~~Tremor Video, Inc.~~

~~Consolidated Statements of Comprehensive Loss~~

~~(in thousands)~~

~~(unaudited)~~

Three Months Ended

Six Months Ended

June 30,

June 30,

2017

2016

2017

2016

Net loss

$
(2,300
)
$
(5,855
)
$
(9,160
)
$
(16,929
)
Other comprehensive loss:

Foreign currency translation adjustments

41

19

127

(3
)
Comprehensive loss

$
(2,259
)
$
(5,836
)
$
(9,033
)
$
(16,932
)

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

~~Tremor Video, Inc.~~

~~Consolidated Statement of Changes in Stockholders’ Equity~~

~~(in thousands, except share and per share data)~~

~~(unaudited)~~

Accumulated

Additional

Other

Total

Common Stock

Treaury Stock

Paid-In

Comprehensive

Accumulated

Stockholders’

Share

Capital

Share

Capital

Capital

Income (Loss)

Deficit

Equity

Balance as of December 31, 2016

53,292,956

$
5

(2,861,632
)
$
(6,037
)
$
283,486

$
(331
)
$
(198,601
)
$
78,522

Exercise of stock options awards

104,656

62

62

Stock-based compensation expense

2,065

2,065

Cumulative-effect adjustment for stock compensation forfeitures

94

(94
)
—

Common stock issued for settlement of restricted stock units net of 337,049 shares withheld to satisfy income tax withholding obligations

497,280

(709
)

(709
)
Common stock issuance in connection with employee stock purchase plan

176,898

255

255

Treasury stock — repurchase of stock

(983,864
)
(2,406
)

(2,406
)
Net loss

(9,160
)
(9,160
)
Foreign currency translation adjustment

—

—

—

—

—

127

—

127

Balance as of June 30, 2017

54,071,790

$
5

(3,845,496
)
$
(8,443
)
$
285,253

$
(204
)
$
(207,855
)
$
68,756

~~Tremor Video, Inc.~~

~~Consolidated Statements of Cash Flows~~

~~(in thousands)~~

~~(unaudited)~~

Six Months Ended

June 30,

2017

2016

Cash flows from operating activities:

Net loss

$
(9,160
)
$
(16,929
)
Adjustments required to reconcile net loss to net cash used in operating activities:

Depreciation and amortization expense

4,706

4,564

Loss from sublease

—

341

Bad debt expense / (recovery)

325

(61
)
Mark-to-market expense

148

1,089

Compensation expense related to the acquisition contingent consideration

1,810

2,142

Loss on disposal of property and equipment

—

23

Stock-based compensation expense

2,065

1,989

Deferred tax benefit

40

—

Net changes in operating assets and liabilities:

Decrease in accounts receivable

4,742

14,964

Increase/(decrease) in prepaid expenses, other current assets and other long-term assets

161

(176
)
Decrease in accounts payable and accrued expenses

(8,892
)
(15,032
)
Decrease in other current liabilities

(79
)
—

Decrease in deferred rent and security deposits payable

(315
)
(26
)
Decrease/(increase) in restricted cash

770

(170
)
Increase/(decrease) in deferred revenue

90

(47
)
Net cash used in operating activities

(3,589
)
(7,329
)

Cash flows from investing activities:

Purchase of property and equipment

(895
)
(2,323
)
Net cash used in investing activities

(895
)
(2,323
)

Cash flows from financing activities:

Proceeds from the exercise of stock options awards

62

153

Proceeds from common stock issuance

255

245

Principal portion of capital lease payments

(187
)
—

Treasury stock — repurchase of stock

(2,406
)
(332
)
Tax withholdings related to net share settlements of restricted stock unit awards (RSUs)

(709
)
(252
)
Net cash used in financing activities

(2,985
)
(186
)

Net decrease in cash and cash equivalents

(7,469
)
(9,838
)

Effect of exchange rate changes in cash and cash equivalents

462

(72
)

Cash and cash equivalents at beginning of period

43,160

59,887

Cash and cash equivalents at end of period

$
36,153

$
49,977

Supplemental disclosure of cash flow activities:

Cash paid for income taxes

$
74

$
609

Cash paid for interest expense

$
90

$
4

Supplemental disclosure of non-cash investing and financing activities:

Purchase of property and equipment in accounts payable and accrued expenses

$
72

$
58

Common stock issued for settlement of RSUs

$
1,879

$
621

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

~~Tremor Video, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~(in thousands, except share and per share data)~~

~~(unaudited)~~

~~(1)~~ Includes employment inducement stock option awards granted to the Company’s Chief Financial Officer (“CFO”), Chief Technology Officer (“CTO”), and Chief Marketing Officer (“CMO”) covering 570,000, 350,000 and 125,000 shares of common stock, respectively (collectively, “Inducement Awards”) The Inducement Awards were issued outside of the Company’s stockholder approved equity compensation plans, but are generally subject to the same terms and conditions as applied to awards granted under the Company’s 2013 Plan. Stock option awards are generally granted at the fair market value of the Company’s common stock on the date of grant, generally vest over periods up to four years, have a one-year cliff with monthly vesting thereafter, and have terms not to exceed 10 years.

The fair value for stock option awards granted under all plans was estimated at the date of grant using a Black-Scholes option pricing model. Calculating the fair value of the stock option awards requires subjective assumptions, including, but not limited to, the expected term of the stock option awards and stock price volatility. The Company estimates the expected life of stock option awards granted based on the simplified method, which the Company believes is representative of the actual characteristics of the awards. The Company estimates the volatility of its common stock on the date of grant based on the historic volatility of comparable companies in its industry. Risk-free interest rates are based on yields from United States Treasury zero-coupon issues with a term consistent with the expected term of the awards in effect at the time of grant. Forfeitures are accounted for as they occur. The Company has never declared or paid any cash dividends and has no current plan to do so. Consequently, it used an expected dividend yield of zero.

There was $413 of total unrecognized compensation cost related to non-vested stock option awards granted under the Company’s equity incentive plans as of June 30, 2017. This cost is expected to be recognized over a weighted-average period of 2.19 years.

~~The following table presents a summary of the Company’s non-vested restricted stock unit award activity under all plans and related information for the six months ended June 30, 2017:~~

There was $7,571 of total unrecognized compensation cost related to non-vested restricted stock unit awards granted under the Company’s equity incentive plans as of June 30, 2017. This cost is expected to be recognized over a weighted-average period of 3.11 years.

In April 2014, the Company’s board of directors adopted the 2014 Employee Stock Purchase Plan (“2014 ESPP”), which was approved by the Company’s stockholders at the 2014 annual meeting of stockholders. The 2014 ESPP allows eligible participants to purchase shares of the Company’s common stock generally at six-month intervals, or offering periods, at a price equal to 85% of the lower of (i) the fair market value at the beginning of the offering period or (ii) the fair market value at the end of the offering period, or the purchase date. The Company’s current offering period commenced in February 2017 and will end in August 2017.

Employees purchase shares of common stock through payroll deductions, which may not exceed 15% of their total base salary. The 2014 ESPP imposes certain limitations upon an employee’s right to purchase shares, including the following: (1) no employee may purchase more than 5,000 shares on any one purchase date and (2) no employee may purchase shares with a fair market value in excess of $25 in any calendar year.

During the six months ended June 30, 2017, employees purchased 176,898 shares of common stock pursuant to the ESPP at an exercise price of $1.44 per share. No more than 2,000,000 shares of common stock are reserved for future issuance under the 2014 ESPP of which 1,103,671 shares remain available at June 30, 2017.

The fair value for each award under the 2014 ESPP is estimated at the date of grant, at the beginning of the offering period, using a Black-Scholes option pricing model. Calculating the fair value of the ESPP awards requires subjective assumptions, including, but not limited to, the expected term of the ESPP award and stock price volatility. The Company estimates the expected life of the awards granted under the 2014 ESPP based on the duration of the offering periods, which is six months. The Company estimates the volatility of its common stock on the date of grant based on the historic volatility of comparable companies in its industry. Risk-free interest rates are based on yields from United States Treasury zero-coupon issues with a term consistent with the expected term of the awards in effect at the time of grant. The Company has never declared or paid any cash dividends and has no current plan to do so. Consequently, it used an expected dividend yield of zero.

There was $34 of total unrecognized compensation cost related to awards under the 2014 ESPP as of June 30, 2017. This cost is expected to be recognized over a weighted-average period of less than one year.

The following securities were outstanding during the periods presented below and have been excluded from the calculation of diluted net loss per share of common stock because the effect is anti-dilutive:

On March 29, 2016 the Company announced that the Company’s Board of Directors approved a share repurchase program, under which the Company is authorized to purchase up to $15,000 of common stock over an eighteen month period commencing March 25, 2016. The repurchases may be made, from time to time, in the open market or by privately negotiated transactions, and are expected to be funded from cash on hand. The share repurchase program may be suspended, modified or discontinued at any time. There were no stock repurchases during the three months ended June 30, 2017. During the six months ended June 30, 2017, the Company has made open-market purchases totaling 983,864 shares of common stock, respectively for an aggregate purchase price of $2,406.

On August 7, 2017, the Company completed the sale to Taptica Ltd. (“Buyer”), an affiliate of Taptica International Ltd, of certain assets and certain liabilities primarily related to the Company’s buyer platform, pursuant to an Asset Purchase Agreement (the “Purchase Agreement”), by and between the Company, ScanScout, Inc. (a wholly owned subsidiary of Company), the Buyer and Taptica International Ltd., dated August 4, 2017. The purchase price for the sale of the Business was $50 million, payable to the Company as follows: (a) a $30 million payment to the Company in cash on the date of closing and (b) a $20 million payment to the Company via a senior secured promissory note issued to the Company and secured by a security interest in the assets purchased under the Purchase Agreement by the Buyer. The promissory note will be repaid by Buyer upon the earlier of September 1, 2017 or the closing of a debt financing undertaken by Buyer to repay such note. In addition, the Company retained certain working capital of the Business above an agreed upon target. In connection with the sale of the Business, the Company has agreed to provide certain transition services to the Buyer through December 31, 2017. We evaluated the criteria prescribed by U.S. GAAP for recording a disposal group as held for sale and discontinued operations. This criteria was not met as of June 30, 2017. Therefore, we did not present this disposal group as a discontinued operation in the accompanying Consolidated Balance Sheets and Consolidated Statements of Operations. Beginning in the third quarter of fiscal 2017, the historical financial results attributable to the Buy Side Transaction for periods prior to the transaction will be reflected in the Company’s consolidated financial statements as discontinued operations.

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

The following table is a summary of our consolidated statements of operations data for each of the periods indicated. The ~~period-to-period comparisons~~results of ~~the results are not necessarily indicative~~operations of our ~~results for future periods, which will be impacted by the August 2017 sale~~buyer platform are included in “Income from discontinued operations, net of ~~the buyer platform.~~

Three Months Ended

Six Months Ended

June 30,

June 30,

2017

2016

2017

2016

Percentage

Percentage

Percentage

Percentage

Amount

of Revenue

Amount

of Revenue

Amount

of Revenue

Amount

of Revenue

(dollars in thousands)

Consolidated Statements of Operations Data:

Revenue

$
48,867

100.0
%
$
37,107

100.0
%
$
90,267

100.0
%
$
71,672

100.0
%
Cost of revenue

24,441

50.0

19,907

53.6

46,464

51.5

38,254

53.4

Gross profit

24,426

50.0

17,200

46.4

43,803

48.5

33,418

46.6

Operating expenses:

Technology and development

5,190

10.6

5,045

13.6

10,851

12.0

10,888

15.2

Sales and marketing

13,908

28.5

11,342

30.6

26,961

29.9

24,006

33.5

General and administrative

5,005

10.2

4,074

11.0

10,088

11.2

8,996

12.5

Depreciation and amortization

2,357

4.8

2,325

6.3

4,706

5.2

4,564

6.4

Mark-to-market

93

0.2

45

0.1

148

0.2

1,089

1.5

Total operating expenses

26,553

54.3

22,831

61.6

52,754

58.5

49,543

69.1

Loss from operations

(2,127
)
(4.3
)
(5,631
)
(15.2
)
(8,951
)
(9.9
)
(16,125
)
(22.5
)
Total interest and other (expense) income, net

(78
)
(0.2
)
(46
)
(0.1
)
(105
)
(0.1
)
(300
)
(0.4
)
Loss before provision for income taxes

(2,205
)
(4.5
)
(5,677
)
(15.2
)
(9,056
)
(10.0
)
(16,425
)
(22.9
)
Provision for income taxes

95

0.2

178

0.5

104

0.1

504

0.7

Net loss

$
(2,300
)
(4.7
)%
$
(5,855
)
(15.7
)%
$
(9,160
)
(10.2
)%
$
(16,929
)
(23.6
)%

income taxes."

