deductible for tax purposes. The impairment charge did not affect the

~~Company’s liquidity or cash flows and had no effect on the Company’s compliance with the financial covenants under its credit agreement.~~

The intangible asset amortization relates to certain amortizable intangible assets acquired by the Company in connection with its acquisitions. The intangible assets were fully amortized as of July 31, 2015. Amortization expense for intangible assets for the fiscal years ended July 31, 2015 was $0.7 million.

~~(7)~~

~~RESTRUCTURING~~

~~The following tables summarize the activity in the restructuring accrual for the fiscal years ended July 31, 2017, 2016, and 2015:~~

   Employee
Related
Expenses    Contractual
Obligations    Total
   (In thousands)
Accrued restructuring balance at July 31, 2014
   $ 1,687    $ 598    $ 2,285






Restructuring charges
   5,063    324    5,387
Restructuring adjustments
   (193 )    (64 )    (257 )
Cash paid
   (4,949 )    (691 )    (5,640 )
Non-cash adjustments
   (171 )    (76 )    (247 )






Accrued restructuring balance at July 31, 2015
   1,437    91    1,528






Restructuring charges
   6,025    1,536    7,561
Restructuring adjustments
   (108 )    (32 )    (140 )
Cash paid
   (5,244 )    (641 )    (5,885 )
Non-cash adjustments
   (36 )    1    (35 )






Accrued restructuring balance at July 31, 2016
   2,074    955    3,029






Restructuring charges
   1,853    439    2,292
Restructuring adjustments
   (416 )    91    (325 )
Cash paid
   (3,357 )    (1,419 )    (4,776 )
Non-cash adjustments
   (54 )    20    (34 )






Accrued restructuring balance at July 31, 2017
   $ 100    $ 86    $ 186

Restructuring and other costs for the year ended July 31, 2017 primarily included continuing charges for personnel reductions and facility consolidations in an effort to streamline operations across our global supply chain operations. The payments of employee-related charges were substantially completed during the fiscal year ended July 31, 2017. The remaining contractual obligations include facility lease obligations for vacant space resulting from the previous restructuring activities of the Company. The Company anticipates that these contractual obligations will be substantially fulfilled by the end of December 2017.

During the fiscal year ended July 31, 2017, the Company recorded a net restructuring charge of $2.0 million. Of this amount, $1.5 million primarily related to the workforce reduction of 78 employees across all operating segments, and $0.5 million related to contractual obligations.

During the fiscal year ended July 31, 2016, the Company recorded a net restructuring charge of $7.4 million. Of this amount, $5.9 million primarily related to the workforce reduction of 228 employees across all operating segments, and $1.5 million related to contractual obligations.

During the fiscal year ended July 31, 2015, the Company recorded a net restructuring charge of $5.1 million. Of this amount, $4.9 million primarily related to the workforce reduction of 235 employees across all operating segments, and $0.2 million related to contractual obligations

The net restructuring charges for the fiscal years ended July 31, 2017, 2016 and 2015 would have been allocated as follows had the Company recorded the expense and adjustments within the functional department of the restructured activities:

   Twelve Months Ended
July 31,
   2017    2016    2015
   (In thousands)
Cost of revenue
   $ 563    $ 4,812    $ 4,718
Selling, general and administrative
   1,404    2,609    412






   $ 1,967    $ 7,421    $ 5,130

~~The following tables summarize the restructuring accrual by operating segment for the fiscal years ended July 31, 2017, 2016 and 2015:~~

   Americas Asia Europe e-Business Consolidated
Total
   (In thousands)
Accrued restructuring balance at July 31, 2014
   $ 195 $ 274 $ 1,750 $ 66 $ 2,285


Restructuring charges
   1,073 1,056 3,158 100 5,387
Restructuring adjustments
   (164 ) (59 ) 7 (41 ) (257 )
Cash paid
   (869 ) (1,106 ) (3,655 ) (10 ) (5,640 )
Non-cash adjustments
   —   88 (234 ) (101 ) (247 )


Accrued restructuring balance at July 31, 2015
   235 253 1,026 14 1,528


Restructuring charges
   1,885 2,293 2,353 1,030 7,561
Restructuring adjustments
   —   (46 ) (94 ) —   (140 )
Cash paid
   (1,258 ) (1,563 ) (2,895 ) (169 ) (5,885 )
Non-cash adjustments
   —   (43 ) 8 —   (35 )


Accrued restructuring balance at July 31, 2016
   862 894 398 875 3,029


Restructuring charges
   500 972 698 122 2,292
Restructuring adjustments
   (162 ) (154 ) (75 ) 66 (325 )
Cash paid
   (1,172 ) (1,672 ) (984 ) (948 ) (4,776 )
Non-cash adjustments
   23 (40 ) (14 ) (3 ) (34 )


Accrued restructuring balance at July 31, 2017
   $ 51 $ —   $ 23 $ 112 $ 186

~~(8)~~

~~ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES~~

~~The following schedules reflect the components of “Accrued expenses” and “Other Current Liabilities”:~~

   July 31,
2017    July 31,
2016
   (In thousands)
Accrued taxes
   $ 2,272    $ 3,068
Accrued compensation
   10,678    9,590
Accrued interest
   1,366    1,346
Accrued audit, tax and legal
   2,759    2,544
Accrued contract labor
   1,632    2,966
Accrued other
   19,191    18,226




   $ 37,898    $ 37,740

��    July 31,
2017    July 31,
2016
   (In thousands)
Accrued pricing liabilities
   $ 18,882    $ 18,882
Other
   7,259    8,227




   $ 26,141    $ 27,109

As of July 31, 2017 and 2016, the Company had accrued pricing liabilities of approximately $18.9 million. As previously reported by the Company, several principal adjustments were made to its historic financial statements for periods ending on or before January 31, 2012, the most significant of which related to the treatment of vendor rebates in its pricing policies. Where the retention of a rebate or a mark-up was determined to have been inconsistent with a client contract (collectively referred to as “pricing adjustments”), the Company concluded that these amounts were not properly recorded as revenue. Accordingly, revenue was reduced by an equivalent amount for the period that the rebate was estimated to have been affected. A corresponding liability for the same amount was recorded in that period (referred to as accrued pricing liabilities). The Company believes that it may not ultimately be required to pay all of the accrued pricing liabilities, due in part to the nature of the interactions with its clients. The remaining accrued pricing liabilities at July 31, 2017 will be derecognized when there is sufficient information for the Company to conclude that such liabilities have been extinguished, which may occur through payment, legal release, or other legal or factual determination.

~~(9)~~

~~DEBT~~

~~Notes Payable~~

On March 18, 2014, the Company entered into an indenture (the “Indenture”) with Wells Fargo Bank, National Association, as trustee, relating to the Company’s issuance of $100 million of 5.25% Convertible Senior Notes (the “Notes”). The Notes bear interest at the rate of 5.25% per year, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2014. The Notes will mature on March 1, 2019, unless earlier repurchased by the Company or converted by the holder in accordance with their terms prior to such maturity date.

Holders of the Notes may convert all or any portion of their notes, in multiples of $1,000 principal amount, at their option at any time prior to the close of business or the business day immediately preceding the maturity date. Each $1,000 of principal of the Notes will initially be convertible into 166.2593 shares of our common stock, which is equivalent to an initial conversion price of approximately $6.01 per share, subject to adjustment upon the occurrence of certain events, or, if the Company obtains the required consent from its stockholders, into shares of the Company’s common stock, cash or a combination of cash and shares of its common stock, at the Company’s election. If the Company has received stockholder approval, and it elects to settle conversions through the payment of cash or payment or delivery of a combination of cash and shares, the Company’s conversion obligation will be based on the volume weighted average prices (“VWAP”) of its common stock for each VWAP trading day in a 40 VWAP trading day observation period. The Notes and any of the shares of common stock issuable upon conversion have not been registered. As of July 31, 2017, the if-converted value of the Notes did not exceed the principal value of the Notes.

Holders will have the right to require the Company to repurchase their Notes, at a repurchase price equal to 100% of the principal amount of the Notes plus accrued and unpaid interest, upon the occurrence of certain fundamental changes, subject to certain conditions. No fundamental changes occurred during the year ended July 31, 2017.

The Company may not redeem the Notes prior to the mandatory date, and no sinking fund is provided for the Notes. The Company will have the right to elect to cause the mandatory conversion of the Notes in whole, and not in part, at any time on or after March 6, 2017, if the last reported sale price of its common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company notifies holders of its election to mandatorily convert the Notes, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company notifies holders of its election to mandatorily convert the notes.

Per the Indenture, if the Notes are assigned a restricted CUSIP or the Notes are not otherwise freely tradable by holders at any time during the three months immediately preceding as of the 365th day after the last date of original issuance of the Notes, the Company shall pay additional interest on the Notes at a rate equal to 0.50% per annum of the principal amount of Notes outstanding until the restrictive legend on the Notes has been removed. The restrictive legend was removed on August 26, 2015 and, as such, the Company paid $0.2 million in additional interest associated with this restriction.

The Company has valued the debt using similar nonconvertible debt as of the original issuance date of the Notes and bifurcated the conversion option associated with the Notes from the host debt instrument and recorded the conversion option of $28.1 million in stockholders’ equity prior to the allocation of debt issuance costs. The initial value of the equity component, which reflects the equity conversion feature, is equal to the initial debt discount. The resulting debt discount on the Notes is being accreted to interest expense at the effective interest rate over the estimated life of the Notes. The equity component is included in the additional paid-in-capital portion of stockholders’ equity on the Company’s consolidated balance sheet. In addition, the debt issuance costs of $3.4 million are allocated between the liability and equity components in proportion to the allocation of the proceeds. During the first quarter of fiscal year 2017, the Company adopted ASU No. 2015-03. As such, the issuance costs allocated to the liability component ($2.5 million) are capitalized as a reduction of the principal amount of the Notes payable on the

Company’s balance sheet and amortized, using the effective-interest method, as additional interest expense over the term of the Notes. The issuance costs allocated to the equity component is recorded as a reduction to additional paid-in capital.

During the year ended July 31, 2017, the Company purchased $2.0 million in face value of the Notes in the open market at a purchase price of $1.8 million. The gain of $0.1 million on this transaction is presented as a component of other gains and losses. The fair value of the Company’s Notes payable, calculated as of the closing price of the traded securities, was $63.9 million and $51.0 million as of July 31, 2017 and July 31, 2016, respectively. This value does not represent the settlement value of these long-term debt liabilities to the Company. The fair value of the Notes payable could vary each period based on fluctuations in market interest rates, as well as changes to our credit ratings. The Notes payable are traded and their fair values are based upon traded prices as of the reporting dates. As of July 31, 2017 and July 31, 2016, the net carrying value of the Notes was $59.8 million and $57.2 million, respectively.

   July 31,
2017    July 31,
2016
   (In thousands)
Carrying amount of equity component (net of allocated debt issuance costs)
   $ 26,961    $ 27,099
Principal amount of Notes
   $ 67,625    $ 69,625
Unamortized debt discount
   (7,227 )    (11,443 )
Unamortized debt issuance costs
   (640 )    (1,013 )




Net carrying amount
   $ 59,758    $ 57,169

~~As of July 31, 2017, the remaining period over which the unamortized discount will be amortized is 19 months.~~

   Twelve Months Ended
July 31,
   2017    2016    2015
   (In thousands)
Interest expense related to contractual interest coupon
   $ 3,651    $ 5,159    $ 5,310
Interest expense related to accretion of the discount
   3,919    4,967    4,473
Interest expense related to debt issuance costs
   347    439    344






   $ 7,917    $ 10,565    $ 10,127

During the year ended July 31, 2017, 2016 and 2015, the Company recognized interest expense of $7.9 million, $10.6 million and $10.1 million associated with the Notes, respectively. The effective interest rate on the Notes, including amortization of debt issuance costs and accretion of the discount, is 13.9%. The notes bear interest of 5.25%.

~~PNC Bank Credit Facility~~

On June 30, 2014, two direct and wholly owned subsidiaries of the Company (the “Borrowers”) entered into a revolving credit and security agreement (the “Credit Agreement”), as borrowers and guarantors, with PNC Bank and National Association, as lender and as agent, respectively.

The Credit Agreement has a five (5) year term which expires on June 30, 2019. It includes a maximum credit commitment of $50.0 million, is available for letters of credit (with a sublimit of $5.0 million) and has a $20.0 million uncommitted accordion feature. The actual maximum credit available under the Credit Agreement varies from time to time and is determined by calculating the applicable borrowing base, which is based upon applicable percentages of the values of eligible accounts receivable and eligible inventory minus reserves determined by the Agent (including other reserves that the Agent may establish from time to time in its permitted discretion), all as specified in the Credit Agreement.

Generally, borrowings under the Credit Agreement bear interest at a rate per annum equal to, at the Borrowers’ option, either (a) LIBOR (adjusted to reflect any required bank reserves) for an interest period equal to one, two or three months (as selected by the Borrowers) plus a margin of 2.25% per annum or (b) a base rate determined by reference to the highest of (1) the base commercial lending rate publicly announced from time to time by PNC Bank, National Association, (2) the sum of the Federal Funds Open Rate in effect on such day plus one half of one percent (0.5%) per annum, or (3) the LIBOR rate (adjusted to reflect any required bank reserves) in effect on such day plus 1.00% per annum. In addition to paying interest on outstanding principal under the Credit Agreement, the Borrowers are required to pay a commitment fee, in respect of the unutilized commitments thereunder, of 0.25% per annum, paid quarterly in arrears. The Borrowers are also required to pay a customary letter of credit fee equal to the applicable margin on revolving credit LIBOR loans and fronting fees.

Obligations under the Credit Agreement are guaranteed by the Borrowers’ existing and future direct and indirect wholly-owned domestic subsidiaries, subject to certain limited exceptions; and the Credit Agreement is secured by security interests in substantially all the Borrowers’ assets and the assets of each subsidiary guarantor, whether owned as of the closing or thereafter acquired, including a pledge of 100.0% of the equity interests of each subsidiary guarantor that is a domestic entity (subject to certain limited exceptions) and 65.0% of the voting equity interests of any direct first tier foreign entity owned by either Borrower or by a subsidiary guarantor. The Company is not a borrower or a guarantor under the Credit Agreement.

The Credit Agreement contains certain customary negative covenants, which include limitations on mergers and acquisitions, the sale of assets, liens, guarantees, investments, loans, capital expenditures, dividends, indebtedness, changes in the nature of business, transactions with affiliates, the creation of subsidiaries, changes in fiscal year and accounting practices, changes to governing documents, compliance with certain statutes, and prepayments of certain indebtedness. The Credit Agreement also contains certain customary affirmative covenants (including periodic reporting obligations) and events of default, including upon a change of control. The Credit Agreement requires compliance with certain financial covenants providing for maintenance of specified liquidity, maintenance of a minimum fixed charge coverage ratio and/or maintenance of a maximum leverage ratio following the occurrence of certain events and/or prior to taking certain actions, all as more fully described in the Credit Agreement. The Company believes that the Credit Agreement provides greater financial flexibility to the Company and the Borrowers and may enhance their ability to consummate one or several larger and/or more attractive acquisitions and should provide the Company’s clients and/or potential clients with greater confidence in the Company’s and the Borrowers’ liquidity. During the year ended July 31, 2017, the Company did not meet the criteria that would cause its financial covenants to be applicable. As of July 31, 2017 and 2016, the Company did not have any balance outstanding on the PNC Bank credit facility.

~~(10)~~

~~COMMITMENTS AND CONTINGENCIES~~

The Company leases facilities and certain other machinery and equipment under various non-cancelable operating leases and executory contracts expiring through December 2021. Certain non-cancelable leases are classified as capital leases and the leased assets are included in property, plant and equipment, at cost. Future annual minimum payments, including restructuring related obligations as of July 31, 2017, are as follows:

   Operating
Leases    Capital
Lease
Obligations    Purchase
Obligations    Convertible
Notes
Interest &
Principal    Total
      (In thousands)
For the fiscal years ended July 31:

2018
   $ 9,947    $ 64    $ 30,998    $ 3,550    $ 44,559
2019
   6,318    101    —      71,175    77,594
2020
   3,398    55    —      —      3,453
2021
   2,358    55    —      —      2,413
2022
   2,160    30    —      —      2,190
Thereafter
   —      —      —      —      —










   $ 24,181    $ 305    $ 30,998    $ 74,725    $ 130,209

~~Total rent and equipment lease expense charged to continuing operations was $15.6 million, $17.3 million and $19.7 million for the fiscal years ended July 31, 2017, 2016 and 2015, respectively.~~

From time to time, the Company agrees to provide indemnification to its clients in the ordinary course of business. Typically, the Company agrees to indemnify its clients for losses caused by the Company. As of July 31, 2017, the Company had no recorded liabilities with respect to these arrangements.

Purchase obligations represent an estimate of all open purchase orders and contractual obligations in the ordinary course of business for which the Company has not received the goods or services. Although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to cancel, reschedule, and adjust the Company’s requirements based on its business needs prior to the delivery of goods or performance of services.

~~Legal Proceedings~~

On June 8, 2015, Sean Peters, a former employee filed a complaint (the “Complaint”) against ModusLink Corporation (together, the “parties”) in Superior Court of California asserting claims, among other things, for failure to pay wages, breach of

contract, wrongful retaliation and termination, fraud, violations of California Business and Professions Code Section 17200, et seq., and civil penalties pursuant to California Labor Code Sections and pursuant to the California Private Attorney General Act, seeking over $1.0 million in damages, attorneys’ fees and costs and penalties. ModusLink filed an Answer to the Complaint making a general denial and asserting various affirmative defenses. The parties agreed to mediate the matter and on June 29, 2017, the parties attended a confidential mediation. At mediation ModusLink Corporation and its insurance carrier agreed to pay an immaterial amount to settle the matter.

On May 12, 2017, the Excise Tax Branch of the Internal Revenue Service issued a claim associated with the Company’s compliance with the self-assessment of excise tax on Ozone Depleting Chemicals. The Company is objecting to the assessment on a number of technical and substantive grounds, and plans to vigorously defend itself against this claim. Currently the Company is unable to determine the probability of an unfavorable outcome or a range of outcomes. Accordingly, the Company has not recorded a reserve associated with this matter.

~~(11)~~

~~DEFINED BENEFIT PENSION PLANS~~

During the year ended July 31, 2017, the Company terminated the defined benefit pension plan (the “Taiwan Plan”) covering certain of its employees in its Taiwan facility. As of the Taiwan Plan termination date, the fair value of the Taiwan Plan assets were in excess of the project benefit obligation. The Company received $0.9 million in cash proceeds associated with the termination of this defined benefit pension plan. The termination of this defined benefit pension plan did not result in a gain or loss for the year ended July 31, 2017.

As of July 31, 2017, the Company sponsored two defined benefit pension plans covering certain of its employees in its Netherlands facility and one unfunded defined benefit pension plan covering certain of its employees in Japan. Pension costs are actuarially determined.

The plan assets are primarily related to the defined benefit plan associated with the Company’s Netherlands facility. It consists of an insurance contract that guarantees the payment of the funded pension entitlements. Insurance contract assets are recorded at fair value, which is determined based on the cash surrender value of the insured benefits which is the present value of the guaranteed funded benefits. Insurance contracts are valued using unobservable inputs, primarily by discounting expected future cash flows relating to benefits paid from a notional investment portfolio in order to determine the cash surrender value of the policy. The following table presents the plan assets measured at fair value on a recurring basis as of July 31, 2017 and 2016, classified by fair value hierarchy:

      Fair Value Measurements at Reporting Date Using
(In thousands)    July 31, 2017    Asset
Allocations Level 1    Level 2    Level 3
Insurance contract
   $ 20,726    98 % $ —      $ —      $ 20,726
Other investments
   478    2 % —      —      478








   $ 21,204    100 % $ —      $ —      $ 21,204








      Fair Value Measurements at Reporting Date Using
(In thousands)    July 31, 2016    Asset
Allocations Level 1    Level 2    Level 3
Insurance contract
   $ 24,012    94 % $ —      $ —      $ 24,012
Other investments
   1,461    6 % —      —      1,461








   $ 25,473    100 % $ —      $ —      $ 25,473

~~The aggregate change in benefit obligation and plan assets related to these plans was as follows:~~

   July 31,
   2017    2016
   (In thousands)
Change in benefit obligation

Benefit obligation at beginning of year
   $ 31,667    $ 25,617
Service cost
   700    632
Interest cost
   573    637
Actuarial (gain) loss
   (6,814 )    5,351
Employee contributions
   103    120
Benefits and administrative expenses paid
   (157 )    (269 )
Adjustments
   —      156
Settlements
   (279 )    (55 )
Effect of curtailment
   —      (941 )
Currency translation
   1,671    419




Benefit obligation at end of year
   27,464    31,667




Change in plan assets

Fair value of plan assets at beginning of year
   25,473    19,350
Actual return on plan assets
   (5,005 )    5,556
Employee contributions
   104    120
Employer contributions (withdrawals), net
   (342 )    539
Settlements
   (279 )    (55 )
Benefits and administrative expenses paid
   (157 )    (269 )
Currency translation
   1,410    232




Fair value of plan assets at end of year
   21,204    25,473




Funded status

Assets
   —      889
Current liability
   (12 )    (68 )
Noncurrent liability
   (6,248 )    (7,015 )




Net amount recognized in statement of financial position as a noncurrent asset (liability)
   $ (6,260 )    $ (6,194 )

~~The accumulated benefit obligation was approximately $25.5 million and $29.0 million at July 31, 2017 and 2016, respectively.~~

~~Information for pension plans with an accumulated benefit obligation in excess of plan assets was as follows:~~

   July 31,
   2017    2016
   (In thousands)
Projected benefit obligation
   $ 27,464    $ 31,667
Accumulated benefit obligation
   $ 25,531    $ 29,031
Fair value of plan assets
   $ 21,204    $ 24,584

~~Components of net periodic pension cost were as follows:~~

   Twelve Months Ended
July 31,
   2017    2016    2015
   (In thousands)
Service cost
   $ 700    $ 632    $ 658
Interest costs
   573    637    604
Expected return on plan assets
   (457 )    (491 )    (537 )
Amortization of net actuarial (gain) loss
   201    222    64
Curtailment gain
   —      (844 )    (164 )






Net periodic pension costs
   $ 1,017    $ 156    $ 625

The amount included in accumulated other comprehensive income expected to be recognized as a component of net periodic pension costs in fiscal year 2018 is approximately $4.7 million related to amortization of a net actuarial loss and prior service cost.

~~Assumptions:~~

~~Weighted-average assumptions used to determine benefit obligations was as follows:~~

   Twelve Months Ended
July 31,
   2017 2016 2015
Discount rate
   2.47 % 1.72 % 2.46 %
Rate of compensation increase
   1.93 % 1.92 % 1.95 %

~~Weighted-average assumptions used to determine net periodic pension cost was as follows:~~

   Twelve Months Ended
July 31,
   2017 2016 2015
Discount rate
   1.69 % 1.95 % 3.05 %
Expected long-term rate of return on plan assets
   1.69 % 2.41 % 3.02 %
Rate of compensation increase
   1.91 % 1.83 % 2.41 %

The discount rate reflects the Company’s best estimate of the interest rate at which pension benefits could be effectively settled as of the valuation date. It is based on the Mercer Yield Curve for the Eurozone as per July 31, 2017 for the appropriate duration of the plan.

To develop the expected long-term rate of return on assets assumptions consideration is given to the current level of expected returns on risk free investments, the historical level of risk premium associated with the other asset classes in which the portfolio is invested and the expectations for the future returns of each asset class. The expected return for each asset class was then weighted based on the target asset allocation to develop the expected long-term rate of return on assets assumption for the portfolio.

~~Benefit payments:~~

The following table summarizes expected benefit payments from the plans through fiscal year 2026. Actual benefit payments may differ from expected benefit payments. The minimum required contributions to the plans are expected to be approximately $0.2 million in fiscal year 2018.

   Pension Benefit
Payments
   (in thousands)
For the fiscal years ended July 31:

2018
   168
2019
   211
2020
   210
2021
   252
2022
   254
Next 5 years
   2,095

~~The current target allocations for plan assets are primarily insurance contracts. The market value of plan assets using Level 3 inputs is approximately $21.2 million.~~

~~Valuation Technique:~~

Benefit obligations are computed using the projected unit credit method. Benefits are attributed to service based on the plan’s benefit formula. Cumulative gains and losses in excess of 10% of the greater of the pension benefit obligation or market-related value of plan assets are amortized over the expected average remaining future service of the current active membership.

~~(12)~~

~~OTHER GAINS (LOSSES), NET~~

~~The following schedule reflects the components of “Other gains (losses), net”:~~

   Twelve Months Ended
July 31,
   2017    2016    2015
   (In thousands)
Foreign currency exchange gain (losses)
   $ 199    $ (593 )    $ 1,796
Gains (losses) on Trading Securities
   3,128    (5,920 )    13,611
Other, net
   (127 )    756    (402 )






   $ 3,200    $ (5,757 )    $ 15,005

Other gains (losses), net totaled approximately $3.2 million for the fiscal years ended July 31, 2017. The balance consists primarily of $2.2 million and $0.9 million, in net non-cash and cash gains, respectively, associated with its Trading Securities, and $0.2 million in net realized and unrealized foreign exchange gains, offset by other gain and losses.

Other gains (losses), net totaled approximately $(5.8) million for the fiscal years ended July 31, 2016. The balance consists primarily of $(12.3) million and $6.4 million, in net non-cash and cash gains and (losses), respectively, associated with its Trading Securities, $0.8 million in non-cash gains associated with the repurchase of the Company’s Notes and $(0.6) million in net realized and unrealized foreign exchange losses, offset by other gain and losses.

Other gains (losses), net totaled approximately $15.0 million for the fiscal years ended July 31, 2015. The balance consists primarily of $12.8 million and $0.8 million, in net non-cash and cash gains, respectively, associated with its Trading Securities and $1.8 million in net realized and unrealized foreign exchange gains, offset by other gain and losses.

~~(13)~~

~~SHARE-BASED PAYMENTS~~

~~Stock Option Plans~~

During the fiscal year ended July 31, 2017, the Company had outstanding awards for stock options under two plans: the 2010 Incentive Award Plan (the “2010 Plan”) and the 2005 Non-Employee Director Plan (the “2005 Plan”). Historically, the Company has had the 2004 Stock Incentive Plan (the “2004 Plan”), the 2002 Non-Officer Employee Stock Incentive Plan (the “2002 Plan”), and the 2000 Stock Incentive Plan (the “2000 Plan”). Options granted under the 2010 Plan are generally exercisable as to 25% of the shares underlying the options beginning one year after the date of grant, with the option being exercisable as to the remaining shares in equal monthly installments over the next three years. The Company may also grant awards other than stock options under the 2010 Plan. Options granted under the 2005 plan are exercisable in equal monthly installments over three years, and have a term of ten years. As of December 2010, no additional grants may be issued under this plan. Stock options granted under all other plans have contractual terms of seven years.

During the fiscal year ended July 31, 2013, under the 2010 Plan, the Company issued to certain officers options that vest based on market conditions, specifically, the performance of the Company’s stock (the “Market Options”). The Market Options have a seven-year term and vest and become exercisable as to 20% of the total number of shares subject to the Market Option on each of the first five anniversaries of the grant date, subject to a minimum average share price being achieved as of each such vesting date (the “Price Performance Threshold”), which shall be (i) 1.5 times the exercise price, (ii) 2 times the exercise price, (iii) 2.5 times the exercise price, (iv) 3 times the exercise price and (v) 3.5 times the exercise price, respectively. If the specified minimum average share price for the applicable anniversary date is not achieved, 20% of the total number of shares subject to the Market Option shall not vest and become exercisable but may vest on the subsequent anniversary date if the minimum average share price related to the earlier anniversary date is achieved or exceeded on the subsequent anniversary date. These options were no longer outstanding as of July 31, 2017.

