TREMOR VIDEO INC. (Form: 10-K, Received: 03/10/2017 16:09:50)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2016

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-35982

TREMOR VIDEO, INC.

(Exact name of registrant as specified in its charter)

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

1501 Broadway, Suite 801, New York, NY		10036
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (646) 723-5300

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:		Name of each exchange on which registered:
Common Stock, $0.0001 par value per share		The New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	o	Accelerated filer	x
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	o

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $81.20 million as of the last business day of the registrant’s most recently completed second fiscal quarter, based upon the closing sale price on The New York Stock Exchange reported for such date.

As of March 6, 2017, there were 50,066,636 shares of the registrant’s common stock $0.0001 par value per share outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the information called for by Part III of this Annual Report on Form 10-K, to the extent not set forth herein, are incorporated herein by reference from the definitive proxy statement relating to our 2017 annual meeting of stockholders. The proxy statement will be filed with the U.S. Securities and Exchange Commission not later than 120 days after December 31, 2016.

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Tremor Video, Inc.

Form 10-K

For the Fiscal Year Ended December 31, 2016

		Page
Part I
Item 1.	Business	4
Item 1A.	Risk Factors	12
Item 1B.	Unresolved Staff Comments	35
Item 2.	Properties	35
Item 3.	Legal Proceedings	36
Item 4.	Mine Safety Disclosures	36

Part II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	37
Item 6.	Selected Consolidated Financial Data	40
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	58
Item 8.	Financial Statements and Supplementary Data	59
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	91
Item 9A.	Controls and Procedures	91
Item 9B.	Other Information	92

Part III
Item 10.	Directors, Executive Officers and Corporate Governance	92
Item 11.	Executive Compensation	92
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	92
Item 13.	Certain Relationships and Related Transactions, and Director Independence	93
Item 14.	Principal Accounting Fees and Services	93

Part IV
Item 15.	Exhibits and Financial Statement Schedules	93
	Signatures	94

The Tremor Video logo, name and other trademarks or service marks of Tremor Video, Inc. appearing in this report are the property of Tremor Video, Inc. and its consolidated subsidiaries. This report contains additional trade names, trademarks and service marks of others, which are the property of their respective owners.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements that involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “predict,” “project,” “potential,” “should,” “will,” or “would,” and or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this report, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain. Forward-looking statements include statements about:

· the expansion of the online video advertising market;

· our ability to increase revenue from new and existing buyers through our buyer platform;

· the adoption of our seller platform, the Tremor Video SSP, by sellers;

· the adoption of our self-service programmatic solutions;

· our ability to increase spend transacted by third party demand side platforms through the Tremor Video SSP;

· the adoption of our all-screen optimization solution and other higher-function buying products;

· our ability to ensure a high level of brand safety for our clients;

· our ability to acquire an adequate supply of premium video advertising inventory on terms that are favorable to us;

· the effects of increased competition as well as innovations by new and existing competitors in our market;

· our ability to effectively innovate and scale our technology and to continue to address the rapidly evolving requirements of our clients;

· our ability to effectively manage our growth;

· the increase in broadband speed, sales of internet-connected devices and time spent viewing online videos;

· our ability to successfully expand our reach beyond current core verticals and manage our international expansion;

· our ability to protect viewers’ information and adequately address privacy concerns;

· the effect of regulatory developments and industry standards regarding internet privacy and other matters;

· our ability to maintain, protect and enhance our intellectual property;

· our ability to effectively deliver video ad campaigns with a guaranteed demographic reach;

· costs associated with defending intellectual property infringement, securities and other claims;

· potential acquisitions and integrations of complementary business and technologies;

· expected investments or expenditures;

· statements regarding future revenue or the sources of such revenue, gross margins, net income, hiring plans, expenses, capital expenditures, capital requirements and stock performance;

· our ability to detect “bot” traffic and other fraudulent or malicious activity; and

· our ability to attract and retain qualified employees and key personnel, including a new permanent Chief Executive Officer.

You should refer to “Part I. Item 1A. Risk Factors” of this Annual Report on Form 10-K for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should read this report and the documents that we reference in this report and have filed or incorporated by reference as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

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PART I

ITEM 1. BUSINESS

Overview

Tremor Video, Inc., we or us, provides software for video advertising effectiveness. Our buyer and seller platforms enable seamless transactions in a premium video marketplace by offering control and transparency to our clients.

Our buyer platform enables advertisers , agencies and other buyers of advertising, which we collectively refer to as buyers, to discover, buy, optimize and measure the effectiveness of their video ad campaigns, across all screens, including computers, smartphones, tablets and connected TVs. Our proprietary technology analyzes video content, detects viewer and system attributes, and leverages our large repository of stored and integrated third-party data to optimize and target the delivery of ad campaigns to achieve a broad spectrum of marketing goals — from audience reach to more sophisticated goals such as engagement, brand lift and viewability. Through our All-Screen optimization solution, buyers are able to choose a single campaign goal and our technology will optimize delivery of the campaign across a broad inventory pool to find the right viewer wherever they may be watching video, eliminating the need to allocate campaign budgets to a specific screen or device.

We empower video ad buying however a buyer wants to transact. Our buyer platform is directly integrated with video inventory sources, enabling the dynamic purchase of ad impressions through robust auctions, as well as through private marketplaces that connect buyers directly to sellers. Buyers can purchase advertising on a guaranteed basis, where we execute the campaign according to an agreed set of objectives for a fixed price, or on a non-guaranteed basis, utilizing our proprietary real-time bidding technology. We offer varying levels of client service, from fully managed to self-service, depending on a buyer’s needs.

Buyers are able to access our buyer platform on a programmatic basis through the Tremor Video DSP, an intuitive and customizable user interface where they can actively manage the execution of their campaigns. The Tremor Video DSP creates significant work flow efficiencies for buyers, providing them with tools to manage settings across account, advertiser, campaign or placement level, and the ability to discover, activate and measure all of their private market place deals through one central console. Our advanced analytics suite enables buyers to gain a deep understanding of the drivers of campaign performance and obtain reporting on key brand performance metrics such as viewability, as well as TV-like metrics that measure reach and frequency of viewing by a particular audience.

Our higher-function buying products offer clients innovative ways to reach their target audiences and ensure that they are only paying for what performs. With our proprietary outcome-based pricing models, a buyer only pays when they have achieved their desired objective, fully aligning our results with the success of a campaign. For instance, with our CPE pricing, an advertiser only pays when a viewer actively engages with an ad, such as by interacting with the ad through clicks or screen touches. Our advanced targeting solutions allow buyers to leverage unique data sets to find their desired audience across screens and increase the impact of their brand advertising.