~~that included the following:~~

· an unaudited pro forma condensed combined balance sheet as of March 31, 2017, giving effect to the disposition of the buyer platform, on a pro forma basis, as if such transaction had occurred on that date; and

· an unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2017 and the years ended December 31, 2016, 2015 and 2014 giving effect the disposition of the buyer platform on a pro forma basis, as if such transactions had occurred on January 1, 2014.

However, the unaudited pro forma financial statements included in the Current Report on Form 8-K do not purport to represent, and are not necessarily indicative of, what our financial position or results of operations would have been had such transactions occurred on the dates indicated.

~~Risks Relating to Our Business and Industry~~

Because our business model is continuing to develop, our past operating results may not be indicative of future performance, and our future operating results may fluctuate materially and may increase your investment risk.

For fiscal years 2016, 2015 and 2014, and the six month periods ended June 30, 2017 and 2016, our total revenue was $166.7 million, $173.8 million and $159.5 million and $90.3 million and $71.7 million, respectively. Our developing business model and our recent sale of our buyer platform makes it difficult to assess our future prospects. The success of our business faces a number of challenges, including:

· ~~continuing to innovate and improve the technologies that enable us to provide our solutions;~~

· ~~maintaining and expanding our existing relationships, and developing new relationships with sellers and buyers on our seller platform;~~

· ~~increasing the level of spending through our seller platform;~~

· ~~developing market acceptance for our self-service programmatic seller platform, the Tremor Video SSP;~~

· ~~the growth, evolution and rate of adoption of industry standards;~~

· ~~offering competitive rates to sellers;~~

· ~~providing sellers of online video advertising with increased yield and monetization compared to competitors;~~

· ~~offering access to unique data;~~

· ~~competing effectively against traditional and online media companies to increase our share of brand advertising spend;~~

· ~~ensuring that buyers’ video ads are shown in brand-safe environments;~~

· ~~maintaining and increasing the value of our brand and goodwill with buyers and sellers;~~

· ~~effectively controlling our costs as we grow our business;~~

· ~~responding to evolving government regulations relating to the internet, telecommunications, privacy, marketing and advertising aspects of our business; and~~

· ~~identifying, attracting, retaining and motivating qualified personnel.~~

~~Our ability to meet these challenges will help determine whether we can successfully leverage our business model to~~

achieve profitability and growth in the future. We cannot assure our ability to achieve this goal, to generate consistent and improving operating results, or even to maintain the same level of success that we have had to date. If we fail to meet these challenges, our operating results may fluctuate materially and may increase your investment risk.

We have incurred significant net losses since inception, and we expect our operating expenses relating to our seller platform to increase in the foreseeable future. Accordingly, we may never achieve or sustain profitability.

We have incurred operating losses since we were formed and expect to incur operating losses in the future. We incurred net losses of $20.9 million, $43.2 million, and $23.5 million in fiscal years 2016, 2015, and 2014, respectively and net losses of $9.2 million and $16.9 million in the six months ended June 30, 2017 and 2016 respectively. We had an accumulated deficit of $198.6 million and $177.7 million as of December 31, 2016 and 2015, respectively, and $207.9 million and $194.6 million as of June 30, 2017 and 2016, respectively, which included a $20.9 million goodwill impairment charge in fiscal 2015. We do not know if we will be able to achieve profitability or maintain profitability on a continued basis. In addition, we recently sold our buyer platform, and we cannot predict the impact that will have on our seller platform. Although the amount of spend being transacted through our platforms has increased substantially in recent periods, the sale of our buyer platform will result in a decrease in total spend in absolute dollars and we may not be able to maintain our historical rate of growth on our seller platform. Furthermore, the take rate on our seller platform varies across clients and depending on the type of transaction being executed, which makes it more difficult to predict the gross profit which may result from any anticipated level of future total spend. While our total operating expenses may decrease as a result of the sale of our buyer platform, we anticipate that our operating expenses in respect of our seller platform will continue to increase in absolute dollars as we scale our business and expand our operations. In particular, we plan to continue to invest in our technology and development efforts and sales and marketing efforts. Our ability to achieve or sustain profitability is based on numerous factors, many of which are beyond our control and we may never be able to generate sufficient revenue to achieve or sustain profitability.

~~Unfavorable conditions in the global economy could limit our ability to grow our business and negatively affect our operating results.~~

General worldwide economic and political conditions have experienced significant instability in recent years. These conditions make it extremely difficult for advertisers and us to accurately forecast and plan future business activities, and could cause buyers to reduce or delay their advertising spending. Historically, economic downturns have resulted in overall reductions in advertising spending. If macroeconomic conditions deteriorate, buyers may curtail or freeze spending on advertising in general, which would impact the amount of spend transacted through our seller platform. Furthermore, our contracts and relationships with demand side partners generally do not include long-term obligations requiring them to purchase advertising on the Tremor Video SSP and are cancelable upon short or no notice and without penalty. Any reduction in advertising spending could limit our ability to grow our business and negatively affect our operating results.

We cannot predict the timing, strength or duration of any economic slowdown or recovery. In addition, even if the overall economy improves, we cannot assure you that the market for online video advertising solutions will experience growth or that we will experience growth.

~~If we fail to adapt and respond effectively to rapidly changing technology and client needs, our solutions may become less competitive or obsolete.~~

Our future success will depend on our ability to adapt and innovate. To attract new clients and increase spend transacted through our seller platform, we will need to expand and enhance our solutions to meet client needs, add functionality and address technological advancements, including with respect to the sale of video advertising through new and developing mediums and platforms such as connected TV and OTT. If we fail to develop new solutions that address our client’s needs, or enhance and improve our solutions in a timely manner or conform to industry standards, we may not be able to achieve or maintain adequate market acceptance of our solutions, and our solutions may become less competitive or obsolete.

Our ability to grow is also subject to the risk of future disruptive technologies. If new technologies emerge that are able to deliver to sellers increased yield and monetization more efficiently or effectively than our solutions, such technologies could adversely impact our ability to compete. Programmatic technologies are continuously evolving; for

instance, some sellers of digital advertising, in particular with respect to display advertising, have begun to embrace so-called header bidding, a programmatic technique that enables sellers to offer inventory to multiple demand sources simultaneously through a tag in the header of the seller’s website. We do not currently offer a header bidding solution. sales.

~~The market in which we participate is intensely competitive and fragmented, and we may not be able to compete successfully with our current or future competitors.~~

The online video advertising market is highly competitive. We compete with large online video publishers such as Google Inc. and Facebook, Inc., as well as advertising technology companies, supply side platforms and exchanges. We also compete for advertising dollars from companies in the traditional media space, including TV networks, radio broadcasters and print media publishers, many of which also have a digital presence.

Many of these competitors and potential competitors have significant client relationships, much larger financial resources and longer operating histories than we have and may be less severely affected by changes in consumer preferences, regulations or other developments that may impact the online video advertising industry as a whole. They, or other companies that offer competing advertising solutions, may establish or strengthen cooperative relationships with buyers or sellers, thereby limiting our ability to promote our solutions and generate revenue. Many of these companies are also providers of content, and have access to large amounts of first party data, which are not available to us. Competitive pressures could require us to increase the prices we pay to sellers.

Our business may suffer to the extent that buyers and sellers purchase and sell online video advertising directly from each other without the use of technological intermediaries such as the Tremor Video SSP. New technologies and methods of buying advertising present a dynamic competitive challenge, as market participants offer multiple new products and services aimed at capturing advertising spend such as analytics and bundled offline and online video advertising. If the market shifts towards such new technologies and we are unable to either provide such solutions in a compelling manner or otherwise compete with such shift in ad spending, we may incur increased pricing pressure, reduced profit margins, increased sales and marketing expenses or the loss of market share.

We believe that we compete primarily on the basis of the speed and ease of use of our seller platform, the quality of tools that we provide to sellers to control their inventory and maximize yield, our ability to provide real-time reporting and analytics, and our ability to provide and attract demand to sellers at scale. Historically, our buyer platform was a source of demand for our seller platform and we cannot predict how the sale of our buyer platform will impact our ability to provide demand at scale to our seller clients. If we are unable to compete favorably with respect to any of these factors our business could suffer.

Our competitors or potential competitors may adopt certain aspects of our business model, which could reduce our ability to differentiate our solutions. As market dynamics change, or as new and existing competitors introduce more competitive pricing or new or disruptive technologies, we may be unable to maintain or attract new buyers or sellers or increase spend transacted through our platform. As a result, we may be required to change our business model and incur additional expenses in response to competitive pressures, which could harm our revenue, profitability and operating results. For all of these reasons, we may not be able to compete successfully against our current and future competitors.

We operate in a new and rapidly evolving industry. If the online video advertising industry, or programmatic solutions in particular, do not develop or develop more slowly than we expect, our operating results and growth prospects could be harmed.

Online video advertising is an emerging industry, and future demand and market acceptance for online video advertising is uncertain. For example, the online video advertising industry is in the midst of shifting, in part, towards programmatic solutions that automate the sales process and allow for the purchase of inventory through dynamic marketplaces. Many buyers and sellers of advertising have limited experience with online video advertising, and in particular programmatic buying and selling of inventory. Our Tremor Video SSP is fully-programmatic self-service solution for sellers. Accordingly, if buyers and sellers of video inventory are slow to adopt programmatic solutions our operating results and growth prospects could be harmed.

~~If the market for the Tremor Video SSP develops more slowly than we expect then our operating results and growth prospects may be adversely affected.~~

The Tremor Video SSP is still developing, and the future demand and acceptance for it is uncertain and will likely depend on its perceived effectiveness by sellers. The growth of the Tremor Video SSP is, in part, dependent on the continued proliferation of digital video content, including the pace of adoption of connected TV and OTT as a substitute for traditional cable and broadcast TV. If the market for the Tremor Video SSP develops more slowly than we expect, or fails to develop, our operating results and growth prospects could be harmed.

~~Our business depends in part on the success of our strategic relationships with third parties.~~

Our business depends in part on our ability to continue to successfully manage and enter into successful strategic relationships with third parties. We currently have and are seeking to establish new relationships with third parties, including with respect to the development of integrations with complementary technologies and data vendors.

The success of our seller platform is dependent, in part, on our ability to integrate our technology with third-party programmatic sources of demand. Buyers connect to the Tremor Video SSP through third party demand side platforms, or DSPs, that are directly integrated with our platform. We are reliant on these third party DSPs to increase the amount of spend that is transacted through our seller platform. We do not have exclusive relationships with these third party DSPs and they are generally free to stop transacting on the Tremor Video SSP with little or no notice. As a result, we have limited visibility as to our future advertising revenue streams from our buyers. In some instances, the third party DSPs that transact on the Tremor Video SSP are also our competitors. As a result, they may be more likely to decrease or eliminate their spending on our platform. Some third party DSPs control significant amounts of advertising spend across a broad spectrum of buyers; therefore, any determination by a third party DSP to materially decrease their spending on our platform could impair our operating results. If we experience connectivity or other technical problems with our integrations with third party DSPs they may be unable to transact on our platform, and any such technical difficulties could lead to a negative perception of our product that could impact future spend decisions.

Integrations with third parties are often costly and time consuming, and can present technological challenges. If we experience any delays in our integration efforts or are unable to attract new strategic third parties with whom to integrate our technology, it could impact the efficacy of our solutions and hurt our ability to compete in the marketplace.

~~We may be unable to retain key buyers, attract new buyers or replace departing buyers with buyers that can provide comparable revenue to us.~~

Buyers on the Tremor Video SSP generally transact through third party DSPs that are integrated with our platform. Campaigns running through third-party DSPs do not utilize our technology for optimizing campaign delivery or making bidding decisions; rather, the DSP will bid on inventory using its own decision engine. While the third-party DSP is responsible for bidding decisions, the overall direction of the advertising spend is typically determined by the advertiser or advertising agency. Accordingly, our ability to increase spend transacted through our Tremor Video SSP requires us to maintain and expand our relationships with brand advertisers, including the ad agencies that represent them, and to develop new relationships with other brand advertisers and ad agencies. An advertiser or agency’s willingness to purchase inventory through our seller platform depends on a number of factors, including our ability to secure sought after high performing inventory, our access to inventory across multiple screens and devices, the ease of use of our platform, our client support and sales efforts, seasonal pattern in buyers’ spending, and reductions in spending levels or changes in strategies.