Under the 2010 Plan, pursuant to which the Company may grant stock options, stock appreciation rights, restricted stock awards and other equity-based awards for the issuance of (i) 5,000,000 shares of common stock of the Company plus (ii) the number of shares subject to outstanding awards under the Company’s 2000 Plan, 2002 Plan and 2004 Plan (collectively, the “Prior Plans”) that expire or are forfeited following December 8, 2010, the effective date of the 2010 Plan. As of December 8, 2010, the Company ceased making any further awards under its Prior Plans. As of December 8, 2010, the effective date of the 2010 Plan, there were an additional 2,922,258 shares of common stock underlying equity awards issued under the Company’s Prior Plans. This amount represents the maximum number of additional shares that may be added to the 2010 Plan should these awards expire or be forfeited subsequent to December 8, 2010. Any awards that were outstanding under the Prior Plans as of the effective date continued to be subject to the terms and conditions of such Prior Plan. As of July 31, 2017, 5,299,305 shares were available for future issuance under the 2010 Plan.

The Board of Directors administers all stock plans, approves the individuals to whom options will be granted, and determines the number of shares and exercise price of each option and may delegate this authority to a committee of the Board or to certain officers of the Company in accordance with SEC regulations and applicable Delaware law.

~~Employee Stock Purchase Plan~~

The Company offers to its employees an Employee Stock Purchase Plan, (the “ESPP”) under which an aggregate of 600,000 shares of the Company’s stock may be issued. Employees who elect to participate in the ESPP instruct the Company to withhold a specified amount through payroll deductions during each quarterly period. On the last business day of each applicable quarterly payment period, the amount withheld is used to purchase the Company’s common stock at a purchase price equal to 85% of the lower of the market price on the first or last business day of the quarterly period. During the fiscal years ended July 31, 2017, 2016 and 2015, the Company issued approximately 11,000, 30,000 and 15,000 shares, respectively, under the ESPP. Approximately 136,000 shares are available for future issuance as of July 31, 2017.

~~Stock Option Valuation and Expense Information~~

The following table summarizes share-based compensation expense related to employee stock options, employee stock purchases and nonvested shares for the fiscal years ended July 31, 2017, 2016 and 2015:

   Twelve Months Ended July 31,
   2017    2016    2015
Cost of revenue
   $ 53    $ 96    $ 171
Selling, general and administrative
   628    1,030    1,586






   $ 681    $ 1,126    $ 1,757

The Company estimates the fair value of stock option awards on the date of grant using a binomial-lattice model. No employee stock options were granted during the fiscal year ended July 31, 2017. The weighted-average grant date fair value of employee stock options granted during the fiscal years ended July 31, 2016, and 2015 was $1.11 and $1.59, respectively, using the binomial-lattice model with the following weighted-average assumptions:

   Twelve Months Ended July 31,
       2016         2015
Expected volatility
   55.80 % 56.30 %
Risk-free interest rate
   1.28 % 1.24 %
Expected term (in years)
   4.41 4.41
Expected dividend yield
   0.00 % 0.00 %

The volatility assumption for fiscal years 2016 and 2015 is based on the weighted-average of the historical volatility of the Company’s common shares for a period equal to the expected term of the stock option awards.

~~The weighted-average risk-free interest rate assumption is based upon the interpolation of various U.S. Treasury rates, as of the month of the grants.~~

The expected term of employee stock options represents the weighted-average period the stock options are expected to remain outstanding and is based on historical option activity. The determination of the expected term of employee stock options assumes

that employees’ exercise behavior is comparable to historical option activity. The binomial-lattice model estimates the probability of exercise as a function of time based on the entire history of exercises and cancellations on all past option grants made by the Company. The expected term generated by these probabilities reflects actual and anticipated exercise behavior of options granted historically.

As share-based compensation expense recognized in the Consolidated Statements of Operations for the fiscal years ended July 31, 2017, 2016 and 2015 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. ASC Topic 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience.

~~Stock Options~~

~~A summary of option activity for the fiscal year ended July 31, 2017 is as follows:~~

   Number
of Shares Weighted-
Average
Exercise Price    Weighted-Average
Remaining Contractual
Term (Years)    Aggregate
Intrinsic
Value
   (in thousands, except exercise price and years)
Stock options outstanding, July 31, 2016
   1,368 $ 4.36
Granted
   —   —
Exercised
   —   —
Forfeited or expired
   (795 ) 4.37



Stock options outstanding, July 31, 2017
   573 4.36    2.70    $ —






Stock options exercisable, July 31, 2017
   532 $ 4.40    2.60    $ —

As of July 31, 2017, unrecognized share-based compensation related to stock options was approximately $0.1 million. This cost is expected to be expensed over a weighted average period of 0.9 years. The aggregate intrinsic value of options exercised during the fiscal years ended July 31, 2017, 2016 and 2015 was immaterial.

As of July 31, 2017, there were 0.6 million stock options that were vested and expected to vest in the future with a weighted- average remaining contractual term of 2.71 years. The aggregate intrinsic value of these awards is immaterial.

~~Nonvested Stock~~

Nonvested stock consists of shares of common stock that are subject to restrictions on transfer and risk of forfeiture until the fulfillment of specified conditions. Nonvested stock is expensed ratably over the term of the restriction period, ranging from one to five years unless there are performance restrictions placed on the nonvested stock, in which case the nonvested stock is expensed using graded vesting. Nonvested stock compensation expense for the fiscal years ended July 31, 2017, 2016 and 2015 was $0.5 million, $0.7 million and $0.6 million, respectively.

~~A summary of the activity of the Company’s nonvested stock for the fiscal year ended July 31, 2017, is as follows:~~

   Number
of Shares    Weighted-Average
Grant Date Fair
Value
   (share amounts in thousands)
Nonvested stock outstanding, July 31, 2016
   258    $ 2.48
Granted
   296    —
Vested
   (245 )    2.45
Forfeited
   (13 )    3.05



Nonvested stock outstanding, July 31, 2017
   296    $ —

The fair value of nonvested shares is determined based on the market price of the Company’s common stock on the grant date. The total grant date fair value of nonvested stock that vested during the fiscal years ended July 31, 2017, 2016 and 2015 was approximately $0.6 million, $1.0 million and $0.3 million, respectively. As of July 31, 2017, there was approximately $0.2 million of total unrecognized compensation cost related to nonvested stock to be recognized over a weighted-average period of 0.4 years.

~~(14) INCOME TAXES~~

~~The components of loss from continuing operations before provision for income taxes are as follows:~~

   Twelve Months Ended
July 31,
   2017 2016 2015
   (In thousands)
Income (loss) from operations before income taxes:

U.S.
   $ (34,884 ) $ (69,861 ) $ (8,476 )
Foreign
   10,475 13,234 (7,878 )


Total loss from operations before income taxes
   $ (24,409 ) $ (56,627 ) $ (16,354 )

~~The components of income tax expense have been recorded in the Company’s consolidated financial statements as follows:~~

   Twelve Months Ended
July 31,
   2017    2016    2015
   (In thousands)
Income tax expense from continuing operations
   2,696    5,443    2,283






Total income tax expense
   $ 2,696    $ 5,443    $ 2,283

~~The components of income tax expense from continuing operations consist of the following:~~

   Twelve Months Ended
July 31,
   2017    2016    2015
   (In thousands)
Current provision

Federal
   $ —      $ —      $ —
State
   —      —      —
Foreign
   2,298    3,090    4,323






   2,298    3,090    4,323






Deferred provision:

Federal
   —      —      —
State
   —      —      —
Foreign
   398    2,353    (2,040 )






   398    2,353    (2,040 )






Total tax provision
   $ 2,696    $ 5,443    $ 2,283

Deferred income tax assets and liabilities have been classified on the Consolidated Balance Sheets in accordance with the nature of the item giving rise to the temporary differences. During the year ended July 31, 2016, the Company elected to early adopt ASU No. 2015-17, which requires companies to classify all deferred tax assets and liabilities as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. This guidance allows for adoption on either a prospective or retrospective basis. As of July 31, 2017, the Company recorded a non-current deferred tax asset of $1.9 million and a non-current deferred tax liability of $0.7 million in Other Assets, and Other Long-term Liabilities, respectively. As of July 31,

2016, the Company recorded a non-current deferred tax asset of $2.3 million and a non-current deferred tax liability of $0.8 million in Other Assets and Other Long-term Liabilities, respectively. The components of deferred tax assets and liabilities are as follows:

      July 31, 2017    July 31, 2016
   (In thousands)
Deferred tax assets:

Accruals and reserves
   $ 12,193    $ 12,240
Tax basis in excess of financial basis of investments in affiliates
   18,332    19,051
Tax basis in excess of financial basis for intangible and fixed assets
   7,689    8,455
Net operating loss and capital loss carry forwards
   751,435    744,357




Total gross deferred tax assets
   789,649    784,103
Less: valuation allowance
   (771,884 )    (760,906 )




Net deferred tax assets
   $ 17,765    $ 23,197




Deferred tax liabilities:

Financial basis in excess of tax basis for intangible and fixed assets
   $ (784 )    $ (861 )
Convertible Debt
   (2,655 )    (4,241 )
Undistributed accumulated earnings of foreign subsidiaries
   (13,150 )    (16,554 )




Total gross deferred tax liabilities
   (16,589 )    (21,656 )




Net deferred tax asset
   $ 1,176    $ 1,541

~~Subsequently reported tax benefits relating to the valuation allowance for deferred tax assets as of July 31, 2017 will be allocated as follows (in thousands):~~

Income tax benefit recognized in the consolidated statement of operations
   $ (756,423 )
Additional paid in capital
   (15,461 )


   $ (771,884 )

The net change in the total valuation allowance for the fiscal year ended July 31, 2017 was an increase of approximately $11.0 million. This increase is primarily due to the U.S. valuation allowance as well as the valuation allowance provided for Taiwan and France for the year ended July 31, 2017. A valuation allowance has been recorded against the gross deferred tax asset in the U.S and certain foreign subsidiaries since management believes that after considering all the available objective evidence, both positive and negative, historical and prospective, it is more likely than not that certain assets will not be realized. The net change in the total valuation allowance for the fiscal year ended July 31, 2016 was an increase of approximately $10.3 million.

The Company has certain deferred tax benefits, including those generated by net operating losses and certain other tax attributes (collectively, the “Tax Benefits”). The Company’s ability to use these Tax Benefits could be substantially limited if it were to experience an “ownership change,” as defined under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). In general, an ownership change would occur if there is a greater than 50-percentage point change in ownership of securities by stockholders owning (or deemed to own under Section 382 of the Code) five percent or more of a corporation’s securities over a rolling three-year period.

On October 17, 2011, the Company’s Board of Directors adopted a Tax Benefit Preservation Plan between the Company and American Stock Transfer & Trust Company, LLC, as rights agent (as amended from time to time, the “Tax Plan”). The Tax Plan reduces the likelihood that changes in the Company’s investor base would have the unintended effect of limiting the Company’s use of its Tax Benefits. The Tax Plan is intended to require any person acquiring shares of the Company’s securities equal to or exceeding 4.99% of the Company’s outstanding shares to obtain the approval of the Board of Directors. This would protect the Tax Benefits because changes in ownership by a person owning less than 4.99% of the Company’s stock are considered and included in

one or more public groups in the calculation of “ownership change” for purposes of Section 382 of the Code. On October 9, 2014, the Tax Plan was amended by the Company’s Board of Directors to extend the expiration of the Tax Plan until October 17, 2017. Following the stockholders’ approval of the Protective Amendment (as described in the following paragraphs) at the Company’s 2014 Annual Meeting, the Tax Plan was further amended so that it expired at the close of business on December 31, 2014.

On December 29, 2014, the Company filed an Amendment to its Restated Certificate of Incorporation (the “Protective Amendment”) with the Delaware Secretary of State to protect the significant potential long-term tax benefits presented by its net operating losses and other tax benefits (collectively, the “NOLs”). The Protective Amendment was approved by the Company’s stockholders at the Company’s 2014 Annual Meeting of Stockholders held on December 9, 2014. As a result of the filing of the Protective Amendment with the Delaware Secretary of State, the Company amended its Tax Benefit Preservation Plan so that it expired at the close of business on December 31, 2014.

The Protective Amendment limits certain transfers of the Company’s common stock, to assist the Company in protecting the long-term value of its accumulated NOLs. The Protective Amendment’s transfer restrictions generally restrict any direct or indirect transfers of the common stock if the effect would be to increase the direct or indirect ownership of the common stock by any person (as defined in the Protective Amendment) from less than 4.99% to 4.99% or more of the common stock, or increase the percentage of the common stock owned directly or indirectly by a Person owning or deemed to own 4.99% or more of the common stock. Any direct or indirect transfer attempted in violation of the Protective Amendment will be void as of the date of the prohibited transfer as to the purported transferee. The Board of Directors of the Company has discretion to grant waivers to permit transfers otherwise restricted by the Protective Amendment.

In accordance with the Protective Amendment, Handy & Harman (“HNH”), a related party, requested, and the Company granted HNH and its affiliates, a waiver under the Protective Amendment to permit their acquisition of up to 45% of the Company’s outstanding shares of common stock in the aggregate (subject to proportionate adjustment, the “45% Cap”), in addition to acquisitions of common stock in connection with the exercise of certain warrants of the Company (the “Warrants”) held by Steel Partners Holdings L.P. (“SPH”), an affiliate of HNH, as well as a limited waiver under Section 203 of the Delaware General Corporation Law for this purpose. Notwithstanding the foregoing, HNH and its affiliates (and any group of which HNH or any of its affiliates is a member) are not permitted to acquire securities that would result in an “ownership change” of the Company for purposes of Section 382 of the Internal Revenue Code of 1986, as amended, that would have the effect of impairing any of the Company’s NOLs. The foregoing waiver was approved by the independent directors of the Company.

The Company has net operating loss carryforwards for federal and state tax purposes of approximately $2.1 billion and $209.8 million, respectively, at July 31, 2017. The federal net operating losses will expire from fiscal year 2022 through 2037 and the state net operating losses will expire from fiscal year 2018 through 2037. The Company has a foreign net operating loss carryforward of approximately $84.1 million, of which $58.8 million has an indefinite carryforward period. In addition, the Company has an immaterial amount of capital loss carryforwards for federal and state tax purposes. The federal and state capital losses will expire in fiscal year 2018.

The Company’s ModusLink Corporation subsidiary has undistributed earnings from its foreign subsidiaries of approximately $39.1 million at July 31, 2017, of which approximately $2.0 million is considered to be permanently reinvested due to certain restrictions under local laws as well as the Company’s plans to reinvest such earnings for future expansion in certain foreign jurisdictions. The amount of taxes attributable to the permanently undistributed earnings is estimated at $0.7 million. The Company has recorded a deferred tax liability of $13.2 million on the remaining $37.1 million of undistributed earnings that are not considered to be permanently reinvested.

Income tax expense attributable to income from continuing operations differs from the expense computed by applying the U.S. federal income tax rate of 35% to income (loss) from continuing operations before income taxes as a result of the following:

   Twelve Months Ended July 31,
   2017 2016 2015
   (In thousands)
Computed “expected” income tax expense (benefit)
   $ (8,106 ) $ (19,368 ) $ (5,653 )
Increase (decrease) in income tax expense resulting from:

Change in valuation allowance
   10,978 22,907 2,067
Foreign dividends
   2,724 4,730 732
Foreign tax rate differential
   (2,386 ) (1,082 ) 1,262
Capitalized costs
   —   —   (478 )
Nondeductible goodwill impairment
   —   —   1,070
Nondeductible expenses
   20 262 417
Foreign withholding taxes
   239 762 (19 )
Reversal of uncertain tax position reserves
   (481 ) (2,768 ) —
Other
   (292 ) —   2,885


Actual income tax expense
   $ 2,696 $ 5,443 $ 2,283

The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations in several tax jurisdictions. The Company is periodically reviewed by domestic and foreign tax authorities regarding the amount of taxes due. These reviews include questions regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the exposure associated with various filing positions, the Company records estimated reserves when necessary. Based on the evaluation of current tax positions, the Company believes it has appropriately accrued for exposures.

The Company operates in multiple taxing jurisdictions, both within and outside of the United States. At July 31, 2017, 2016 and 2015, the total amount of the liability for unrecognized tax benefits, including interest, related to federal, state and foreign taxes was approximately $0.7 million, $1.2 million and $3.9 million, respectively. To the extent the unrecognized tax benefits are recognized, the entire amount would impact income tax expense.

The Company files income tax returns in the U.S., various states and in foreign jurisdictions. The federal and state income tax returns are generally subject to tax examinations for the tax years ended July 31, 2013 through July 31, 2017. To the extent the Company has tax attribute carryforwards, the tax year in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent utilized in a future period. In addition, a number of tax years remain subject to examination by the appropriate government agencies for certain countries in the Europe and Asia regions. In Europe, the Company’s 2009 through 2016 tax years remain subject to examination in most locations while the Company’s 2005 through 2016 tax years remain subject to examination in most Asia locations.

~~A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:~~

   Twelve Months Ended July 31,
   2017    2016    2015
   (In thousands)
Balance as of beginning of year
   $ 994    $ 3,756    $ 1,028
Additions for current year tax positions
   —      19    2,884
Currency translation
   18    —      (156 )
Reductions for lapses in statute of limitations
   (331 )    (27 )    —
Reductions of prior year tax positions
   —      (2,754 )    —






Balance as of end of year
   $ 681    $ 994    $ 3,756

In accordance with the Company’s accounting policy, interest related to income taxes is included in the provision of income taxes line of the Consolidated Statements of Operations. For the fiscal year ended July 31, 2017, the Company has not recognized any material interest expense related to uncertain tax positions. As of July 31, 2017, 2016 and 2015, the Company had recorded liabilities for increases (decreases) in interest expense related to uncertain tax positions in the amount of ($168,000), $40,000 and $48,000, respectively. The Company did not accrue for penalties related to income tax positions as there were no income tax positions that required the Company to accrue penalties. The Company does not expect that any unrecognized tax benefits will reverse in the next twelve months.

~~(15)~~ ~~ACCUMULATED OTHER COMPREHENSIVE INCOME~~

~~The components of accumulated other comprehensive income, net of income taxes, are as follows:~~

   Foreign
currency
items    Pension
items Unrealized
gains
(losses) on
securities    Total



   (In thousands)
Accumulated other comprehensive income (loss) at July 31, 2016
   $ 6,131    $ (4,206 ) $ 94    $ 2,019
Foreign currency translation adjustment
   1,391    —   —      1,391
Pension liability adjustments
   —      830 —      830
Net unrealized holding gain on securities
   —      —   73    73






Net current-period other comprehensive income (loss)
   1,391    830 73    2,294






Accumulated other comprehensive income (loss) at July 31, 2017
   $ 7,522    $ (3,376 ) $ 167    $ 4,313

In the fiscal years ended July 31, 2017, the Company recorded approximately $0.3 million in taxes related to other comprehensive income. In the fiscal years ended July 31, 2016, the Company recorded an immaterial amount in taxes related to other comprehensive income. In the fiscal years ended July 31, 2015, the Company recorded approximately $0.5 million in taxes related to other comprehensive income.

~~(16)~~

~~STATEMENT OF CASH FLOWS SUPPLEMENTAL INFORMATION~~

~~Cash used for operating activities reflect cash payments for interest and income taxes as follows:~~

   Years Ended July 31,
   2017    2016    2015
   (In thousands)
Cash paid for interest
   $ 3,783    $ 6,111    $ 5,281
Cash paid for income taxes
   $ 2,500    $ 3,287    $ 2,078

Cash paid for taxes can be higher than income tax expense as shown on the Company’s consolidated statements of operations due to prepayments made in certain jurisdictions as well as to the timing of required payments in relation to recorded expense, which can cross fiscal years.

~~Non-cash Activities~~

Non-cash financing activities during the fiscal years ended July 31, 2017, 2016 and 2015 included the issuance of approximately 0.3 million, 0.2 million and 0.1 million shares, respectively, of nonvested common stock, valued at approximately $0.5 million, $0.6 million and $0.5 million, respectively, to certain employees of the Company. Non-cash financing activities during the fiscal year ended July 31, 2016 also included the issuance of 2.7 million shares of the Company’s common stock, valued at $3.1 million, associated with the repurchase of the Company’s Notes. See Note 17 for further details.

~~(17)~~

~~STOCKHOLDERS’ EQUITY~~

~~Preferred Stock~~

The Company’s board of directors has the authority, subject to any limitations prescribed by Delaware law, to issue shares of preferred stock in one or more series and to fix and determine the designation, privileges, preferences and rights and the qualifications, limitations and restrictions of those shares, including dividend rights, conversion rights, voting rights, redemption rights, terms of sinking funds, liquidation preferences and the number of shares constituting any series or the designation of the series, without any further vote or action by the stockholders. Any shares of the Company’s preferred stock so issued may have priority over its common stock with respect to dividend, liquidation and other rights. The Company’s board of directors may authorize the issuance of preferred stock with voting rights or conversion features that could adversely affect the voting power or other rights of the holders of its common stock. Although the issuance of preferred stock could provide us with flexibility in connection with possible acquisitions and other corporate purposes, under some circumstances, it could have the effect of delaying, deferring or preventing a change of control.

~~Common Stock~~

~~Each holder of the Company’s common stock is entitled to:~~

~~one vote per share on all matters submitted to a vote of the stockholders, subject to the rights of any preferred stock that may be outstanding;~~

~~dividends as may be declared by the Company’s board of directors out of funds legally available for that purpose, subject to the rights of any preferred stock that may be outstanding; and~~

a pro rata share in any distribution of the Company’s assets after payment or providing for the payment of liabilities and the liquidation preference of any outstanding preferred stock in the event of liquidation.

Holders of the Company’s common stock have no cumulative voting rights, redemption rights or preemptive rights to purchase or subscribe for any shares of its common stock or other securities. All of the outstanding shares of common stock are fully paid and nonassessable. The rights, preferences and privileges of holders of its common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any existing series of preferred stock and any series of preferred stock that the Company may designate and issue in the future. There are no redemption or sinking fund provisions applicable to the Company’s common stock.

On March 12, 2013, stockholders of the Company approved the sale of 7,500,000 shares of newly issued common stock to Steel Partners Holdings L.P. (“Steel Partners”) at a price of $4.00 per share, resulting in aggregate proceeds of $30.0 million before transaction costs. The Company incurred $2.3 million of transaction costs, which consisted primarily of investment banking and legal fees, resulting in net proceeds from the sale of $27.7 million. In addition, as part of the transaction, the Company issued Steel Partners a warrant to acquire an additional 2,000,000 shares at an exercise price of $5.00 per share. These warrants expire after a term of five years after issuance. All the warrants were outstanding as of July 31, 2017.

Pursuant to the investment agreement, the Company agreed to grant Steel Partners certain registration rights. The Company agreed to file a resale registration statement on Form S-3 as soon as practicable after it is eligible to do so, covering the shares of common stock purchased by Steel Partners and the shares of common stock issuable upon exercise of the warrants. The Company is required to keep the resale registration statement effective for three years following the date it is declared effective. Steel Partners also has the right, until such time as it owns less than one-third of the common stock originally issued to it under the investment agreement, to require that the Company file a prospectus supplement or amendment to cover sales of common stock through a firm commitment underwritten public offering. The underwriters of any underwritten offering have the right to limit the number of shares to be included in any such offering. In addition, the Company has agreed to certain “piggyback registration rights.” If the Company registers any securities for public sale, Steel Partners has the right to include its shares in the registration, subject to certain exceptions. The underwriters of any underwritten offering have the right to limit the number of Steel Partners’ shares to be included in any such offering for marketing reasons. The Company has agreed to pay the expenses of Steel Partners in connection with any registration of the securities issued in the Steel Partners investment and to provide customary indemnification to Steel Partners in connection with such registration.

On July 21, 2016, the Company entered into an agreement with Highbridge International LLC and Highbridge Tactical Credit & Convertibles Master Fund, L.P. (together “Highbridge”) for the repurchase of 5.25% Convertible Senior Notes of the Company. The consideration paid to Highbridge included 2,656,336 newly issued shares of the Company’s common stock, par value $0.01 per share (valued based on the closing price of the ModusLink Common Stock on July 21, 2016), a cash payment of $18.5 million and a cash payment in the amount of the unpaid interest ($0.6 million). The transaction was executed in a private transaction and closed on July 27, 2016. The Notes were cancelled following closing.

~~(18)~~

~~FAIR VALUE MEASUREMENTS~~

~~Level 1:~~

~~Observable inputs such as quoted prices for identical assets or liabilities in active markets~~

~~Level 2:~~

~~Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities or market-corroborated inputs~~

~~Level 3:~~

~~Unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions about how market participants would price the assets or liabilities~~

The carrying value of cash and cash equivalents, accounts receivable, funds held for clients, accounts payable, current liabilities and the revolving line of credit approximate fair value because of the short maturity of these instruments. The carrying

value of capital lease obligations approximates fair value, as estimated by using discounted future cash flows based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The fair values of the Company’s Trading Securities are estimated using quoted market prices. The Company values foreign exchange forward contracts using observable inputs which primarily consist of an income approach based on the present value of the forward rate less the contract rate multiplied by the notional amount. The defined benefit plans have 100% of their assets invested in bank-managed portfolios of debt securities and other assets. Conservation of capital with some conservative growth potential is the strategy for the plans. The Company’s pension plans are outside the United States, where asset allocation decisions are typically made by an independent board of trustees. Investment objectives are aligned to generate returns that will enable the plans to meet their future obligations. The Company acts in a consulting and governance role in reviewing investment strategy and providing a recommended list of investment managers for each plan, with final decisions on asset allocation and investment manager made by local trustees.

~~Assets and Liabilities that are Measured at Fair Value on a Recurring Basis~~

~~The following tables present the Company’s financial assets measured at fair value on a recurring basis as of July 31, 2017 and 2016, classified by fair value hierarchy:~~

      Fair Value Measurements at
Reporting Date Using
(In thousands)    July 31, 2017    Level 1    Level 2    Level 3
Assets:

Marketable equity securities
   $ 11,898    $ 11,898    $ —      $ —
Money market funds
   85,683    85,683    —      —
      Fair Value Measurements at
Reporting Date Using
(In thousands)    July 31, 2016    Level 1    Level 2    Level 3
Assets:

Marketable equity securities
   $ 4,209    $ 4,209    $ —      $ —
Marketable corporate bonds
   12,559    12,559    —      —
Money market funds
   101,224    101,224    —      —

~~The following table presents the pension plan assets measured at fair value on a recurring basis as of July 31, 2017 and 2016, classified by fair value hierarchy:~~

      Fair Value Measurements at Reporting Date Using
(In thousands)    July 31, 2016    Asset
Allocations Level 1    Level 2    Level 3
Insurance contract
   $ 24,012    94 % $ —      $ —      $ 24,012
Other investments
   1,461    6 % —      —      1,461








   $ 25,473    100 % $ —      $ —      $ 25,473

~~The following table sets forth a summary of the changes in the fair value of the pension plan assets for the years ended July 31, 2017 and 2016:~~

   July 31,
   2017    2016
   (In thousands)
Fair value of plan assets at beginning of year
   25,473    19,350
Actual return on plan assets
   (5,005 )    5,556
Employee contributions
   104    120
Employer contributions (withdrawals), net
   (342 )    539
Settlements
   (279 )    (55 )
Benefits and administrative expenses paid
   (157 )    (269 )
Currency translation
   1,410    232




Fair value of plan assets at end of year
   21,204    25,473

~~There were no transfers between Levels 1, 2 or 3 during any of the periods presented.~~

When available, quoted prices were used to determine fair value. When quoted prices in active markets were available, investments were classified within Level 1 of the fair value hierarchy. When quoted prices in active markets were not available, fair values were determined using pricing models, and the inputs to those pricing models were based on observable market inputs. The inputs to the pricing models were typically benchmark yields, reported trades, broker-dealer quotes, issuer spreads and benchmark securities, among others.