Our seller platform, the Tremor Video SSP, helps suppliers of video advertising inventory, or sellers, improve yield and maximize the value of their inventory by enabling their programmatic sales efforts. Sellers on the Tremor Video SSP can make inventory available to buyers through an open exchange, where buyers bid on inventory in a robust auction environment, or through private marketplaces so that only selected buyers have the opportunity to purchase video ad inventory. Through the Tremor Video SSP, we provide sellers with tools to manage their supply hierarchies and demand tiers, and offer real-time reporting that allows sellers to effectively monitor bidding activity on their inventory. Buyers connect to sellers on the Tremor Video SSP through third-party demand side platforms, or third party DSPs, that are integrated directly with our seller platform. In addition, the Tremor Video SSP is one of many inventory sources that is connected to our buyer platform.

Industry Background

Online video advertising is among the fastest growing advertising formats worldwide. Several factors, including the availability of high-speed broadband and mobile network infrastructure, growth of internet-connected devices capable of video consumption, an increase in online video content and a behavioral shift towards online video viewing are driving robust growth in online video consumption across screens. We believe this growth will continue to accelerate as traditional television content migrates online.

Online video advertising offers brand advertisers a number of advantages over more traditional advertising solutions, such as the ability to measure and analyze large repositories of data in real-time and optimize the delivery of an ad campaign for a specific campaign objective or target audience. Online video provides buyers with unprecedented control over the direction and targeting of their ad campaigns and offers transparency into what is driving performance, giving marketers the ability to effectively measure the return on their brand advertising dollars. Online video also provides sellers with the opportunity to maximize yield and the value of their video content by providing access to advanced analytics and reporting as well as tools to manage and allocate inventory. We believe that online video is a highly effective channel for brand advertisers to meet their advertising objectives by combining the rich “sight, sound and motion” of television, the opt-in engagement of print and the real-time measurement and optimization capabilities of online.

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As online video advertising continues to scale and evolve, the need for software solutions that automate the process for planning, buying, selling and measuring video advertising across screens has become more pronounced. Recently, an increasing amount of online video advertising is being transacted programmatically. Programmatic buying refers to the automated purchase and sale of digital advertising through technology, including the use of real-time bidding technology that allows for the dynamic purchase and sale of advertising inventory on an impression-by-impression basis. This technology enables buyers and sellers to efficiently transact in an open auction environment or through private marketplaces that seamlessly connect buyers and sellers of video advertising.

Despite the tremendous growth opportunity for the online video advertising market, there are a number of challenges to the adoption of online video advertising that require sophisticated technology to solve, including: audience and device fragmentation; the complexity of analyzing video and optimizing campaigns across multiple screens; ensuring that video ads are viewable to viewers; the absence of performance transparency; scarcity of premium inventory; reliance on multiple technology providers and intermediaries; challenges combatting fraudulent activities and brand safety issues; and the lack of consistent and standard measurements.

Tremor Video Technology and Solutions

We provide software for video advertising effectiveness. Our buyer and seller platforms enable seamless transactions between buyers and sellers of advertising in a premium video marketplace.

Buyer Platform

Our buyer platform enables buyers to efficiently discover, buy, optimize and measure the effectiveness of their video ad campaigns. Through our buyer platform we deliver:

· Advanced optimization for brand performance . We have developed a suite of brand-centric key performance indicators, or KPIs, such as engagement, viewability and brand preference (i.e., a positive shift in preference towards a brand or branded product driven by exposure to a video ad and brand education), which are tailored to the needs of brand advertisers and designed specifically for video. Before the launch of a video advertising campaign, a buyer selects the KPI against which it wants to optimize the performance of its campaign. Using a proprietary algorithm, our technology builds a decision tree that predicts performance of the video ad campaign for the chosen KPI based on its analysis of a series of signals, such as video player size, geography, content category, length of video and viewer data, including demographic information and viewing history. Our technology performs an analysis on the video stream, including by using the ability to scan and categorize content by analyzing the audio track and certain visual elements, and optimizes delivery of the campaign for the selected KPI by directing advertising spend towards video ad inventory that is more likely to perform. For instance, if a client chooses to optimize a video ad campaign for engagement, our technology will continuously track and analyze the signals described above to determine which are most correlated with achieving a high engagement rate and direct campaign spend towards video ad inventory that meet these criteria.

· All-screen optimization. Our all-screen optimization solution for in-stream video advertising enables buyers to select a single performance objective and our technology will optimize delivery of the campaign across screens to find the right viewer wherever they may be watching video, whether on computers, tablets, smartphones or connected TVs, thus eliminating the need to allocate campaign budgets to a specific device.

· Real-time bidding technology . Our buyer platform is directly integrated with the largest video supply side platforms, enabling the dynamic purchase of individual ad impressions in an open exchange as well as through private marketplaces that connect buyers directly to selected sellers of video advertising inventory. Our buyer platform utilizes proprietary real-time bidding and optimization technology to maximize a buyer’s campaign spend for delivery against a given campaign objective.

· Precision targeting . In addition to offering optimization against a suite of brand-centric KPIs, our technology enables precise targeting across specific signals such as demographics, geography and player-size. We also enable buyers to target consumers using first-party data or data from integrated third party data management platforms.

· Integrated data and technology partners. In addition to our proprietary technology, our buyer platform is integrated with a suite of third-party technologies, including data management platforms to enhance audience targeting. For example, through our partnership with Alphonso Inc., we are able to offer buyers the ability to target audiences in real-time based

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on TV viewership data. We are also integrated with a number of third-party technologies that offer placement verification and reporting services. By offering access to these integrated technologies through a single platform, we reduce complexities faced by buyers utilizing multiple technology providers.

· Full spectrum buying options. Our buyer platform empowers video ad buying however a buyer wants to transact. We offer varying levels of client service, from fully managed to self-service, based on the individual preference of a buyer. Buyers can purchase advertising through guaranteed pricing models as well as non-guaranteed pricing, and can transact through open auction or private marketplaces with specific sellers.

· Work-flow efficiency . Buyers are able to access our buyer platform programmatically through the Tremor Video DSP, an intuitive and customizable user interface where they can actively manage the execution of their campaigns. Buyers are able to manage settings from account level, advertiser level, campaign level or placement level to create workflow efficiency. Our Deal Manager solution allows buyers to discover, activate and measure all of their private market place deals through one central console. Buyers can explore and purchase pre-approved packages of inventory that have been curated for performance against a given metric or seamlessly execute direct buys with specific sellers, while monitoring performance in real time.