If a major buyer decides to materially reduce its advertising spend with us it could do so on short or no notice, which could impair our operating results. We cannot assure that buyers will continue to transact through our seller platform or that we will be able to replace in a timely or effective manner departing buyers with new buyers from whom we generate comparable revenue.

~~We may be unable to provide access to inventory in a brand safe environment, which could harm our reputation and cause our business to suffer.~~

~~It is important to buyers that advertisements not be placed in or near content that is unlawful or would be deemed~~

offensive or inappropriate by their customers. Unlike advertising on other mediums, online content can be more unpredictable, and we cannot guarantee that advertisements will appear in a brand safe environment. If we are not successful in providing inventory in a brand environment, our reputation could suffer and our ability to attract potential buyers and retain and expand business with existing buyers could be harmed, or our customers may seek to avoid payment or demand refunds, any of which could harm our business and operating results.

~~If we fail to detect fraud or other actions that impact video ad campaign performance, we could lose the confidence of buyers, which would cause our business to suffer.~~

The success of our seller platform depends in part on our ability to assure buyers access to quality, high performing inventory. We have in the past, and may in the future, be subject to fraudulent and malicious activities with respect to seller inventory offered through our seller platform. An example of such activities would be the use of bots, non-human traffic delivered by machines that are designed to simulate human users and artificially inflate user traffic on websites. These activities could overstate the performance of any given video ad campaign and could harm our reputation. It may be difficult to detect fraudulent or malicious activity because we do not own content and rely in part on our seller partners for controls with respect to such activity. These risks become more pronounced when programmatic buying is in place. If fraudulent or other malicious activity is perpetrated by others, and we fail to detect or prevent it, the affected buyers may experience or perceive a reduced return on their investment and our reputation may be harmed. Fraudulent or malicious activity could lead to dissatisfaction with our solutions, refusals to pay, refund demands or withdrawal of future business. If we fail to detect fraud or other actions that impact the performance of our video ad campaigns, we could lose the confidence of our buyers, which could cause our business to suffer.

~~Activities of our seller clients with which we do business could damage our reputation or give rise to legal claims against us.~~

Failure of our seller platform clients to comply with federal, state, local or foreign laws or our policies could damage our reputation and expose us to liability under these laws. We may also be liable to third-parties with respect to the content of the video inventory in which an ad is served if the content violates intellectual property rights of third-parties or if the content is in violation of applicable laws. A third-party or regulatory authority may file a claim against us even if our client has represented that its use of the content is lawful and that they have the right to use the intellectual property. Any of these claims could be costly and time-consuming to defend and could also hurt our reputation. Further, if we are exposed to legal liability, we could be required to pay substantial fines or penalties, redesign our business methods, discontinue some of our solutions or otherwise expend significant resources.

~~If we fail to maintain or increase our access to premium advertising inventory, our operating results may be harmed.~~

Our success requires us to maintain and expand our access to premium video advertising inventory. We do not own or control the video ad inventory upon which our business depends. Sellers are generally not required to offer a specified level of inventory on the Tremor Video SSP, and we cannot be assured that our exclusive sellers will renew their agreements with us or continue to make their ad inventory available on our seller platform. Sellers may seek to change the terms on which they offer inventory on our platform, including seeking an increase in the price we pay for inventory, or may elect to make advertising inventory available to our competitors who offer more favorable economic terms. Furthermore, sellers may enter into exclusive relationships with our competitors, which preclude us from offering their inventory. In addition, we review our sellers on an on-going basis and have ceased, and may in the future cease, doing business with sellers based on the quality of their inventory. As a result of these factors, we may have limited visibility as to our future access to inventory from sellers or the terms on which such inventory will be made available.

Sellers have a variety of channels in which to sell their video ad inventory, including direct sales forces and third party supply side platforms. Any increase in a seller’s direct sales efforts may negatively impact our access to that inventory.

If we are unable to maintain or increase our access to premium video ad inventory or if sellers seek to change the terms on which they offer such inventory on the Tremor Video SSP, our operating results may be harmed.

~~We may not be able to adequately satisfy the supply from our exclusive sellers.~~

In certain instances, we enter into exclusive relationships with sellers. Substantially all of our exclusive seller agreements obligate us to fill a specified percentage of the video ad inventory that they make available on our seller platform, which we refer to as an ad request. In some cases, there is no cap on our fill obligation. If we are unable to deliver ad campaigns to this inventory, we will bear the loss on those unfilled ad requests. This risk can be magnified during certain times of the year when we see increased ad requests from our exclusive sellers coupled with reduced purchase demand from buyers and may be further magnified by our recent sale of our buyer platform.

~~Our sales efforts with buyers and sellers require significant time and expense.~~

Attracting new buyers and sellers to our seller platform requires significant time and expense, and we may not be successful in establishing new relationships or in maintaining or advancing our current relationships. Our technology and online video brand advertising are relatively new and often require us to spend substantial time and effort educating potential buyers and sellers about our solutions, including providing demonstrations and comparisons against other available services. Some clients undertake a significant evaluation process that frequently involves not only our platform but also the offerings of our competitors. This process can be costly and time-consuming. As a result, it is difficult to predict when we will obtain new customers and begin generating revenue from these new customers. As part of our sales cycle, we may incur significant expenses. We have no assurance that the substantial time and money spent on our sales efforts will generate significant revenue.

We are focused on increasing adoption by sellers of the Tremor Video SSP. As a result, we invest significant time in cultivating relationships with our sellers to ensure they understand the potential benefits of our platform and monetization of their inventory with us rather than with third-party media networks, exchanges and supply side platforms. The relationship building process can take many months and may not result in us winning an opportunity with any given seller.

Because of competitive market conditions and the negotiating leverage enjoyed by large publishers, we are sometimes forced to choose between losing the opportunity or contracting on terms that allocate more risk to us than or are otherwise less favorable than we prefer to accept.

~~If we are not successful in streamlining our sales processes with buyers and sellers, our ability to grow our business may be adversely affected.~~

~~We experienced fluctuations in our operating results due to a number of factors, which make our future results difficult to predict and could cause our operating results to fall below expectations.~~

Our operating results have historically fluctuated and our future operating results may vary significantly from quarter to quarter due to a variety of factors, including our recent sale of our buyer platform. Period-to-period comparisons of our operating results should not be relied upon as an indication of our future performance. Given our relatively short operating history, the rapidly evolving online video advertising industry and our recent sale of the buyer platform, our historical operating results may not be useful in predicting our future operating results.

~~Factors that may affect our operating results include the following:~~

· ~~changes in demand for the Tremor Video SSP from sellers or buyers of video advertising;~~

· ~~changes in the amount, price and quality of available video advertising inventory from sellers;~~

· ~~the timing and amount of sales and marketing expenses incurred to attract new buyers and sellers;~~

· ~~changes in the economic prospects of buyers or the economy generally, which could reduce current or prospective buyers’ spend for online video advertising;~~

· ~~changes in our pricing policies, the pricing policies of our competitors or the pricing of online video advertising inventory generally; and~~

· ~~costs related to acquisitions of other businesses or dispositions of assets.~~

~~Our operating results may fall below the expectations of market analysts and investors in some future periods. If this happens, even just temporarily, the market price of our common stock may fall.~~

~~Our revenue tends to be seasonal in nature.~~

Our revenue and the total spend transacted through our platform tends to be seasonal in nature and varies from quarter to quarter. During the first quarter, buyers generally devote less of their budgets to ad spending, which impacts our seller platform. Our operating cash flows could also fluctuate materially from period to period as a result of these seasonal fluctuations.

~~Our take rates vary across sellers and transaction types.~~

Revenue on our Tremor Video SSP is booked net of inventory costs. Our take rate, or our revenue over as a percentage of our total spend, varies by seller and transaction type. For instance, we may receive a different take rate with respect to a transaction executed via open auction compared to a private marketplace transaction. Our take rate may also be negatively impacted by competitive pricing pressures and the negotiating leverage enjoyed by large publishers. Even if we are able to accurately forecast the anticipated total spend across our seller platform, we may have limited visibility regarding our overall take rate. Decreases in our take rate could cause our revenue and earnings to decrease notwithstanding an increase in the total spend transacted through our seller platform.

~~Acquisitions or dispositions could entail significant execution, integration and operational risks.~~

As part of our business strategy, we may acquire or dispose of certain businesses, assets or technologies. For example, we recently disposed of our buyer platform. Acquisitions and dispositions involve numerous risks, any of which could harm our business, including:

· ~~difficulties in integrating the technologies, solutions, operations, existing contracts and personnel of a target company or business unit;~~

· ~~difficulties in supporting and transitioning clients, if any, of a target company or business unit;~~

· ~~diversion of financial and management resources from existing operations or alternative opportunities;~~

· ~~failure to realize the anticipated benefits or synergies of a transaction or loss of existing synergies between platforms or services;~~

· failure to identify all of the problems, liabilities or other shortcomings or challenges of an acquired company, technology, or solution, including issues related to intellectual property, solution quality or architecture, regulatory compliance practices, revenue recognition or other accounting practices or employee or client issues;

· ~~risks of entering new markets, including international markets, in which we have limited or no experience;~~

· ~~potential loss of key employees, customers or suppliers;~~

· ~~increased potential for litigation;~~

· ~~inability to generate sufficient revenue to offset acquisition or divestiture costs; and~~

· ~~possible write-offs or impairment charges relating to acquired or divested businesses.~~

In addition, we may incur indebtedness to complete an acquisition, which may impose operational limitations, or issue equity securities, which would dilute our stockholders’ ownership. We may also unknowingly inherit liabilities from acquired businesses or assets that arise after the acquisition and are not adequately covered by indemnities.

Additionally, acquisitions also frequently result in the recording of goodwill and other intangible assets which are subject to potential impairments in the future that could harm our financial results and dispositions may result in an immediate impairment of goodwill.

Foreign acquisitions involve unique risks in addition to those mentioned above, including those related to integration of operations across different cultures and languages, currency risks and the particular economic political and regulatory risks associated with specific countries. The failure to successfully evaluate and execute acquisitions, divestitures or investments or otherwise adequately address the risks described above could materially harm our business and financial results.

~~We have limited international operations and any future international expansion may expose us to several risks, such as difficulty adapting our solutions for international markets.~~

We have limited experience in marketing, selling and supporting our solutions abroad. During each of fiscal years 2016, 2015 and 2014, a substantial majority of our revenue was generated in the United States. While we have offices outside of North America in Australia, Brazil, and the United Kingdom, a substantial majority of our operations are located in the United States.

~~Any future international expansion of our business will involve a variety of risks, including:~~

· ~~localization of our solutions, including translation into foreign languages and adaptation for local practices;~~

· ~~unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or other trade restrictions;~~

· ~~differing labor regulations where labor laws may be more advantageous to employees as compared to the United States;~~

· ~~more stringent regulations relating to data security and the unauthorized use of, or access to, commercial and personal information, particularly in the European Union;~~

· reluctance to allow personally identifiable data related to non-U.S. citizens to be stored in databases within the United States, due to concerns over the U.S. government’s right to access information in these databases or other concerns;

· ~~changes in a specific country’s or region’s political or economic conditions;~~

· challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs;

· ~~risks resulting from changes in currency exchange rates;~~

· ~~limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries;~~

· ~~different or lesser intellectual property protection; and~~

· ~~exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act and similar laws and regulations in other jurisdictions.~~

Operating internationally requires significant management attention and financial resources. We cannot be certain that the investment and additional resources required in establishing and expanding our international operations will produce desired levels of revenue or profitability. If we invest substantial time and resources to establish and expand our international operations and are unable to do so successfully and in a timely manner, our business and operating results

~~will suffer.~~

We have not engaged in currency hedging activities to limit risk of exchange rate fluctuations. Changes in exchange rates affect our costs and earnings, and may also affect the book value of our assets located outside the United States and the amount of our stockholders’ equity.

~~Our ability to raise capital in the future may be limited, and our failure to raise capital when needed could prevent us from growing.~~

Our business and operations may consume resources faster than we anticipate. In the future, we may need to raise additional funds to expand our marketing and sales and technology development efforts or to make acquisitions. Additional financing may not be available on favorable terms, if at all. Our credit facility matures in January 2018, and we may be unable to renew the credit facility on terms that are acceptable to us. In addition, our lender is not required to make future advances under our credit facility and we cannot assure you that they will be willing to do so should we make a borrowing request. If adequate funds are not available on acceptable terms, we may be unable to fund the expansion of our marketing and sales and technology development efforts or take advantage of acquisition or other opportunities, which could harm our business and results of operations. Furthermore, if we issue additional equity securities, stockholders will experience dilution, and the new equity securities could have rights senior to those of our common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. As a result, our stockholders bear the risk of our future securities offerings reducing the market price of our common stock and diluting their interest.