~~Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis~~

The Company reviews the carrying amounts of these assets whenever certain events or changes in circumstances indicate that the carrying amounts may not be recoverable. An impairment loss is recognized when the carrying amount of the asset group or reporting unit is not recoverable and exceeds its fair value. The Company estimated the fair values of assets subject to impairment based on the Company’s own judgments about the assumptions that market participants would use in pricing the assets and on observable market data, when available.

~~Fair Value of Financial Instruments~~

The Company’s financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable, accounts payable, funds held for clients and long-term debt and are reflected in the financial statements at cost. With the exception of long-term debt, cost approximates fair value for these items due to their short-term nature.

Included in trading securities in the accompanying balance sheet are marketable equity securities and marketable corporate bonds. These instruments are valued at quoted market prices in active markets. Included in cash and cash equivalents in the accompanying balance sheet are money market funds. These are valued at quoted market prices in active markets.

~~The following table presents the Company’s debt not carried at fair value:~~

   July 31, 2017    July 31, 2016
   Carrying
Amount    Fair
Value    Carrying
Amount    Fair
Value    Fair Value
Hierarchy
   (In thousands)
Notes payable
   $ 59,758    $ 63,852    $ 57,169    $ 50,957    Level 1

The fair value of the Company’s Notes payable represents the value at which its lenders could trade its debt within the financial markets, and does not represent the settlement value of these long-term debt liabilities to us. The fair value of the Notes payable could vary each period based on fluctuations in market interest rates, as well as changes to our credit ratings. The Notes payable are traded and their fair values are based upon traded prices as of the reporting dates.

~~(19) SEGMENT INFORMATION~~

The Company has four operating segments: Americas; Asia; Europe; and e-Business. Based on the information provided to the Company’s chief operating decision-maker (“CODM”) for purposes of making decisions about allocating resources and assessing performance and quantitative thresholds, the Company has determined that it has four reportable segments: Americas, Asia, Europe and e-Business. During the prior year, the Company had determined that it had three reportable segments: Americas; Asia; and Europe. e-Business was reported as a part of the All Other category in the prior year. The Company also has Corporate-level activity, which consists primarily of costs associated with certain corporate administrative functions such as legal and finance, which are not allocated to the Company’s reportable segments. The Corporate-level balance sheet information includes cash and cash equivalents, trading securities, Notes payables and other assets and liabilities which are not identifiable to the operations of the Company’s operating segments. All significant intra-segment amounts have been eliminated.

Management evaluates segment performance based on segment net revenue, operating income (loss) and “adjusted operating income (loss)”, which is defined as the operating income (loss) excluding net charges related to depreciation, amortization of intangible assets, goodwill and long-lived asset impairment, share-based compensation and restructuring. These items are excluded because they may be considered to be of a non-operational or non-cash nature. Historically, the Company has recorded significant impairment and restructuring charges and therefore management uses adjusted operating income to assist in evaluating the performance of the Company’s core operations.

~~Summarized financial information of the Company’s continuing operations by operating segment is as follows:~~

   Twelve Months Ended July 31,
   2017    2016    2015
   (In thousands)
Net revenue:

Americas
   $ 92,324    $ 106,143    $ 200,929
Asia
   158,048    167,861    163,262
Europe
   159,085    151,842    160,602
e-Business
   27,163    33,177    36,880






   $ 436,620    $ 459,023    $ 561,673






Operating income (loss):

Americas
   $ (10,342 )    $ (14,731 )    $ (4,407 )
Asia
   5,620    (855 )    10,003
Europe
   (9,008 )    (13,825 )    (6,479 )
e-Business
   (1,185 )    (4,384 )    (2,367 )






Total Segment operating income (loss)
   (14,915 )    (33,795 )    (3,250 )
Corporate-level activity
   (4,846 )    (6,777 )    (11,089 )






Total operating loss
   (19,761 )    (40,572 )    (14,339 )






Total other expense
   4,648    16,055    2,015






Loss before income taxes
   $ (24,409 )    $ (56,627 )    $ (16,354 )

   July 31,
2017    July 31,
2016
   (In thousands)
Total assets:

Americas
   $ 21,876    $ 28,280
Asia
   63,819    89,242
Europe
   64,639    75,952
e-Business
   20,703    22,884




Sub-total—segment assets
   171,037    216,358
Corporate
   110,261    131,574




   $ 281,298    $ 347,932

~~Summarized financial information of the Company’s net revenue from external customers by group of services is as follows:~~

   Twelve Months Ended
   July 31,
   2017    2016    2015
   (In thousands)
Supply chain services
   $ 409,457    $ 425,846    $ 524,793
e-Business services
   27,163    33,177    36,880






   $ 436,620    $ 459,023    $ 561,673

As of July 31, 2017, approximately $9.3 million, $3.3 million, $3.6 million $2.4 million and $2.2 million of the Company’s long-lived assets were located in the U.S.A., Netherlands, Ireland, Singapore and China, respectively. As of July 31, 2016, approximately $5.2 million, $3.0 million, $3.5 million, $2.9 million and $3.0 million of the Company’s long-lived assets were located in the U.S.A., Netherlands, Ireland, Singapore and China, respectively.

For the fiscal year ended July 31, 2017, the Company’s net revenues within U.S.A., China, Netherlands and Czech Republic were $95.1 million, $128.3 million, $70.8 million and $79.8 million, respectively. For the fiscal year ended July 31, 2016, the Company’s net revenues within U.S.A., China, Netherlands and Czech Republic were $110.9 million, $140.2 million, $68.1 million and $75.7 million, respectively. For the fiscal year ended July 31, 2015, the Company’s net revenues within U.S.A., China, Netherlands and Czech Republic were $205.0 million, $134.5 million, $71.9 million and $80.6 million, respectively.

~~(20) RELATED PARTY TRANSACTIONS~~

On December 24, 2014, the Company entered into a Management Services Agreement with SP Corporate Services LLC (“SP Corporate”), effective as of January 1, 2015 (as amended, the “Management Services Agreement”). SP Corporate is an indirect wholly owned subsidiary of Steel Partners Holdings L.P. (“Steel Holdings”) and is a related party. Pursuant to the Management Services Agreement, SP Corporate provided the Company and its subsidiaries with the services of certain employees, including certain executive officers, and other corporate services.

The Management Services Agreement had an initial term of six months. On June 30, 2015, the Company entered into an amendment that extended the term of the Management Services Agreement to December 31, 2015 and provided for automatic renewal for successive one year periods, unless and until terminated in accordance with the terms set forth therein, which include, under certain circumstances, the payment by the Company of certain termination fees to SP Corporate. On March 10, 2016, the Company entered into a Second Amendment to the Management Services Agreement with SPH Services, Inc. (“SPH Services”) pursuant to which SPH Services assumed rights and responsibilities of SP Corporate and the services provided by SPH Services to the Company were modified pursuant to the terms of the amendment. SPH Services is the parent of SP Corporate and an affiliate of SPH Group Holdings LLC. On March 10, 2016, the Company entered into a Transfer Agreement with SPH Services pursuant to which the parties agreed to transfer to the Company certain individuals who provide corporate services to the Company. SPH Services has since changed its name to Steel Services Ltd. (“Steel Services”).

During the year ended July 31, 2017, pursuant to the Management Services Agreement, the Company paid a fixed monthly fee of $175,000 in consideration for the services and incremental costs as incurred. A third amendment to the Management Services Agreement, effective September 1, 2017, reduced the fixed monthly fee paid by the Company to Steel Services under the Management Services Agreement from $175,000 per month to $95,641 per month. The monthly fee is subject to review and adjustment by agreement between the Company and Steel Services for periods commencing in fiscal 2016 and beyond. Additionally, the Company may be required to reimburse Steel Services and its affiliates for all reasonable and necessary business expenses incurred on the Company’s behalf in connection with the performance of the services under the Management Services Agreement. Total expenses incurred related to this agreement for the twelve months ended July 31, 2017 and 2016 were $2.3 million and $2.2 million, respectively. As of July 31, 2017 and 2016, amounts due to SP Corporate and Steel Services were $0.3 million and $0.5 million, respectively.

The Related Party Transactions Committee of the Board (the “Related Party Transactions Committee”) approved the entry into the Management Services Agreement (and the first and second amendments thereto) and the Transfer Agreement. The Audit Committee of the Board approved the third amendment to the Management Services Agreement. The Related Party Transactions Committee held the responsibility to review, approve and ratify related party transactions from November 20, 2014, until October 11, 2016. On October 11, 2016, the Board adopted a Related Person Transaction Policy that is administered by the Audit Committee and applies to all related party transactions. As of October 11, 2016, the Audit Committee reviews all related party transactions on an ongoing basis and all such transactions must be approved or ratified by the Audit Committee.

Mutual Securities, Inc. (“Mutual Securities”) serves as the broker and record-keeper for all the transactions associated with the Trading Securities. An officer of SP Corporate and of the General Partner of Steel Partners Holdings L.P., is a registered principal of Mutual Securities. Commissions charged by Mutual Securities are generally commensurate with commissions charged by other institutional brokers, and the Company believes its use of Mutual Securities is consistent with its desire to obtain best price and execution. During the year ended July 31, 2017, Mutual Securities received an immaterial amount in commissions associated with these transactions. During the year ended July 31, 2016, Mutual Securities received $0.1 million in commissions associated with these transactions.

~~(21) SELECTED QUARTERLY FINANCIAL INFORMATION (Unaudited)~~

The following table sets forth selected quarterly financial information for the fiscal years ended July 31, 2017 and 2016. The operating results for any given quarter are not necessarily indicative of results for any future period.

Quarter Ended Quarter Ended
Oct. 31, ‘16 Jan. 31, ‘17 Apr. 30, ‘17 Jul. 31, ‘17 Oct. 31, ‘15 Jan. 31, ‘16 Apr. 30, ‘16 Jul. 31, ‘16
(In thousands, except per share data) (In thousands, except per share data)
Net revenue
$ 121,327 $ 117,568 $ 97,948 $ 99,777 $ 141,089 $ 119,966 $ 96,460 $ 101,508
Cost of revenue
111,994 106,370 89,406 92,485 $ 128,637 $ 116,311 $ 94,286 $ 95,031

Gross profit
9,333 11,198 8,542 7,292 12,452 3,655 2,174 6,477
Total operating expenses
14,975 12,702 13,785 14,664 14,021 15,318 14,671 21,320

Operating loss
(5,642 ) (1,504 ) (5,243 ) (7,372 ) (1,569 ) (11,663 ) (12,497 ) (14,843 )
Total other income (expense)
(2,352 ) (1,075 ) 763 (1,984 ) (12,354 ) (2,338 ) (260 ) (1,103 )
Income tax expense
(1,049 ) (723 ) (819 ) (105 ) (850 ) (206 ) (408 ) (3,979 )
Gains on investments in affiliates, net of tax
500 396 232 150 — 259 316 214

Net loss
$ (8,543 ) $ (2,906 ) $ (5,067 ) $ (9,311 ) $ (14,773 ) $ (13,948 ) $ (12,849 ) $ (19,711 )

Basic and diluted earnings (loss) per share:

Net income (loss)
$ (0.16 ) $ (0.05 ) $ (0.09 ) $ (0.17 ) $ (0.29 ) $ (0.27 ) $ (0.25 ) $ (0.38 )

~~(22) SUBSEQUENT EVENTS~~

Subsequent to July 31, 2017, and prior to the issuance of these financial statements, the Company sold $11.9 million in Trading Securities. During this period, the Company received approximately $13.7 in cash proceeds associated with the trading activities.

Subsequent to July 31, 2017, and prior to the issuance of these financial statements, the Company completed the sale of its facility in Kildare, Ireland for the sale price of approximately $4.5 million, less legal and administrative expense.

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

~~Not applicable.~~

~~ITEM 9A.— CONTROLS AND PROCEDURES~~

~~Evaluation of Disclosure Controls and Procedures~~

At the end of the period covered by this Annual Report on Form 10-K, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. “Disclosure controls and procedures” means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of July 31, 2017 because of the material weakness in internal control over financial reporting discussed below.

~~Management’s Report on Internal Control Over Financial Reporting~~

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of its financial reporting and the preparation of its financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision of and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, the Company conducted an evaluation of the effectiveness of its internal control over financial reporting based on the criteria in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based upon that evaluation, management identified a material weakness in the Company’s internal control over financial reporting in the prior fiscal year. Because of the material weakness described below, despite significant Audit Committee oversight, management involvement and the engagement of a nationally recognized accounting firm, management concluded that we did not maintain effective internal control over financial reporting in one area, as of July 31, 2017, based on the criteria established by COSO.

A material weakness is a control deficiency, or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement to the annual or interim financial statements will not be prevented or detected on a timely basis. In its evaluation of the effectiveness of its internal control over financial reporting as of July 31, 2017, management identified that the Company did not maintain effective internal controls over the financial statement close process for the Company’s e-Business operating segment.

Notwithstanding the identified material weakness, management believes the consolidated financial statements included in this Annual Report on Form 10-K fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.

BDO USA, LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting and has issued an attestation report as of July 31, 2017. Please see their report included in this Item 9A below.

~~Remediation of the Material Weakness in Internal Control Over Financial Reporting~~

Management had been actively engaged in the planning for, and implementation of, remediation efforts to address the material weakness throughout the fiscal year 2017. These remediation efforts, outlined below, are intended both to address the identified material weakness and to enhance the Company’s overall financial control environment.

Management has enhanced the formality and rigor of the reconciliation procedures and the evaluation of certain accounts and transactions, controls, including access controls. This deficiency was not effectively remediated during the fiscal year primarily due to the number of access rights, segregation of duties and review controls not sufficiently documented for a sufficient period of time, primarily within the e-Business segment.

~~Management has enhanced the design and precision level of existing monitoring controls to provide additional controls supporting the reporting process.~~

A significant amount of remediation was performed in implementing additional policies, improved processes and documented procedures relating to our financial statement close processes and procedures within the e-Business and Americas segments.

~~We will continue to engage a nationally recognized accounting firm to provide assistance and guidance in designing, implementing and testing the Company’s internal controls during the year.~~

Under the direction of the Audit Committee, management will continue to review and make necessary changes to the overall design of the Company’s internal control environment, as well as policies and procedures to improve the overall effectiveness of internal control over financial reporting.

Management believes the measures described above and others that will be implemented will remediate the control deficiencies the Company has identified and strengthen its internal control over financial reporting. Management is committed to continuous improvement of the Company’s internal control processes and will continue to diligently review the Company’s financial reporting controls and procedures. The material weakness in our internal control over financial reporting will not be considered remediated until the remediated controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We are working to have the material weakness remediated as soon as possible and significant progress has been made to date. We are committed to continuing to improve our internal control processes and will continue to diligently and vigorously review our financial reporting controls and procedures. As management continues to evaluate and work to improve internal control over financial reporting, the Company may decide to take additional measures to address control deficiencies or decide to modify, or in appropriate circumstances not to complete, certain of the remediation measures described above.

~~Changes in Internal Control over Financial Reporting~~

Other than the changes resulting from the remediation activities described above, there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended July 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Report of Independent Registered Public Accounting Firm~~

~~Board of Directors and Stockholders~~

~~ModusLink Global Solutions, Inc.~~

~~Waltham, Massachusetts~~

~~We have audited ModusLink Global Solutions, Inc.’s (the “Company”) internal control over financial reporting as of July 31, 2017, based on criteria established in~~~~Internal Control—Integrated Framework (2013)~~ issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). ModusLink Global Solutions, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. A material weakness regarding management’s failure to design and maintain controls over the financial statement closing process has been identified and described in management’s assessment. This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the fiscal year 2017 financial statements, and this report does not affect our report dated October 16, 2017 on those financial statements.

~~In our opinion, ModusLink Global Solutions, Inc. did not maintain, in all material respects, effective internal control over financial reporting as of July 31, 2017, based on the COSO criteria.~~

~~We do not express an opinion or any other form of assurance on management’s statements referring to any corrective actions taken by the company after the date of management’s assessment.~~

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of ModusLink Global Solutions, Inc. as of July 31, 2017 and 2016 and the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity, and cash flows for each of the three years in the period ended July 31, 2017 and our report dated October 16, 2017 expressed an unqualified opinion thereon.

~~/s/ BDO USA, LLP~~

~~Boston, Massachusetts~~

~~October 16, 2017~~

~~ITEM 9B.— OTHER INFORMATION~~

~~None.~~

PART III

ITEM 10.— DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

~~The information with respect to~~Information Concerning the Directors

Set forth below are the names and ages of the directors and executive officers ~~required by this Item will be contained in our Definitive Proxy Statement to be filed with the SEC not later than 120 days after the close of business~~ of the ~~fiscal year~~Company and ~~is incorporated in this report by reference.~~

~~During~~their principal occupations at present and for the ~~fiscal year ended July 31, 2017, we made no material changes to the procedures by which stockholders may recommend nominees to our~~past five years. Our Board of Directors currently has seven members and is divided into three classes, with a class of directors elected each year for a three-year term.No family relationships exist between any directors or executive officers, as ~~described~~such term is defined in Item 401 of Regulation S-K promulgated under the Exchange Act.

Name	Age	Current Position with the Company	Director Since
Warren G. Lichtenstein	53	Class I Director, Executive Chairman, Interim Chief Executive Officer	March 2013
Glen M. Kassan	75	Class I Director, Vice Chairman	March 2013
*Philip E. Lengyel^(1)(2)(3)	69	Class II Director	May 2014
Jack L. Howard	57	Class II Director	December 2017
William T. Fejes, Jr.	62	Class II Director	December 2017
*Jeffrey J. Fenton⁽¹⁾⁽²⁾	61	Class III Director	November 2010
*Jeffrey S. Wald⁽²⁾⁽³⁾	44	Class III Director	February 2012

*Independent

(1)

Member of Human Resources and Compensation Committee (the “Compensation Committee”).

(2)

MemberofAudit Committee.

(3)

Member of Nominating and Corporate Governance Committee (the “Governance Committee”).

Class I Directors Continuing in Office until the 2018 Annual Meeting

Warren G. Lichtenstein, age 53. Mr. Lichtenstein has served as the Chairman of the Board and as a Director of the Company since March 12, 2013, and as its Executive Chairman since June 17, 2016. Following Mr. Henderson’s resignation, effective December 4, 2018, Mr. Lichtenstein assumed the additional role of Interim Chief Executive Officer of the Company. Mr. Lichtenstein had previously served as the Company’s Interim Chief Executive Officer from March 28, 2016, until June 17, 2016. Mr. Lichtenstein has served as Executive Chairman of the Board of Steel Partners Holdings GP Inc. (“Steel Holdings GP”) since February 2013 and had previously served as Chief Executive Officer and Chairman from July 2009 to February 2013. Steel Holdings GP is the general partner of Steel Partners Holdings L.P. (“Steel Holdings”), a diversified holding company that engages in multiple businesses. He has served as Chairman of the Board of Handy & Harman Ltd. (“HNH”) since July 2005. Mr. Lichtenstein has served as a director of Aerojet Rocketdyne Holdings, Inc. (“Aerojet”), a manufacturer of aerospace and defense products with a real estate business segment since March 2008, and serving as the Chairman of the Board from March 2013 to June 2016 and as Executive Chairman since June 2016. Mr. Lichtenstein has served as a director of Steel Excel Inc. (“Steel Excel”), a company whose business currently consists of Steel Sports Inc. and Steel Energy Services Ltd., since October 2010 and Chairman of the Board since May 2011. Mr. Lichtenstein served as a director of SL Industries, Inc., a company that designs, manufactures and markets power electronics, motion control, power protection, power quality electromagnetic and specialized communication equipment, from March 2010 until it was acquired by HNH in June 2016.

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Glen M. Kassan, age 75. Mr. Kassan has served as a Director of the Company since March 2013 and as its Vice Chairman since May 2014. He served as the Company’s Chief Administrative Officer from May 2014 until January 2015. Mr. Kassan served as a director of HNH from July 2005 until May 2015 and as the Company's Vice Chairman of the Board since October 2005 until May 2015. He served as HNH’s Chief Executive Officer from October 2005 until December 2012. He has been associated with Steel Partners LLC (“Partners LLC”) and its affiliates since August 1999. He served as the Vice President, Chief Financial Officer and Secretary of a predecessor entity of Steel Holdings from June 2000 to April 2007. He served as a director of SL Industries from January 2002, and its Chairman of the Board from May 2008, until SL Industries was acquired by HNH in June 2016. He previously served as SL Industries' Vice Chairman of the Board from August 2005 to May 2008, its President from February 2002 to August 2005, its interim Chief Executive Officer from June 14, 2010 to June 29, 2010 and its interim Chief Financial Officer from June 14, 2010 to August 30, 2010. We believe Mr. Kassan is qualified to serve as a director due to his years of experience and record of success in leadership positions in industrial and other public companies having attributes similar to the Company as well as the expertise he possesses in capital markets and corporate finance.

Class II Directors Continuing in Office until the 2019 Annual Meeting of Stockholders

Philip E. Lengyel,age 69. Mr. Lengyel has served as a Director of the Company since May 2014. Mr. Lengyel is currently Executive Vice President for Dick Cook Studios in Los Angeles, California, a next generation family multi-media company involved in creating, producing, marketing and distributing family entertainment. Since January 2009 Mr. Lengyel has also been self-employed as a consultant providing services to companies and organizations relating to marketing, branding strategies, promotions, sponsorships and public relations. Previously, Mr. Lengyel served over two decades in senior marketing and other business positions with Walt Disney World, most recently from March 1999 through April 2005, as Vice President of Alliance Development. Mr. Lengyel brings to the Board significant experience in the areas of marketing, advertising, promotions, publicity, branding and business development.

Jack L. Howard,age 57. Mr. Howard has served as a director of the Company since December 15, 2017. Mr. Howard has served as the Vice Chairman of the Board of HNH since March 2012 and Principal Executive Officer of HNH since January 2013, and has served as a director of HNH since July 2005. Mr. Howard has been a registered principal of Mutual Securities, Inc., a FINRA registered broker-dealer, since 1989. Mr. Howard has served as the President of Steel Holdings GP since July 2009 and has served as a director of Steel Holdings GP since October 2011. He also served as the Assistant Secretary of Steel Holdings GP from July 2009 to September 2011 and as Secretary from September 2011 to January 2012. He is the President of SP General Services LLC. He is the President of Steel Holdings and has been associated with Steel Holdings and its predecessors and affiliates since 1993. Mr. Howard has been a director of Steel Excel since December 2007, serving as Vice Chairman of the Steel Excel Board since May 2012, and Principal Executive Officer of Steel Excel since March 2013. He currently holds the securities licenses of Series 7, Series 24, Series 55 and Series 63.

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William T. Fejes, Jr., age 62. Mr. Fejes has served as a director of the Company since December 15, 2017. Mr. Fejes has served as the president of Steel Services, Ltd. an indirect wholly owned subsidiary of Steel Holdings, since October 2017. Mr. Fejes served as Senior Vice President of HNH and President and Chief Executive Officer of Handy & Harman Group Ltd. (“HNH Group”) from June 2016 until October 2017. Mr. Fejes has served as President of SL Industries, Inc. (“SLI”) since June 2010 and served as Chief Executive Officer of SLI from June 2010 until October 2016. From 2007 until April 2010, Mr. Fejes was the Chief Operating Officer of Seakeeper, Inc., a company that designs, manufactures and markets motion stabilization equipment for boats under 50 meters in length. Prior to joining Seakeeper, Inc., Mr. Fejes was the President and Chief Executive Officer of TB Wood’s Corporation (“TB Wood’s”), a public company that designs, manufactures and markets industrial power transmission components, with plants in the United States, Mexico and Italy, from 2004 to 2007, and was a director of TB Wood’s from 2004 to 2005. Mr. Fejes also held various executive and management roles at Danaher Corporation, a public company that designs, manufactures and markets industrial and consumer products, for 18 years. From March 2009 to February 2015, Mr. Fejes served as a director of Broadwind Energy, a public company for which he also served as the Chairman of the Governance /Nominating Committee, as a member of the Audit and Compensation Committees. From 2008 to 2010, Mr. Fejes was a Director of Automation Solutions, Inc., a privately held distributor of factory automation equipment.

Class III Director Nominees for a three year term expiring at the 2020 Annual Meeting of Stockholders

Jeffrey J. Fenton, age 61. Mr. Fenton has served as a Director of the Company since November 2010. Mr. Fenton was initially appointed to the Board pursuant to a Settlement Agreement among the Company, LCV Capital Management, LLC, Raging Capital Management, LLC and certain of their affiliates, dated October 20, 2010. In January 2013, he was appointed as Senior Vice President, Business Development of United Rentals, Inc., a construction and industrial equipment rental company. Since March 2004, Mr. Fenton has served as a Principal of Devonshire Advisors LLC, an advisory services firm. From March 2004 to April 2008, Mr. Fenton also served as Senior Advisor to Cerberus Capital Management L.P., a leading private investment firm. Mr. Fenton served as a director of Bluelinx Holdings Inc., Formica Corporation, IAP Worldwide Services, Global Motorsports Group, Inc. and Transamerica Trailer Leasing Co. Mr. Fenton brings to the Board significant finance, international business and leadership experience, having served as a senior advisor at a leading private investment firm as well as chief executive officer of a major industrial company.

Jeffrey S. Wald, age 44. Mr. Wald has served as a Director of the Company since February 2012. Mr. Wald was elected to the Board at the Company’s 2011 annual meeting of stockholders after being nominated for election by Peerless Systems Corporation. Since May 2010, Mr. Wald has been the Chief Operating Officer and Chief Financial Officer of Work Market, Inc., a labor resource platform that he co-founded. From May 2008 to May 2010, Mr. Wald was a Managing Director at Barington Capital Group, L.P. an activist hedge fund manager, where he initiated investments and managed Barington’s portfolio of investments. From March 2007 through May 2008, Mr. Wald was the Chief Operating Officer and Chief Financial Officer of Spinback, Inc., an internet commerce company he co-founded (sold to Buddy Media Corporation). From January 2003 to March 2007, Mr. Wald was a Vice President at The GlenRock Group, a private equity firm which invests in undervalued, middle market companies as well as emerging and early stage companies. Earlier in his career, Mr. Wald held positions in the mergers and acquisitions department at J.P. Morgan Chase & Co. Mr. Wald is currently a director of Work Market, Inc. and CoStar Technologies, Inc., where he also serves on the audit committee. From 2010 to 2012, Mr. Wald served as a director of Peerless Systems Corporation and from 2009 to 2010 he served on the board of Register.com. Mr. Wald brings to the Board substantial experience in the area of venture capital, technology, principal investing and operations.