· Advanced Analytics. We provide buyers with advanced analytics and measurement tools so that they can understand the true performance of their ad campaigns, relieving them from the need to integrate and support multiple, disparate technologies, including:

· Ad performance transparency. We provide buyers with transparency into the workings of our decision engine so that they can understand what signals are driving the performance of their video ad campaigns. These insights into campaign performance can not only inform future online advertising decisions but also influence offline advertising decisions.

· Viewability . Our technology analyzes whether a video ad placement is fully, partially, or not visible to a viewer. Our platform is also integrated with third party technology providers that provide independent metrics for measuring and validating viewability. Buyers are able to optimize delivery of their video campaigns to maximize viewability and we offer pricing models where a buyer only pays for viewable impressions.

· Cross-site measurement . Our proprietary measurement tools enable buyers to compare video inventory quality across sellers by measuring attributes such as viewability, the size of the video player and ad completion rate. When coupled with pricing information, these insights help buyers compare the relative value of video inventory across sellers.

· TV-like buying and measurement. Our buyer platform enables advertisers to buy and measure video advertising in a manner consistent with the television industry, using metrics such as gross rating points, or GRPs, which are a measure of reach and frequency among a target audience, and verify the audience they reach using Nielsen reporting. These functions help buyers unify the planning and measurement of TV and online video advertising campaigns.

· Brand safety and anti-fraud solutions . Our buyer platform offers advanced solutions for combating fraudulent or objectionable ad placements, including “bot” traffic. Through server - to-server integrations with third party technology providers, our platform preemptively and in real-time prevents the placement of advertising to inventory that is identified as being potentially fraudulent. We also offer solutions that block placements of advertising to brand conflicting properties or page content that is identified as being inappropriate or unsafe for the brand.

· Advanced ad formats. Our proprietary ad formats give buyers the ability to create a more engaging experience across multiple internet-connected devices, allowing viewers to interact with an ad and explore additional content within the ad itself, driving increased awareness and time spent with an ad.

· Scale and reach. Our buyer platform delivers scale and reach across multiple internet-connected devices, including computers, smartphones, tablets, and connected TVs, enabling buyers to use our solutions to address their online video advertising needs across screens. Our buyer platform is directly integrated with the largest video supply side platforms, enabling the dynamic purchase of individual ad impressions in an open exchange. We continuously evaluate and refine our network of sellers to ensure that buyers have access to high performing content in a brand safe environment.

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· Proprietary pricing models. We offer innovative brand outcome-based pricing for in-stream video advertising that allow buyers to purchase measurable brand results, such as:

· Cost per engagement, or CPE pricing, where we are compensated only when viewers actively engage with buyers’ campaigns, such as by interacting with the elements of the video ad through clicks or screen touches or by rolling over certain elements of the video ad for at least three seconds;

· Cost per viewable and completed, or CPV&C pricing, where we are only compensated when a video ad is both completed and viewable by the viewer for the duration of the ad;

· Cost per video completion, or CPVC, pricing, where we are compensated only when viewers complete the video ad;

· Cost per brand-shift, or CPS, pricing, where we are compensated only when a campaign results in a positive shift in the consumer’s favorability or intent towards a brand; and

· Cost per conquest, or CPQ, pricing, where we are compensated only when a consumer’s intent is shifted away from a competing brand.

We believe that buyers are attracted to our outcome-based pricing models because these models more closely tie advertising spend to actual campaign performance.

Seller Platform

Our seller platform, the Tremor Video SSP, helps sellers improve yield and maximize the value of their video inventory by enabling their programmatic sales efforts.

· Robust auction environment . The Tremor Video SSP is directly integrated with the leading video demand sources, including third party DSPs and our buyer platform, creating a robust marketplace through which sellers are able to efficiently monetize their advertising inventory in an open auction real-time bidding environment. Server-to-server integrations with third party DSPs are multi-faceted and often require several months of testing and technical trouble-shooting to ensure that the third party DSP is able to access the full functionality of our platform. These server-to-server integrations significantly reduce latency and response time.

· Private marketplaces . The Tremor Video SSP enables sellers to establish private marketplaces with buyers. Private marketplaces can be transacted through invite only auctions, where select buyers are given the opportunity to bid on a curated set of publisher inventory at a pre-negotiated price on a non-guaranteed basis. For instance, a buyer can access a private marketplace on the Tremor Video SSP that consists of sellers that have been specifically selected because they are likely to have a high number of viewable impressions. In addition, private marketplaces can directly connect a given buyer to a seller on our Tremor Video SSP, allowing them to efficiently transact on a guaranteed or non-guaranteed basis without the need for manual insertion orders.

· Inventory management tools . We provide sellers with the tools and controls to manage their inventory across multiple devices and platforms. These tools enable sellers to establish supply hierarchies and demand tiers, set minimum price floors, and define advertiser and category level black and white lists to manage potential sales channel conflicts.

· Advanced real-time reporting . Real-time reporting provides up-to-the-second data, allowing sellers to effectively monitor buyers’ buying patterns and make instant changes to take advantage of market dynamics and maximize their yield.

Clients

Buyer Platform

We maintain close relationships directly with brand advertisers and we consider them to be our clients, as the video ad campaigns we run are ultimately those of the advertiser and we work closely with them to execute their campaigns. However, we primarily market and sell our buyer platform to advertising agencies, including agency trading desks, which often plan and execute programmatic transactions on behalf of an agency.

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Buyers are able to access our buyer platform as a managed service, with our team of specialists managing the execution of an advertising campaign, from advising on pre-flight planning through post-campaign reporting and analysis. In addition, buyers can transact directly on our buyer platform through the Tremor Video DSP. The Tremor Video DSP can be accessed on a self-service basis or at varying levels of managed service, depending on the preferences of the buyer.

Revenue contribution from individual brand advertisers varies from period to period. We do not believe our business is substantially dependent upon any individual advertiser as no individual advertiser represented more than 10% of our revenue in 2016, 2015 or 2014.

Seller Platform

Sellers own or operate websites and applications through which video advertisements can be delivered to consumers as they navigate across screens, including computers, smartphones, tablets and connected TVs. Sellers provide us with the content, or video advertising inventory, within which video advertising campaigns are delivered on our buyer platform. Sellers also utilize the Tremor Video SSP as a yield-optimization and supply management tool to improve their selling efforts.