~~Provisions of our debt instruments may restrict our ability to pursue our business strategies.~~

~~Our credit facility requires us, and any debt instruments we may enter into in the future may require us, to comply with various covenants that limit our ability to, among other things:~~

· ~~dispose of assets;~~

· ~~complete mergers or acquisitions;~~

· ~~incur indebtedness;~~

· ~~encumber assets;~~

· ~~pay dividends or make other distributions to holders of our capital stock;~~

· ~~make specified investments; and~~

· ~~engage in transactions with our affiliates.~~

These restrictions could inhibit our ability to pursue our business strategies. For example, in connection with our disposition of the buyer business we were required to seek the consent of our lender under the credit facility. To obtain that consent we agreed that our lender is not required to make future advances under our credit facility and we cannot assure you that they will be willing to do so should we make a borrowing request in the future. We are also subject to a financial covenant with respect to quarterly minimum trailing twelve month capital levels. If we default under our credit facility, and such event of default is not cured or waived, the lender could cause all amounts outstanding with respect to the debt to be due and payable immediately, which in turn could result in cross defaults under other debt instruments.

Our assets and cash flow may not be sufficient to fully repay borrowings under all of our outstanding debt instruments if some or all of these instruments are accelerated upon a default. We may incur additional indebtedness in the future. The debt instruments governing such indebtedness could contain provisions that are as, or more, restrictive than our existing debt instruments. If we are unable to repay, refinance or restructure our indebtedness when payment is due, the lenders could proceed against the collateral granted to them to secure such indebtedness or force us into

~~bankruptcy or liquidation.~~

~~We have experienced significant growth in recent periods and recently sold our buyer platform. If we fail to manage our evolving business effectively, our financial performance may suffer.~~

We have expanded the total spend transacted through our seller platform, as well as the scale and scope of our overall business operations in recent periods. In addition, we recently sold our buyer platform. These changes have placed, and the changes resulting from the recent sale of our buyer platform and our expected future growth of our seller platform will continue to place, a significant strain on our managerial, operational, product development, sales and marketing, administrative, financial and other resources. For instance, we expect to be substantially dependent on our direct sales force to obtain new clients, and we plan to continue to expand our seller platform direct sales force both domestically and internationally. Newly hired sales personnel may not become productive as quickly as we would like, or at all, thus representing increased operating costs and lost opportunities which in turn would adversely affect our business, financial condition and operating results.

If we do not manage these changes effectively, successfully forecast demand for our seller platform or manage our expected expenses accordingly, our operating results will be harmed. If we fail to manage our evolving business effectively, our financial performance may suffer.

~~Forecasts of market growth may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business may not grow at similar rates, if at all.~~

We have in the past provided, and may continue to provide, forecasts related to the market in which we operate. Market forecasts are subject to significant uncertainty and are based on assumptions and estimates that may prove to be inaccurate. Even if these forecasts prove to be correct, we may not be successful in maintaining or increasing our share of any relevant market.

We depend on key personnel to operate our business, and if we are unable to retain, attract and integrate qualified personnel, our ability to develop and successfully grow our business could be harmed.

We believe that our future success is highly dependent on the contributions of our senior management, as well as our ability to attract and retain additional senior management and highly skilled and experienced technical and other personnel in the United States and abroad. All of our employees, including our senior management, are free to terminate their employment relationship with us at any time, and their knowledge of our business, technology and industry may be difficult to replace. We recently hired Mark Zagorski as our Chief Executive Officer. We may not be able to fully integrate our new Chief Executive Officer or other new executives or replicate the current dynamic and working relationships that have developed among our executive officers and other key personnel, and our operations could suffer. Qualified technical personnel are in high demand, particularly in the digital media industry, and we may incur significant costs to attract them. Many of the companies with which we compete for experienced personnel also have greater resources than us. Additionally, volatility or lack of performance in our stock price may also affect our ability to attract employees and retain our key employees. If we are unable to attract and retain our senior management and key employees, our ability to develop and successfully grow our business could be harmed.

~~Defects or errors in our solutions could harm our reputation and result in significant costs to us.~~

The technology underlying our solutions, including our proprietary technology and technology provided by third-parties, may contain material defects or errors that can adversely affect our ability to operate our business and cause significant harm to our reputation. This risk is compounded by the complexity of the technology underlying our solutions and the large amounts of data we utilize. Errors, defects, disruptions in service or other performance problems in our solutions could result in the failure of an ad campaign. Any such failure, malfunction, or disruption in service could harm our reputation and result in significant costs to us.

~~System failures could significantly disrupt our operations and cause us to lose clients.~~

Our success depends on the continuing and uninterrupted performance of our solutions. Sustained or repeated system failures that interrupt our ability to provide our solutions, including technological failures affecting our ability to

process seller ad requests or bids for inventory, could significantly reduce the attractiveness of our solutions and reduce our revenue. Our systems are vulnerable to damage from a variety of sources, including telecommunications failures, power outages, malicious human acts and natural disasters. In addition, any steps we take to increase the reliability and redundancy of our systems may be expensive and may not be successful in preventing system failures. Any such system failures could significantly disrupt our operations and cause us to lose clients.

~~Security breaches, computer viruses and computer hacking attacks could harm our business and results of operations.~~

We collect, store and transmit information in the provision of our services. We take steps to protect the security, integrity and confidentiality of the information we collect, store or transmit, but there is no guarantee that inadvertent or unauthorized use or disclosure will not occur or that third-parties will not gain unauthorized access to this information despite our efforts. Security breaches, computer malware and computer hacking attacks have become more prevalent in our industry and may occur on our systems or those of our information technology vendors in the future. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, or the inadvertent transmission of computer viruses or other harmful software code could result in the unauthorized disclosure, misuse, or loss of information, legal claims and litigation, indemnity obligations, regulatory fines and penalties, contractual obligations and liabilities, and other liabilities. In addition, if our security measures or those of our vendors are breached or unauthorized access to consumer data otherwise occurs our solutions may be perceived as not being secure, and our clients may reduce the use of or stop using our solutions.

While we have security measures in place, these systems and networks are subject to ongoing threats and, therefore, these security measures may be breached as a result of employee error, failure to implement appropriate processes and procedures, malfeasance, third-party action, including cyber-attacks or other international misconduct by computer hackers or otherwise. This could result in one or more third-parties obtaining unauthorized access to our clientdata or our data, including personally identifiable information or other viewer data, intellectual property and other confidential business information. Third-parties may also attempt to fraudulently induce employees into disclosing sensitive information such as user names, passwords or other information in order to gain access to client data or our data, including intellectual property and other confidential business information.

Because techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative or mitigation measures. Though it is difficult to determine what harm may directly result from any specific interruption or breach, any failure to maintain performance, reliability, security and availability of our network infrastructure or otherwise to maintain the confidentiality, security, and integrity of data that we store or otherwise maintain on behalf of third-parties may harm our reputation and our relationships or harm our ability to retain existing clients and attract new clients. Any of these could harm our business, financial condition and results of operations.

If such unauthorized disclosure or access does occur, we may be required to notify our clients or those persons whose information was improperly used, disclosed or accessed. We may also be subject to claims of breach of contract for such use or disclosure, investigation and penalties by regulatory authorities and potential claims by persons whose information was improperly used or disclosed. The unauthorized use or disclosure of information may result in the termination of one or more of our commercial relationships or a reduction in confidence and usage of our solutions. We may also be subject to litigation and regulatory action alleging the improper use, transmission or storage of confidential information, which could damage our reputation among our current and potential clients, require significant expenditures of capital and other resources and cause us to lose business and revenue.

Even if we do not suffer a data security breach, the increase in the number and the scope of data security incidents has increased regulatory and industry focus on security requirements and heightened data security industry practices. New regulation, evolving industry standards, and the interpretation of both, may cause us to incur additional expense in complying with any new data security requirements. Further, any actual or perceived threats to the security of computers and computer networks, especially mobile devices and mobile networks, could lead existing and potential users to refrain from responding to online video advertising.

~~Interruptions or delays in service from our third-party data centers or other third party hosting services could impair the delivery of our solutions and harm our business.~~

We utilize data center hosting facilities as well Amazon Web Services to deliver our solutions. We also rely on multiple bandwidth providers, multiple internet service providers, as well as content delivery network, or CDN providers, and domain name systems, or DNS providers, and mobile networks to deliver video ads. Any damage to, or failure of, these systems could result in interruptions to the availability or functionality of our service. If for any reason our arrangements with our data center hosting facilities or third-party providers are terminated, we could experience additional expense in arranging for new facilities, technology services and support. In addition, the failure of our data center hosting facilities or any other third-party providers to meet our capacity requirements could result in interruptions in the availability or functionality of our solutions or impede our ability to scale our operations.

The occurrence of a natural disaster, an act of terrorism, vandalism or sabotage, a decision to close our third-party data center hosting facilities or the facilities of any third-party provider without adequate notice, or other unanticipated problems at these facilities could result in lengthy interruptions in the availability of our solutions. While we have disaster recovery arrangements in place, they have not been tested under actual disasters or similar events and may not effectively permit us to continue to provide our solutions in the event of any problems with respect to our data center hosting facilities or any other third-party facilities. To date, we have not experienced these types of events, but we cannot provide any assurances that they will not occur in the future. If any such event were to occur to our business, the delivery of our solutions could be impaired and our business harmed.

We relocated our headquarters and sublet our former headquarters. If our subtenant is unable to meet its obligations under the sublease we may be responsible which could impact our financial performance.

In June 2015, we relocated our headquarters; however the lease for our former headquarters does not expire until 2021. In connection with our relocation, we sublet our former headquarters. If the subtenant is unable to meet its obligations under the sublease, we may remain responsible for the obligations under the lease or incur expenses as a result of their breach. Any such unanticipated expenses may impact our financial performance.

~~Our net operating loss carryforwards may expire unutilized or underutilized, which could prevent us from offsetting future taxable income.~~

We may be limited in the portion of net operating loss carry-forwards, or NOLs, that we can use in the future to offset taxable income for U.S. federal income tax purposes. Our U.S. federal NOLs will expire in various years beginning in 2025 through 2036. Our foreign NOLs can be carried forward without limitation in each respective country. While we expect to be able to use a portion of our available NOL’s to offset gain in respect of the sale of our buyer platform, a lack of future taxable income would adversely affect our ability to utilize the remaining NOLs. In addition, under Section 382 of the Internal Revenue Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its NOLs to offset future taxable income. We believe that we experienced an ownership change under Section 382 of the Internal Revenue Code in prior years that may limit our ability to utilize a portion of the NOLs in the future. In addition, future changes in our stock ownership, including future offerings, as well as other changes that may be outside of our control, could result in additional ownership changes under Section 382 of the Internal Revenue Code. Our NOLs may also be impaired under similar provisions of state law. We have recorded a full valuation allowance related to substantially all of our NOLs and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets, a portion of which is expected to be reversed in connection with the sale of our buyer platform. Our NOLs may expire unutilized or underutilized, which could prevent us from offsetting future taxable income.

~~Risks Relating to Our Data Collection and Intellectual Property~~

Our ability to generate revenue depends on our ability to collect and use significant amounts of data to provide the Tremor Video SSP, and any limitations on the collection and use of this data could significantly diminish the value of our solutions.

Our ability to increase adoption of our seller platform depends, in part, on our ability to successfully leverage data that we collect from our sellers, buyers and third-parties such as data providers. Our ability to successfully leverage such data, in turn, depends on our ability to collect and obtain rights to utilize such data.

When we provide the Tremor Video SSP, we are often able to collect anonymous information about the user in order to communicate with buyers and enable the placement of the video ads on seller inventory. We, and our third-party data providers, currently employ various tracking technologies to collect the data we use to operate and enhance the Tremor Video SSP. These tracking technologies are used, in part, to collect information related to the user. As we collect and aggregate this data, we analyze it in order to operate and enhance the Tremor Video SSP and to report to a seller regarding the performance of its inventory.