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Information Concerning Executive Officers

Officers are elected annually by the Board and serve at the discretion of the Board. Set forth below is information regarding the executive officers of the Company as of the date of this Annual Report.

Name	Age	Position	Officer Since
Warren G. Lichtenstein⁽¹⁾⁽²⁾	53	Interim Chief Executive Officer, Class I Director, Executive Chairman	December 2018, March 2016 – June 2016
James R. Henderson⁽¹⁾	61	President and Chief Executive Officer	May 2016 – December 2018
Louis J. Belardi	67	Executive Vice President, Chief Financial Officer and Secretary	June 2016
John Whitenack⁽¹⁾	53	Chief Executive Officer of ModusLink	October 2018
James N. Andersen	60	Chief Executive Officer of IWCO	December 2017

(1) Mr. Henderson resigned from his position as Chief Executive Officer of ModusLink, effective October 31, 2018, and resigned from his positions as President and Chief Executive Officer of the Company, effective upon the filing of the Original Form 10-K on December 4, 2018. Mr. Whitenack assumed the position of Chief Executive Officer of ModusLink upon Mr. Henderson’s resignation from ModusLink, and Mr. Lichtenstein assumed the additional role of Interim Chief Executive Officer of the Company effective upon Mr. Henderson’s resignation from the Company.

(2) Mr. Lichtenstein’s biographical information is provided above in the section entitled, “Class I Directors Continuing in Office until the 2018 Annual Meeting.”

James R. Henderson, age 61, served as our ~~most recent proxy statement.~~President and Chief Executive Officer until his resignation effective upon the filing of the Original Form 10-K on December 4, 2018. He served as the Chief Executive Officer of ModusLink from May 2016 until his resignation on October 31, 2018. Mr. Henderson has served as a director of Aerojet since 2008 and serves as a Manager of the Board of Managers of Easton Development Company, LLC, a subsidiary of Aerojet. Mr. Henderson was a Managing Director and operating partner of Partners LLC, a subsidiary of Steel Holdings, a global diversified holding company that owns and operates businesses and has significant interests in leading companies in a variety of industries, including diversified industrial products, energy, defense, banking, insurance, and food products and services, until April 2011. He was associated with Partners LLC and its affiliates from August 1999 until April 2011. Mr. Henderson served as a director of DGT Holdings Corp., a manufacturer of proprietary high-voltage power conversion subsystems and components, from November 2003 until December 2011. Mr. Henderson also served as a director of SL Industries from January 2002 to March 2010. Mr. Henderson was an Executive Vice President of SP Acquisition Holdings, Inc. a company formed for the purpose of acquiring one or more businesses or assets, from February 2007 until October 2009. He was a director of Angelica Corporation, a provider of healthcare linen management services, from August 2006 to August 2008. Mr. Henderson was a director and CEO of WebFinancial Corporation, the predecessor entity of Steel Holdings, from June 2005 to April 2008, President and COO from November 2003 to April 2008, and was the Vice President of Operations from September 2000 to December 2003. He was also the CEO of WebBank, a wholly-owned subsidiary of Steel Holdings, from November 2004 to May 2005. He was a director of ECC International Corp., a manufacturer and marketer of computer controlled simulators for training personnel to perform maintenance and operation procedures on military weapons, from December 1999 to September 2003 and was acting CEO from July 2002 to March 2003. He served as the Chairman of the Board of Point Blank Solutions, Inc. (“Point Blank”), a designer and manufacturer of protective body armor, from August 2008 until October 2011, CEO from June 2009 until October 2011, and was Acting CEO from April 2009 to May 2009. Mr. Henderson was also the CEO and Chairman of the Board of certain subsidiaries of Point Blank. On April 14, 2010, Point Blank and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The Chapter 11 petitions are being jointly administered under the caption “In re Point Blank Solutions, Inc., et. al.” Case No. 10-11255, which case is ongoing. He has served as the CEO of Point Blank Enterprises, Inc., the successor to the business of Point Blank, from October 2011 to September 2012. He served as Acting CEO of School Specialty, Inc., a company that provides education-related products, programs and services from July 2013 to April 2014, and serves as a Director since June 2013, served as Chairman from June 2013 to June 2017. Mr. Henderson served as a Director of RELM Wireless Corporation from March 2014 to September 2015. Mr. Henderson has served on the Board of Aviat Network from January 2015 to November 2016 and Armor Express since September 2015.

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Louis J. Belardi, age 67, has served as the Executive Vice President, Chief Financial Officer and Secretary of the Company since June 17, 2016. Prior to joining the Company, Mr. Belardi was the Chief Financial Officer of SL Industries from August 2010 through June 2016, and as SL Industries’ Secretary and Treasurer from July 2010 through June 2016. Mr. Belardi previously served as the Corporate Controller of SL Industries from 2004 until August 2010, during which time he was responsible for management of SL Industries’ corporate accounting, SEC reporting functions and Sarbanes-Oxley compliance. Prior to joining SL Industries, Mr. Belardi was a partner in his own management consulting firm that specialized in providing financial consulting to public corporations. Before entering consulting, he was promoted through several financial roles to the position of Vice President Finance and Administration at Aydin Corporation, now part of L-3 Communications. Mr. Belardi started his career as a CPA at Price Waterhouse and has an MBA in finance.

John Whitenack, age 53, has served as the Chief Executive Officer of ModusLink since October 31, 2018, and as Chief Operating Officer of ModusLink since June 25, 2018. From March 2014 until April 2018, Mr. Whitenack served as President and CEO of Lucas-Milhaupt, a global brazing and metal joining products and services leader and an indirect subsidiary of Steel Holdings. From August 2007 until March 2014, he served as President and CEO of Indiana Tube Corporation, a premium manufacturer specializing in welded, low carbon & HSLA steel tubing and an indirect subsidiary of Steel Holdings. Mr. Whitenack also served as the Chief Operating Officer of Paradigm Precision, a manufacturer of complex fabrication and precision machined components for gas turbine engines from 2006 to 2007. Additionally, Mr. Whitenack served as President and CEO of Cline Services, and several GE Subsidiaries from 2001 to 2006. Mr. Whitenack earned his degree in Management Studies from the United States Military Academy at West Point and proudly served in the U.S. Army, holding the rank of Captain before honorably discharging from military service.

James N. Andersen, age 60. Mr. Andersen has served as the CEO of IWCO Direct, a wholly owned subsidiary of the Company, since April 1999. IWCO Direct, which was acquired by the Company in December 2017, is a leading provider of data-driven marketing solutions that help its clients drive response across marketing channels to create new and more loyal customers. Mr. Andersen earned his Bachelor of Science in Judicial Administration from American University. He was honored with the 2010 Harry V. Quadracci VISION award from the Printing Industries of America and was inducted into the Printing Impressions/RIT Printing Industry Hall of Fame in 2008.

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Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities, to file reports of beneficial ownership and changes in beneficial ownership with the SEC.

Based solely on its review of the copies of such reports furnished to us or written representations from certain reporting persons, the Company believes that, during Fiscal 2018, its officers, directors and ten-percent stockholders complied with all applicable Section 16(a) filing requirements applicable to such individual, other than the inadvertent late filing by Steel Holdings of one Form 4, filed on June 1, 2018, reporting four transactions.

Code of Business Conduct and Ethics

The Company has adopted a Code of Business Conduct and Ethics that applies to all directors, officers and employees of the Company, including the Company’s principal executive officer, and its senior financial officers (principal financial officer and controller or principal accounting officer, or persons performing similar functions). The Company’s Code of Business Conduct and Ethics is posted on its website, ~~www.moduslink.com~~www.moduslink.com/about/ (under the Investor ~~Relations—~~Relations & Press Release—Governance section). We intend to satisfy the disclosure requirement regarding any amendment to, or waiver of, a provision of the Code of Business Conduct and Ethics applicable to the Company’s principal executive officer or its senior financial officers (principal financial officer and controller or principal accounting officer, or persons performing similar functions) by posting such information on our website.

Director Nominations

During Fiscal 2018, we made no material changes to the procedures by which stockholders may recommend nominees to our Board of Directors, as described in our most recent proxy statement.

Audit Committee

The Board of Directors has an Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, which assists the Board of Directors in fulfilling its responsibilities to stockholders concerning the Company’s financial reporting and internal controls and facilitates open communication among the Audit Committee, the Board of Directors, outside auditors and management. The Board has adopted a written charter for the Audit Committee, a copy of which can be found by clicking on “Governance” under the Investor Relations & Press tab on our website atwww.moduslink.com/about. The contents of our website are not part of this Annual Report on Form 10-K, and our internet address is included in this document as an inactive textual reference only. The Audit Committee currently consists of Jeffrey J. Fenton, Phillip E. Lengyel and Jeffrey S. Wald, as Chairman, each of whom is independent as defined in applicable Nasdaq listing standards and Rule 10A-3 under the Securities Exchange Act of 1934, as amended. The Board of Directors has determined that Jeffrey S. Wald is an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K.

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ITEM 11.— EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis provides details about the Company’s compensation practices for its Named Executive Officers (as defined below in the section entitled “Executive Compensation - Summary Compensation Table”). The information in this section should be read together with the tables and narratives that accompany the information presented.

The following executives are the Company’s Named Executive Officers for Fiscal 2018:

*James R. Henderson, President and Chief Executive Officer;

Louis J. Belardi, Executive Vice President, Chief Financial Officer and Secretary; and

James N. Andersen, Chief Executive Officer of IWCO Direct.

* Mr. Henderson resigned from his positions as President and Chief Executive Officer of the Company, effective upon the filing of the Original Form 10-K on December 4, 2018.

Executive Summary of Fiscal 2018 Compensation

Fiscal 2018 was a year of continued emphasis on improving operational efficiency and building upon the programs and strategic initiatives implemented in fiscal 2013 and thereafter to position us for the future. Among other things, we continued our multi-year transformation to streamline our company and create the capacity to invest in innovation and new markets for our business in addition to pursuing initiatives that will allow us to better allocate resources and prioritize investment dollars. Our compensation actions and decisions for Fiscal 2018 were selective. Accordingly, we took the following actions with respect to compensation of our executive officers in Fiscal 2018:

When compensation was determined for Fiscal 2018, base salaries for all of our Named Executive Officers were maintained at the same levels used for the year ended July 31, 2017 (“Fiscal 2017”).

As a result of the Compensation Committee’s ongoing review of our executive compensation programs, the Compensation Committee, in consultation with our full Board, worked with management to re-evaluate our annual cash incentive and equity incentive plans for potential changes in an effort to better align the plans with our business mission, strategy and goals for the Company. As a result of this review, the Compensation Committee maintained a broad based management incentive plans and made certain adjustments to the program metrics for our annual incentive plans.

As a result of the IWCO Acquisition, the Company integrated certain IWCO Direct compensation practices into the Company’s compensation framework. Specifically, Mr. Andersen continues to participate in the IWCO Direct 2018 Short-Term and Long-Term Incentive Plans (the “2018 IWCO Incentive Plans”).

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Company and ModusLink Plans

The FY 2018 Management Incentive Plan (the “2018 MIP”), which related to the Company’s fiscal year ending July 31, 2018 (the “Plan Year”), was designed to motivate appropriate behaviors that support short-term and long-term growth of shareholder value by rewarding the achievement of financial, business and management goals that are essential to the success of the Company and ModusLink. The 2018 MIP covers certain executive officers, executive leadership team members and key managers of the Company and its subsidiaries (the “Participants”), as determined by the Company’s Chief Executive Officer. All awards under the 2018 MIP (the “Awards”), if any, would be paid in cash. Participants were employees of the Company or its subsidiaries who were 2018 MIP eligible for six months or greater since the start of the Plan Year. In order to receive an Award under the 2018 MIP, the Participant must have been an employee of the Company in good standing at the time of the Award payment.

All Awards under the 2018 MIP were subject to the achievement of a minimum Plan Year adjusted EBITDA target (the “EBITDA Target”) for the Company’s supply chain business. Under the terms of the 2018 MIP, Awards to Participants who are direct employees of the Company (“Corporate Participants”) and to employees of the Company’s business units (the “Business Unit Participants”), would be determined based on the achievement of certain performance targets and only after EBITDA Target was been achieved. For Corporate Participants, provided the EBITDA Target was achieved or exceeded, Awards would be determined based on the following performance target components: (a) 50% of the Award would be based on achievement of the EBITDA Target, (b) 35% of the Award would be based on year-over-year revenue growth as defined (c) 15% of the Award would be based on the Participant’s implementation of defined objectives in support of the Company’s strategic plan. For Business Unit Participants, provided the EBITDA Target was achieved or exceeded, Awards would be determined based on the following performance target components: (a) 25% of the Award would be based on the achievement of the EBITDA Target (b) 35% of the Award would be based on the business unit’s Operating Income as defined (c) 25% of the Award would be based on the Participant’s implementation of their defined objectives in support of the Company’s strategic plan, and (d) 15% of the Award would be based on the business unit’s cash conversion cycle as defined. Awards, if any, would be subject to meeting minimum or greater performance results, audited financial results and the approval of the Company’s Chief Executive Officer. The Compensation Committee was responsible for approving Awards to the Chief Executive Officer and his direct management reports.

Under the 2018 MIP, the Award target for Mr. Henderson was set at 100% of base salary and the Award target for Mr. Belardi was set at 60% of base salary. Based on the achievement of the objectives set forth in the 2018 MIP, the percentage of base salary that could be earned by Participants ranged from 3.75% to 200% of base salary. No Awards could made under the 2018 MIP if the EBITDA Target is not achieved.

In determining the EBITDA Target, the Compensation Committee noted that the financial objectives, while feasible to meet, would be challenging to achieve and would require improved performance compared with prior year results. For Fiscal 2018, the Compensation Committee determined that the Company did not meet the EBITDA Target and, accordingly, no Participants received Awards under the 2018 MIP.

IWCO Plans

Mr. Andersen is the only Named Executive Officer who participates in the IWCO compensation plans (the “IWCO Plans”).

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IWCO Direct 2017 Management Incentive Plan (the “2017 IWCO MIP”)

The 2017 IWCO MIP, which related to IWCO Direct’s fiscal year ending December 31, 2017 (the “2017 IWCO Plan Year”), was designed to motivate appropriate behaviors that support short-term and long-term growth of shareholder value by rewarding the achievement of financial, business and management goals that are essential to the success of IWCO Direct. The 2017 IWCO MIP covers certain executive officers, executive leadership team members and key managers of IWCO Direct (the “IWCO Participants”), as determined by IWCO Direct’s Chief Executive Officer. All awards under the 2017 IWCO MIP (the “2017 IWCO Awards”) were paid in cash. In order to receive an IWCO Award under the 2017 IWCO MIP, the IWCO Participant must have been an employee of the Company in good standing at the time of the IWCO Award payment.

All Awards under the 2017 IWCO MIP were subject to the achievement of a minimum IWCO Plan Year adjusted EBITDA target (the “2017 IWCO EBITDA Target”) for IWCO Direct. Under the terms of the 2017 IWCO MIP, the 2017 IWCO Awards to IWCO Participants were determined based on the achievement of certain performance targets once the 2017 IWCO EBITDA Target was achieved. Upon achieving or exceeding the 2017 IWCO EBITDA Target, the 2017 IWCO Awards were determined based on the following performance target components: (a) 80% of the 2017 IWCO Award was based on the achievement of the 2017 IWCO EBITDA Target (b) 10% of the 2017 IWCO Award was based on the achievement of an accounts receivable days sales outstanding target as defined and (c) 10% of the 2017 IWCO Award was based on the achievement of defined objectives in support of IWCO’s corporate objectives as defined. The 2017 IWCO Awards were subject to audited financial results and the approval of IWCO Direct’s Chief Executive Officer and IWCO Direct’s Board of Directors.

Under the 2017 IWCO MIP, the 2017 IWCO Award target for Mr. Andersen was 50% of base salary. Under the terms of the 2017 IWCO MIP, no IWCO Awards could be made under the 2017 IWCO MIP if the 2017 IWCO EBITDA Target is not achieved, but 2017 IWCO Awards could exceed the 2017 IWCO Award target if the 2017 IWCO EBITDA Target is exceeded.

In determining the 2017 IWCO EBITDA Target, the financial objectives, while feasible to meet, would be challenging to achieve and would require improved performance compared with prior year results. For the 2017 IWCO Plan Year, the Company exceeded the 2017 IWCO EBITDA Target, met the accounts receivable days sales outstanding target and partially met the defined objectives in support of IWCO’s corporate objectives. Accordingly, Mr. Andersen received a 2017 IWCO Award of 92% of base salary (award of $656,131) under the 2017 IWCO MIP, which was paid on February 23, 2018.

2018 IWCO Incentive Plans

The 2018 IWCO Incentive Plans, which relates to IWCO Direct’s fiscal year ending December 31, 2018 (the “2018 IWCO Plan Year”), is designed to motivate appropriate behaviors that support short-term and long-term growth of shareholder value by rewarding the achievement of financial, business and management goals that are essential to the success of IWCO Direct. The 2018 IWCO Incentive Plans cover the IWCO Participants, as determined by IWCO Direct’s Chief Executive Officer. All awards under the 2018 IWCO Incentive Plans (the “2018 IWCO Awards”) will be paid in cash. In order to receive the 2018 IWCO Award under the 2018 IWCO Incentive Plans, the IWCO Participant must be an employee of the Company in good standing at the time of the 2018 IWCO Award payment.

The 2018 IWCO Awards under the 2018 IWCO Incentive Plans to IWCO Participants will be determined based on the achievement of certain performance targets. The 2018 IWCO Awards will be determined based on the following performance target components: (a) 63% of the 2018 IWCO Award will be based on the achievement of the 2018 IWCO Plan Year adjusted EBITDA target (the “2018 IWCO EBITDA Target”) for IWCO Direct (b) 21% of the IWCO Award will be based on the achievement of defined objectives in support of IWCO’s corporate objectives as defined and (c) 16% of the IWCO Award will be based on the achievement of a working capital target as defined. IWCO Awards are subject to the approval of IWCO Direct’s Chief Executive Officer and IWCO Direct Board of Directors.

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Under the 2018 IWCO Incentive Plans, the 2018 IWCO Award target for Mr. Andersen is 100% of base salary.

In determining the 2018 IWCO EBITDA Target, the financial objectives, while feasible to meet, will be challenging to achieve and will require improved performance compared with prior year results. No 2018 IWCO Awards have been earned or paid. To the extent a 2018 IWCO Award is earned, approximately 80% of the 2018 IWCO Awards will be paid in calendar year 2019, 10% in calendar year 2020 and 10% in calendar year 2021.

Executive Compensation Objectives

Our executive compensation program is designed to meet the following objectives:

Attract and retain executive officers who contribute to our success;

Align compensation with our short-term and long-term strategy and goals; and

Motivate and reward high levels of performance.

These objectives serve as guiding principles in our compensation program design, and collectively seek to link compensation to overall Company performance, which helps to ensure that the interests of our executives are aligned with the interests of our stockholders.

Our compensation philosophy generally is to set target total compensation (base salary, bonus and long term incentives) at the median for similarly situated individuals at companies we consider to be our peers and competitors for talented individuals and within the general industry and geography (as more fully described below under “Benchmarking”). We also consider the need to account for factors such as tenure, individual performance, and unique characteristics and criticality of the job to the Company, and, as a result, from time to time and for certain individuals, we will exceed or trail the median target.

Our Committee has not adopted any rigid policies or guidelines for allocating compensation between short-term and long-term compensation, between cash and non-cash compensation or among different forms of cash compensation. However, the Compensation Committee is guided by the principle that a substantial portion of the total compensation for our executives should be comprised of performance-based incentives that link to the Company’s financial results.

In determining performance-based compensation, the Compensation Committee believes that the primary measure of the effectiveness of a performance-based compensation plan is whether compensation is being earned commensurate with performance and whether goals are set properly to reward desired performance. In years in which the Company did not meet its financial and operational goals, no amounts were earned under our variable cash compensation plans or performance-based equity programs. For Fiscal 2018, the Compensation Committee determined that we did not meet the performance criteria relating to the financial goals underlying the 2018 MIP and, as a result, none of the executive officers who were eligible to participate in the 2018 MIP received bonuses in accordance with the terms of the 2018 MIP. Because the performance criteria relating to the financial goals underlying the 2017 IWCO MIP was met, executive officers who were eligible to participate in the 2017 IWCO MIP received bonuses in accordance with the terms of the 2017 IWCO MIP.

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Components of Executive Compensation

The principal components of compensation for our executive officers consist of base salary and may also include performance-based annual cash bonus or time based restricted stock or performance-based restricted stock, limited perquisites and other benefits. Each component is described in more detail below. The Compensation Committee engages a compensation consultant from time to time to assist us in determining these compensation levels and to review our executive compensation programs.

Base Salary

Base salary is the fixed component of an executive’s annual cash compensation and supports our compensation objectives to attract and retain talented executives and adequately compensate and reward them for services rendered during the fiscal year. Changes in base salary are typically considered based on an evaluation of individual performance during our annual performance review process. Assessment of individual performance includes achievements and performance of the applicable operating unit or function for which the executive is responsible. In addition, from time to time, adjustments are made to base salaries during the fiscal year in light of promotions, added responsibilities or in reaction to changes in the market for an individual possessing the skills and abilities required by our executives.

The Compensation Committee reviewed the base salaries of our Named Executive Officers and determined that no change in base salary would be made for any Named Executive Officers for Fiscal 2018. Accordingly, the Fiscal 2018 annual base salaries for Mr. Henderson and Mr. Belardi remained unchanged at $600,000 and $325,000, respectively. The base salary for Mr. Andersen was $715,628, which remains unchanged since the closing of the IWCO Acquisition.

Performance-Based Annual Cash Bonus

In most years, the Compensation Committee has established a Management Incentive Plan (or MIP), which provides cash incentives for our non-IWCO executives. As a result of the IWCO Acquisition, the Company has also integrated certain IWCO compensation practices into its compensation objectives. Specifically, Mr. Andersen continues to participate in the IWCO Plans, which provides cash incentives for IWCO Participants. The MIP and IWCO Plans support our compensation objectives by focusing on annual financial and operating results and enabling our target total compensation to remain competitive within the marketplace for executive officers.

Target bonus awards under the MIP are expressed as a percentage of the base salary paid to the non-IWCO executive officer during that plan year. Typically, the Compensation Committee has selected bonus amounts for the executive officers such that the target total cash compensation approximates the median of comparable positions at our peer companies or the general industry. For Fiscal 2018, the target bonuses for our Named Executive Officers who participated in the 2018 MIP and the 2017 IWCO MIP were:

Executive Officer	Target as Percentage of Base Salary (%)
James R. Henderson	100
Louis J. Belardi	60
James N. Andersen	50

MIPs provide for cash payments to executive officers based on achievement of certain corporate financial objectives. Bonus payouts on the financial objectives could range from 0% to 200% of an individual’s target bonus depending on the Company’s actual performance versus the established performance goals. For Fiscal 2018, the Compensation Committee determined that the Company did not meet the EBITDA Target and, accordingly, no Participants received Awards under the 2018 MIP. The 2018 MIP is described in more detail above in the section entitled “Company and ModusLink Plans.”

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Target bonus awards under the IWCO Plan are expressed as a percentage of the base salary paid to IWCO Participants during the applicable plan year. Mr. Andersen is the only Named Executive Officer who participates in the IWCO Plans. Because the performance criteria relating to the financial goals underlying the 2017 IWCO MIP was met, executive officers who were eligible to participate in the 2017 IWCO MIP received bonuses in accordance with the terms of the 2017 IWCO MIP. The 2017 IWCO MIP is described in more detail above in the section entitled “IWCO Plans.”

Equity Grants

Compensation in the form of equity grants, including stock options, performance-based stock options, time-based restricted stock, performance-based restricted stock, and restricted stock units (“RSU”) have been a key component of our executives’ compensation in the past. Over the past two years however, our emphasis on equity grants has declined. No equity awards were granted to Named Executive Officers in Fiscal 2018 as our compensation objectives for Fiscal 2018 emphasized base pay and cash incentives.

Stock Options

Our equity program for executive officers has periodically utilized stock options, with the size and value of awards based on the executive’s position and market compensation data. In Fiscal 2018, we did not award any stock options to our Named Executive Officers.

Performance-Based Stock Options

Our equity program has periodically utilized performance-based stock options as an additional incentive for our executive officers to increase stockholder value. In Fiscal 2018, we did not award any performance-based stock options to our Named Executive Officers.

Performance-Based Restricted Stock

From time to time the Company’s equity program may grant performance-based restricted stock, pursuant to which executive officers are granted a predetermined number of shares or value of restricted stock in the event that the Company achieves a certain level of financial performance. As the Compensation Committee deems appropriate, performance-based restricted stock will be awarded to align the interests of our executive officers with the interests of investors, rewarding executives for enhancing our stock valuation and serves as a retention vehicle. We did not establish a plan for performance-based restricted stock grants for Fiscal 2018 or grant any performance-based restricted stock in Fiscal 2018.

Restricted Shares

The Compensation Committee may, from time to time, award shares of restricted stock to executive officers at commencement of employment or in recognition of a promotion, added responsibilities, exemplary performance, to address market factors or to serve as a means to retain and motivate management. During Fiscal 2018, no time-based restricted stock was awarded to our Named Executive Officers.

Restricted Stock Units

The Compensation Committee may, from time to time, award RSUs to executive officers at commencement of employment or in recognition of a promotion, added responsibilities, exemplary performance, to address market factors or to serve as a means to retain and motivate management. On October 4, 2017, the Compensation Committee granted 609,137 RSUs to Mr. Henderson and 329,949 RSUs to Mr. Belardi. These awards are described more fully below in the section entitled, “Potential Payments Upon Termination or Change-in-Control.”

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Perquisites and Other Benefits

The Compensation Committee believes that the perquisites provided to our executive officers are reasonable and modest compared to the general market. To the extent we offer any perquisites, we do so in order to be competitive with the market. Except for Mr. Andersen who was provided a company car, our Named Executive Officers did not receive executive perquisites in Fiscal 2018. Our Named Executive Officers do, however, receive other benefits that are available to all benefit eligible employees, including a 401(k) matching benefit.

From time to time, we have awarded discretionary cash or equity bonuses based on, for example, exemplary performance or the assumption of additional responsibilities. None of our Named Executive Officers was awarded a discretionary cash bonus in Fiscal 2018.

Assessment of Risk

The Compensation Committee believes that our compensation policies and practices motivate our employees to achieve our corporate objectives and to remain with our Company while avoiding unreasonable risk taking, and that our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on our Company. We believe we have allocated our compensation among base salary and incentive compensation target opportunities in such a way as to not encourage excessive risk taking. In addition, we believe our approach to goal setting, and our bonus plan design that provides for payouts at various levels of performance, further aligns employee and stockholder interests. Also, the multi-year vesting of our equity awards and our share ownership guidelines encourage our employees to have a long-term perspective.

Benchmarking

The Compensation Committee reviews executive compensation relative to marketplace norms on a regular basis and historically has followed a practice of refreshing this data every few years. The Compensation Committee last conducted a comprehensive review of executive compensation working with the Hay Group during the fiscal year ended July 31, 2015 (“Fiscal 2015”). The Hay Group was again consulted in during the fiscal year ended July 31, 2016 (“Fiscal 2016”) in connection with preliminary plan design. The Hay Group was not consulted in Fiscal 2017 and 2018.