The Tremor Video SSP helps sellers improve their yield and maximize the value of their video inventory by enabling their programmatic sales efforts. Sellers can sell their video inventory through an open exchange, where demand sources bid on inventory in a robust auction environment, or through private marketplaces so that only a selected buyer or buyers have the opportunity to purchase video ad inventory. We provide sellers with the tools and controls to manage their inventory across multiple devices and platforms. These tools enable sellers to establish supply hierarchies and demand tiers, set minimum price floors, and define advertiser and category level black and white lists to manage potential sales channel conflicts. Real-time reporting provides up-to-the-second data, allowing sellers to effectively monitor buyers’ buying patterns and make instant changes to take advantage of market dynamics and maximize their yield.

In order to increase spend running through our Seller Platform, we maintain close relationships with the third party DSPs through which buyers transact. Third party DSPs purchase advertising inventory on the Tremor Video SSP through server-to-server integrations. Server-to-server integrations with third party DSPs are multi-faceted and often require several months of testing and technical trouble-shooting to ensure that the third party DSP is able to access the full functionality of 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.

Technology and Development

We have incurred substantial technology and development expenses developing, maintaining and improving the technology that underlies our buyer and seller platforms. We believe that technology innovation is key to our success and we intend to continue to invest in the development of new feature sets and functionalities as well as enhancements to our existing product suite. As of December 31, 2016, we had a total of 103 employees engaged in technology and development functions. For 2016, 2015, and 2014, our total technology and development expenses were $21.0 million, $20.2 million, and $17.0 million, respectively.

Sales

As of December 31, 2016, we had total sales and marketing staff of 192 employees. For 2016, 2015, and 2014, our total sales and marketing expenses were $48.4 million, $48.9 million, and $42.6 million, respectively.

Buyer Platform

Our sales strategy is focused on targeting the most “video ready” brand advertisers, including those advertisers that are large traditional television advertising spenders. We have developed and will continue to develop preferred relationships with key agency holding companies, advertising agencies and agency trading desks that position us to benefit from increased online video spending. Brand advertisers’ purchasing decisions typically are made and coordinated by their advertising agencies and require input from multiple constituencies and the sales process therefore can be time-consuming. We have invested significant resources in establishing relationships with brand advertisers, advertising agencies and agency trading desks.

Our buyer focused sales force is generally structured around core vertical markets, including automotive, consumer packaged goods, entertainment, technology and telecommunications, retail and financial services. In addition, certain members of our sales team are focused on establishing relationships with key decision makers within the largest advertising agencies and agency trading desks, in particular as relates to our programmatic offering. Our sales team is supported by engineers with deep technical expertise.

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Sales executives and account managers are assigned to specific advertisers to oversee relationships. For managed service campaigns, our team of specialists provides guidance throughout the campaign process from launch to post campaign review, and our creative team will often work with advertisers to create innovative ad campaigns that are specifically suited for in-stream video viewing and optimizing viewer engagement.

We generally locate sales and marketing personnel across the United States to align with the geographies of buyers and the vertical markets that we serve.

Seller Platform

Our seller initiatives utilize a full-service development and support strategy. Our seller focused sales team is responsible for ensuring that we are meeting the ongoing needs of our sellers throughout the duration of the relationship, and is supported by engineers with deep technical expertise. We invest significant time in identifying and cultivating relationships with sellers to ensure they understand the potential benefits of monetizing their inventory with us, and in order to secure access to premium advertising inventory for buyers.

Our seller team is focused on fostering adoption and overall market awareness of the Tremor Video SSP solution. We also maintain a sales team that is focused on identifying and increasing spend from third-party DSPs that transact on the Tremor Video SSP. Our team of technical account managers monitors third-party DSP bidding activities and provides recommendations that inform their trading practices, including insights around bidding behaviors and forecasting tools that assist in media planning. Our sales team also collaborates with DSPs to create private marketplaces with select sellers on the Tremor Video SSP through custom deal configurations.

The relationship building process can be time consuming and we have invested significant resources in establishing relationships with our seller partners.

Competition

We operate in a dynamic and competitive market, influenced by trends in both the overall advertising market as well as the online video advertising industry. The competitive dynamics of our market are unpredictable because our market is in an early stage of development, rapidly evolving, fragmented and subject to potential disruption by new technological innovations. We compete with large online video publishers such as Google, Inc. and Facebook, Inc. that offer video advertising services as part of a larger solution for digital media buying, as well as advertising technology companies, advertising networks, demand side platforms, supply side platforms and exchanges. We also compete for advertiser spending with large sellers who rely on their own sales organizations to attract buyers across their properties. In the traditional media space, our primary competitors for advertising spend are mainly TV broadcasters, radio broadcasters and print media publishers. Many of these competitors have significant client relationships, much larger financial resources and longer operating histories than we have.

With respect to our buyer platform, we believe that we compete for advertising spend primarily on the basis of: proven technology and optimization capabilities; pricing, quality and scale of online video inventory; depth and breadth of relationships with buyers; all-screen capabilities; brand-centric measurement; our ability to combat fraudulent placements and ensure brand safety; and our ability to ensure viewability and transparency into ad performance and placement. With respect to our seller platform, we believe that we compete primarily on the basis of the speed and ease of use of our 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 demand to sellers at scale, including demand through our buyer platform.

We believe that we compete favorably with respect to all of these factors and that we are well positioned as a leading provider of software solutions for video advertising effectiveness.

Intellectual Property

Our ability to protect our intellectual property and our technology will be an important factor in the success and continued growth of our business. We rely on a combination of trade secrets, copyrights, patents and trademarks, as well as contractual protections, to establish and protect our intellectual property and protect our proprietary technology. We currently own three issued U.S. patents that expire in 2027, 2028 and 2031, respectively, and one granted European patent, which we registered in France, Germany and Great Britain, that expires in 2029. Additionally, we currently own three pending U.S. patent applications that we are currently prosecuting with the U.S. Patent and Trademark Office, although there can be no assurance that any of these patent applications will ultimately be issued a patent. 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.” 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. We also use measures designed to control access to our technology and proprietary information. We view our trade secrets and know-how as a significant component of our intellectual property assets, which we believe differentiate us from our competitors.