~~Risks Related to Data Collected from Consumers~~

Internet users can, with increasing ease, implement practices or technologies that may limit our ability to collect and use data to provide the Tremor Video SSP, or otherwise inhibit the effectiveness of our software. Cookies may easily be deleted or blocked by Internet users. All of the most commonly used Internet browsers (Chrome, Firefox, Internet Explorer, and Safari) allow Internet users to modify their browser settings to prevent first party or third-party cookies from being accepted by their browsers. Most browsers also now support temporary privacy modes that allow the user to suspend, with a single click, the placement of new cookies or reading or updates of existing cookies. Internet users can also delete cookies from their computers at any time. Some Internet users also download free or paid “ad blocking” software that prevents third-party cookies from being stored on a user’s computer or mobile device. Many applications and other devices allow users to avoid receiving advertisements by paying for subscriptions or other downloads. Mobile devices based upon the Android operating system use cookies only in their web browser applications, so that cookies do not track Android users while they are using other applications on the device.

In addition, current versions of the most widely used web browsers, such as Chrome, Firefox, Internet Explorer and Safari, allow users to send “Do Not Track” signals, to indicate that they do not wish to have their web usage tracked. There is currently no definition of “tracking” and no standards regarding how to respond to a “Do Not Track” preference that are accepted or standardized in the industry. Even absent an industry standard, various government authorities have implemented, or indicated an intent to implement, some type of “Do Not Track” standard. For example, in 2014, an amendment to the California Online Privacy Protection Act of 2003, California Business and Professional Code § 22575 et seq., became effective, which requires operators of websites or online services to disclose how the operator responds to “Do Not Track” signals regarding the collection of personally identifiable information about an individual consumer’s online activities over time and across third-party Web sites or online services, as well as to disclose whether third parties may collect personally identifiable information about an individual consumer’s online activities over time and across different Web sites or online services. In addition, the Federal Trade Commission, or FTC, has previously stated that it will pursue a legislative solution if the industry does not agree to a standard. Similarly, the European Commission, which proposes legislation to the European Parliament, has suggested that it intends to consider “Do Not Track” legislation in the absence of an industry standard. Some proposed “Do Not Track” standards impose limits or requirements that apply to data gathering and use by third parties like us, but that may not apply to first parties. Laws or regulations could take a similar approach. Any such standard, law, or regulation could prohibit us from using non-personal consumer data by industry standards or state or federal legislation, which may diminish our ability to optimize inventory, and the value of our services, and place us at a competitive disadvantage to first-party data owners such as large website operators, many of whom own or are developing or acquiring capabilities that compete with our solutions.

In addition to “Do Not Track” options, certain mobile devices allow users to “Limit Ad Tracking” on their device. Like “Do Not Track,” “Limit Ad Tracking” is a signal that is sent by particular mobile devices, when a user chooses to send such a signal. While there is no clear guidance on how third parties must respond upon receiving such a signal, it is possible that sellers, regulators, or future legislation may dictate a response that would limit our access to data, and consequently negatively impact the effectiveness of our solution and the value of our services.

Further, ad-blocking technologies have emerged that have the effect of blocking the display of an advertisement. Estimates of the use of ad-blocking technologies vary by user population, type of media content, geography, and other factors, and the ultimate prevalence and effect of ad-blocking technologies is not certain, but it could have an adverse effect on our business if it reduces the volume or effectiveness (and therefore value) of advertising. In addition, some ad-blocking technologies block only ads that are targeted through use of third-party data, while allowing ads based on first-party data (i.e. data owned by the provider of the website or application being viewed). These ad-blockers could place us at a disadvantage because we rely on third-party data, while large competitors have troves of first-party data they use to direct advertising. Other technologies allow ads that are deemed “acceptable,” which could be defined in ways that place

us or our clients at a disadvantage, particularly if such technologies are controlled or influenced by our competitors. Even if ad-blockers do not ultimately have a material impact on our business, investor concerns about ad blockers could cause our stock price to decline.

Finally, network carriers, providers of mobile device operating systems, and device manufacturers may also impact our ability to collect data on internet-connected devices. These carriers, operating system providers, and device manufacturers are increasingly promoting features that allow device users to disable some of the functionality of the device or its operating system, which may impair or disable the collection of data on their devices. Any interruptions, failures, or defects in our data collection, mining, analysis, and storage systems could limit our ability to aggregate and analyze user data from our clients’ advertising campaigns. If that happens, we may not be able to optimize inventory sales for the benefit of our sellers, which could make our solutions less valuable, and, as a result, we may lose clients and our revenue may decline.

Increased prevalence of ad-blocking has prompted examination of the effect of digital advertising industry practices upon the quality of user experiences, and changes in industry practices may emerge as a result. Such changes could reduce the viability of our existing business model, place us at a competitive disadvantage, or require us to invest significantly in developing new technologies and business practices.

If consumer sentiment regarding privacy issues or the development and deployment of new browser solutions or other mechanisms that limit the use of tracking technologies, such as cookies, or data collected through use of such technologies results in a material increase in the number of consumers who choose to opt out or are otherwise using browsers where they need to, and fail to, configure the browser to accept cookies, our ability to collect valuable and actionable data would be impaired. Consumers may become increasingly resistant to the collection, use, and sharing of information used to deliver targeted advertising and may take steps to prevent such collection and use of information. Consumers may elect not to allow data collection, use, or sharing for targeted advertising for a number of reasons, such as privacy concerns or pricing mechanisms that may charge the user based upon the amount or types of data consumed on the device.

~~Risks Related to Data Collected from Sellers and Other Third-Parties~~

In order to effectively operate our services, we collect data from buyers, sellers, and other third-parties. If we are not able to obtain sufficient rights to data from these third-parties, we may not be able to utilize the data in our solutions. Although our arrangements with sellers generally permit us to collect data from advertising campaigns on their sites, some of our sellers do not allow us to collect some or all of this data or limit our use of this data, and future sellers may do so in the future.

We and many of our sellers voluntarily participate in several trade associations and industry self-regulatory groups that promulgate best practice guidelines or codes of conduct addressing the delivery of promotional content to users, and tracking of users or devices for the purpose of delivering targeted advertising. We could be adversely affected by changes to these guidelines and codes in ways that are inconsistent with our practices or in conflict with the laws and regulations of U.S. or international regulatory authorities In addition, when we purchase data from third-parties, we rely on them to comply with applicable data collection regulations, best practices and guidelines. If we are perceived as not operating in accordance with industry best practices or any such guidelines or codes with regard to privacy, either because of our practices or those of our third party data providers, our reputation may suffer, we could lose relationships with sellers, and we could be subject to proceedings or actions against us by governmental entities or others as described below. Any limitation on our ability to collect data about user behavior and interaction with content could make it more difficult for us to optimize sales of inventory and meet the demands of our sellers.

Our business practices with respect to data could give rise to liabilities or reputational harm as a result of governmental regulation, legal requirements or industry standards relating to consumer privacy and data protection.

U.S. and foreign governments and relevant self-regulatory bodies have enacted, considered, or are considering legislation or regulations that could significantly restrict our ability to collect, augment, analyze, use, and share anonymous data, such as by regulating the level of consumer notice and consent required before a company can employ cookies or other electronic tools to track people online. Such legislation or regulation could affect the costs of doing business online and may adversely affect the demand for or effectiveness and value of our solution.

Federal, state, and international laws and regulations govern the collection, use, retention, sharing, and security of data that we collect across our solutions. We strive to comply with all applicable laws, regulations, self-regulatory requirements, policies, and legal obligations relating to privacy and data protection. However, it is possible that new laws and regulations will be adopted in the United States and internationally, or existing laws and regulations may be interpreted and applied in new ways or in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. As we expand our operations globally, compliance with regulations that differ from country to country may also impose substantial compliance burdens on our business. In particular, the European Union has traditionally taken a broader view as to what is considered personal information and has imposed greater obligations under data privacy laws and regulations. In addition, individual EU member countries have had discretion with respect to their interpretation and implementation of the regulations, which has resulted in variation of privacy standards from country to country. We may be subject to foreign laws regulating online and mobile advertising even in jurisdictions where we do not have any physical presence to the extent a digital media content provider has advertising inventory that we manage or to the extent that we collect and use data from consumers in those jurisdictions.

In 2009, the European Union ePrivacy Directive was amended (Directive 2009/136/EC amending Directive 2002/58/EC) requiring buyers to obtain specific types of notice and consent from individuals before using cookies or other technologies to track individuals and their online behavior and deliver targeted advertisements. In particular, to comply with certain of these requirements, the use of cookies or other similar technologies may require the user’s affirmative, opt-in consent. In February 2016, the European Commission announced an agreement with the United States Department of Commerce, or DOC, to replace the invalidated Safe Harbor framework with a new EU-US “Privacy Shield.” On July 12, 2016, the European Commission adopted a decision on the adequacy of the protection provided by the Privacy Shield. The Privacy Shield is intended to address the requirements set out by the European Court of Justice in its recent ruling invalidating safe harbor by imposing more stringent obligations on companies, providing stronger monitoring and enforcement by the DOC and FTC, and making commitments on the part of public authorities regarding access to information. US companies are able to certify to the U.S. Department of Commerce their compliance with the privacy principles of the Privacy Shield since August 1, 2016. Further, the European Commission has issued a new General Data Protection Regulation that will go into effect in May 2018, which will introduce new data protection requirements in the EU, as well as substantial fines for breaches of the data protection rules. The EU General Data Protection Regulation will increase our responsibility and liability in relation to personal data that we process, and we may be required to put in place additional mechanisms to ensure compliance with the new EU data protection rules. Complying with these new regulatory requirements could force us to incur substantial costs or require us to change our business practices in a manner that could compromise our ability to effectively pursue our growth strategy.

Any proceeding or action brought against us by a governmental entity or others relating to noncompliance with U.S federal, state, or international laws, self-regulatory requirements, policies, or other legal obligations relating to privacy or data protection could hurt our reputation, force us to spend significant amounts in defense of these proceedings, distract our management, increase our costs of doing business, adversely affect the demand for our solutions, and ultimately result in the imposition of monetary liability. We may also be contractually liable to indemnify and hold harmless our sellers from the costs or consequences of noncompliance with privacy-related laws, regulations, self-regulatory requirements or other legal obligations, or inadvertent or unauthorized use or disclosure of data that we store or handle as part of providing our solutions.

Changes in global privacy-related laws and regulations and self-regulatory regimes may also impact our sellers and adversely affect the demand for our solutions or otherwise harm our business, results of operations, and financial condition. For instance, privacy laws or regulations could require digital media content providers to take additional measures to facilitate consumer privacy preferences, in which case we will be reliant upon them to do so. In addition, digital media content providers could become subject to regulatory restrictions that would require them to limit or cease altogether the collection and/or use of data by third-parties such as ourselves. For example, one potential form of restriction on the use of cookies would allow the website that the consumer has elected to visit, a first-party website, to continue to place cookies on the user’s browser or device without explicit consent, but would require the user’s explicit consent for a third-party to place its cookies on the user’s browser or device.

Additionally, a March 2012 FTC staff report recommends that websites offer consumers a choice about whether the owner of the website can use third-parties like us to track the activity for marketing purposes (e.g., delivery of targeted

advertising). We are a third-party in this context, and therefore currently depend on the ability to place our cookies and other tracking technologies on browsers and devices of users that visit the websites of our digital media content providers and to track devices for the purpose of ad delivery reporting on mobile devices, and if we were restricted from doing so because of compliance with laws or regulatory and industry best practices or recommendations by digital media content providers, our ability to gather the data on which we rely would be impaired. Further, we could be placed at a competitive disadvantage to large competitors such as Google and Facebook who have heavily trafficked, first-party properties that would continue to have greater ability to collect visitor data and use such data for marketing purposes.

If web, smartphones, tablet and connected TV devices, their operating systems or content distribution channels, including those controlled by our competitors, develop in ways that prevent our solutions from working effectively, our ability to grow our business could be impaired.

Our business model depends upon the continued compatibility of our solutions with most internet-connected devices across online, mobile, tablet, connected TV and OTT distribution channels, as well as the major operating systems that run on them. The design of these devices and operating systems are controlled by third-parties with whom we do not have any formal relationships. These parties frequently introduce new devices, and from time to time they may introduce new operating systems or modify existing ones. In some cases, the parties that control the development of internet-connected devices and operating systems include companies that we regard as our competitors, including some of our most significant competitors. If our solutions were unable to work on these devices or operating systems, either because of technological constraints or because a maker of these devices or developer of these operating systems wished to impair our ability to sell video ads on them, our ability to grow our business could be impaired.