With input from the Compensation Committee, the Hay Group recommended a list of comparable companies for compensation comparisons based primarily on the following pre-defined selection criteria:

(i)

Peer Company Size – Sizing factors included revenue, profitability, market capitalization and number of employees, with a greater emphasis on revenue as a correlation to pay levels;

(ii)

Comparable Industry – Companies that operate in the logistics, software and e-commerce/IT transactions services area;

(iii)

Business Model – Supply chain management companies more likely to serve enterprise-level customers and operate in lower margin businesses; and

(iv)

Executive Talent Sources – Companies with whom we compete for executive talent.

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In early Fiscal 2015, the Compensation Committee worked with the Hay Group to refine our peer group for purposes of assessing our executive compensation. Historically, we identified potential peers using a rules-based process that considered industry, size with respect to revenues, employees, assets, financial and operating characteristics, including operating leverage and EBITDA margin, as well as customer base and end markets served. Our peer group was developed by considering companies identified during such process, and reflected the Company’s evolution to a supply chain management services model.

Given the relatively small number of similar-sized companies operating in our industry, the Hay Group considered a revenue range slightly outside its standard 50% - 200% parameter in an effort to balance the size and scope of the Company’s business within the peer group. As a result of this review, the Compensation Committee removed four companies from the Fiscal 2014 peer group either because the company had recently been acquired (Brightpoint, Inc., GSI Commerce, Inc. and Pacer International, Inc.) or because the former peer’s size was sufficiently different from that of the Company that they should no longer be considered a peer for compensation comparison purposes (Hub Group, Inc.), and added seven companies (CSG System International, Inc., Echo Global Logistics, Inc., ePlus, Inc., Neustar, Inc., Park-Ohio Holdings Corp., Radiant Logistics, Inc. and Virtusa Corp.) to our peer group. Accordingly, effective as of September 2015, the Company’s peer group consisted of the following 15 companies (the “2015 Peer Group”);

CIBER, Inc.;

Computer Task Group, Inc.;

CSG Systems international, Inc.;

CTS Corporation;

Digital River, Inc.;

Echo Global Logistics, Inc.;

ePlus, Inc.;

Forward Air Corporation;

Neustar, Inc.;

Park-Ohio Holdings Corp.;

Radiant Logistics, Inc.;

PC Connection, Inc.;

PFSweb, Inc.;

ScanSource, Inc.; and

Virtusa Corp.

To supplement our proxy peer group data, the Hay Group also provided the Compensation Committee with market survey data from its 2014 General Industry Executive Compensation Report. Only revenue size appropriate cuts of data were used. The Compensation Committee generally considered the market survey data as a broader industry reference to the peer group data.

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In Fiscal 2016, the compensation of Mr. Henderson, our President and Chief Executive Officer at the time, and Mr. Belardi, our Executive Vice President, Chief Financial Officer and Secretary, were determined based on competitive market practice and supported by survey data previously provided by the Hay Group. Survey data focused on total cash compensation at the 50^th percentile of the market. On a total pay basis, compensation for Mr. Henderson and Mr. Belardi are at or below the reported market median.

President and Chief Executive Officer Compensation Decisions

In connection with the appointment of Mr. Henderson as President and Chief Executive Officer of ModusLink in March 2016 and of the Company in June 2016, the Board, as noted above, relied on competitive market practice to determine Mr. Henderson’s compensation. Mr. Henderson’s offer letter (the “Henderson Offer Letter”) specifies an annual salary of $600,000 paid bi-weekly and an annual cash bonus of up to 100% of base salary subject to attainment of short term objectives to be mutually agreed upon. The Compensation Committee did not make any adjustments to Mr. Henderson’s salary for Fiscal 2017 or 2018 and accordingly, his annual base salary remained at $600,000. Mr. Henderson received a bonus of $720,000 for Fiscal 2017 under the 2017 Management Incentive Plan (the “2017 MIP”) Mr. Henderson did not receive a bonus under the 2018 MIP. Mr. Henderson resigned from his position as Chief Executive Officer of ModusLink, effective October 31, 2018, and resigned from his positions as President and Chief Executive Officer of the Company, effective upon the filing of the Original Form 10-K on December 4, 2018.

Warren G. Lichtenstein, the Chairman of our Board, served as the Company’s Interim CEO from March 28, 2016, to June 17, 2016. Following Mr. Henderson’s resignation, effective December 4, 2018, Mr. Lichtenstein again assumed the additional role of Interim Chief Executive Officer of the Company. On June 17, 2016, the Board appointed Mr. Lichtenstein as Executive Chairman.

Mr. Lichtenstein was not separately compensated for serving as Interim Chief Executive Officer or for serving as Executive Chairman. Mr. Lichtenstein’s compensation is set forth on the Director Compensation Table.

Input from Management

In determining the performance criteria and compensation of our executive officers, the Compensation Committee generally takes into account the recommendations of our President and Chief Executive Officer (except as they relate to his own compensation). Typically, our President and Chief Executive Officer will make these recommendations based on his assessment of each executive officer’s individual performance as well as his knowledge of each executive officer’s job responsibilities, seniority, expected contributions, and his understanding of the competitive market for such executives. Our President and Chief Executive Officer may also attend meetings of the Compensation Committee at which executive compensation matters are addressed, except with respect to discussions involving his own compensation. All decisions with respect to the President and Chief Executive Officer’s compensation are made by the Compensation Committee, all of whom are independent members of the Board.

Related Policies and Considerations

Employment, Termination of Employment and Change-In-Control Agreements

Each of our executive officers is an employee-at-will, meaning that his employment may be terminated at any time and for any reason.

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Stock Ownership Guidelines

The Compensation Committee believes that it is appropriate for the executive officers to hold equity in the Company. Under our stock ownership guidelines, the Chief Executive Officer’s ownership requirement is set at three times his annual salary and other executive officers’ ownership requirement is set at two times their respective annual salaries. All individuals will have five years from the later of the adoption of the guidelines or his or her first appointment as an executive officer to reach these ownership levels. In computing the amounts owned, the Company will consider the value of shares owned outright, unvested restricted stock held by the individual, and in-the-money vested options.

Tax and Accounting Implications

Under Section 162(m) of the Internal Revenue Code, certain executive compensation in excess of $1 million paid to certain officers of a public company is not deductible for federal income tax purposes unless the executive compensation is awarded under a performance-based plan approved by stockholders. To maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Compensation Committee has not adopted a policy that all compensation must be deductible. The Compensation Committee intends, to the extent practicable, to preserve deductibility under the Internal Revenue Code of compensation paid to our executive officers while maintaining compensation programs that support attraction and retention of key executives.

Stock options awarded to executive officers under our stock option plans, which were approved by stockholders, and shares of restricted stock awarded under our performance-based restricted stock program are performance-based and are potentially deductible for us. Restricted stock awards that are not performance-based do not qualify for the performance-based exception to Section 162(m) of the Internal Revenue Code, but the Compensation Committee believes that the retention benefit derived outweighs any tax benefit that might otherwise be obtained.

The Tax Cuts and Jobs Act of 2017 ("Tax Act") generally eliminated the ability to deduct compensation qualifying for the "performance-based compensation" exception under Code Section 162(m) for tax years commencing after December 31, 2017. Code Section 162(m) imposes a $1 million limit on the amount that a public company may deduct for compensation paid to anyone who has ever been the Company’s chief executive officer, chief financial officer or one of the three highest compensated officers in any fiscal year beginning after December 31, 2016 (i.e., a "covered employee"). For 2017 and prior taxable years, an exception to this deduction limit applied to "performance-based compensation," such as stock options and other equity awards that satisfied certain criteria. Under the Tax Act, the performance-based pay exception to Code Section 162(m) was eliminated, but a transition rule may allow the exception to continue to apply to certain performance-based compensation payable under written binding contracts that were in effect on November 2, 2017. Because of the fact-based nature of the performance-based compensation exception under Code Section 162(m), the limited availability of guidance thereunder, and the uncertain scope of the aforementioned transition relief, we cannot provide assurance that any awards under theCompany’s 2010 Incentive Award Plan, as amended (the “2010 Plan”),will qualify for the performance-based compensation exception. The Board and the Compensation Committee will consider the potential impact of Code Section 162(m) on grants made under the 2010 Plan, but reserve the right to approve grants of options and other awards for a covered employee that exceeds the deduction limit of Code Section 162(m).

The compensation that we pay to the Named Executive Officers is expensed in our financial statements as required by U.S. generally accepted accounting principles. As one of many factors, the Compensation Committee considers the financial statement impact in determining the amount of, and allocation among the elements of, compensation. We account for stock-based compensation in accordance with the requirements of the Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”) (formerly Statement of Financial Accounting Standards No. 123R, “Share-Based Payment”).

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COMPENSATION COMMITTEE REPORT

The Human Resources and Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis with management and, based on this review and discussion, recommended to the Board that the Compensation Discussion and Analysis beincluded in this Amendment No. 1 on Form 10-K/A for the fiscal year ended July 31, 2018.

HUMAN RESOURCES AND COMPENSATION COMMITTEE
Jeffrey J. Fenton, Chair
Philip E. Lengyel

The information contained in the foregoing report shall not be deemed to be “soliciting material” or “filed” or incorporated by reference into any of the Company’s previous or future filings with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, except to the extent specifically incorporated by reference into a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934.

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SUMMARY COMPENSATION TABLE

The following table sets forth certain information concerning the Fiscal 2018, Fiscal 2017 and Fiscal 2016 compensation of: (i) individuals who served as, or acted in the capacity of, the Company’s principal executive officer or principal financial officer for the calendar year August 1, 2017 through July 31, 2018; (ii) the Company’s three most highly compensated executive officers, other than the principal executive officer or principal financial officer, who were serving as executive officers at the end of the calendar year from August 1, 2017 through July 31, 2018; and (iii) up to two additional individuals for whom disclosure would have been provided but for the fact that the individual was not serving as an executive officer of the Company at the end of the calendar year ended July 31, 2018. Collectively, we refer to all of these individuals as the “Named Executive Officers.”

Name and
Principal Position* Year Salary
($) Bonus
($) Stock
Awards
($) Option
Awards
($)
Non-Equity
Incentive Plan
Compensation
($)⁽¹⁾
All Other
Compensation
($) Total
($)
James R. Henderson 2018 600,000 —   1,169,543 (2) —   —   5,999 (3) 1,775,542
President and Chief 2017 600,000 —   —   —   720,000 7,999 (3) 1,327,999
Executive Officer 2016 205,385 —   —   —   —   —   205,385

Louis J. Belardi 2018 325,000 —   633,502 (2) —   —   1,667 (3) 960,169
Executive Vice 2017 325,000 —   —   —   234,000 —   559,000
President, Chief Financial Officer and Secretary 2016 31,250 50,000 (4) —   —   —   —   81,250

James N. Andersen 2018 453,231 (5) 1,349,804 (6) —   —   —   6,683 (7) 1,809,718
Named Executive Officer of IWCO Direct
* Henderson – On March 23, 2016, the Board appointed Mr. Henderson to serve as the Chief Executive Officer of ModusLink; and on June 17, 2016, the Board appointed Mr. Henderson to serve as the Company’s President and Chief Executive Officer. Mr. Henderson subsequently resigned from his position as Chief Executive Officer of ModusLink, effective October 31, 2018, and resigned from his positions as President and Chief Executive Officer of the Company, effective upon the filing of the Original Form 10-K on December 4, 2018. Mr. Lichtenstein, the Company’s Executive Chairman, assumed the additional role of Interim Chief Executive Officer of the Company effective upon Mr. Henderson’s resignation from the Company. Mr. Lichtenstein had previously served as the Company’s Interim CEO from March 28, 2016, to June 17, 2016. On June 17, 2016, the Board appointed Mr. Lichtenstein as Executive Chairman. Mr. Lichtenstein was not separately compensated for serving as Interim Chief Executive Officer or for serving as Executive Chairman. Mr. Lichtenstein’s compensation is set forth on the Director Compensation Table.
Belardi – On June 17, 2016, the Board appointed Louis J. Belardi to serve as the Company’s Executive Vice President, Chief Financial Officer and Secretary effective June 27, 2016.
Andersen – Upon the closing of the IWCO Acquisition on December 15, 2017, Mr. Andersen was the Chief Executive Officer of one of the Company’s principal operating subsidiaries. The amounts reflected in the Summary Compensation Table are for the Company’s full 2018 fiscal year.
_____________
(1) Represents amounts earned under the Company’s Fiscal 2017 Management Incentive Plan. The Company did not establish a Management Incentive Plan in Fiscal 2016.
(2) Represents the full fair value at grant date of a one-time grant of RSUs computed in accordance with FASB ASC Topic 718.
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(3) Amounts represent employer 401(k) plan matching cash contributions.
(4) Represents a signing bonus paid to Mr. Belardi in connection with commencing employment with the Company.
(5) Represents Mr. Andersen’s pro-rated salary for Fiscal 2018. Mr. Andersen joined the Company following the IWCO Acquisition and his annual base salary is $715,628.
(6) Represents Mr. Andersen’s 2017 IWCO Award under the 2017 IWCO MIP, which was paid on February 23, 2018 and a cash bonus paid on December 31, 2017 to Mr. Andersen in connection to IWCO’s prior practice of granting discretionary bonus amounts to management due to their participation in certain liquidity events.
(7) Represents employer 401(k) plan matching cash contributions ($4,350) and the amount attributable to the business and personal use of a company car ($2,333).
Grants of Plan-Based Awards

Estimated Future Payouts Under Non-Equity IncentivePlan Awards ($)

Estimated Future Payouts Under Equity Incentive PlanAwards (#)

All Other Stock Awards: Number of Shares of Stock or Units

All Other Option Awards: Number of Securities Underlying Options

Exercise or Base Price of Option Awards

Grant Date Fair Value of Stock and Option Awards
Name Grant Date Threshold Target Maximum Threshold Target Maximum (#) (#) ($/Sh) ($)⁽¹⁾
James R. Henderson 10/4/2017 —   —   —   —   —   —   609,137 (2) —   —   1,169,543

Louis J. Belardi 10/4/2017 —   —   —   —   —   —   329,949 (3) —   —   633,502

James N. Andersen     — —   —   —   —   —   —   — —   —   —

(1) Represents the full fair value at grant date of RSUs computed in accordance with FASB ASC Topic 718.
(2) Represents RSUs issued under the Company’s 2010 Plan. One hundred percent (100%) of the RSUs were scheduled to vest on the earlier of (a) the one (1) year anniversary of October 4, 2017, subject to Mr. Henderson's continuing employment or services through such date or (b) Mr. Henderson's death, disability or involuntary separation from service with the Company other than for cause. On October 4, 2018, the RSUs fully vested to Mr. Henderson. For more information on this grant, see the section above entitled, “Potential Payments Upon Termination or Change-in-Control.”
(3) Represents RSUs issued under the Company’s 2010 Plan. One hundred percent (100%) of the RSUs were scheduled to vest on the earlier of (a) the one (1) year anniversary of October 4, 2017, subject to Mr. Belardi's continuing employment or services through such date or (b) Mr. Belardi's death, disability or involuntary separation from service with the Company other than for cause. On October 4, 2018, the RSUs fully vested to Mr. Belardi. For more information on this grant, see the section above entitled, “Potential Payments Upon Termination or Change-in-Control.”
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table.
The compensation paid to the above named Named Executive Officers during the fiscal years ended July 31, 2016, 2017 and 2018 included salaries, bonuses and perquisites as more fully described in the notes to the Summary Compensation Table. As noted in the Summary Compensation Table, Mr. Henderson received contributions to his 401(k) plan under our matching contribution program in Fiscal 2017.
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CEO Pay Ratio
As required by ~~this~~Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item ~~will be contained in~~402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our ~~Definitive Proxy Statement~~employees and ~~is incorporated~~the annual total compensation of Mr. Henderson, our CEO. The pay ratio included in this ~~report~~information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.
For Fiscal 2018, our last completed fiscal year:
• The median of the annual total compensation of all employees of our Company (excluding our CEO) who were employed by ~~reference.~~us on July 31, 2018 (the last day of our 2018 fiscal year) was $22,922.07.
• The annual total compensation of our CEO, as reported in the Summary Compensation Table included elsewhere in this Amendment, was $1,775,542.35, which includes the full fair value at grant date (computed in accordance with FASB ASC Topic 718) of a one-time Henderson Grant of 609,137 RSUs to our CEO valued at $1,169,543.
• Based on this information, for Fiscal 2018 the ratio of the annual total compensation of Mr. Henderson, our CEO, to the median of the annual total compensation of all employees was 77 to 1.
To identify the median of the annual total compensation of all of our employees, globally, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps:
1. We determined that, as of July 31, 2018, our global employee population consisted of approximately 1,561 individuals.
2. We selected July 31, 2018, which is within the last three months of Fiscal 2018, as the date upon which we would identify the "median employee" because it enabled us to make such identification in a reasonably efficient and economical manner.
3. To identify the "median employee" from our global employee population, we compared the amount of salary and wages of our employees as reflected in our payroll records.
4. In order to determine the total compensation of our median employee, we combined all of the elements of employee compensation for Fiscal 2018 for all our employees in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $22,922.07. Included in the median employee's annual total compensation were: the match to the employee's 401(k) retirement plan (if any), the contributions towards pension for international plans (if any), spot bonuses and the different allowances as required by statutory regulations and/or local best practices (if any). Since we do not maintain a defined benefit or other actuarial plan for our employees, our median employee's annual total compensation did not include amounts attributable to these arrangements.
5. With respect to the annual total compensation of our CEO, we used the amount reported in the "Total" column of our Fiscal 2018 Summary Compensation Table included in this Amendment. Included were: base wages, equity grants and the match to the 401(k) retirement plan.
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Supplemental CEO Pay Ratio (Excluding the Henderson Grant)
Excluding the value of the one-time Henderson Grant, the ratio of our CEO’s total annual compensation to the median of the annual total compensation of all employees would be 26 to 1.
Outstanding Equity Awards at Fiscal Year-End
Option Awards Stock Awards
Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($)⁽¹⁾ Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
James R. Henderson - - - - - 609,137⁽²⁾ 1,169,543 - -
Louis J. Belardi - - - - - 329,949⁽³⁾ 633,502   - -
James N. Andersen - - - - - - - - -
(1) Represents the full fair value at grant date of RSUs computed in accordance with FASB ASC Topic 718.
(2) Represents RSUs issued under the Company’s 2010 Plan. One hundred percent (100%) of the RSUs were scheduled to vest on the earlier of (a) the one (1) year anniversary of October 4, 2017, subject to Mr. Henderson's continuing employment or services through such date or (b) Mr. Henderson's death, disability or involuntary separation from service with the Company other than for cause. On October 4, 2018, the RSUs fully vested to Mr. Henderson. For more information on this grant, see the section above entitled, “Potential Payments Upon Termination or Change-in-Control.”
(3) Represents RSUs issued under the Company’s 2010 Plan. One hundred percent (100%) of the RSUs were scheduled to vest on the earlier of (a) the one (1) year anniversary of October 4, 2017, subject to Mr. Belardi's continuing employment or services through such date or (b) Mr. Belardi's death, disability or involuntary separation from service with the Company other than for cause. On October 4, 2018, the RSUs fully vested to Mr. Belardi. For more information on this grant, see the section above entitled, “Potential Payments Upon Termination or Change-in-Control.”
Employment Arrangements of Named Executive Officers
We do not have agreements with any of the Named Executive Officers which guarantee employment for a set term and, accordingly, all of the Named Executive Officers are employees at will.
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James R. Henderson
James R. Henderson was appointed the President and Chief Executive Officer of the Company on June 17, 2016, and appointed the Chief Executive Officer ModusLink, one of the Company’s principal operating subsidiary on March 23, 2016. In connection therewith, the Company and Mr. Henderson executed an employment offer letter dated April 13, 2016, which provides for the employment of Mr. Henderson at an annualized base salary of $600,000. Mr. Henderson is also eligible for an annual cash bonus, with a target equal to 100% of his base salary.
Louis J. Belardi
Louis J. Belardi was appointed Executive Vice President, Chief Financial Officer and Secretary of the Company effective June 27, 2016. In connection therewith, the Company and Mr. Belardi executed an employment offer letter effective June 27, 2016, which provides for the employment of Mr. Belardi at an annualized base salary of $325,000. Mr. Belardi is also eligible for an annual cash bonus with a target equal to 60% of his base salary. Mr. Belardi’s employment offer letter specified a $50,000 signing bonus payable after 30 days service. The bonus was paid.
Potential Payments Upon Termination or Change-in-Control
James R. Henderson
On October 4, 2017, the Compensation Committee approved a one-time grant of 609,137 RSUs to Mr. Henderson (the “Henderson Grant”), which was made under the 2010 Plan and pursuant to a Restricted Stock Unit Agreement (the “RSU Agreement”). The RSUs granted pursuant to the Henderson Grant vest and become non-forfeitable on the earlier of: (i) the first anniversary of the grant date, subject to the recipient’s continued employment or services through the first anniversary date; (ii) the recipient’s “involuntary separation from service” (within the meaning of Treasury Regulation Section 1.409A-1(n)) with the Company other than for Cause (as defined in the 2010 Plan) and whether or not a Change in Control (as defined in the 2010 Plan) has occurred; (iii) the recipient’s “separation from service” (within the meaning of Treasury Regulation Section 1.409A-1(h)) for “Good Reason” (as defined in Section 2(c) of the RSU Agreement) with the Company and whether or not a Change in Control has occurred; (iv) the recipient’s separation from service due to a disability (within the meaning of Treasury Regulation Section 1.409A-3(i)(4); or (v) the recipient’s death.
The Henderson Grant vested in its entirety, in accordance with its terms, on October 4, 2018, the first anniversary of the grant date. Following the time-based vesting of the Henderson Grant, Mr. Henderson was no longer party to any agreement that provides for payments or benefits in the event of termination of employment and as a result, he did not receive any termination-related payments as a result of his resignation form the Company effective December 4, 2018.
If the Henderson Grant were to have vested upon a qualifying termination of service on July 31, 2018, the last day of Fiscal 2018, the RSUs granted pursuant to the Henderson Grant would have a value of approximately $1,291,370 based on the closing price of $2.12 per share for the Company’s common stock on July 31, 2018.
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Louis J. Belardi
On October 4, 2017, the Compensation Committee approved a one-time grant of 329,949 RSUs to Mr. Belardi (the “Belardi Grant”). The Belardi Grant was made under the 2010 Plan and pursuant to an RSU Agreement. The RSUs granted pursuant to the Belardi Grant vest and become non-forfeitable on the earlier of: (i) the first anniversary of the grant date, subject to the recipient’s continued employment or services through the first anniversary date; (ii) the recipient’s “involuntary separation from service” (within the meaning of Treasury Regulation Section 1.409A-1(n)) with the Company other than for Cause (as defined in the 2010 Plan) and whether or not a Change in Control (as defined in the 2010 Plan) has occurred; (iii) the recipient’s “separation from service” (within the meaning of Treasury Regulation Section 1.409A-1(h)) for “Good Reason” (as defined in Section 2(c) of the RSU Agreement) with the Company and whether or not a Change in Control has occurred; (iv) the recipient’s separation from service due to a disability (within the meaning of Treasury Regulation Section 1.409A-3(i)(4); or (v) the recipient’s death.
The Belardi Grant vested in its entirety, in accordance with its terms, on October 4, 2018, the first anniversary of the grant date. Following the time-based vesting of the Belardi Grant, Mr. Belardi was no longer party to any agreement that provides for payments or benefits in the event of termination of employment.
If the Belardi Grant were to have vested upon a qualifying termination of service on July 31, 2018, the last day of Fiscal 2018, the RSUs granted pursuant to the Belardi Grant would have a value of approximately $699,492 based on the closing price of $2.12 per share for the Company’s common stock on July 31, 2018.
Director Compensation
The table below sets forth certain information concerning our Fiscal 2018 compensation of our Directors.
DIRECTOR COMPENSATION FOR FISCAL 2018
Name
Fees Earned or Paid in Cash ($)
Stock Awards ($)⁽¹⁾⁽²⁾
All Other Compensation ($)
Total
($)
Anthony Bergamo⁽³⁾ 16,000 - - 16,000
Jeffrey J. Fenton⁽⁴⁾ 87,500 63,266 - 150,766
Glen M. Kassan⁽⁵⁾ 55,000 63,266 - 118,266
Philip E. Lengyel⁽⁶⁾ 81,500 63,266 - 144,766
Warren G. Lichtenstein⁽⁷⁾ 119,000 63,266 5,566,200⁽¹¹⁾ 5,748,466
Jeffrey S. Wald⁽⁸⁾ 92,500 63,266 - 155,766
William T. Fejes, Jr.⁽⁹⁾ 34,745 63,266 927,700⁽¹¹⁾ 1,025,711
Jack L. Howard⁽¹⁰⁾ 35,245 63,266 2,783,100⁽¹¹⁾ 2,881,611
(1) The amounts shown in the “Stock Awards” column represent the aggregate grant date fair value of awards computed in accordance with ASC 718, not the actual amounts paid to or realized by the directors during Fiscal 2018.
(2) Each director received an award of 32,258 shares of restricted stock on April 12, 2018, pursuant to the ModusLink Global Solutions, Inc. Fourth Amended and Restated Director Compensation Plan, as amended. Restricted stock awards are subject to a restriction on transfer; the restricted stock vest on January 2, 2019, provided he remains a director of the Company on such vesting date.
(3) Anthony Bergamo passed away on September 29, 2017. During Fiscal 2018, he was not granted restricted stock.
(4) As of July 31, 2018, Mr. Fenton held 32,258 shares of restricted stock that vest on January 2, 2019, provided he remains a director of the Company on such vesting date and remain subject to a restriction on transfer until vesting. Mr. Fenton does not hold any vested or unvested options to purchase shares of our Common Stock.
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(5) As of July 31, 2018, Mr. Kassan held 32,258 shares of restricted stock that vest on January 2, 2019, provided he remains a director of the Company on such vesting date and remain subject to a restriction on transfer until vesting. Mr. Kassan does not hold any vested or unvested options to purchase shares of our Common Stock.
(6) As of July 31, 2018, Mr. Lengyel held 32,258 shares of restricted stock that vest on January 2, 2019, provided he remains a director of the Company on such vesting date and remain subject to a restriction on transfer until vesting. Mr. Lengyel does not hold any vested or unvested options to purchase shares of our Common Stock.
(7) As of July 31, 2018, Mr. Lichtenstein held 32,258 shares of restricted stock that vest on January 2, 2019, provided that he remains a director of the Company on such vesting date and remain subject to a restriction on transfer until vesting. Mr. Lichtenstein does not hold any vested or unvested options to purchase shares of our Common Stock. See footnote 11 for disclosure regarding the December 15 Awards.
(8) As of July 31, 2018, Mr. Wald held 32,258 shares of restricted stock that vest on January 2, 2019, provided he remains a director of the Company on such vesting date and remain subject to a restriction on transfer until vesting. Mr. Wald does not hold any vested or unvested options to purchase shares of our Common Stock.
(9) As of July 31, 2018, Mr. Fejes held 32,258 shares of restricted stock that vest on January 2, 2019, provided that he remains a director of the Company on such vesting date and remain subject to a restriction on transfer until vesting. Mr. Fejes does not hold any vested or unvested options to purchase shares of our Common Stock. See footnote 11 for disclosure regarding the December 15 Awards.
(10) As of July 31, 2018, Mr. Howard held 32,258 shares of restricted stock that vest on January 2, 2019, provided that he remains a director of the Company on such vesting date and remain subject to a restriction on transfer until vesting. Mr. Howard does not hold any vested or unvested options to purchase shares of our Common Stock. See footnote 11 for disclosure regarding the December 15 Awards.
(11) On December 15, 2017, the Board, upon the recommendation of the Compensation Committee and a Special Committee of the Board, approved the following restricted stock grants and market performance based restricted stock grants to Messrs. Howard, Fejes and Lichtenstein (the “December 15 Awards”), in each case effective upon the closing of the IWCO Acquisition and in consideration for current and future services to the Company:
Recipient Total Award Vested Portion of Award^(a) Unvested Portion of Award^(a)(b)
Warren G. Lichtenstein 3,300,000 shares 3,000,000 shares 300,000 shares
Jack L. Howard 1,650,000 shares 1,500,000 shares 150,000 shares
William T. Fejes, Jr. 550,000 shares 500,000 shares 50,000 shares
(a) As of July 31, 2018.
(b) Shares of restricted stock will automatically vest, in their entirety, on the day the price of the Company’s common stock shall have closed at or above $2.50 per share for any five consecutive business days after the grant date (December 15, 2017), subject to the Director’s continuous service with the Company from the grant date through the vesting date.
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Director Compensation Plan
Members of the Board receive a combination of cash compensation and equity in the form of restricted stock awards, provided they are eligible under the applicable plan. In addition, all of the Directors of the Company receive reimbursement of expenses incurred with respect to attendance at meetings of the Board and meetings of committees thereof, which is not included in the above table.
The Fourth Amended and Restated Director Compensation Plan, adopted December 20, 2015 (the “Director Compensation Plan”), governs cash and equity compensation to eligible Directors. All Directors are eligible to participate in the Director Compensation Plan other than any Director who (i) is an employee of the Company or any of its subsidiaries or affiliates or (ii) unless otherwise determined by the Board, is an affiliate, employee, representative or designee of an institutional or corporate investor in the Company (an “Affiliated Director”).
Under the Director Compensation Plan, each participating Director who serves as a Director during any fiscal quarter receives a payment for such quarter of $12,500, with a pro rata fee applicable to service for less than a whole quarter; provided, however, that any Director who serves as the non-executive Chairman of the Board during any fiscal quarter receives a payment for such quarter of $28,750 instead of $12,500, with a pro rata fee applicable to service for less than a whole quarter. Each participating Director who serves as the chairperson of a committee of the Board during any fiscal quarter receives a payment of $1,250; provided, however, that the chairperson of the Audit Committee during any fiscal quarter receives a payment of $2,500, in each such case with a pro rata fee applicable to service for less than a whole quarter. Each participating Director who attends a telephonic meeting of the Board or a committee thereof receives a meeting fee of $500. Each participating Director who attends a meeting of the Board or a committee thereof, where a majority of the Directors attend such meeting in person, receives a meeting fee of $1,000. Payment of these fees was temporarily suspended by the Board between May 2016 and August 2017.
In addition, the Director Compensation Plan provides that each Director, other than an Affiliated Director, will receive a restricted stock award for shares of Common Stock with a fair market value equal to $100,000 on the first business day of the calendar year provided that such Director is serving as a Director on such date (an “Annual Award”). These Annual Awards vest on the first anniversary of the date of grant, provided that the Director remains a director of the Company on the vesting date. Notwithstanding the foregoing, if a Director ceases to be a director due to (i) removal without cause, (ii) resignation upon request of a majority of the Board, other than for reasons the Board determines to be cause, (iii) the failure to be re-elected to the Board either because the Company fails to nominate the Director for re-election or the Director fails to receive sufficient stockholder votes, then, on the day the Director ceases to be a Director, 25% of the Annual Award vests for each full calendar quarter that the Director has served as a Director from and after the award date. The Board temporarily lowered the fair market value of the Annual Awards to $80,000 and the fair market value of the Annual Awards continues to be $80,000. The granting of the 2018 Annual Awards was delayed until an amendment of the 2010 Plan was approved by the Company’s stockholder that made enough shares available under the 2010 Plan for such awards.
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Two of the Company’s Directors have each entered into an Indemnification Agreement with the Company pursuant to which the Company shall indemnify the Director to the fullest extent authorized or permitted by applicable law in the event that the Director is involved in any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether brought by or in the right of the Company or by any other party and whether of a civil, criminal, administrative or investigative nature, by reason of the fact that the Director is or was a Director of the Company, or is or was serving at the request of the Company as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against all expenses, judgments, fines and penalties, provided that the Director shall not have been finally adjudged to have engaged in willful misconduct or to have acted in a manner which was knowingly fraudulent or deliberately dishonest, or had reasonable cause to believe that his or her conduct was unlawful.
Compensation Committee Interlocks and Insider Participation
The Directors who served as members of the Compensation Committee during Fiscal 2018 were Jeffrey J. Fenton and Philip E. Lengyel. Prior to his passing, Anthony Bergamo served as a member of the Compensation Committee and was independent as determined in accordance with the Compensation Committee charter and applicable NASDAQ rules. No member of the Compensation Committee was an officer or employee of the Company while serving on the Compensation Committee in Fiscal 2018. No executive officer of the Company has served on the board of directors or compensation committee of any other entity that has or has had one or more executive officers who served as a member of the Board or the Compensation Committee during Fiscal 2018.
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ITEM 12.— SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED