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Despite our efforts to preserve and protect our intellectual property, our efforts may not prevent the misappropriation of our intellectual property or technology, or deter independent development of similar intellectual property or technology by others. Policing unauthorized use of our technology and intellectual property is difficult. Third-parties may attempt to copy, reverse engineer or otherwise obtain our proprietary technology, or otherwise violate our intellectual property rights. Unauthorized disclosure by our employees, contractors or other third-parties could also occur. Effective intellectual property protection may not be available in the United States or other jurisdictions in which we operate and the efforts we have taken to protect our proprietary rights may not be sufficient or effective. Any impairment or loss of our intellectual property, or any inability to enforce our intellectual property rights effectively, could harm our business or our ability to compete. Also, protecting our technology and intellectual property is costly and time-consuming. Any unauthorized disclosure or use of our intellectual property or technology could make it more expensive for us to do business and could harm our operating results.

Additionally, we expect that products in our industry may be subject to third-party infringement lawsuits as the number of competitors grows and the functionality of products in different industry segments overlaps. 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. We cannot assure you that we are not infringing or violating any third-party intellectual property rights. Such claims may be made by competitors or other entities. In the future, we, or our clients, may be the subject of legal proceedings alleging that our solutions or underlying technology infringe or violate the intellectual property rights of others.

Governmental Regulation; Industry Alliances

We are subject to numerous U.S. and foreign laws and regulations that are applicable to companies engaged in the online video advertising business, including video advertising on mobile devices. In addition, many areas of law that apply to our business are still evolving, and could potentially affect our business to the extent they restrict our business practices or impose a greater risk of liability. We are aware of several ongoing lawsuits filed against companies in our industry alleging various violations of privacy or data security related laws.

Privacy

Privacy and data protection laws and regulations play a significant role in our business. In the United States, at both the state and federal level, there are laws that govern activities such as the collection, use and disclosure of data by companies like us. Online advertising activities in the United States have primarily been subject to regulation by the Federal Trade Commission, or the FTC, which has regularly relied upon Section 5 of the Federal Trade Commission Act, or Section 5, to enforce against unfair and deceptive trade practices. Section 5 has been the primary regulatory tool used to enforce against alleged violations of consumer privacy interests. In addition, our solutions reach devices and users throughout the world, including in Australia, North America, South America, Europe and Asia. As a result, some of our activities may also be subject to the laws of foreign jurisdictions. In particular, European data protection laws can be more restrictive regarding the collection, use, and disclosure of data than those in the United States. As we continue to expand into other foreign countries and jurisdictions, we may be subject to additional laws and regulations that may affect how we conduct business.

Additionally, U.S. and foreign governments and relevant self-regulatory bodies have enacted, considered or are considering legislation or regulations that could significantly restrict industry participants’ 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 or by redefining the types of information that constitute personal information and non-personal information. The European Union, or EU, and some EU member states have already implemented legislation and regulations requiring advertisers 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. We sometimes use precise location information for the purpose of better targeting online or mobile advertisements. The use of precise location information is of significant interest to regulators and legislators and new regulations or legislation may impose additional restrictions and/or costs upon us in the future. It remains a possibility that additional legislation and regulations may be passed or otherwise issued other than in relation to precise location information in the future. We also participate in industry self-regulatory programs under which, in addition to other compliance obligations, we provide consumers with notice about our use of cookies and our collection and use of data in connection with the delivery of targeted advertising and allow them to opt-out from the use of data we collect for the delivery of targeted advertising. The rules and policies of the self-regulatory programs that we participate in are updated from time to time and may impose additional restrictions upon us in the future.

Any failure, or perceived failure, by us to comply with U.S. federal, state, or international laws or regulations pertaining to privacy or data protection, or other policies, self-regulatory requirements or legal obligations could result in proceedings or actions against us by governmental entities or others.

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Advertising

Even though we generally receive certain contractual protections from our buyers with respect to their video ads, we may nevertheless be subject to regulations concerning the content of ads. Federal and state laws governing intellectual property or other third-party rights could apply to the content of ads we place. Laws and regulations regarding unfair and deceptive advertising, sweepstakes, advertising to children, and other consumer protection regulations, may also apply to the ads we place on behalf of clients.

Industry Alliances

Given the developmental stage of video advertising, industry practices are rapidly evolving. We are participating members of the Digital Advertising Alliance, or DAA, including the DAA Principles and Communications Advisory Committee, which oversees the DAA and its working groups. We also participate in a wide range of Interactive Advertising Bureau (“IAB”) committees, councils and working groups, as well as other industry groups that are focused on establishing best practices for the online video advertising industry.

Employees

As of December 31, 2016, we had 328 employees, of which 103 were primarily engaged in technology and development functions, 192 were engaged in sales and marketing functions, and 33 were engaged in general and administrative functions. Substantially all of these employees are located in the United States. None of our employees are represented by a labor union or covered by a collective bargaining agreement. We consider our relationship with our employees to be good.

Information about Segment and Geographic Revenue

Information about segment and geographic revenue is set forth in “Note 18 — Segment and Geographic Information” in the notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K.

Corporate Information

Tremor Video, Inc. was originally organized as Tremor Media, LLC in November 2005 and converted into a corporation named “Tremor Media, Inc.” under the laws of the State of Delaware in September 2006. We changed our name to Tremor Video, Inc. in June 2011.

Available Information

Our website is located at www.tremorvideo.com, and our investor relations website is located at http://investor.tremorvideo.com. The contents of our website are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the U.S. Securities and Exchange Commission, or SEC, and any references to our websites are intended to be inactive textual references only. The following filings are available for download free of charge through our investor relations website as soon as reasonably practicable after we file them with the SEC: Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, as well as any amendments to such reports and all other filings pursuant to Section 13(a) or 15(d) of the Securities Act. Additionally, copies of materials filed by us with the SEC may be accessed at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 or at www.sec.gov. For information about the SEC’s Public Reference Room, contact 1-800-SEC-0330.

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ITEM 1A. RISK FACTORS

The following is a summary description of some of the material risks and uncertainties that may affect our business, including our future financial and operational results. In addition to the other information in this Annual Report on Form 10-K, the following statements should be carefully considered in evaluating us.

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, our total revenue was $166.7 million, $173.8 million and $159.5 million, respectively. Our developing business model 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 buyers and sellers;

· increasing the level of spending through our buyer and seller platforms;

· developing market acceptance for our self-service programmatic solutions;

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

· offering competitive pricing to buyers;

· offering competitive rates to sellers;

· delivering online video advertising campaign performance results that are superior to competing providers or technologies;

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

· offering access to unique data and advanced data targeting solutions;

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

· ensuring that our clients’ 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, including a new permanent Chief Executive Officer.