~~Any failure to protect our intellectual property rights could negatively impact our business.~~

We regard the protection of our intellectual property, which includes trade secrets, copyrights, trademarks and domain names as critical to our success. We strive to protect our intellectual property rights by relying on federal, state and common law rights, as well as contractual restrictions. We generally enter into confidentiality and invention assignment agreements with our employees and contractors, and confidentiality agreements with parties, with whom we conduct business in order to limit access to, and disclosure and use of, our proprietary information. However, we may not be successful in executing these agreements with every party who has access to our confidential information or contributes to the development of our intellectual property.

Those agreements that we do execute may be breached, and we may not have adequate remedies for any such breach. These contractual arrangements and the other steps we have taken to protect our intellectual property may not prevent the misappropriation of our intellectual property, or deter independent development of similar intellectual property by others. Breaches of the security of our solutions, databases or other resources could expose us to a risk of loss or unauthorized disclosure of information collected, stored, or transmitted for or on behalf of sellers, or of cookies, data stored in cookies, other user information, or other proprietary or confidential information.

We register certain domain names, trademarks and service marks in the United States and in certain locations outside the United States. We also rely upon common law protection for certain marks, such as “Tremor Video.” Any of our trademarks or other intellectual property rights may be challenged by others or invalidated through administrative process or litigation. Any patents that may be issued in the future may not adequately protect our intellectual property or provide us with competitive advantages, or may be successfully challenged by third-parties. Our competitors and others could attempt to capitalize on our brand recognition by using domain names or business names similar to ours. Domain names similar to ours have been registered in the United States and elsewhere. We may be unable to prevent third-parties from acquiring or using domain names and other trademarks that infringe on, are similar to, or otherwise decrease the value of our brands, trademarks or service marks. Effective trade secret, copyright, trademark, domain name and patent protection are expensive to develop and maintain, both in terms of initial and ongoing registration requirements and the costs of defending our rights. We may be required to protect our intellectual property in an increasing number of jurisdictions, a process that is expensive and may not be successful or which we may not pursue in every location. We may, over time, increase our investment in protecting our intellectual property through patent filings that could be expensive and time-consuming.

Additionally, the Leahy-Smith America Invents Act, or AIA, among other things, switched U.S. patent rights from the former “first-to-invent” system to a “first inventor-to-file” system. This may result in inventors and companies

~~having to file patent applications more frequently to preserve rights in their inventions. This may favor larger competitors that have the resources to file more patent applications.~~

Monitoring unauthorized use of our intellectual property is difficult and costly. Our efforts to protect our proprietary rights and intellectual property may not be adequate to prevent their misappropriation or misuse. Further, we may not be able to detect unauthorized use of, or take appropriate steps to enforce, our intellectual property rights. Our competitors may also independently develop similar technology, which avoids infringing on our intellectual property rights. The laws of some foreign countries may not be as protective of intellectual property rights as those in the United States, and mechanisms for enforcement of intellectual property rights may be inadequate. Effective patent, trademark, copyright and trade secret protection may not be available to us in every country in which our solutions or technology are hosted or available. Further, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain. The laws in the United States and elsewhere change rapidly, and any future changes could adversely affect us and our intellectual property. Our failure to meaningfully protect our intellectual property could result in competitors offering solutions that incorporate our most technologically advanced features, which could seriously reduce demand for our solutions. In addition, we may in the future find it necessary or appropriate to initiate infringement claims or litigation, whether to protect our intellectual property or to determine the enforceability, scope and validity of the intellectual property rights of others. Litigation, whether we are a plaintiff or a defendant, can be expensive, time-consuming and may divert the efforts of our technical staff and managerial personnel, which could harm our business, whether or not such litigation results in a determination that is unfavorable to us. In addition, litigation is inherently uncertain. Accordingly, despite our efforts, we may be unable to prevent third-parties from infringing upon or misappropriating our intellectual property.

~~Our business may suffer if it is alleged or determined that our solutions or another aspect of our business infringes the intellectual property rights of others.~~

The online advertising industry is characterized by the existence of large numbers of patents, copyrights, trademarks, trade secrets and other intellectual property and proprietary rights. Companies in this industry are often required to defend against litigation claims that are based on allegations of infringement or other violations of intellectual property rights. Our technologies may not be able to withstand any third-party claims or rights against their use.

Our success depends, in part, upon non-infringement of intellectual property rights owned by others and being able to resolve claims of intellectual property infringement or misappropriation without major financial expenditures or adverse consequences. From time to time we face claims by third-parties that we infringe upon or misappropriate their intellectual property rights, and we may be found to be infringing upon or to have misappropriated such rights. Such claims may be made by competitors or other parties. We cannot assure you that we are not infringing or violating any third-party intellectual property rights. From time to time, we or our clients may be subject to legal proceedings relating to our solutions or underlying technology and the intellectual property rights of others, particularly as we expand the complexity and scope of our business. As a result of disclosure of information in filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third-parties.

Regardless of whether claims that we are infringing patents or infringing or misappropriating other intellectual property rights have any merit, these claims are time-consuming and costly to evaluate and defend, and can impose a significant burden on management and employees. The outcome of any litigation is inherently uncertain, and we may receive unfavorable interim or preliminary rulings in the course of litigation. There can be no assurances that favorable final outcomes will be obtained in all cases. We may decide to settle lawsuits and disputes on terms that are unfavorable to us. Some of our competitors have substantially greater resources than we do and are able to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time than we could. Claims that we are infringing patents or other intellectual property rights could:

· ~~subject us to significant liabilities for monetary damages, which may be tripled in certain instances, and the attorney’s fees of others;~~

· prohibit us from developing, commercializing or continuing to provide some or all of our solutions unless we obtain licenses from, and pay royalties to, the holders of the patents or other intellectual property rights, which may not be available on commercially favorable terms, or at all;

· ~~subject us to indemnification obligations or obligations to refund fees to, and adversely affect our relationships with, our current or future sellers;~~

· ~~result in injunctive relief against us, or otherwise result in delays or stoppages in providing all or certain aspects of our solutions;~~

· ~~cause sellers to avoid working with us;~~

· ~~divert the attention and resources of management and technical personnel; and~~

· ~~require technology or branding changes to our solutions that would cause us to incur substantial cost and that we may be unable to execute effectively or at all.~~

~~We use open source software in our solutions that may subject our technology to general release or require us to re-engineer our solutions, which may cause harm to our business.~~

Our technology incorporates or is distributed with software or data licensed from third-parties, including some software distributed under so-called “open source” licenses, which we use without charge. Some of these licenses contain requirements that we make available source code for modifications or derivative works we create based upon the open source software, and that we license such modifications or derivative works under the terms of a particular open source license or other license granting third-parties certain rights of further use. By the terms of certain open source licenses, we could be required to release the source code of our proprietary software, and to make our proprietary software available under open source licenses, if we combine and/or distribute our proprietary software with open source software in certain manners. Although we monitor our use of open source software, we cannot be sure that all open source software is reviewed prior to use in our proprietary software, that our programmers have not incorporated open source software into our proprietary software, or that they will not do so in the future. Additionally, the terms of many open source licenses to which we are subject have not been interpreted by U.S. or foreign courts. There is a risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide our solutions to our clients. In addition, the terms of open source software licenses may require us to provide software that we develop, using such open source software, to others, including our competitors, on unfavorable license terms. As a result of our current or future use of open source software, we may face claims or litigation, be required to release our proprietary source code, pay damages for breach of contract, re-engineer our technology, discontinue sales in the event re-engineering cannot be accomplished on a timely basis, or take other remedial action that may divert resources away from our development efforts, any of which could adversely affect our business, financial condition or operating results.

~~We rely on data, other technology, and intellectual property licensed from other parties, the failure or loss of which could increase our costs and delay or prevent the delivery of our solutions.~~

We utilize various types of data, other technology, and intellectual property licensed from unaffiliated third-parties in order to provide certain elements of our solutions. Any errors or defects in any third-party data or other technology could result in errors in our solutions that could harm our business and damage our reputation and losses in revenue, and we could be required to spend significant amounts of additional research and development resources to fix any problems. In addition, licensed technology, data, and intellectual property may not continue to be available on commercially reasonable terms, or at all. Any loss of the right to use any of these on commercially reasonable terms, or at all, could result in delays in producing or delivering our solutions until equivalent data, other technology, or intellectual property is identified and integrated, which delays could harm our business. In this situation we would be required to either redesign our solutions to function with technology, data or intellectual property available from other parties or to develop these components ourselves, which would result in increased costs. Furthermore, we might be forced to limit the features available in our current or future solutions. If we fail to maintain or renegotiate any of these technology or intellectual property licenses, we could face significant delays and diversion of resources in attempting to develop similar or replacement technology, or to license and integrate a functional equivalent of the technology or intellectual property. The occurrence of any of these events may have an adverse effect on our business, financial condition and operating results.

~~Risks Related to Being a Public Company and Public Company Financial Reporting~~

We have identified in the past a material weakness in our internal control over financial reporting. If we fail to maintain proper and effective internal and disclosure controls, our ability to produce accurate financial statements and other disclosures on a timely basis could be impaired.

The Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting, that meet the applicable standards. We may err in the design or operation of our controls. In addition, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. We are required to perform system and process evaluation and testing of our internal controls over financial reporting to allow management to report on, and our independent registered public accounting firm potentially to attest to, the effectiveness of our internal controls over financial reporting as required by Section 404 of the Sarbanes-Oxley Act. During the fiscal year ended December 31, 2015 management identified a material weakness in our internal control over financial reporting related to principal-agent considerations around revenue recognition. A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As a result of the material weakness, our management concluded that our internal control over financial reporting was not effective for fiscal year 2015 and engaged in implementing a remediation plan designed to address the material weakness. While we have remediated the material weakness we identified, if additional material weaknesses or significant deficiencies in our internal control are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results. In addition, the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources and could lead to substantial additional costs for accounting and legal fees.

As an “emerging growth company” under the Jumpstart Our Business Startups, or JOBS Act, we have in the past availed ourselves, and we expect to avail ourselves in future filings, of the exemption from the requirement that our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting; however, we may no longer avail ourselves of this exemption when we cease to be an “emerging growth company.” This will require that we incur substantial additional professional fees and internal costs to expand our accounting and finance functions and that we expend significant management efforts. Prior to becoming a public company, we were never required to test our internal controls within a specified period, and, as a result, we may experience difficulty in meeting these reporting requirements in a timely manner. Moreover, if we or our independent registered public accounting firm identifies deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

We may in the future discover areas of our internal controls over financial reporting that need improvement. Our internal controls over financial reporting will not prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

If we identify new or additional material weaknesses in our internal controls, or we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we are unable to maintain proper and effective disclosure controls and procedures or proper and effective internal controls over our financial reporting, we may not be able to produce timely and accurate financial statements and other disclosures, and we may conclude that our internal controls over financial reporting are not effective. If that were to happen, the market price of our stock could decline and we could be subject to sanctions or investigations by the New York Stock Exchange, or NYSE, the SEC or other regulatory authorities.

Our accounting is becoming more complex, and relies upon estimates or judgments relating to our critical accounting policies. If our accounting is erroneous or based on assumptions that change or prove to be incorrect, our operating results could fall below the expectations of securities analysts and investors, resulting in a decline in our stock price.

The preparation of financial statements in conformity with generally accepted accounting principles in the United States, or U.S. GAAP, requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes, and also to comply with many complex requirements and standards. We devote substantial resources to compliance with accounting requirements and we base our estimates on our best judgment, historical experience, information derived from third parties, and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources. However, various factors, including the recent sale of our buyer platform, are causing our accounting to become complex. Ongoing evolution of our business, and any future acquisitions or dispositions, will compound these complexities. Our operating results may be adversely affected if we make accounting errors or our judgments prove to be wrong, assumptions change or actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of securities analysts and investors or guidance we may have provided, resulting in a decline in our stock price and potential legal claims. Significant judgments, assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, stock-based compensation, business combinations, and income taxes.

~~Risks associated with being a public company.~~

As a public company, and particularly after we cease to be an “emerging growth company,” we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002 and rules subsequently implemented by the SEC and NYSE impose numerous requirements on public companies, including requiring changes in corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to compliance with these laws and regulations. These requirements have increased and will continue to increase our legal, accounting, and financial compliance costs and have made and will continue to make some activities more time consuming and costly. For example, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance compared to when we were a private company. These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors or our board committees or as executive officers.