STOCKHOLDER MATTERS

~~Information regarding~~SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information, as of December 4, 2018, with respect to the ~~security~~beneficial ownership of ~~certain beneficial owners~~shares of Common Stock by: (i) 5% stockholders; (ii) the members of the Board of the Company, (iii) the Named Executive Officers (as defined under “Summary Compensation Table”); and ~~management will be contained in our Definitive Proxy Statement~~(iv) all current executive officers and ~~is incorporated in this report by reference.~~members of the Board of the Company, as a group.

	Amount and Nature of Beneficial Ownership⁽¹⁾
Name of Beneficial Owner	Number of Shares		Percent of Class⁽²⁾
5% Stockholders
Steel Partners Holdings L.P.⁽³⁾		41,365,072		52.63	%

Directors
Jeffrey J. Fenton⁽⁴⁾		224,469		*
Glen M. Kassan⁽⁵⁾		178,713		*
Philip E. Lengyel⁽⁶⁾		71,276		*
Warren G. Lichtenstein⁽⁷⁾		3,241,995		5.35	%
Jeffrey S. Wald⁽⁸⁾		196,958		*
Jack L. Howard⁽⁹⁾		1,542,258		2.54	%
William T. Fejes, Jr.⁽¹⁰⁾		362,258		*

Named Executive Officers**
James R. Henderson⁽¹¹⁾		408,143		*
Louis J. Belardi⁽¹²⁾		232,779		*
James N. Andersen		0		*

Other Executive Officers
John Whitenack		0		*

All current executive officers and directors, as a group (11 persons)		6,458,849		10.64	%

________

Less than 1%

On March 23, 2016, the Board appointed Mr. Henderson to serve as the Chief Executive Officer of ModusLink; and on June 17, 2016, the Board appointed Mr. Henderson to serve as the Company’s President and Chief Executive Officer. Mr. Henderson subsequently resigned from his position as Chief Executive Officer of ModusLink, effective October 31, 2018, and resigned from his positions as President and Chief Executive Officer of the Company, effective upon the filing of the Original Form 10-K on December 4, 2018. Mr. Lichtenstein, the Company’s Executive Chairman, assumed the additional role of Interim Chief Executive Officer of the Company effective upon Mr. Henderson’s resignation from the Company. Mr. Lichtenstein had previously served as the Company’s Interim CEO from March 28, 2016, to June 17, 2016.

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(1)

For purposes of this table, beneficial ownership is determined by rules promulgated by the Securities and Exchange Commission (the “SEC”), and the information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares over which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days after December 4, 2018, through the exercise of any stock option or other right (“Presently Exercisable Options”). The inclusion herein of such shares, however, does not constitute an admission that the named stockholder is a direct or indirect beneficial owner of such shares. The Company believes that each person or entity named in the table has sole voting power and investment power (or shares such power with his or her spouse) with respect to all shares of Common Stock listed as owned by such person or entity unless noted otherwise. Unless otherwise indicated, the address of each person listed in the table is c/o Steel Connect, Inc., 1601 Trapelo Road, Suite 170, Waltham, MA 02451.

(2)

Number of shares deemed outstanding includes 60,612,214 shares of Common Stock as of December 4, 2018, plus any shares subject to Presently Exercisable Options held by the person in question.

(3)

Based on information provided in the Schedule 13D filed by HNH, BNS Holdings, Inc. (“BNS”), Steel Partners, Ltd. (“SPL”), Steel Holdings, SPH Group LLC (“SPHG”), SPH Group Holdings LLC (“SPHG Holdings”), Partners LLC, and Warren G. Lichtenstein with the SEC on October 14, 2011 and all amendments thereto, including that certain Amendment No. 22 to Schedule 13D filed by HNH, WHX CS Corp. (“WHX CS”), SPL, Steel Holdings, SPHG, SPHG Holdings, Steel Holdings GP, Mr. Lichtenstein, Glen M. Kassan, Jack L. Howard and William T. Fejes, Jr. on December 19, 2017; a Form 4 filed by Steel Holdings, SPHG, SPHG Holdings and Steel Holdings GP on December 19, 2017; a Form 4 filed by Mr. Lichtenstein on April 16, 2018; a Form 4 filed by Mr. Kassan on April 16, 2018; a Form 4 filed by Mr. Howard on April 16, 2018; and a Form 4 filed by Mr. Fejes on April 16, 2018. The principal business address of HNH and WHX CS is 1133 Westchester Avenue, Suite N222, White Plains, NY 10604. The principal business address of SPL, Steel Holdings, SPHG, SPHG Holdings and Partners LLC is 590 Madison Avenue, 32nd Floor, New York, NY 10022.

SPL owns 60,000 shares of Common Stock. Mr. Lichtenstein is the Chief Executive Officer and stockholder of SPL. Accordingly, Mr. Lichtenstein may be deemed to have shared investment and voting power with respect to such shares of Common Stock held indirectly by him. Mr. Lichtenstein disclaims beneficial ownership of the shares of Common Stock owned directly by SPL except to the extent of his pecuniary interest therein.

SPHG Holdings owns 2,245,990 shares of Common Stock and beneficially owns an additional 17,857,143 shares of Common Stock underlying currently convertible Series C Convertible Preferred Stock of the Issuer (the “Preferred Stock”) owned directly by SPHG Holding. Steel Holdings owns 99% of the membership interests of SPHG. SPHG is the sole member of SPHG Holdings. Steel Holdings GP is the general partner of Steel Holdings, the managing manager of SPHG and the manager of SPHG Holdings. Accordingly, by virtue the relationships discussed above, each of Steel Holdings, SPHG, and Steel Holdings GP may be deemed to beneficially own the shares of Common Stock owned directly by SPHG Holdings. Each of SPHG, Steel Holdings, and Steel Holdings GP disclaims beneficial ownership of the shares of Common Stock owned directly by SPHG Holdings except to the extent of his or its pecuniary interest therein.

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HNH owns 2,496,545 shares of Common Stock. SPHG Holdings owns 100% of the outstanding shares of Common Stock of HNH. Steel Holdings owns 99% of the membership interests of SPHG. SPHG is the sole member of SPHG Holdings. Steel Holdings GP is the general partner of Steel Holdings, the managing manager of SPHG and the manager of SPHG Holdings Accordingly, each of SPHG Holdings, Steel Holdings, SPHG and Steel Holdings GP may be deemed to beneficially own the shares of Common Stock owned directly by HNH. Each of SPHG Holdings, Steel Holdings, SPHG and Steel Holdings GP disclaims beneficial ownership of the shares of Common Stock owned directly by HNH.

WHX CS owns 5,940,170 shares of Common Stock. HNH owns 100% of the outstanding shares of Common Stock of WHX CS, and SPHG Holdings owns 100% of the outstanding shares of Common Stock of HNH. Steel Holdings owns 99% of the membership interests of SPHG. SPHG is the sole member of SPHG Holdings. Steel Holdings GP is the general partner of Steel Holdings, the managing manager of SPHG and the manager of SPHG Holdings. Accordingly, by virtue of the relationships described above, each of HNH, SPHG Holdings, Steel Holdings, SPHG and Steel Holdings GP may be deemed to beneficially own the shares of Common Stock owned directly by WHX CS. Each of HNH, SPHG Holdings, Steel Holdings, SPHG and Steel Holdings GP disclaims beneficial ownership of the shares of Common Stock owned directly by WHX CS. Each of WHX CS, HNH, SPHG Holdings, SPHG, Steel Holdings and Steel Holdings GP is deemed to have shared power to vote and dispose of the shares owned directly by WHX CS. Each of HNH, SPHG Holdings, SPHG, Steel Holdings and Steel Holdings GP is deemed to have shared power to vote and dispose of the shares owned directly by HNH. Each of SPHG Holdings, Steel Holdings, SPHG and Steel Holdings GP is deemed to have shared power to vote and dispose of the shares owned directly by SPHG Holdings. Each of Steel Holdings and Steel Holdings GP is deemed to have shared power to vote and dispose of the shares owned directly by Steel Holdings. Each of SPL and Mr. Lichtenstein is deemed to have shared power to vote and dispose of the shares owned directly by SPL. Each of Messrs. Lichtenstein, Kassan, Howard and Fejes has the sole power to vote all shares he directly owns and has the sole power to dispose all shares (other than unvested restricted shares) he directly owns.

Steel Holdings directly owns 7,500,000 shares of Common Stock. Steel Holdings GP may be deemed to beneficially own the shares. Mr. Lichtenstein beneficially owns 3,181,995 shares of Common Stock, including 32,258 shares of restricted stock that will vest on January 2, 2019. Mr. Kassan beneficially owns 178,713 shares of Common Stock, including 32,258 shares of restricted stock that will vest on January 2, 2019. Mr. Howard beneficially owns 1,542,258 shares of Common Stock, including 32,258 shares of restricted stock that will vest on January 2, 2019. Mr. Fejes beneficially owns 362,258 shares of Common Stock, including 32,258 shares of restricted stock that will vest on January 2, 2019. As described above Mr. Lichtenstein may also be deemed to have shared investment and voting power with respect to 60,000 shares owned by SPL, and Mr. Lichtenstein disclaims beneficial ownership of the shares of Common Stock owned directly by SPL except to the extent of his pecuniary interest therein.

Each of Messrs. Lichtenstein, Fejes, and Howard also hold shares of restricted stock that will automatically vest, in their entirety, on the day the price of the Company’s common stock shall have closed at or above $2.50 per share for any five consecutive business days after the grant date, subject to the Reporting Person's continuous service with the Issuer from the grant date through the vesting date. Mr. Lichtenstein holds 300,000 shares of such restricted stock, Mr. Fejes holds 50,000 shares of such restricted stock, and Mr. Howard holds 150,000 shares of such restricted stock. Such shares of restricted stock held by each of Messrs. Lichtenstein, Fejes, and Howard, are not included because the vesting of such shares is subject to a material condition beyond their control.

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(4)

Consists of 224,469 shares of Common Stock owned directly by Mr. Fenton, including 32,258 shares of restricted stock that vest on January 2, 2019.

(5)

Consists of 178,713 shares of Common Stock owned directly by Mr. Kassan, including 32,258 shares of restricted stock that vest on January 2, 2019. Mr. Kassan is a member of the Section 13(d) group described in Footnote 3 above that owns more than 10% of the Company’s outstanding Common Stock. Mr. Kassan disclaims beneficial ownership of the shares of Common Stock of the Company owned directly by the other members of the Section 13(d) group except to the extent of his pecuniary interest therein.

(6)

Consists of 71,276 shares owned directly by Mr. Lengyel, including 32,258 shares of restricted stock that vest on January 2, 2019.

(7)

Consists of 3,181,995 shares of Common Stock owned directly by Mr. Lichtenstein (including 32,258 shares of restricted stock that vest on January 2, 2019) and 60,000 shares of Common Stock owned directly by SPL. Does not include the 300,000 shares of restricted stock that will automatically vest, in their entirety, on the day the price of the Company’s common stock shall have closed at or above $2.50 per share for any five consecutive business days after the grant date, subject to Mr. Lichtenstein’s continuous service with the Company from the grant date through the vesting date, because such stock is subject to a material condition beyond Mr. Lichtenstein’s control. Mr. Lichtenstein is the Chief Executive Officer and sole director of SPL. Accordingly, by virtue of the Mr. Lichtenstein’s relationship with SPL, Mr. Lichtenstein may be deemed to beneficially own the shares of Common Stock of the Company owned directly by SPL. Mr. Lichtenstein disclaims beneficial ownership of the shares of Common Stock of the Company owned directly by SPL except to the extent of his pecuniary interest therein. Mr. Lichtenstein is a member of the Section 13(d) group described in Footnote 3 above that owns more than 10% of the Company’s outstanding Common Stock. Mr. Lichtenstein disclaims beneficial ownership of the shares of Common Stock of the Company owned directly by the other members of the Section 13(d) group except to the extent of his pecuniary interest therein.

(8)

Consists of 196,958 shares owned directly by Mr. Wald, including 32,258 shares of restricted stock that vest on January 2, 2019.

(9)

Consists of 1,542,258 shares of Common Stock owned directly by Mr. Howard (including 32,258 shares of restricted stock that vest on January 2, 2019). Does not include 150,000 shares of restricted stock that will vest in their entirety, on the day the price of the Company’s common stock shall have closed at or above $2.50 per share for any five consecutive business days after the grant date, subject to Mr. Howard’s continuous service with the Company from the grant date through the vesting date, because such stock is subject to a material condition beyond Mr. Howard’s control. Mr. Howard is a member of the Section 13(d) group described in Footnote 3 above that owns more than 10% of the Company’s outstanding Common Stock. Mr. Howard disclaims beneficial ownership of the shares of Common Stock of the Company owned directly by the other members of the Section 13(d) group except to the extent of his pecuniary interest therein.

(10)

Consists of 362,258 shares of Common Stock owned directly by Mr. Fejes (including 32,258 shares of restricted stock that vest on January 2, 2019). Does not include 50,000 shares of restricted stock that will automatically vest, in their entirety, on the day the price of the Company’s common stock shall have closed at $2.50 per share for any five consecutive business days after the grant date, subject to Mr. Fejes’ continuous service with the Company from the grant date through the vesting date, because such stock is subject to a material condition beyond Mr. Fejes’ control. Mr. Fejes is a member of the Section 13(d) group described in Footnote 3 above that owns more than 10% of the Company’s outstanding Common Stock. Mr. Fejes disclaims beneficial ownership of the shares of Common Stock of the Company owned directly by the other members of the Section 13(d) group except to the extent of his pecuniary interest therein.

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(11)

Consists of 408,143 shares of Common Stock owned directly by Mr. Henderson.

(12)

Consists of 232,779 shares of Common Stock owned directly by Mr. Belardi.

Equity Compensation Plan Information as of July 31, ~~2017~~2018

The following table sets forth certain information regarding the Company’s equity compensation plans as of July 31, ~~2017:~~2018:

   (a)    (b)    (c)
Plan Category
   Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights    Weighted-average
exercise price of
outstanding options,
warrants and rights    Number of securities
remaining available for
future issuance under equity
compensation plans
(excluding securities
reflected in column (a))
Equity compensation plans approved by security holders
   838,734    $ 2.73    5,299,305 ⁽¹⁾
Equity compensation plans not approved by security holders⁽²⁾
   30,250    $ 6.58    —




Total
   868,984    $ 9.31    5,299,305

	(a)		(b)		(c)
Plan Category		Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders		2,103,144	$	1.71		4,929,789⁽¹⁾
Equity compensation plans not approved by security holders⁽²⁾		—	$	—		—

Total		2,103,144	$	1.71		4,929,789

(1)

~~Includes approximately 136,400~~Includes:

125,954 shares available for issuance under the Company’s Amended and Restated 1995 Employee Stock Purchase Plan, as amended.

4,803,835 shares available for issuance under the Company’s 2010 Incentive Award Plan, as amended April 12, 2018.

(2)

In March 2002, the Board of Directors adopted the 2002 Non-officer Employee Stock Incentive Plan (the “2002 Plan”), which was adopted without the approval of our security holders. Pursuant to the 2002 Plan, 415,000 shares of common stock were reserved for issuance (subject to adjustment in the event of stock splits and other similar events). In May 2002, the Board of Directors approved an amendment to the 2002 Plan in which the total shares available under the plan were increased to 1,915,000. Under the 2002 Plan, non-statutory stock options or restricted stock awards were granted to the Company’s or its subsidiaries’ employees, other than those who were also officers or directors, as defined. In connection with the adoption of the 2010 Incentive Award Plan on December 8, 2010, equity awards are no longer granted under the 2002 Plan.

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Controlled Company

As a result of the Preferred Stock Transaction and Warrant Repurchase described below under the section entitled “Preferred Stock Transaction and Warrant Repurchase,” SPHG Holdings and its affiliates beneficially own approximately 52.63% of our outstanding shares of Common Stock, which includes shares of Common Stock underlying currently convertible Series C Convertible Preferred Stock of the Issuer (the Preferred Stock). As a result, we are a “controlled company” within the meaning of Rule 5615(c) of the Nasdaq Stock Market Listing Rules. Under the Nasdaq rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain Nasdaq corporate governance requirements, including: (i) the requirement that a majority of the Board consist of independent directors; (ii) the requirement that we have director nominees selected or recommended for the Board’s selection, either by a majority vote of only the independent directors or by a nomination committee comprised solely of independent directors, with a written charter or Board resolution addressing the nominations process; and (iii) the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. We currently rely on some of these exemptions. Although our Governance Committee and our Compensation Committee consist entirely of independent directors, we do not currently have a majority of independent directors on the Board.

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

Certain Relationships and Related Transactions

Management by Affiliates of Steel Holdings

As of December 4, 2018, Steel Holdings and its affiliates beneficially owned 60,612,214 shares of the Company’s Common Stock, representing approximately 52.63% of our outstanding shares of Common Stock. Steel Holdings GP is the general partner of Steel Holdings. Warren G. Lichtenstein, the Executive Chairman of our Board, is also the Executive Chairman of Steel Holdings GP. Glen Kassan, our Vice Chairman of the Board and former Chief Administrative Officer, is also affiliated with Steel Holdings GP. Jack L. Howard, the President and a director of Steel Holdings GP, was appointed to the Board upon the closing of the Preferred Stock Transaction described below. William T. Fejes, an employee of a subsidiary of Steel Holdings, was appointed to the Board upon the closing of the Preferred Stock Transaction described below. Full biographical information for Messrs. Lichtenstein, Kassan, Howard and Fejes can be found above in Proposal 1 under the section entitled “Information Concerning the Directors and the Board’s Nominees.” Prior to his passing, Mr. Bergamo was a director of Steel Holdings and of the Company and also served as Chairman of the Company’s Audit Committee.

As of July 31, 2018, SPHG Holdings held $14.9 million principal amount of the Company’s 5.25% Convertible Senior Notes. SPHG Holdings had previously advised the Company that it will not require a cash payment on the Notes when they mature on March 1, 2019 (the “Maturity Date”) and for a period of twelve months from the date of the Original Form 10-K filing. On December 12, 2018, SPHG Holdings further advised the Company that in addition to not requiring a cash payment on the Notes on the Maturity Date, that SPHG Holdings agrees to either (a) the extension of the Maturity Date to a date later than January 15, 2020, or (b) the issuance of a replacement convertible security with a maturity date later than January 15, 2020.

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Preferred Stock Transaction and Warrant Repurchase

On December 15, 2017, the Company entered into a Preferred Stock Purchase Agreement (the “Purchase Agreement”) with SPHG Holdings, pursuant to which the Company issued 35,000 shares of the Company’s newly created Series C Convertible Preferred Stock, par value $0.01 per share (the Preferred Stock), to SPHG Holdings at a price of $1,000 per share, for an aggregate purchase consideration of $35.0 million (the “Preferred Stock Transaction”). The terms, rights, obligations and preferences of the Preferred Stock are set forth in a Certificate of Designations, Preferences and Rights of Series C Convertible Preferred Stock of the Company (the “Series C Certificate of Designations”), which has been filed with the Secretary of State of the State of Delaware.

Under the Series C Certificate of Designations, each share of Preferred Stock can be converted into shares of the our Common Stock, at an initial conversion price equal to $1.96 per share, subject to appropriate adjustments for any stock dividend, stock split, stock combination, reclassification or similar transaction. Holders of the Preferred Stock will also receive dividends at 6% per annum payable in cash or Common Stock. If at any time the closing bid price of the Company’s Common Stock exceeds 170% of the conversion price for at least five consecutive trading days (subject to appropriate adjustments for any stock dividend, stock split, stock combination, reclassification or similar transaction), the Company has the right to require each holder of Preferred Stock to convert all, or any whole number, of shares of the Preferred Stock into Common Stock. The Preferred Stock is currently convertible into 17,857,143 shares of Common Stock.

The ~~information~~Preferred Stock Transaction was approved and recommended to the Board by a special committee of the Board (the “Special Committee”) consisting of Messrs. Wald, Fenton and Lengyel. Each member of the Special Committee was independent and not affiliated with Steel Holdings GP, which controls the power to vote and dispose of the securities held by SPHG Holdings and its affiliates.

On December 15, 2017, contemporaneously with the closing of the Preferred Stock Transaction, the Company entered into a Warrant Repurchase Agreement (the “Warrant Repurchase”) with Steel Holdings, an affiliate of SPHG Holdings, pursuant to which the Company repurchased for $100 the warrant to acquire 2,000,000 shares of the Common Stock (the “Warrant”) that the Company had previously issued to Steel Holdings. The Warrant, which was to expire in 2018, was terminated by the Company upon repurchase.

As of December 14, 2017 (prior to the closing of the Preferred Stock Transaction), SPHG Holdings and its affiliates beneficially owned approximately 35.62% of our outstanding shares of Common Stock. Upon closing of the Preferred Stock Transaction and the Warrant Repurchase and following the previously reported equity grants to Messrs. Lichtenstein, Howard and Fejes on December 15, 2017, SPHG Holdings and its affiliates beneficially own approximately 52% of our outstanding shares of Common Stock, and the Company may be deemed to be a controlled company under Nasdaq rules.

Management Services Agreement

On December 24, 2014, we entered into a Management Services Agreement with SP Corporate Services LLC (“SP Corporate”), an indirect wholly owned subsidiary of Steel Holdings, effective as of January 1, 2015 (as amended, the “Management Services Agreement”).

The Management Services Agreement had an initial term of six months. On June 30, 2015, we entered into an amendment that extended the term of the Management Services Agreement to December 31, 2015, and provided for automatic renewal for successive one year periods, unless and until terminated in accordance with the terms set forth therein, which include, under certain circumstances, the payment by the Company of certain termination fees to SP Corporate. On March 10, 2016, we entered into a Second Amendment to the Management Services Agreement with SPH Services, Inc. (“SPH Services”), the parent of SP Corporate and an affiliate of SPHG Holdings, pursuant to which SPH Services assumed rights and responsibilities of SP Corporate and the services provided by SPH Services to the Company were modified pursuant to the terms of the Amendment. Also on March 10, 2016, we entered into a Transfer Agreement with SPH Services pursuant to which we agreed to the transfer to the Company of certain individuals who provide corporate services to the Company. SP Corporate and Partners LLC merged with and into SPH Services, with SPH Services surviving. SPH Services has since changed its name to Steel Services Ltd. (“Steel Services”).