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 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 we had an accumulated deficit of $198.6 million and $177.7 million as of December 31, 2016 and 2015, respectively, which included a $20.9 million goodwill impairment charge in fiscal 2015 and a $15.8 million deemed dividend related to the conversion of our Series F preferred stock in fiscal 2013 in connection with the closing of our initial public offering, or IPO. We do not know if we will be able to achieve profitability or maintain profitability on a continued basis. Although the amount of spend being transacted through our platforms has increased substantially in recent periods, we may not be able to maintain this rate of growth. In addition, our margins vary significantly across different categories of spend transacted through our platforms which makes it more difficult to predict the operating profit or loss which may result from an anticipated level of total spend. We anticipate that our operating expenses 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. We may never be able to generate sufficient revenue to achieve or sustain profitability.

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Unfavorable conditions in the global economy or the vertical markets we serve 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 and for solutions such as ours specifically, which would impact the amount of spend transacted through both our buyer and seller platforms. Furthermore, our contracts and relationships with advertising agencies on behalf of advertisers generally do not include long-term obligations requiring them to purchase our solutions 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. In addition, our business may be materially and adversely affected by weak economic conditions in the specific vertical markets that we serve.

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 customers and increase spend transacted through our platforms, we will need to expand and enhance our solutions to meet client needs, add functionality and address technological advancements. 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 video advertising solutions at lower prices or more efficiently or effectively than our solutions, such technologies could adversely impact our ability to compete. For example, the online video advertising industry is in the midst of shifting, in part, towards programmatic buying solutions. Programmatic buying is the automated purchase of digital advertising inventory through technology, including real time bidding technology, which allows for the dynamic purchase and sale of advertising inventory on an impression-by-impression basis. 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. If our programmatic solutions are not considered effective, or if there is a delay or failure of the market to adopt our solutions, our business and growth prospects could be harmed as buyers may increasingly rely on programmatic channels to transact online video advertising spend. Moreover, even if our programmatic solutions experience significant adoption, such adoption may occur at the expense of our traditional non-programmatic managed service model.

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. that offer video advertising services as part of a larger solution for digital media buying, as well as advertising technology companies, advertising networks, demand side platforms, supply side platforms and exchanges. In the traditional media space, our primary competitors are mainly 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

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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 can be used to inform targeting and delivery of advertising campaigns, and that are not available to us. Competitive pressures could require us to reduce the prices we charge buyers or increase the prices we pay to sellers. For example, the online video advertising industry may experience price erosion due to increased adoption of automated ad buying.

Our business may suffer to the extent that buyers and sellers purchase and sell online video advertising directly from each other or through other companies that are able to become intermediaries between buyers and sellers. 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, programmatic buying 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. If there is a failure to adopt our programmatic solutions our business and growth prospects could be harmed.

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 platforms. 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 does not develop or develops 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. Many buyers have limited experience with online brand advertising, generally, and online video advertising specifically, and may continue to devote more significant portions of their advertising budgets to traditional, offline-based advertising, such as television and may not shift or devote significant portions of their advertising budgets to online video advertising. Additionally, we compete for online advertising spend with other products and technologies such as search, display and in-banner video as well as advertising networks and exchanges.

We believe that the continued growth and acceptance of online video ad spending by buyers generally will depend on the perceived effectiveness and the acceptance of our solutions, which are still emerging and evolving, and the continued growth in commercial use of online media, as well as other factors. Additionally, buyers may find online video advertising to be less effective than traditional offline channels, such as television, newspapers, radio and billboards, or other online methods for promoting their products and services, and they may reduce their spending on online video advertising from current levels as a result. Accordingly, if the market for online video advertising deteriorates, or develops more slowly than we expect, our operating results and growth prospects could be harmed.

If the market for our programmatic solutions develops more slowly than we expect then our operating results and growth prospects may be adversely affected.

In 2014, we introduced to market the Tremor Video DSP, an intuitive and customizable user interface where buyers can actively plan, buy, manage and measure the success of their campaigns on a programmatic basis. The Tremor Video DSP is an automated solution that can be accessed on a self-service basis, or at varying levels of managed service depending on the buyer’s preference.

In 2015, we introduced to market a seller platform, the Tremor Video SSP, which helps sellers maximize the value of their video inventory by enabling their programmatic sales efforts and automating workflow. Sellers on the Tremor Video SSP can make inventory available to buyers that are integrated with our technology through a robust auction environment or through private marketplaces so that only selected buyers have the opportunity to purchase video ad inventory.

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These solutions are still developing, and the future demand and acceptance for these solutions is uncertain and will likely depend on their perceived effectiveness by buyers and sellers. If the market for our programmatic solutions, in particular with respect to our self-service solutions, 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.

Our ability to target, verify and measure campaigns is, in part, dependent on the data that we receive through third party integrations. For instance, our buyer platform is integrated with third party technology providers that provide independent metrics for measuring and validating viewability, brand safety and demographic reach, and for combating fraudulent activities.

Many of our higher-function buying products that utilize advanced targeting solutions rely on data that is provided by third parties. As an example, we recently entered into an exclusive agreement with Alphonso Inc., which provides us with access to real-time TV viewership data for purposes of targeting audiences. We have invested significant time and resources in cultivating this relationship and bringing the product to market. If we were to lose access to this data or are unable to renew our exclusivity, or could only maintain access or exclusivity on terms that are less favorable to us, it could harm our ability to generate spend through our non-programmatic higher-function buying channel, and our business, results of operations and financial condition may be adversely impacted. Additionally, our contract with Alphonso Inc. requires us to meet certain minimum spend commitment obligations. These commitments could have an adverse effect on our operating results if we are not able to generate sufficient sales to satisfy the minimum commitments. Our higher-function buying products often present new and innovative methods for targeting consumers, and we may be unable to achieve market acceptance for these solutions.

In addition, the success of our programmatic solutions is dependent, in part, on our ability to integrate our platforms with third-party programmatic sources of inventory and demand. Our buyer platform is directly integrated with the largest third party video SSPs, enabling the dynamic purchase ad impressions in an open exchange as well as through private marketplaces. If we fail to maintain existing integrations or attract new supply partners, it could negatively impact the effectiveness of and market for our buyer platform, in particular the Tremor Video DSP. We do not have exclusive relationships with these third party SSPs and they are generally under no obligation to provide inventory to us.