~~As an “emerging growth company” under the JOBS Act we are permitted to, and intend to, rely on exemptions from certain disclosure requirements.~~

We are an “emerging growth company” and, for as long as we continue to be an “emerging growth company,” we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and not being required to hold a nonbinding advisory vote on executive compensation or obtain stockholder approval of “golden parachute” payments. We could be an “emerging growth company” for up to five years from the date of our initial public offering in June 2013, although, if we have more than $1.0 billion in annual revenue, if the market value of our common stock that is held by non-affiliates exceeds $700 million as of June 30 of any year, or we issue more than $1.0 billion of non-convertible debt over a three year period before the end of that five-year period, we would cease to be an “emerging growth company” as of December 31st following such occurrence. Investors may find our common stock less attractive if we choose to rely on these exemptions, in which case the price of our common stock may suffer or there may be a less active trading market for our common stock and our stock price may be more volatile.

~~Risks Related to Ownership of Our Common Stock~~

~~The market price of our common stock may be volatile, which could result in substantial losses for investors.~~

The trading price of our common stock has been, and is likely to continue to be, volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. Between August 7, 2016 and August 7, 2017, our stock price has ranged from $1.48 per share to $2.62 per share. In addition, the trading prices of the securities of advertising technology companies in general have been highly volatile, and the volatility in market price and trading volume of securities is often unrelated or disproportionate to the financial performance of the companies issuing the securities. In addition to the factors discussed in this “Risk Factors” section and elsewhere in our public filings with

~~the SEC, factors affecting the market price of our common stock include:~~

· ~~price and volume fluctuations in the overall stock market, or in the market for the stock of comparable companies, from time to time;~~

· ~~adverse changes in the regulatory environment;~~

· ~~actual or anticipated changes in our earnings or fluctuations in our operating results or the results of our competitors;~~

· ~~changes in the market perception of online video advertising platforms generally or in the effectiveness of our solutions in particular;~~

· ~~a lack of trading volume in our common stock;~~

·~~announcements of technological innovations, new solutions, strategic alliances or significant agreements by us or by our competitors;~~

· ~~issuance of new or changed securities analysts’ reports or recommendations for our or our competitors’ stock;~~

· ~~litigation involving us;~~

· ~~changes in general economic, industry and market conditions and trends;~~

· ~~recruitment or departure of key personnel;~~

· ~~announcements of acquisitions or dispositions, including the sale of the Company’s buyer platform; and~~

· ~~the other factors described in this section of the report titled “Risk Factors.”~~

In the past, following periods of volatility in the market price of a company’s securities, securities class action or derivative litigation has often been brought against that company and its officers and directors. In November 2013, a class action lawsuit was filed against us, alleging certain misrepresentations in connection with our initial public offering. The claim was dismissed in March 2015. Because of the potential volatility of our stock price, we may become the target of additional securities litigation in the future. Securities litigation could result in substantial costs and divert management’s attention and resources from our business.

Sales of substantial amounts of our common stock in the public markets, or the perception that they might occur, could reduce the price that our common stock might otherwise attain and may dilute your voting power and your ownership interest in us.

Sales of a substantial number of shares of our common stock, or the perception that a substantial number of shares could be sold, could reduce the market price of our common stock. As of August 7, 2017, we had 50,482,940 shares of common stock outstanding. In addition, shares subject to stock option awards for which 5,172,208 shares were exercisable as of June 30, 2017 will become available for sale immediately upon the exercise of such warrants to purchase common stock or stock option awards.

We have also registered for offer and sale all shares of common stock that we may issue under our stock-based compensation plans, including our employee stock purchase plan. These shares can be freely sold in the public market upon issuance. Sales of common stock by existing stockholders in the public market, whether as part of an underwritten public offering or pursuant to exemptions from registration, the availability of these shares for sale, our issuance of securities or the perception that any of these events might occur could materially and adversely affect the market price of

~~our common stock. In addition, the sale of these securities could impair our ability to raise capital through the sale of additional stock.~~

In addition, in the future, we may issue additional shares of common stock or other equity or debt securities convertible into common stock in connection with a financing, acquisition, litigation settlement, and employee arrangements or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and could cause our stock price to decline.

Our stock repurchase program could affect the price of our common stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our common stock.

In March 2016, our board of directors approved a stock repurchase program of up to $15 million. Through June 30, 2017, we had repurchased 3,845,496 shares of our common stock under the program for a total of approximately $8.3 million. The timing and actual number of shares repurchased will depend on a variety of factors including the timing of open trading windows, price, corporate and regulatory requirements, an assessment by management and our board of directors of cash availability and other market conditions. The stock repurchase program may be suspended or discontinued at any time without prior notice. Repurchases pursuant to our stock repurchase program could affect the price of our common stock and increase its volatility. The existence of our stock repurchase program could also cause the price of our common stock to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our common stock. Additionally, repurchases under our stock repurchase program will diminish our cash reserves, which could impact our ability to further develop our business and service our indebtedness. There can be no assurance that any stock repurchases will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased such shares. Any failure to repurchase shares after we have announced our intention to do so may negatively impact our reputation and investor confidence in us and may negatively impact our stock price. Although our stock repurchase program is intended to enhance long-term stockholder value, short-term stock price fluctuations could reduce the program’s effectiveness.

~~Concentration of ownership of our common stock among our existing executive officers, directors and principal stockholders may prevent new investors from influencing significant corporate decisions.~~

Our executive officers, directors and principal stockholders and their respective affiliates beneficially owned, in the aggregate, a significant percentage of our outstanding common stock as of June 30, 2017. These persons, acting together, are able to significantly influence all matters requiring stockholder approval, including the election and removal of directors and any merger or other significant corporate transactions. The interests of this group of stockholders may not coincide with our interests or the interests of other stockholders.

If securities or industry analysts do not publish, or cease publishing, research or reports about us, our business or our market, if they publish negative evaluations of our stock, or if we fail to meet the expectations of analysts, the price of our stock and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. We do not have any control over these analysts, and their reports or analyst consensus may not reflect our guidance, plans or expectations. If one or more of the analysts covering our business issues an adverse opinion of our company because we fail to meet their expectations or otherwise, the price of our stock could decline. If one or more of these analysts cease to cover our stock, we could lose visibility in the market for our stock, which in turn could cause our stock price to decline.

Anti-takeover provisions in our certificate of incorporation and bylaws as well as provisions of Delaware law might discourage, delay or prevent a change in control of our company or changes in our board of directors or management and, therefore, depress the price of our common stock.

Our certificate of incorporation and bylaws and Delaware law contain provisions that may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares of our common stock or transactions that our stockholders might otherwise deem to be in their best interests. These provisions may also prevent or frustrate attempts by our stockholders to replace or remove members of our board of directors or our management. Therefore, these

~~provisions could adversely affect the price of our stock. Our corporate governance documents include provisions:~~

· ~~establishing a classified board of directors with staggered three-year terms so that not all members of our board of directors are elected at one time;~~

· ~~providing that directors may be removed by stockholders only for cause;~~

· ~~preventing the ability of our stockholders to call and bring business before special meetings and to take action by written consent in lieu of a meeting;~~

· ~~requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors;~~

· ~~permitting the board of directors to issue up to 10,000,000 shares of preferred stock with any rights, preferences and privileges as they may designate;~~

· ~~limiting the liability of, and providing indemnification to, our directors and officers;~~

· ~~providing that vacancies may be filled by remaining directors;~~

· ~~preventing cumulative voting; and~~

· ~~providing for a supermajority requirement to amend our bylaws.~~

As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the General Corporation Law of the State of Delaware, which prohibits a Delaware corporation from engaging in a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder. Any provision of our certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.

~~Delaware~~		~~20-5480343~~

Delaware	20-5480343
(State or ~~other~~another jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

~~1501~~

222 Broadway, ~~Suite 801,~~16th Floor, New York, NY		~~10036~~ 10038
(Address of principal executive offices)		(Zip Code)

			~~PAGE~~

	TABLE OF CONTENTS

		PAGE
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of June 30, ~~2017~~2018 (unaudited) and December 31, ~~2016~~2017	3

	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2018 and 2017 ~~and 2016~~ (unaudited)	4

	Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2018 and 2017 ~~and 2016~~ (unaudited)	5

	Condensed Consolidated Statement of Changes in Stockholders’ Equity for the six months ended June 30, ~~2017~~2018 (unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2018 and 2017 ~~and 2016~~ (unaudited)	7

	Notes to Condensed Consolidated Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19 23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32 35

Item 4.	Controls and Procedures	33 35

PART II.	OTHER INFORMATION	37

Item 1.	Legal Proceedings	33 37

Item 1A.	Risk Factors	34 37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58 37

Item 3.	Defaults Upon Senior Securities	58 37

Item 4.	Mine Safety Disclosures	59 37

Item 5.	Other Information	59 37

Item 6.	Exhibits	60 38

SIGNATURES

CERTIFICATIONS

	June 30,			December 31,
	2017			2016
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	36,153		$	43,160
Accounts receivable, net of allowance for doubtful accounts of $328 and $3 as of June 30, 2017 and December 31, 2016, respectively	74,190			79,027
Prepaid expenses and other current assets	2,284			2,405
Total current assets	112,627			124,592
Long-term assets:
Restricted cash	—			770
Property and equipment, net of accumulated depreciation of $13,854 and $11,282 as of June 30, 2017 and December 31, 2016, respectively	8,080			9,656
Intangible assets, net of accumulated amortization of $31,197 and $29,012 as of June 30, 2017 and December 31, 2016, respectively	4,868			6,922
Goodwill	10,881			10,758
Other assets	1,487			1,527
Total long-term assets	25,316			29,633
Total assets	$	137,943		$	154,225

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses	$	56,474		$	64,691
Deferred rent, short-term	745			704
Contingent consideration on acquisition, short-term	4,635			2,483
Deferred revenue	95			5
Capital leases, short-term	362			362
Other current liabilities	100			179
Total current liabilities	62,411			68,424
Long-term liabilities:
Deferred rent	5,716			6,072
Deferred tax liabilities	487			447
Capital leases	573			760
Total liabilities	69,187			75,703
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value: 250,000,000 shares authorized as of June 30, 2017 and December 31, 2016, respectively; 50,226,294 and 50,431,324 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively	5			5
Treasury stock, at cost 3,845,496 and 2,861,632 shares as of June 30, 2017 and December 31,2016, respectively	(8,443		)	(6,037		)
Additional paid-in capital	285,253			283,486
Accumulated other comprehensive (loss) income	(204		)	(331		)
Accumulated deficit	(207,855		)	(198,601		)
Total stockholders’ equity	68,756			78,522
Total liabilities and stockholders’ equity	$	137,943		$	154,225



	June 30,			December 31,
	2018			2017
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	64,950		$	76,320
Accounts receivable, net	60,021			59,288
Prepaid expenses and other current assets	3,541			2,499
Total current assets	128,512			138,107
Long-term assets:
Property and equipment, net	3,222			3,194
Intangible assets, net	4,926			1,307
Goodwill	9,658			6,320
Deferred tax assets	332			332
Other assets	938			1,168
Total long-term assets	19,076			12,321

Total assets	$	147,588		$	150,428

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses	$	61,171		$	59,419
Deferred rent, short-term	838			808
Contingent consideration on acquisition	1,443			—
Deferred income	31			674
Other current liabilities	748			53
Total current liabilities	64,231			60,954
Long-term liabilities:
Deferred rent	5,990			5,260
Deferred tax liabilities	1,385			338
Other non-current liabilities	98			737
Total liabilities	71,704			67,289
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value: 250,000,000 shares authorized as of June 30, 2018 and December 31, 2017, respectively; 56,259,264 and 55,136,038 shares issued and 52,413,768 and 51,290,542 outstanding as of June 30, 2018 and December 31, 2017, respectively	5			5
Treasury stock, at cost: 3,845,496 shares as of June 30, 2018 and December 31, 2017	(8,443		)	(8,443		)
Additional paid-in capital	290,516			288,277
Accumulated other comprehensive loss	(504		)	(232		)
Accumulated deficit	(205,690		)	(196,468		)
Total stockholders’ equity	75,884			83,139
Total liabilities and stockholders’ equity	$	147,588		$	150,428



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Revenue	$	12,430		$	9,934		22,031			16,073
Cost of revenue	1,136			917			2,164			1,681
Gross profit	11,294			9,017			19,867			14,392

Operating expenses:
Technology and development	2,305			2,109			4,613			4,534
Sales and marketing	6,646			7,700			12,938			14,226
General and administrative	5,365			4,774			10,363			9,647
Restructuring costs	117			—			117			—
Depreciation and amortization	874			990			2,675			2,011
Mark-to-market	—			93			—			148
Total operating expenses	15,307			15,666			30,706			30,566