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Warren Lichtenstein, our Executive Chairman of the Board, is affiliated with Steel Holdings, and was the Chief Executive Officer of SP Corporate and is now the Interim Chief Executive Officer and Chief Executive Officer of Steel Services. In addition, Glen Kassan, our Vice Chairman of the Board and former Chief Administrative Officer, is also affiliated with Steel Holdings. Under the Management Services Agreement, Steel Services furnishes us with personnel to perform additional services, which include, without limitation:

Services related to corporate treasury functions and financing matters;

Support of M&A functions; and

Legal services, including but not limited to advising the Company on risk management, governance and compliance generally, assisting with public company reporting requirements, advising on investigations and litigation, and advising on major business transactions.

The Management Services Agreement was approved by the Related Party Transactions Committee, a special committee of the Board comprised entirely of independent directors having no affiliation with SP Corporate or its affiliates. Performance of services under the Management Services Agreement by Steel Services and its personnel are now subject to the oversight of the Audit Committee, and the authority of Steel Services and its personnel to incur any obligation or enter into any transaction is subject to the prior approval of the Audit Committee or a prior written delegation of authority of the Audit Committee delivered to Steel Services. In connection with entry into the Management Services Agreement, eight employees of the Company were transferred to SP Corporate, at which time SP Corporate assumed the majority of costs associated with compensating those employees and providing applicable benefits. The services that such persons provide to the Company are provided on a non-exclusive basis. However, pursuant to the terms of the Management Services Agreement, all such persons are required to devote such time and effort as is reasonably necessary to fulfill the statutory and fiduciary duties applicable to them in performing such services.

A third amendment to the Management Services Agreement, effective September 1, 2017 (the “Third Amendment”), reduced the fixed monthly fee paid by ~~this Item~~the Company to Steel Services under the Management Services Agreement from $175,000 per month to $95,641 per month. The monthly fee is subject to review and adjustment by agreement between the Company and Steel Services for periods commencing in Fiscal 2016 and beyond. Additionally, we may be required to reimburse Steel Services and its affiliates for all reasonable and necessary business expenses incurred on our behalf in connection with the performance of the services under the Management Services Agreement, including travel expenses.

The Management Services Agreement provides that, under certain circumstances, we may be required to indemnify and hold harmless Steel Services and its affiliates and employees from any claims or liabilities by a third party in connection with activities or the rendering of services under the Management Services Agreement.

Our Related Party Transactions Committee approved the entry into the Management Services Agreement, the first two amendments to the Management Services Agreement and the Transfer Agreement. The Audit Committee approved the Third Amendment. The Related Party Transactions Committee concluded that by consolidating back office functions and corporate overhead between SP Corporate (now Steel Services) and the Company, the Company likely would achieve cost savings over time. In negotiating and approving the Management Services Agreement, the Related Party Transactions Committee, consisting of Jeffrey J. Fenton, Philip E. Lengyel and Jeffrey S. Wald, each of whom is an independent director as defined by the rules of Nasdaq, considered, among other things, issues such as the scope of the services to be provided by SP Corporate and SPH Services to the Company, the pricing of the arrangement under the Management Services Agreement, and the limits of authority for the outsourced personnel.

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On December 15, 2017, the Board, upon the recommendation of the Special Committee and the Compensation Committee, approved restricted stock grants and market performance based restricted stock grants to non-employee directors Messrs. Howard, Fejes and Lichtenstein, the Executive Chairman of the Board, as more fully described in the section entitled “New Plan Benefits.” Messrs. Howard and Lichtenstein are affiliated with Steel Holdings GP, which is a wholly-owned subsidiary of Steel Holdings. Mr. Fejes is currently affiliated with Steel Services, an indirect wholly owned subsidiary of Steel Holdings. These awards were measured based on the fair market value on the Grant Date.

Air Travel

During Fiscal 2018, the Company reimbursed SP General Services, LLC (“SPGS”), a wholly owned subsidiary of SPL, for air travel in the amount of $547,524.78, which was primarily related to the IWCO acquisition and its integration.

Review, Approval or Ratification of Transactions with Related Persons

The Audit Committee reviews all related party transactions on an ongoing basis and all such transactions must be approved or ratified by the Audit Committee. On October 11, 2016, the Board adopted a Related Person Transaction Policy that is administered by the Audit Committee and applies to all related party transactions. The Related Person Transaction Policy was adopted in part to address Auditing Standard No. 18 (Related Parties). The responsibility to review, approve and ratify related party transactions was previously held by the Related Party Transactions Committee from November 20, 2014, until October 11, 2016.

A “related-party transaction” is a transaction that meets the minimum threshold for disclosure under the relevant SEC rules (generally, transactions involving amounts exceeding $120,000 in which a “related person” or entity has a direct or indirect material interest). “Related persons” include the Company’s executive officers, directors, nominees for directors, 5% or more beneficial owners of our Common Stock, immediate family members of these persons and entities in which one of these persons has a direct or indirect material interest.

During the period between the August 1, 2016 and October 11, 2016, the Related Party Transactions Committee was responsible to review, approve and ratify related-party transactions. The Related Party Transactions Committee reviewed the material facts of any related-party transaction and either approves or disapproves of the entry into the transaction. In the course of reviewing the related-party transaction, the Related Party Transactions Committee considered whether (i) the transaction was fair and reasonable to the Company, (ii) under all of the circumstances the transaction was in, or not inconsistent with, the Company’s best interests, and (iii) the transaction will be ~~contained~~on terms no less favorable to the Company than could have been obtained in ~~our Definitive Proxy Statement~~an arms’ length transaction with an unrelated third party. If advance approval of a related-party transaction was not feasible, then the transaction was considered and, if the Related Transactions Party Committee determined it to be appropriate, it was then ratified by the Related Party Transactions Committee. No director participated in the approval of a transaction for which he or she is ~~incorporated~~a related party. When a related-party transaction was ongoing, any amendments or changes are reviewed and the transaction was reviewed annually for reasonableness and fairness to the Company.

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Beginning October 11, 2016, under the Related Person Transaction Policy, the Audit Committee reviews the material facts of any related-party transaction and either approves or disapproves of the entry into the transaction or ratification of the transaction. If advance approval of a related-party transaction is not feasible, then the transaction is considered and, if the Audit Committee determines it to be appropriate, it is then ratified by the Audit Committee. No director may participate in ~~this report~~the approval of a transaction for which he or she is a related party. When a related-party transaction is ongoing, any amendments or changes are reviewed in accordance with the previous approval granted by ~~reference.~~the Audit Committee.

Independence of Members of the Board

The Board has determined that each of Jeffrey J. Fenton, Philip E. Lengyel and Jeffrey S. Wald, satisfy the criteria for being an “independent director” under the standards of Nasdaq and has no material relationship with the Company other than by virtue of his service on the Board. A full list of directors is set forth above under “ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE – Information Concerning the Directors.”

The Audit Committee currently consists of Jeffrey J. Fenton, Philip E. Lengyel, and Jeffrey S. Wald, as chairman, each of whom is independent as defined in applicable Nasdaq listing standards and Rule 10A-3 under the Securities Exchange Act of 1934, as amended. The Compensation Committee currently consists of Jeffrey J. Fenton, as chairman, and Philip E. Lengyel, each of whom is an independent director as determined in accordance with the Compensation Committee charter and applicable Nasdaq rules. The Governance Committee currently consists of Philip E. Lengyel and Jeffrey S. Wald, each of whom is independent as defined in applicable Nasdaq listing standards.

Prior to his passing, Mr. Bergamo served as Chairman of the Audit Committee and member of the Compensation Committee and Governance Committee. Mr. Bergamo was independent as defined in applicable Nasdaq listing standards and Rule 10A-3 under the Securities Exchange Act of 1934, as amended.

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ITEM 14.— PRINCIPAL ACCOUNTING FEES AND SERVICES

The ~~information required~~following table presents fees for professional audit services and other services rendered by ~~this Item will~~the Company’s independent registered public accountants for the fiscal years ended July 31, 2018 and 2017:

Fee Category	Fiscal 2018 Fees		Fiscal 2017 Fees
Audit Fees⁽¹⁾	$	3,389,040	$	2,323,152
Audit-Related Fees⁽²⁾		264,392		11,500
Tax Fees⁽³⁾		61,142		0
All Other Fees		0		0
Total Fees	$	3,714,574	$	2,334,652

(1)

Audit Fees. Audit fees for Fiscal 2018 and Fiscal 2017 consist of fees billed for professional services rendered for the audit of the Company’s consolidated financial statements and review of the interim consolidated financial statements included in quarterly reports, services that are normally provided by the Company’s auditors in connection with statutory and regulatory filings or engagements, and costs associated with compliance with Section 404 of the Sarbanes-Oxley Act of 2002.

(2)

Audit-Related Fees. Audit-related fees for Fiscal 2018 and Fiscal 2017 consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements and are not reported under “Audit Fees.” Those audit-related services for Fiscal 2018 includes an audit of an employee benefit plan and due diligence services related to the IWCO Acquisition and for Fiscal 2017 includes an audit of an employee benefit plan.

(3)

Tax Fees. Tax fees for Fiscal 2018 consist of professional services for state and local tax compliance services.

Audit Committee Policy on Pre-Approval of Services of Independent Registered Public Accounting Firm

The Audit Committee’s policy is to pre-approve all audit services to be ~~contained in our Definitive Proxy Statement~~provided by the Company’s independent registered public accounting firm or other firms, and all non-audit services to be provided by the Company’s independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is ~~incorporated~~generally subject to a specific budget. The Company’s independent registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this ~~report~~pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis. During Fiscal 2018 and Fiscal 2017, all services rendered by ~~reference.~~BDO USA, LLP to the Company were pre-approved by the Audit Committee.

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PART IV

ITEM 15.— EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) 1. Financial Statements.

The financial statements listed in the Index to Consolidated Financial Statements are filed as part of this report.

(a) 2. Financial Statement Schedules.

All financial statement schedules have been omitted as they are either not required, not applicable, or the information is otherwise included.

(a) 3. Exhibits.

The exhibits listed in the Exhibit Index are filed, furnished, or incorporated by reference in this report.

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~~EXHIBIT INDEX~~


Exhibit Number		Exhibit Description

2.1		Agreement and Plan of Merger, dated December 15, 2017, by and among ModusLink Global Solutions, Inc., MLGS Merger Company, Inc., IWCO Direct Holdings Inc., CSC Shareholder Services, LLC (solely in its capacity as representative), and the stockholders of IWCO Direct Holdings Inc. is incorporated herein by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on December 19, 2017. Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby agrees to furnish supplementary copies of any of the omitted schedules or exhibits upon request by the Securities and Exchange Commission.
~~3.1~~
3.1		Restated Certificate of Incorporation of the Registrant is incorporated herein by reference to Exhibit 3.4 to the Registrant’s Current Report on Form 8-K dated September 26, ~~2008 (File No. 000-23262).~~2008.

~~3.2~~
3.2		Certificate of Designations of Series A Junior Participating Preferred Stock of ModusLink Global Solutions, Inc., filed with the Secretary of State of the State of Delaware on October 18, 2011 is incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on October 18, ~~2011 (File No. 000-23262).~~2011.

~~3.3~~
3.3		Certificate of Designations of Series B Junior Participating Preferred Stock of ModusLink Global Solutions, Inc., filed with the Secretary of State of the State of Delaware on March 22, 2012 is incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on March 22, ~~2012 (File No. 001-35319).~~2012.

~~3.4~~
3.4		Fourth Amended and Restated Bylaws of ModusLink Global Solutions, Inc., as currently in effect, is incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on June 23, ~~2014 (File No. 001-35319).~~2014.

~~3.5~~
3.5		Certificate of Elimination of Series B Junior Participating Preferred Stock of ModusLink Global Solutions, Inc., dated March 26, 2013 is incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on March 26, ~~2013 (File No. 001-35319).~~2013.

~~3.6~~
3.6		Amendment to the Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on December 29, 2014, is incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on January 5, ~~2015 (File No. 001-35319).~~2015.

~~3.7~~
3.7		Certificate of Amendment of the Restated Certificate of Incorporation of ModusLink Global Solutions, Inc. (Effecting the Reverse Split), filed with the Secretary of State of the State of Delaware on January 16, 2015, is incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on January 22, ~~2015 (File No. 001-35319).~~2015.

~~3.8~~
3.8		Certificate of Amendment of the Restated Certificate of Incorporation of ModusLink Global Solutions, Inc. (Effecting the Forward Split), filed with the Secretary of State of the State of Delaware on January 16, 2015, is incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on January 22, ~~2015 (File No. 001-35319).~~2015.

~~4.1~~
3.9		Certificate of Designations, Preferences and Rights of Series C Convertible Preferred Stock of ModusLink Global Solutions, Inc. filed with the Secretary of State of the State of Delaware on December 15, 2017, is incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on December 19, 2017.

3.10		Certificate of Designation of Rights, Preferences and Privileges of Series D Junior Participating Preferred Stock filed with the Secretary of State of the State of Delaware on January 19, 2018, is incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on January 19, 2018.

3.11		Certificate of Ownership and Merger filed with the Secretary of State of the State of Delaware on February 20, 2018, is incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-Kfiled on February 26, 2018 .

3.12		Amendment to Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on April 12, 2018, is incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on April 16, 2018.

4.1		Specimen stock certificate representing the Registrant’s Common Stock, is incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on January 22, ~~2015 (File No. 001-35319).~~2015.

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~~4.2~~
4.2		Tax Benefit Preservation Plan, dated as of October 17, 2011, between ModusLink Global Solutions, Inc. and American Stock Transfer & Trust Company, LLC, which includes the Form of Certificate of Designations of Series A Junior Participating Preferred Stock as Exhibit A, the Form of Right Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Shares as Exhibit C is incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on October 18, ~~2011 (File No. 000-23262).~~2011.

~~4.3~~
4.3		Amendment No. 1, dated as of March 21, 2012 to Tax Benefit Preservation Plan, dated as of October 17, 2011, between ModusLink Global Solutions, Inc. and American Stock Transfer & Trust Company, LLC is incorporated herein by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on March 22, ~~2012 (File No. 001-35319).~~2012.

~~4.4~~
4.4		Amendment No. 2 to Tax Benefit Preservation Plan, dated as of October 14, 2014, between ModusLink Global Solutions, Inc. and American Stock Transfer & Trust Company, LLC is incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on October 14, ~~2014 (File No. 000-23262).~~2014.

~~4.5~~
4.5		Amendment No. 3, dated December 31, 2014, to Tax Benefit Preservation Plan between ModusLink Global Solutions, Inc. and American Stock Transfer & Trust Company, LLC, as rights agent, is incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on January 5, ~~2015 (File No. 001-35319).~~2015.

~~4.6~~
4.6		Rights Agreement, dated as of March 21, 2012, between ModusLink Global Solutions, Inc. and American Stock Transfer & Trust Company, LLC, which includes the Form of Certificate of Designations of Series B Junior Participating Preferred Stock as Exhibit A, the Form of Right Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Shares as Exhibit C is incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on March 22, ~~2012 (File No. 001-35319).~~2012.

~~4.7~~
4.7		Amendment No. 1, dated as of February 11, 2013 to Rights Agreement, dated as of March 21, 2012, between ModusLink Global Solutions, Inc. and American Stock Transfer & Trust Company, LLC is incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on February 13, ~~2013 (File No. 001-35319).~~2013.

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10.11*
10.11*		Amendment No. 2 to ModusLink Global Solutions, Inc. 2005 Non-Employee Director Plan is incorporated herein by reference to Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, ~~2010 (File No. 000-23262).~~2010.

10.12*
10.12*		Amendment No. 3 to ModusLink Global Solutions, Inc. 2005 Non-Employee Director Plan is incorporated herein by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, ~~2011 (File No. 000-23262).~~2011.

10.13*
10.13*		Form of Non-Statutory Stock Option Agreement for usage under the Registrant’s 2005 Non-Employee Director Plan is incorporated herein by reference to Exhibit 10.11 of the Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, ~~2006 (File No. 000-23262).~~2006.

10.14*
10.14*		ModusLink Global Solutions, Inc. 2010 Incentive Award Plan is incorporated herein by reference to Appendix I to the Registrant’s Definitive Schedule 14A filed on October 26, ~~2010 (File No. 000-23262).~~2010.

10.15*
10.15*		Form of Restricted Stock Agreement Granted Under 2010 Incentive Award Plan is incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated December 8, ~~2010 (File No. 000-23262).~~2010.

10.16*
10.16*		Form of Restricted Stock Unit Agreement Granted Under 2010 Incentive Award Plan is incorporated herein by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K dated December 8, ~~2010 (File No. 000-23262).~~2010.

10.17*
10.17*		Form of 2010 Incentive Award Plan Non-Statutory Stock Option Certificate is incorporated herein by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K dated December 8, ~~2010 (File No. 000-23262).~~2010.

10.18*
10.18*		Form of 2010 Incentive Award Plan Incentive Stock Option Certificate is incorporated herein by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K dated December 8, ~~2010 (File No. 000-23262).~~2010.

10.19*
10.19*		ModusLink Global Solutions, Inc. Fourth Amended and Restated Director Compensation Plan, dated as of December 20, 2015, is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, ~~2016 (File No. 001-35319).~~2016.

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~~10.28~~
10.28		Second Amendment to Amended and Restated Credit Agreement, dated as of January 31, 2012, by and among the Registrant, certain of its subsidiaries, Bank of America, N.A., Silicon Valley Bank and HSBC USA, National Association is incorporated herein by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, ~~2012 (File No. 001-35319).~~2012.

~~10.29~~
10.29		Third Amendment to Amended and Restated Credit Agreement and Forbearance Agreement, dated as of August 16, 2012, by and among the Registrant, certain of its subsidiaries, Bank of America, N.A., Silicon Valley Bank and HSBC Bank USA, National Association is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on August 21, ~~2012 (File No. 001-35319).~~2012.

~~10.30~~
10.30		Amended and Restated Security Agreement, dated as of February 1, 2010, by and among the Registrant and certain of its subsidiaries and Bank of America, N.A. is incorporated herein by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, ~~2010 (File No. 000-23262).~~2010.

~~10.31~~
10.31		Amended and Restated Revolving Credit Note, dated as of February 1, 2010, issued by the Registrant and certain of its subsidiaries to Bank of America, N.A. is incorporated herein by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, ~~2010 (File No. 000-23262).~~2010.

~~10.32~~
10.32		Revolving Credit Note, dated as of February 1, 2010, issued by the Registrant and certain of its subsidiaries to Silicon Valley Bank is incorporated herein by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, ~~2010 (File No. 000-23262).~~2010.

~~10.33~~
10.33		Revolving Credit Note, dated as of February 1, 2010, issued by the Registrant and certain of its subsidiaries to HSBC Business Credit (USA) Inc. is incorporated herein by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, ~~2010 (File No. 000-23262).~~2010.

10.34*
10.34*		Offer Letter, dated as of January 13, 2013, from ModusLink Global Solutions, Inc. to John J. Boucher is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on January 17, ~~2013 (File No. 001-35319).~~2013.

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~~10.44~~
10.44		Guaranty and Security Agreement, dated as of October 31, 2012, by and among the Registrant, certain of its subsidiaries and Wells Fargo Bank, National Association is incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on November 1, ~~2012 (File No. 001-35319).~~2012.

~~10.45~~
10.45		First Amendment to Credit Agreement, dated as of December 18, 2013, by and among the Registrant, certain of its subsidiaries and Wells Fargo Bank, National Association is incorporated herein by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, ~~2014 (File No. 001-35319).~~2014.

~~10.46~~
10.46		Indenture, dated as of March 18, 2014, by and between the Registrant and Wells Fargo Bank, National Association, as trustee, incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on March 18, ~~2014 (File No. 001-35319).~~2014.

~~10.47~~
10.47		Form of 5.25% Convertible Senior Note due 2019, incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on March 18, ~~2014 (File No. 001-35319).~~2014.

~~10.48~~
10.48		Second Amendment to Credit Agreement, dated as of March 13, 2014, between the Registrant, ModusLink Corporation, and ModusLink PTS, Inc., the financial institutions identified on the signature pages thereto as lenders, and Wells Fargo Bank, National Association as administrative agent for the lenders, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 18, ~~2014 (File No. 001-35319).~~2014.

~~10.49~~
10.49		Third Amendment to Credit Agreement, dated as of March 25, 2014, by and among the Registrant, certain of its subsidiaries and Wells Fargo Bank, National Association is incorporated herein by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, ~~2014 (File No. 001-35319).~~2014.

~~10.50~~
10.50		Credit Agreement by and among ModusLink Corporation and ModusLink PTS, Inc., certain subsidiaries thereof, and PNC Bank, National Association, dated as of June 30, 2014, is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on July 7, ~~2014 (File No. 001-35319).~~2014.

10.51*
10.51*		Management Services Agreement, dated as of January 1, 2015, by and between SP Corporate Services LLC and ModusLink Global Solutions, Inc., is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 31, ~~2014 (File No. 001-35319).~~2014.

Table of Contents

10.61**
10.61		ModusLink Global Solutions, Inc. FY 2018 Management Incentive ~~Plan.~~Plan, is incorporated herein by reference to Exhibit 10.61 to the Registrant’s Annual Report on Form 10-K filed on October 16, 2018.

10.62*
10.62*		Form of Restricted Stock Unit Agreement Granted Under 2010 Incentive Award Plan, is incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed October 5, 2017.

21**
10.63		Sale and Purchase Agreement, dated October 5, 2017, between ModusLink Pte. Ltd. and Far East Group Limited, is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on March 15, 2018.

10.64		Financing Agreement dated as of December 15, 2017, by and among IWCO Direct Holdings Inc., MLGS Merger Company, Inc., Instant Web, LLC, certain subsidiaries of IWCO Direct Holdings Inc. identified on the signature pages thereto, the lenders from time to time party hereto, and Cerberus Business Finance, LLC, as collateral agent and administrative agent for the lenders, is incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on December 19, 2017.

10.65		Preferred Stock Purchase Agreement dated as of December 15, 2017, by and between ModusLink Global Solutions, Inc. and SPH Group Holdings LLC is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 19, 2017.

10.66		Waiver and Amendment No. 1 to Financing Agreement, dated as of May 9, 2018, is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 10, 2018.

10.67*		Steel Connect, Inc. 2010 Incentive Award Plan, as amended, April 12, 2018, is incorporated herein by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on June 18, 2018.

10.68*		Form of Award Agreement Granted Under 2010 Incentive Award Plan between the Company and each of Messrs. Lichtenstein, Howard and Fejes during the second quarter of the 2018 fiscal year (filed with the initial filing of the Annual Report on Form 10-K for the year ended July 31, 2018).

10.69*		Form of Restricted Stock Agreement Granted Under 2010 Incentive Award Plan entered into in connection with annual awards of restricted stock to directors pursuant to the Fourth Amended and Restated Director Compensation Plan (filed with the initial filing of the Annual Report on Form 10-K for the year ended July 31, 2018).

21		Subsidiaries of the ~~Registrant.~~Registrant (filed with the initial filing of the Annual Report on Form 10-K for the year ended July 31, 2018).

23.1**
23.1		Consent of BDO USA, ~~LLP.~~

24.1**		~~Power~~LLP (filed with the initial filing of ~~Attorney (included on~~ the ~~signature page of this~~ Annual Report on Form ~~10-K)~~10-K for the year ended July 31, 2018).

31.1**
24.1		Power of Attorney (filed with the initial filing of the Annual Report on Form 10-K for the year ended July 31, 2018).

31.1		Certification of the Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed with the initial filing of the Annual Report on Form 10-K for the year ended July 31, 2018).

31.2		Certification of the Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed with the initial filing of the Annual Report on Form 10-K for the year ended July 31, 2018).

31.3**		Certification of the Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2**
31.4**		Certification of the Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~32.1‡~~
32.1		Certification of the Principal Executive Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002 (furnished with the initial filing of the Annual Report on Form 10-K for the year ended July 31, 2018).

~~32.2‡~~
32.2		Certification of the Principal Financial and Accounting Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002 (furnished with the initial filing of the Annual Report on Form 10-K for the year ended July 31, 2018).

101**101		Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Audited Condensed Consolidated Balance Sheets as of July 31, ~~2017,~~2018, (ii) Audited Condensed Consolidated Statements of Operations for the Twelve Months ended July 31, ~~2017,~~2018, (iii) Audited Condensed Consolidated Statements of Cash Flows for the Twelve Months ended July 31, ~~2017~~2018 and (iv) Notes to Audited Condensed Consolidated Financial ~~Statements.~~Statements (filed with the initial filing of the Annual Report on Form 10-K for the year ended July 31, 2018).

*	Management contract or compensatory plan or arrangement filed in response to Item 15(a)(3) of the instructions toForm 10-K.

**	Filed herewith.

‡	~~Furnished herewith.~~44

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: December 17, 2018


			~~MODUSLINK GLOBAL SOLUTIONS,~~STEEL CONNECT, INC.

~~Date: October 16, 2017~~By:	/s/ Warren G. Lichtenstein
	Warren G. Lichtenstein
	~~By:~~	~~/s/ JAMES~~ ~~R. HENDERSON~~
				~~James R. Henderson~~
				~~President and~~Interim Chief Executive Officer

~~POWER OF ATTORNEY~~

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints jointly and severally, Glen M. Kassan and James R. Henderson, or either of them as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

~~IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney as of the date indicated.~~

Pursuantto the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the ~~Registrant~~registrant and in the capacities and on the ~~16th day of October 2017.~~

date indicated.