Buyers connect to the Tremor Video SSP through third party 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. 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.

Our success requires us to maintain and expand our relationships with our existing brand advertisers, including the ad agencies that represent them, and to develop new relationships with other brand advertisers and ad agencies. Our contracts and relationships with advertising agencies on behalf of advertisers generally do not include long-term obligations requiring them to purchase our solutions and are cancelable upon short or no notice and without penalty. As a result, we have limited visibility as to our future advertising revenue streams from our buyers.

Our buyers’ usage may decline or fluctuate as a result of a number of factors, including, but not limited to:

· the performance of their video ad campaigns and their perception of the efficacy and efficiency of their advertising spend through our solutions;

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· changes in the economic prospects of buyers or the economy generally, which could alter current or prospective spending priorities;

· our access to sought after high performing inventory;

· our access to multiple channels and screens;

· our access to advanced data targeting solutions;

· our ability to serve video ad campaigns in brand safe environments;

· our ability to detect “bot” traffic and other fraudulent or malicious activity;

· our ability to deliver video ad campaigns in full, i.e., our ability to serve each requested impression;

· their satisfaction with our solutions and our client support;

· our ability to offer a complete programmatic solution for buying advertising;

· the ability of our optimization algorithms underlying our solutions to deliver better rates of return on video ad spend dollars than competing solutions;

· seasonal patterns in buyers’ spending, which tend to be discretionary;

· the pricing of our or competing solutions; and

· reductions in spending levels or changes in strategies regarding video advertising spending.

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 our buyers will continue to use our platforms 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. Any non-renewal, cancellation or deferral of large advertising contracts, or a number of contracts that in the aggregate account for a significant amount of revenue, could cause an immediate and significant decline in our revenue and harm our business.

We may be unable to deliver advertising 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 delivering ads in a brand safe 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 buyer platform depends on our ability to effectively and efficiently deliver video ad campaigns for buyers. We have in the past, and may in the future, be subject to fraudulent and malicious activities. 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. While we assess the campaign performance on our sellers’ websites and have engaged third-parties to combat fraudulent and malicious activities, such assessments may not detect or prevent fraudulent or malicious activity. In addition, buyers increasingly rely on third party vendors to measure campaigns and detect fraud. If we are unable to successfully integrate our technology with such vendors, or our measurement and fraud detection differs from their findings, buyers could lose confidence in our solutions and our revenues could decrease. 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.

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

Failure of our buyer platform or 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 ads we deliver, or 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 a buyer fails to pay for ad requests that we have fulfilled, we would still be required to pay the seller for its ad inventory.

Sellers provide the video ad inventory on which we run advertising campaigns for buyers through our buyer platform. If a buyer fails to pay for ad requests we have filled, we would generally still be required to pay the seller for its ad inventory. Any significant failure by buyers to pay us could adversely affect our operating results.

We are highly dependent on advertising agencies, including agency trading desks, and their holding companies as intermediaries, and this may adversely affect our ability to attract and retain business.

We are highly dependent on brand advertisers that rely upon advertising agencies, including agency trading desks, in planning and purchasing advertising. Although we maintain relationships with the owners of brands, we do not typically contract with them directly. Instead, generally we sell to advertising agencies that utilize our solutions on behalf of their clients. Each advertising agency allocates advertising spend from brand advertisers across numerous channels. We do not have exclusive relationships with advertising agencies and we depend on agencies to work with us as they embark on marketing campaigns for brands.

If we fail to maintain satisfactory relationships with an advertising agency, we risk losing business from the brand advertisers represented by that agency. If the advertising agency is owned by a holding company, this risk is magnified because we also risk losing business from the other agencies owned by such holding company and the brand advertisers those agencies represent. Consolidation among agency holding companies could increase this risk. Because advertising agencies act as intermediaries for multiple brand advertisers, our client base is more concentrated than might be reflected by the number of brand advertisers that run campaigns through our solutions.

Further, our revenue could be adversely impacted by industry changes relating to the use of advertising agencies. For example, if brand advertisers seek to bring their marketing campaigns in-house rather than using an advertising agency, we would need to enter agreements with the brand advertisers directly, which we might not be able to do and which could increase our sales and marketing expense. Moreover, as a result of dealing primarily with advertising agencies, advertisers may attribute the value we provide to the advertising agency rather than to us, further limiting our ability to develop long term relationships directly with brand advertisers. Brand advertisers may move from one advertising agency to another, and, accordingly, even if we have a positive relationship with an advertising agency, we may lose the underlying business when an advertiser switches to a new agency. The presence of advertising agencies as intermediaries between us and the advertisers thus creates a challenge to building our own brand awareness and affinity with the advertisers that are the ultimate source of our revenue.

In addition, advertising agencies that are our clients also offer or may offer some of the components of our solutions, including selling ad inventory through their own trading desks. As such, these advertising agencies are, or may become, our competitors. If they further develop their capabilities, they may be more likely to offer their own solutions to advertisers, and our ability to compete effectively could be compromised.

We must provide value to both buyers and sellers of video advertising without being perceived as favoring one over the other or being perceived as competing with them through offerings.

Buyers and sellers have different interests, with each trying to maximize its value in their transactions. We are interposed between buyers and sellers, and to be successful, we must continue to find ways of providing value to both without being perceived as favoring one at the expense of the other. Because new business models continue to emerge, we must constantly adapt our relationship with buyers and sellers and how we market ourselves to each. If we fail to balance our clients’ interests appropriately, our ability to provide a full suite of services and our growth prospects may be compromised.

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If buyers do not perceive meaningful benefits from our higher-function buying products, then our revenue and gross margins may be adversely affected.

Our higher-function buying products include our all-screen optimization solution, advanced data targeting solutions, and our proprietary outcome-based pricing models. Our all-screen optimization solution allows a buyer to select a single campaign goal and our technology will optimize delivery of the campaign to find the right viewer wherever they may be watching video, whether on computers, tablets, smartphones or connected TVs. Our advanced data targeting solutions provide buyers with new and innovative ways to find consumers based on identified behaviors or characteristics. These solutions often utilize data provided by third party vendors. For example, through our partnership with Alphonso Inc., we are able to offer buyers the ability to target audiences in real-time based on TV viewership data. Our outcome-based pricing models enable buyers to only pay for advertising that “performed”, so that a buyer only pay us if the applicable performance metrics are satisfied. For example, with our cost per engagement, or CPE, pricing model we are compensated only when viewers actively engage with buyers’ campaigns, such as by interacting with the elements of the video ad through clicks or screen touches or by rolling over certain elements of the video ad for at least three seconds.