Loss from continuing operations	(4,013		)	(6,649		)	(10,839		)	(16,174		)

Interest and other income (expense), net:
Interest expense	(45		)	(33		)	(48		)	(67		)
Other income (expense), net	1,127			(45		)	1,844			(38		)
Total interest and other income (expense), net	1,082			(78		)	1,796			(105		)

Loss from continuing operations before income taxes	(2,931		)	(6,727		)	(9,043		)	(16,279		)

Provision for income taxes	29			89			43			79

Loss from continuing operations, net of income taxes	(2,960		)	(6,816		)	(9,086		)	(16,358		)

Loss on sale of discontinued operations, net of income taxes	(161		)	—			(136		)	—
Income from discontinued operations, net of income taxes	—			4,516			—			7,198
Total income (loss) from discontinued operations, net of income taxes	(161		)	4,516			(136		)	7,198

Net loss	$	(3,121	)	$	(2,300	)	$	(9,222	)	$	(9,160	)

Net income (loss) per share — basic and diluted:
Loss from continuing operations, net of income taxes	$	(0.06	)	$	(0.14	)	$	(0.18	)	$	(0.32	)
Income from discontinued operations, net of income taxes	—			0.09			—			0.14
Net loss	$	(0.06	)	$	(0.05	)	$	(0.18	)	$	(0.18	)

Weighted-average number of shares of common stock outstanding:
Basic and diluted	52,241,605			50,205,913			52,035,788			50,102,803



												Accumulated
	Common Stock			Treasury Stock					Additional			Other						Total
	Share	Capital		Share		Capital			Paid-In Capital			Comprehensive Loss			Accumulated Deficit			Stockholders' Equity
Balance as of December 31, 2017	55,136,038	$	5	(3,845,496	)	$	(8,443	)	$	288,277		$	(232	)	$	(196,468	)	$	83,139
Exercise of stock options awards	399,246	—							1,178									1,178
Stock-based compensation expense									1,836									1,836
Common stock issued for settlement of restricted stock units net of 222,202 shares withheld to satisfy income tax withholding obligations	639,565								(1,014		)							(1,014		)
Common stock issuance in connection with employee stock purchase plan	84,415								239									239
Net loss															(9,222		)	(9,222		)
Foreign currency translation adjustment	—	—		—		—			—			(272		)	—			(272		)
Balance as of June 30, 2018	56,259,264	$	5	(3,845,496	)	$	(8,443	)	$	290,516		$	(504	)	$	(205,690	)	$	75,884

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016

Revenue	$	48,867		$	37,107		$	90,267		$	71,672
Cost of revenue	24,441			19,907			46,464			38,254
Gross profit	24,426			17,200			43,803			33,418

Operating expenses:
Technology and development	5,190			5,045			10,851			10,888
Sales and marketing	13,908			11,342			26,961			24,006
General and administrative	5,005			4,074			10,088			8,996
Depreciation and amortization	2,357			2,325			4,706			4,564
Mark-to-market	93			45			148			1,089
Total operating expenses	26,553			22,831			52,754			49,543

Loss from operations	(2,127		)	(5,631		)	(8,951		)	(16,125		)

Interest and other (expense) income, net:
Interest expense	(138		)	(13		)	(190		)	(15		)
Other (expense) income, net	60			(33		)	85			(285		)
Total interest and other (expense) income, net	(78		)	(46		)	(105		)	(300		)

Loss before provision for income taxes	(2,205		)	(5,677		)	(9,056		)	(16,425		)

Provision for income taxes	95			178			104			504

Net loss	$	(2,300	)	$	(5,855	)	$	(9,160	)	$	(16,929	)

Net loss per share:
Basic and diluted	$	(0.05	)	$	(0.11	)	$	(0.18	)	$	(0.32	)

Weighted-average number of shares of common stock outstanding:
Basic and diluted	50,205,913			52,633,054			50,102,803			52,502,955

												Accumulated
									Additional			Other						Total
	Common Stock			Treaury Stock					Paid-In			Comprehensive			Accumulated			Stockholders’
	Share	Capital		Share		Capital			Capital			Income (Loss)			Deficit			Equity

Balance as of December 31, 2016	53,292,956	$	5	(2,861,632	)	$	(6,037	)	$	283,486		$	(331	)	$	(198,601	)	$	78,522
Exercise of stock options awards	104,656								62									62
Stock-based compensation expense									2,065									2,065
Cumulative-effect adjustment for stock compensation forfeitures									94						(94		)	—
Common stock issued for settlement of restricted stock units net of 337,049 shares withheld to satisfy income tax withholding obligations	497,280								(709		)							(709		)
Common stock issuance in connection with employee stock purchase plan	176,898								255									255
Treasury stock — repurchase of stock				(983,864	)	(2,406		)										(2,406		)
Net loss															(9,160		)	(9,160		)
Foreign currency translation adjustment	—	—		—		—			—			127			—			127
Balance as of June 30, 2017	54,071,790	$	5	(3,845,496	)	$	(8,443	)	$	285,253		$	(204	)	$	(207,855	)	$	68,756



	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Stock-based compensation expense:
Technology and development	$	124	$	156	$	253	$	300
Sales and marketing	394		187		704		350
General and administrative	462		409		879		846
Total stock-based compensation expense in continuing operations	$	980	$	752	$	1,836	$	1,496



	June 30, 2018		December 31, 2017
Prepaid expenses and other current assets	$	3,229	$	2,231
Prepaid rent	168		127
Deferred rental income	144		141
Total prepaid expenses and other current assets	$	3,541	$	2,499



Computer hardware		3 years
Furniture and fixtures		7 years
Computer software		3 years
Office equipment		3 years



	June 30, 2018		December 31, 2017
Trade accounts payable	$	49,795	$	48,736
Accrued compensation, benefits and payroll taxes	4,352		4,288
Accrued cost of sales	4,762		5,576
Other payables and accrued expenses	2,262		819
Total accounts payable and accrued expenses	$	61,171	$	59,419

	June 30, 2017							December 31, 2016
	(unaudited)
	Level 1		Level 2	Level 3		Total		Level 1		Level 2	Level 3		Total
Assets:
Money market funds(1)	$	13,650				$	13,650	$	33,710				$	33,710
Total assets	$	13,650				$	13,650	$	33,710				$	33,710
Liabilities:
Contingent consideration on acquisition liability(2)	$			$	4,635	$	4,635	$			2,483		$	2,483
Total liabilities	$			$	4,635	$	4,635	$			$	2,483	$	2,483



	June 30, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount

Customer relationships(1)	$	4,955	$	(1,017	)	$	3,938
Technology(2)	1,000		(12		)	988
Total acquisition-related intangible assets, net	$	5,955	$	(1,029	)	$	4,926



	December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount

Customer relationships(1)	$	2,188	$	(881	)	$	1,307



2018 (six months remaining)		416
2019		833
2020		833
2021		690
2022		490
2023 and thereafter		1,664



	June 30, 2018								December 31, 2017
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Money market funds(1)	$	49,233	$	—	$	—	$	49,233	$	53,853	$	—	$	—	$	53,853
Total assets	$	49,233	$	—	$	—	$	49,233	$	53,853	$	—	$	—	$	53,853
Liabilities:
Contingent consideration on acquisition liability(2)	$	—	$	—	$	1,443	$	1,443	$	—	$	—	$	—	$	—
Total liabilities	$	—	$	—	$	1,443	$	1,443	$	—	$	—	$	—	$	—



	2018

Beginning Balance at January 1, 2018	$	—
Contingent consideration (SlimCut Acquisition)	1,443
Mark-to-market(1)	—
Balance as of June 30, 2018	$	1,443

	2017
Beginning balance at January 1, 2017	$	2,483
Compensation expense(1)	1,810
Mark-to-market expense(2)	148
Foreign currency translation adjustment	194
Ending balance at June 30, 2017	$	4,635



	June 30, 2018

Beginning balance as of January 1, 2018	$	6,320
Acquisition-related goodwill	3,434
Foreign exchange impact	(96		)
Ending Balance as of June 30, 2018	$	9,658


(1)	For the three and six months ended June 30, 2018 and 2017, there were no reclassifications to or from accumulated other comprehensive (loss) income.

	Foreign
	Currency
	Translation
	Adjustment			Total
Beginning balance at April 1, 2017	$	(245	)	(245	)
Other comprehensive loss(1)	41			41
Ending balance at June 30, 2017	$	(204	)	(204	)



	Balance as of April 1, 2018		Expenses, net		Cash			Non-Cash		Balance as of June 30, 2018

Restructuring liability	$	—	$	117	$	(23	)	$	1	$	95



Remaining 2018	$	3,223
2019	6,439
2020	6,487
2021	5,399
2022	4,922
Thereafter	18,127
Total minimum operating commitments	44,597
Less non-cancellable sublease income	(22,606		)
Total operating commitments	$	21,991



•	$450 related to its former headquarters at 52 W 23^rd St, New York, New York
•	$320 related to its office space in Mountain View, California
•	$2,332 related to its former headquarters at 1501 Broadway, New York, New York
•	$633 related to its current headquarters at 222 Broadway, New York, New York

	Number of		Weighted
	Stock Option		Average
	Awards		Exercise Price
	Outstanding		Per Share
Stock option awards outstanding as of December 31, 2016(1)	6,425,832		$	3.65
Stock option awards granted	—		—
Stock option awards forfeited	(582,696	)	2.85
Stock option awards exercised	(104,656	)	1.00
Stock option awards outstanding as of June 30, 2017	5,738,480		3.78

Stock option awards vested and exercisable as of June 30, 2017(2)	5,172,208		3.95

	Number of		Weighted
	Shares of		Average
	Restricted		Grant Date
	Stock Unit		Fair Value
	Awards		Per Share
Non-vested restricted stock unit awards outstanding as of December 31, 2016	3,750,292		$	2.07
Restricted stock unit awards granted	2,217,849		2.17
Restricted stock unit awards forfeited	(768,956	)	2.04
Restricted stock unit awards vested	(834,329	)	2.16
Non-vested restricted stock unit awards outstanding as of June 30, 2017	4,364,856		2.10


(1)	Reflects sublease income for our two former corporate headquarters and former Santa Monica location net of rent expense for those same locations. In addition, includes income received from the sale of Tremor Video DSP trademark.


(3)	Reflects the estimated fair value of costs related to the move of our Santa Monica location. Refer to Note 8 - Restructuring costs in the notes to the condensed consolidated financial statements.


(4)	Reflects expense incurred based on the re-measurement, at June 30, 2017, of the estimated fair value of earn-out payments that were paid in connection with the acquisition of TVN and which were not conditioned on continued employment. Refer to Note 4 - Acquisition in the notes to the condensed consolidated financial statements.


(5)	Reflects professional fees incurred in connection with the sale of the buyer platform in August 2017. Refer to Note 3 - Disposition of Buyer Platform in the notes to the condensed consolidated financial statements of this Form 10-Q.


(6)	Reflects costs incurred providing transitional services following the sale of our buyer platform.

	Three Months Ended				Change				Six Months Ended				Change
	June 30,				Increase/ (Decrease)				June 30,				Increase/ (Decrease)
	2017		2016		Amount		Percentage		2017		2016		Amount		Percentage
	(dollars in thousands)
Revenue	$	48,867	$	37,107	$	11,760	31.7	%	$	90,267	$	71,672	$	18,595	25.9	%



	Three Months Ended June 30,				Change Increase/ (Decrease)				Six Months Ended June 30,				Change Increase/ (Decrease)
	2018		2017		Amount		Percentage		2018		2017		Amount		Percentage
	(dollars in thousands)
Revenue	$	12,430	$	9,934	$	2,496	25.1	%	$	22,031	$	16,073	$	5,958	37.1	%



	Three Months Ended June 30,						Change Increase / (Decrease)				Six Months Ended June 30,						Change Increase / (Decrease)
	2018			2017			Amount		Percentage		2018			2017			Amount		Percentage
	(dollars in thousands)
Cost of revenue	$	1,136		$	917		$	219	23.9	%	$	2,164		$	1,681		$	483	28.7	%
Gross profit	11,294			9,017			2,277		25.3	%	19,867			14,392			5,475		38.0	%
Gross margin	90.9		%	90.8		%					90.2		%	89.5		%

	As of
	June 30,
	2017		2016
	(dollars in thousands)
Cash and cash equivalents	$	36,153	$	49,977
Accounts receivable, net of allowance for doubtful accounts	74,190		55,912
Working capital	50,216		62,341

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