Signature	Title	Date

~~Signature~~/s/ Warren G. Lichtenstein		~~Title~~

/S~~/ JAMES~~ ~~R HENDERSON~~ ~~James R. Henderson~~	Warren G. Lichtenstein	~~President and~~Interim Chief Executive Officer (Principal Executive Officer), Executive Chairman of the Board and Director	December 17, 2018

/S~~/ LOUIS~~ ~~J. BELARDI~~ s/ Louis J. Belardi
Louis J. Belardi	Chief Financial Officer (Principal Financial and Accounting Officer)	December 17, 2018

/S~~/ JEFFREY~~ ~~J. FENTON~~ ~~Jeffrey J. Fenton~~s/ *		~~Director~~
Jeffrey J. Fenton	Director	December 17, 2018

/S~~/ GLEN~~ ~~M. KASSAN~~ s/ Glen M. Kassan		~~Director~~
Glen M. Kassan	Director	December 17, 2018

/S~~/ PHILIP~~ ~~E. LENGYEL~~ ~~Philip E. Lengyel~~s/ *		~~Director~~
Philip E. Lengyel	Director	December 17, 2018

/S~~/ WARREN~~ ~~G. LICHTENSTEIN~~ ~~Warren G. Lichtenstein~~s/ *		~~Executive Chairman of the Board and Director~~

/S~~/ JEFFREY~~ ~~S. WALD~~ Jeffrey S. Wald	Director	December 17, 2018

/s/ *
Jack L. Howard	Director	December 17, 2018

/s/ *
William T. Fejes, Jr.	Director	December 17, 2018

91*By/s/ Glen M. Kassan

Glen M. Kassan, Attorney-in-fact



1601 Trapelo Road, Suite 170 Waltham, Massachusetts		02451
(Address of principal executive offices)		(Zip Code)


Title of each class:		Name of each exchange on which registered:
Common Stock, $0.01 par value		The NASDAQ Stock Market LLC


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐
		Emerging growth company	☐


Fiscal Year Ended July 31, 2017	High		Low
First Quarter	$	1.68	$	1.21
Second Quarter	$	2.02	$	1.35
Third Quarter	$	1.89	$	1.41
Fourth Quarter	$	1.72	$	1.51

Fiscal Year Ended July 31, 2016	High		Low
First Quarter	$	3.24	$	2.72
Second Quarter	$	2.89	$	2.07
Third Quarter	$	2.13	$	1.41
Fourth Quarter	$	1.53	$	1.07


	Fiscal year ending July 31,
	2012		2013		2014		2015		2016		2017
ModusLink Global Solutions, Inc.		100.00		90.94		109.06		95.03		37.43		49.12
NASDAQ Composite XCMP		100.00		125.15		152.69		181.26		184.74		229.84
NASDAQ Computer and Data Processing (OMX)		100.00		106.72		109.62		110.23		111.95		121.69
Peer Group		100.00		125.72		131.19		127.50		144.84		186.72


Item		Page
	PART I

1.	Business		1

1A.	Risk Factors		5

1B.	Unresolved Staff Comments		16

2.	Properties		16

3.	Legal Proceedings		16

4.	Mine Safety Disclosures		16

	PART II

5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		17

6.	Selected Financial Data		19

7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20

7A.	Quantitative and Qualitative Disclosures About Market Risk		39

8.	Financial Statements and Supplementary Data		41

9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		80

9A.	Controls and Procedures		80

9B.	Other Information		83

	PART III

10.	Directors, Executive Officers and Corporate Governance		83

11.	Executive Compensation		83

12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		83

13.	Certain Relationships and Related Transactions, and Director Independence		84

14.	Principal Accounting Fees and Services		84

	PART IV

15.	Exhibits, Financial Statement Schedules		85


	Years ended July 31,
	2017			2016			2015			2014			2013
	(In thousands)
Consolidated Statements of Operations Data:
Net revenue	$	436,620		$	459,023		$	561,673		$	723,400		$	754,504

Operating loss		(19,761	)		(40,572	)		(14,339	)		(5,449	)		(28,232	)

Loss from continuing operations		(25,827	)		(61,281	)		(18,429	)		(16,362	)		(39,330	)
Income (loss) from discontinued operations		—			—			—			80			(1,025	)

Net loss	$	(25,827	)	$	(61,281	)	$	(18,429	)	$	(16,282	)	$	(40,355	)

Basic and diluted loss per share:
Loss from continuing operations	$	(0.47	)	$	(1.18	)	$	(0.35	)	$	(0.32	)	$	(0.84	)
Income (loss) from discontinued operations		—			—			—			—			(0.02	)

Net loss	$	(0.47	)	$	(1.18	)	$	(0.35	)	$	(0.32	)	$	(0.86	)

Weighted average common shares outstanding—basic and diluted		55,134			51,934			51,940			51,582			46,654


	July 31,
	2017		2016		2015		2014		2013
Consolidated Balance Sheet Data:
Working capital	$	108,691	$	125,125	$	202,289	$	207,174	$	114,655
Total assets		281,298		347,932		446,502		451,646		343,696
Long-term liabilities		69,172		67,226		90,548		81,434		10,360
Stockholders’ equity		62,971		85,940		144,601		171,618		156,905


	Twelve Months Ended July 31, 2017		As a % of Total Net Revenue	Twelve Months Ended July 31, 2016		As a % of Total Net Revenue			$ Change			% Change
	(In thousands)
Americas	$	92,324	21.1%	$	106,143		23.1	%	$	(13,819	)		(13.0	%)
Asia		158,048	36.2%		167,861		36.6	%		(9,813	)		(5.8	%)
Europe		159,085	36.4%		151,842		33.1	%		7,243			4.8	%
e-Business		27,163	6.3%		33,177		7.2	%		(6,014	)		(18.1	%)

Total	$	436,620	100.0%	$	459,023		100.0	%	$	(22,403	)		(4.9	%)


	Twelve Months Ended July 31, 2017		As a % of Segment Net Revenue			Twelve Months Ended July 31, 2016		As a % of Segment Net Revenue			$ Change			% Change
	(In thousands)
Americas	$	91,622		99.2	%	$	107,057		100.9	%	$	(15,435	)		(14.4	%)
Asia		131,760		83.4	%		145,900		86.9	%		(14,140	)		(9.7	%)
Europe		151,305		95.1	%		147,929		97.4	%		3,376			2.3	%
e-Business		25,568		94.1	%		33,379		100.6	%		(7,811	)		(23.4	%)

Total	$	400,255		91.7	%	$	434,265		94.6	%	$	(34,010	)		(7.8	%)


	Twelve Months Ended July 31,
(In thousands)	2017			2016			2015
Net loss	$	(25,827	)	$	(61,281	)	$	(18,429	)

Interest income		(399	)		(668	)		(893	)
Interest expense		8,247			10,924			10,618
Income tax expense		2,696			5,443			2,283
Depreciation		8,206			8,119			8,668
Amortization of intangible assets		—			—			667

EBITDA		(7,077	)		(37,463	)		2,914

SEC inquiry and financial restatement costs		12			293			489
SEC penalties on resolution		—			—			1,600
Strategic consulting and other related professional fees		92			455			678
Executive severance and employee retention		750			662			—
Restructuring		1,967			7,421			5,130
Share-based compensation		681			1,126			1,757
Impairment of goodwill and long-lived assets		261			305			3,360
Unrealized foreign exchange (gains) losses		670			1,037			(1,585	)
Othernon-cash (gains) losses, net		(3,001	)		5,340			(13,439	)
(Gains) on investments in affiliates and impairments		(1,278	)		(747	)		7,087

Adjusted EBITDA	$	(6,923	)	$	(21,571	)	$	7,991


	Twelve Months Ended July 31, 2016		As a % of Total Net Revenue			Twelve Months Ended July 31, 2015		As a % of Total Net Revenue			$ Change			% Change
	(In thousands)
Americas	$	106,143		23.1	%	$	200,929		35.8	%	$	(94,786	)		(47.2	%)
Asia		167,861		36.6	%		163,262		29.1	%		4,599			2.8	%
Europe		151,842		33.1	%		160,602		28.6	%		(8,760	)		(5.5	%)
e-Business		33,177		7.2	%		36,880		6.5	%		(3,703	)		(10.0	%)

Total	$	459,023		100.0	%	$	561,673		100.0	%	$	(102,650	)		(18.3	%)


	Operating Leases		Capital Lease Obligations		Purchase Obligations		Notes Interest & Principal		Total
	(In thousands)
Payments due by period
Less than 1 year	$	9,947	$	64	$	30,998	$	3,550	$	44,559
1-3 years		9,716		156		—		71,175		81,047
3-5 years		4,518		85		—		—		4,603
More than 5 years		—		—		—		—		—

	$	24,181	$	305	$	30,998	$	74,725	$	130,209


	~~Page~~
~~Report of Independent Registered Public Accounting Firm~~		42
~~Consolidated Balance Sheets at July 31, 2017 and 2016~~		43
~~Consolidated Statements of Operations for the years ended July 31, 2017, 2016 and 2015~~		44
~~Consolidated Statements of Comprehensive Loss for the years ended July 31, 2017, 2016 and 2015~~		45
~~Consolidated Statements of Stockholders’ Equity for the years ended July 31, 2017, 2016 and 2015~~		46
~~Consolidated Statements of Cash Flows for the years ended July 31, 2017, 2016 and 2015~~		47
~~Notes to Consolidated Financial Statements~~		48


		July 31, 2017			July 31, 2016
ASSETS
Current assets:
Cash and cash equivalents		$	110,670		$	130,790
Trading securities			11,898			16,768
Accounts receivable, trade, net of allowance for doubtful accounts of $616 and $489 at July 31, 2017 and July 31, 2016, respectively			81,450			111,336
Inventories			34,369			40,270
Funds held for clients			13,454			12,549
Prepaid expenses and other current assets			6,005			8,178

Total current assets			257,846			319,891
Property and equipment, net			18,555			22,271
Other assets			4,897			5,770
	��
Total assets		$	281,298		$	347,932

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	71,476		$	114,432
Accrued restructuring			186			2,936
Accrued expenses			37,898			37,740
Funds held for clients			13,454			12,549
Other current liabilities			26,141			27,109

Total current liabilities			149,155			194,766

Long-term portion of accrued restructuring			—			93
Notes payable			59,758			57,169
Other long-term liabilities			9,414			9,964

Long-term liabilities			69,172			67,226

Total liabilities			218,327			261,992

Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, $0.01 par value per share. Authorized 5,000,000 shares; zero issued or outstanding shares at July 31, 2017 and July 31, 2016			—			—
Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; 55,555,973 issued and outstanding shares at July 31, 2017; 55,249,076 issued and outstanding shares at July 31, 2016			556			553
Additional paid-in capital			7,457,051			7,456,490
Accumulated deficit			(7,398,949	)		(7,373,122	)
Accumulated other comprehensive income			4,313			2,019

Total stockholders’ equity			62,971			85,940

Total liabilities and stockholders’ equity		$	281,298		$	347,932


	Twelve Months Ended July 31, 2017		As a % of Segment Net Revenue			Twelve Months Ended July 31, 2016		As a % of Segment Net Revenue			$ Change			% Change
	(In thousands)
Americas	$	10,706		11.6	%	$	11,932		11.2	%	$	(1,226	)		(10.3	%)
Asia		19,850		12.6	%		20,569		12.3	%		(719	)		(3.5	%)
Europe		16,165		10.2	%		15,174		10.0	%		991			6.5	%
e-Business		2,592		9.5	%		3,152		9.5	%		(560	)		(17.8	%)

Sub-total		49,313		11.3	%		50,827		11.1	%		(1,514	)		(3.0	%)
Corporate-level activity		4,846					6,777					(1,931	)		(28.5	%)

Total	$	54,159		12.4	%	$	57,604		12.5	%	$	(3,445	)		(6.0	%)


	Twelve Months Ended July 31, 2016		As a % of Segment Net Revenue			Twelve Months Ended July 31, 2015		As a % of Segment Net Revenue			$ Change			% Change
	(In thousands)
Americas	$	11,932		11.2	%	$	13,129		6.5	%	$	(1,197	)		(9.1	%)
Asia		20,569		12.3	%		18,559		11.4	%		2,010			10.8	%
Europe		15,174		10.0	%		14,506		9.0	%		668			4.6	%
e-Business		3,152		9.5	%		2,384		6.5	%		768			32.2	%

Sub-total		50,827		11.1	%		48,578		8.6	%		2,249			4.6	%
Corporate-level activity		6,777					11,089					(4,312	)		(38.9	%)

Total	$	57,604		12.5	%	$	59,667		10.6	%	$	(2,063	)		(3.5	%)


	Number of Shares			Common Stock		Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income			Total Stockholders’ Equity
Balance at July 31, 2014		52,100,763		$	521	$	7,450,541		$	(7,293,412	)	$	13,968		$	171,618
Net loss										(18,429	)					(18,429	)
Equity portion of convertible senior notes																—
Issuance of common stock pursuant to employee stock purchase plan and stock option exercises		33,358			—		113			—			—			113
Restricted stock grants		111,110			1		(1	)		—			—			—
Restricted stock forfeitures		(11,343	)		—		—			—			—			—
Share-based compensation		—			—		1,757			—			—			1,757
Other comprehensive items		—			—		—			—			(10,458	)		(10,458	)

Balance at July 31, 2015		52,233,888			522		7,452,410			(7,311,841	)		3,510			144,601
Net loss										(61,281	)					(61,281	)
Equity portion of convertible notes		—			—		(64	)		—			—			(64	)
Issuance of common stock to Highbridge International LLC and Highbridge Tactical Credit & Convertibles Master Fund, L.P.		2,656,336			27		3,107			—			—			3,134
Issuance of common stock pursuant to employee stock purchase plan and stock option exercises		70,136			—		51			—			—			51
Restricted stock grants		340,259			4		(4	)		—			—			—
Restricted stock forfeitures		(51,543	)		—		(136	)		—			—			(136	)
Share-based compensation		—			—		1,126			—			—			1,126
Other comprehensive items		—			—		—			—			(1,491	)		(1,491	)

Balance at July 31, 2016		55,249,076			553		7,456,490			(7,373,122	)		2,019			85,940
Net loss										(25,827	)					(25,827	)
Equity portion of convertible notes		—			—		(135	)		—			—			(135	)
Issuance of common stock pursuant to employee stock purchase plan and stock option exercises		10,605			—		18			—			—			18
Restricted stock grants		296,292			3		(3	)		—			—			—
Share-based compensation		—			—		681			—			—			681
Other comprehensive items		—			—		—			—			2,294			2,294

Balance at July 31, 2017		55,555,973		$	556	$	7,457,051		$	(7,398,949	)	$	4,313		$	62,971


	July 31, 2017		July 31, 2016
	(In thousands)
Cash and bank deposits	$	24,987	$	29,566
Money market funds		85,683		101,224

	$	110,670	$	130,790


	Twelve Months Ended
	July 31,
	2017			2016			2015
	(In thousands, except per share data)
Net loss	$	(25,827	)	$	(61,281	)	$	(18,429	)
Weighted average common shares outstanding		55,134			51,934			51,940
Weighted average common equivalent shares arising from dilutive stock options and restricted stock		—			—			—

Weighted average number of common and potential common shares		55,134			51,934			51,940

Basic and diluted net loss per share	$	(0.47	)	$	(1.18	)	$	(0.35	)


	Employee Related Expenses			Contractual Obligations			Total
	(In thousands)
Accrued restructuring balance at July 31, 2014	$	1,687		$	598		$	2,285

Restructuring charges		5,063			324			5,387
Restructuring adjustments		(193	)		(64	)		(257	)
Cash paid		(4,949	)		(691	)		(5,640	)
Non-cash adjustments		(171	)		(76	)		(247	)

Accrued restructuring balance at July 31, 2015		1,437			91			1,528

Restructuring charges		6,025			1,536			7,561
Restructuring adjustments		(108	)		(32	)		(140	)
Cash paid		(5,244	)		(641	)		(5,885	)
Non-cash adjustments		(36	)		1			(35	)

Accrued restructuring balance at July 31, 2016		2,074			955			3,029

Restructuring charges		1,853			439			2,292
Restructuring adjustments		(416	)		91			(325	)
Cash paid		(3,357	)		(1,419	)		(4,776	)
Non-cash adjustments		(54	)		20			(34	)

Accrued restructuring balance at July 31, 2017	$	100		$	86		$	186


	Twelve Months Ended July 31,
	2017		2016		2015
	(In thousands)
Cost of revenue	$	563	$	4,812	$	4,718
Selling, general and administrative		1,404		2,609		412

	$	1,967	$	7,421	$	5,130


	Pension Benefit Payments
	(in thousands)
For the fiscal years ended July 31:
2018		168
2019		211
2020		210
2021		252
2022		254
Next 5 years		2,095


	Number of Shares			Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
	(in thousands, except exercise price and years)
Stock options outstanding, July 31, 2016		1,368		$	4.36
Granted		—			—
Exercised		—			—
Forfeited or expired		(795	)		4.37

Stock options outstanding, July 31, 2017		573			4.36		2.70	$	—

Stock options exercisable, July 31, 2017		532		$	4.40		2.60	$	—


	Number of Shares			Weighted-Average Grant Date Fair Value
	(share amounts in thousands)
Nonvested stock outstanding, July 31, 2016		258		$	2.48
Granted		296			—
Vested		(245	)		2.45
Forfeited		(13	)		3.05

Nonvested stock outstanding, July 31, 2017		296		$	—


Income tax benefit recognized in the consolidated statement of operations	$	(756,423	)
Additional paid in capital		(15,461	)

	$	(771,884	)


	Foreign currency items		Pension items			Unrealized gains (losses) on securities		Total



	(In thousands)
Accumulated other comprehensive income (loss) at July 31, 2016	$	6,131	$	(4,206	)	$	94	$	2,019
Foreign currency translation adjustment		1,391		—			—		1,391
Pension liability adjustments		—		830			—		830
Net unrealized holding gain on securities		—		—			73		73

Net current-period other comprehensive income (loss)		1,391		830			73		2,294

Accumulated other comprehensive income (loss) at July 31, 2017	$	7,522	$	(3,376	)	$	167	$	4,313


	July 31, 2017				July 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Hierarchy
	(In thousands)
Notes payable	$	59,758	$	63,852	$	57,169	$	50,957		Level 1


	Quarter Ended												Quarter Ended
	Oct. 31, ‘16			Jan. 31, ‘17			Apr. 30, ‘17			Jul. 31, ‘17			Oct. 31, ‘15			Jan. 31, ‘16			Apr. 30, ‘16			Jul. 31, ‘16
	(In thousands, except per share data)												(In thousands, except per share data)
Net revenue	$	121,327		$	117,568		$	97,948		$	99,777		$	141,089		$	119,966		$	96,460		$	101,508
Cost of revenue		111,994			106,370			89,406			92,485		$	128,637		$	116,311		$	94,286		$	95,031

Gross profit		9,333			11,198			8,542			7,292			12,452			3,655			2,174			6,477
Total operating expenses		14,975			12,702			13,785			14,664			14,021			15,318			14,671			21,320

Operating loss		(5,642	)		(1,504	)		(5,243	)		(7,372	)		(1,569	)		(11,663	)		(12,497	)		(14,843	)
Total other income (expense)		(2,352	)		(1,075	)		763			(1,984	)		(12,354	)		(2,338	)		(260	)		(1,103	)
Income tax expense		(1,049	)		(723	)		(819	)		(105	)		(850	)		(206	)		(408	)		(3,979	)
Gains on investments in affiliates, net of tax		500			396			232			150			—			259			316			214

Net loss	$	(8,543	)	$	(2,906	)	$	(5,067	)	$	(9,311	)	$	(14,773	)	$	(13,948	)	$	(12,849	)	$	(19,711	)

Basic and diluted earnings (loss) per share:
Net income (loss)	$	(0.16	)	$	(0.05	)	$	(0.09	)	$	(0.17	)	$	(0.29	)	$	(0.27	)	$	(0.25	)	$	(0.38	)

Name and Principal Position*	Year		Salary ($)			Bonus ($)			Stock Awards ($)			Option Awards ($)		Non-Equity Incentive Plan Compensation ($)⁽¹⁾		All Other Compensation ($)			Total ($)
James R. Henderson		2018		600,000			—			1,169,543	(2)		—		—		5,999	(3)		1,775,542
President and Chief		2017		600,000			—			—			—		720,000		7,999	(3)		1,327,999
Executive Officer		2016		205,385			—			—			—		—		—			205,385

Louis J. Belardi		2018		325,000			—			633,502	(2)		—		—		1,667	(3)		960,169
Executive Vice		2017		325,000			—			—			—		234,000		—			559,000
President, Chief Financial Officer and Secretary		2016		31,250			50,000	(4)		—			—		—		—			81,250

James N. Andersen		2018		453,231	(5)		1,349,804	(6)		—			—		—		6,683	(7)		1,809,718
Named Executive Officer of IWCO Direct

		Estimated Future Payouts Under Non-Equity IncentivePlan Awards ($)						Estimated Future Payouts Under Equity Incentive PlanAwards (#)						All Other Stock Awards: Number of Shares of Stock or Units			All Other Option Awards: Number of Securities Underlying Options		Exercise or Base Price of Option Awards		Grant Date Fair Value of Stock and Option Awards
Name	Grant Date	Threshold		Target		Maximum		Threshold		Target		Maximum		(#)			(#)		($/Sh)		($)⁽¹⁾
James R. Henderson	10/4/2017		—		—		—		—		—		—		609,137	(2)		—		—		1,169,543

Louis J. Belardi	10/4/2017		—		—		—		—		—		—		329,949	(3)		—		—		633,502

James N. Andersen	—		—		—		—		—		—		—		—			—		—		—

	Option Awards					Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($)⁽¹⁾	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
James R. Henderson	-	-	-	-	-	609,137⁽²⁾	1,169,543	-	-
Louis J. Belardi	-	-	-	-	-	329,949⁽³⁾	633,502	-	-
James N. Andersen	-	-	-	-	-	-	-	-	-

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)⁽¹⁾⁽²⁾	All Other Compensation ($)	Total ($)
Anthony Bergamo⁽³⁾	16,000	-	-	16,000
Jeffrey J. Fenton⁽⁴⁾	87,500	63,266	-	150,766
Glen M. Kassan⁽⁵⁾	55,000	63,266	-	118,266
Philip E. Lengyel⁽⁶⁾	81,500	63,266	-	144,766
Warren G. Lichtenstein⁽⁷⁾	119,000	63,266	5,566,200⁽¹¹⁾	5,748,466
Jeffrey S. Wald⁽⁸⁾	92,500	63,266	-	155,766
William T. Fejes, Jr.⁽⁹⁾	34,745	63,266	927,700⁽¹¹⁾	1,025,711
Jack L. Howard⁽¹⁰⁾	35,245	63,266	2,783,100⁽¹¹⁾	2,881,611

Recipient	Total Award	Vested Portion of Award^(a)	Unvested Portion of Award^(a)(b)
Warren G. Lichtenstein	3,300,000 shares	3,000,000 shares	300,000 shares
Jack L. Howard	1,650,000 shares	1,500,000 shares	150,000 shares
William T. Fejes, Jr.	550,000 shares	500,000 shares	50,000 shares



10.1*
4.8		Tax Benefits Preservation Plan, dated as of January 19, 2018, by and between ModusLink Global Solutions, Inc. and American Stock Transfer & Trust Company, LLC, as rights agent is incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on January 19, 2018.

10.1*		Amended and Restated 1995 Employee Stock Purchase Plan, as amended by Amendment No. 1 and Amendment No. 2 thereto, is incorporated herein by reference to Appendix II to the Registrant’s Definitive Schedule 14A filed on November 16, ~~2001 (File No. 000-23262).~~2001.

10.2*
10.2*		Amendment No. 3 to Amended and Restated 1995 Employee Stock Purchase Plan is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, ~~2006 (File No. 000-23262).~~2006.

10.3*
10.3*		Amendment No. 4 to Amended and Restated 1995 Employee Stock Purchase Plan is incorporated herein by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, ~~2008 (File No. 000-23262).~~2008.

10.4*
10.4*		Amendment No. 5 to Amended and Restated 1995 Employee Stock Purchase Plan is incorporated herein by reference to Appendix I to the Registrant’s Definitive Schedule 14A filed on October 23, ~~2009 (File No. 000-23262).~~2009.

10.5*
10.5*		2002 Non-Officer Employee Stock Incentive Plan, as amended, is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, ~~2002 (File No. 000-23262).~~2002.

10.6*
10.6*		Amendment No. 1 to 2002 Non-Officer Employee Stock Incentive Plan is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, ~~2002 (File No. 000-23262).~~2002.

10.7*
10.7*		Amendment No. 2 to 2002 Non-Officer Employee Stock Incentive Plan is incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated July 23, ~~2007 (File No. 000-23262).~~2007.

10.8*
10.8*		Amendment No. 3 to 2002 Non-Officer Employee Stock Incentive Plan is incorporated herein by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, ~~2008 (File No. 000-23262).~~2008.

10.9*
10.9*		2005 Non-Employee Director Plan is incorporated herein by reference to Appendix V to the Registrant’s Definitive Schedule 14A filed on November 7, ~~2005 (File No. 000-23262).~~2005.

10.10*
10.10*		Amendment No. 1 to 2005 Non-Employee Director Plan is incorporated herein by reference to Exhibit 10.10 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, ~~2008 (File No. 000-23262).~~2008.



10.20*		Offer Letter, dated August 1, 2011, by and between the Registrant and Scott R. Crawley is incorporated herein by reference to Exhibit 10.58 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, ~~2012 (File No. 001-35319).~~2012.

10.21*
10.21*		Executive Severance Agreement, dated August 29, 2011, by and between the Registrant and Scott R. Crawley is incorporated herein by reference to Exhibit 10.59 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, ~~2012 (File No. 001-35319).~~2012.

10.22*
10.22*		First Amendment to Executive Severance Agreement, dated July 30, 2012, by and between the Registrant and Scott R. Crawley is incorporated herein by reference to Exhibit 10.60 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, ~~2012 (File No. 001-35319).~~2012.

10.23*
10.23*		Retention Bonus Letter Agreement, dated July 19, 2012, by and between the Registrant and Scott R. Crawley is incorporated herein by reference to Exhibit 10.61 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, ~~2012 (File No. 001-35319).~~2012.

10.24*
10.24*		Form of Director Indemnification Agreement (executed by the Registrant and each member of the Board of Directors) is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, ~~1998 (File No. 000-23262).~~1998.

10.25*
10.25*		Form of Indemnification Agreement (executed by the Registrant and each member of the Executive Officers) dated December 17, 2008 is incorporated herein by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, ~~2009 (File No. 000-23262).~~2009.

~~10.26~~
10.26		Amended and Restated Credit Agreement, dated as of February 1, 2010, by and among the Registrant, certain of its subsidiaries, Bank of America, N.A., Silicon Valley Bank and HSBC Business Credit (USA) Inc. is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, ~~2010 (File No. 000-23262).~~2010.

~~10.27~~
10.27		First Amendment to Amended and Restated Credit Agreement, dated as of March 10, 2011, and effective as of January 31, 2011, by and among the Registrant and certain of its subsidiaries, Bank of America, N.A., Silicon Valley Bank and HSBC Business Credit (USA) Inc. is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report for the fiscal quarter ended July 31, ~~2011 (File No. 000-23262).~~2011.



10.35*		Executive Severance Agreement, dated as of January 28, 2013, by and between ModusLink Global Solutions, Inc. and John J. Boucher is incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on January 31, ~~2013 (File No. 001-35319).~~2013.

~~10.36~~
10.36		Investment Agreement, dated February 11, 2013, between ModusLink Global Solutions, Inc. and Steel Partners Holdings, L.P. is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 13, ~~2013 (File No. 001-35319).~~2013.

~~10.37~~
10.37		Settlement Agreement, dated February 11, 2013, among ModusLink Global Solutions, Inc., Handy & Harman, Ltd. and certain of its affiliates party thereto is incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on February 13, ~~2013 (File No. 001-35319).~~2013.

~~10.38~~
10.38		Amendment No. 1 to Settlement Agreement, dated January 5, 2015, between ModusLink Global Solutions, Inc. and Handy & Harman Ltd., is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on January 5, ~~2015 (File No. 001-35319).~~2015.

10.39*
10.39*		ModusLink Global Solutions, Inc. FY2014 Executive Management Incentive Plan is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 8, ~~2013 (File No. 001-35319).~~2013.

10.40*
10.40*		ModusLink Global Solutions, Inc. FY2014 Performance Based Restricted Stock Plan is incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on November 8, ~~2013 (File No. 001-35319).~~2013.

10.41*
10.41*		Offer Letter from ModusLink Global Solutions, Inc. to Alan Cormier entered into December 20, 2013 is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 26, ~~2013 (File No. 001-35319).~~2013.

10.42*
10.42*		Executive Severance Agreement by and between ModusLink Global Solutions, Inc. and Alan Cormier, dated as of December 23, 2013 is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 13, ~~2013 (File No. 001-35319).~~2013.

~~10.43~~
10.43		Credit Agreement, dated as of October 31, 2012, by and among the Registrant, certain of its subsidiaries and Wells Fargo Bank, National Association is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 1, ~~2012 (File No. 001-35319).~~2012.