The market for our higher-function buying products is evolving. Adoption of these products depends on our ability to innovate and establish relationships with third party data providers in order to meet and anticipate the changing needs of buyers. If we were unable to access data through third party data providers, or could only maintain access on terms that are less favorable to us, it would negatively impact our ability to offer higher-function buying products to buyers. A significant portion of our revenue is generated from ad campaigns that are purchased through our higher-function buying products, and these campaigns generally provide greater margins than campaigns purchased through our programmatic solutions or non-programmatic media network on a CPM basis. If buyers do not perceive meaningful benefits from our higher-function buying products and fail to adopt such products, or if we are unable to offer certain of our higher-function buying products, our revenue and gross margins may be adversely affected.

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 provide us with a specified level of inventory, and we cannot be assured that our exclusive sellers will renew their agreements with us or continue to make their ad inventory available to us. Sellers may seek to change the terms on which they offer inventory to us, 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 accessing 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, the demographic reach of their inventory, viewer experience and our confidence in the integrity of their ad requests. Further, we may need to improve over time our processes for assessing the quality of seller ad requests. 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. If a seller decides not to make video ad inventory available to us on acceptable terms, or if we decide to cease doing business with a seller, we may not be able to replace this ad inventory with comparable ad inventory quickly enough to fulfill our buyers’ requests. If sellers seek an increase in the price we pay for video ad inventory, it could negatively impact our gross margin. Additionally, with respect to CPM-priced campaigns sold with demo guarantees, if we are unable to access inventory targeted to the selected demographic on a cost-effective basis our margins could be adversely affected.

Sellers have a variety of channels in which to sell their video ad inventory, including direct sales forces and third party supply side platforms. Under our exclusive arrangements, a seller’s direct sales force may sell their own video ad inventory, and many of our exclusive sellers maintain significant direct sales forces. Furthermore, the scope of exclusivity with respect to the third-party monetization of video ad inventory varies with sellers, with some sellers imposing geographical, device, or inventory type limitations. 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 us such inventory, our operating results may be harmed.

We may not be able to adequately satisfy the supply from our exclusive sellers with demand from our buyers.

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 to us, 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 our buyers.

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Additionally, in order to satisfy our required fill obligations, we may have to serve less optimized inventory to our buyers. This may negatively impact the performance of an ad campaign, which could particularly impact us with respect to our campaigns that are priced on an outcome basis. As a result, our margins may be negatively impacted even if we are able to fully satisfy the fill obligation.

Any significant failure to adequately match demand from our buyers with supply from our sellers would harm our operating results.

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

Attracting new buyers and sellers 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.

The sales cycle for our self-service solutions can be particularly long and unpredictable and requires considerable time and effort. Sales efforts involve educating buyers about the use, technical capabilities and benefits of our platform, as many buyers have limited or no experience with programmatic buying. 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 buyer or seller.

Because of competitive market conditions and the negotiating leverage enjoyed by large advertises, agencies and 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 experience 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, many of which are beyond our control. 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 and the rapidly evolving online video advertising industry, 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 the economic prospects of buyers, the industries we primarily serve, or the economy generally, which could alter current or prospective buyers’ spending priorities, or could increase the time it takes us to close sales with buyers;

· the addition of new buyers or the loss of existing buyers;

· changes in demand for our solutions, including the Tremor Video DSP and Tremor Video SSP;

· 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;

· the cancellation or delay of campaigns by buyers;

· changes in our pricing policies, the pricing policies of our competitors or the pricing of online video advertising generally, including the relative mix of performance-priced campaigns, CPM-priced campaigns with demo guarantees, and CPM-priced campaigns without demo guarantees;

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· timing differences at the end of each period between our payments to sellers for advertising inventory and our collection of advertising revenue related to that inventory; and

· costs related to acquisitions of other businesses.

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 platforms 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 both our buyer and seller platforms. Our operating cash flows could also fluctuate materially from period to period as a result of these seasonal fluctuations.

Our gross margins vary across our products.

Our gross margins and take rates reflect a variety of factors, including competitive pricing, inventory costs and the volume and relative mix of products used by our customers. Even if we are able to accurately forecast the anticipated spend across our platforms, we may have limited visibility regarding the product mix. For example, buyers on our platform can purchase video advertising programmatically, non-programmatically with the use of our higher-function buying products, or non-programmatically without the use of any such products. Each of these methods of buying has a different associated gross margin profile. In addition, we offer a number of different pricing models, including outcome-based pricing models where the advertiser only pays when the campaign performs against a given objective, pricing models based on cost per thousand impressions, or CPM, without regard to performance, and pricing models based on achieving a guaranteed demographic reach, or demo guarantees. Our outcome-based pricing models typically generate higher gross margins than campaigns running through our buyer platform that are based on more traditional CPM pricing models because we are often able to serve our clients’ outcome-based goals with a lower number of purchased impressions. However, campaigns priced on a performance-basis are subject to the risk that we may purchase ad inventory that we are unable to monetize if the purchased inventory does not perform for our buyers. Increased inventory costs, pricing pressures and the relative and varying mix of products selected by our customers could cause our gross margins and earnings to decrease notwithstanding an increase in the total spend transacted through our platforms.

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. 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;

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

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

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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, Singapore, and the United Kingdom, substantially all 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.

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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 busi ness 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. 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. 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 terminate commitments to lend and 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. If we fail to manage our growth effectively, our financial performance may suffer.

We have expanded the total spend transacted through our platforms, as well as the scale and scope of our overall business operations in recent periods. Our expansion has placed, and our expected future growth 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 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 our growth effectively, successfully forecast demand for our solutions or manage our expected expenses accordingly, our operating results will be harmed. If we fail to manage our growth effectively, our financial performance may suffer.

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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, including a new permanent Chief Executive Officer, 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. For example, William Day recently resigned from his position as President and Chief Executive Officer. Paul Caine, one of our directors, has been appointed as Interim Chief Executive Officer, and we have initiated a formal search for a new permanent Chief Executive officer. We cannot be certain when a new permanent Chief Executive Officer will be in place. We believe that our senior management has developed highly successful and effective working relationships. When we ultimately hire a new permanent Chief Executive Officer or other senior management, we may not be able to fully integrate the 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, result in significant costs to us, impair our clients’ ability to deliver effective advertising campaigns and impair our ability to meet or fulfill obligations with sellers.

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 incomplete or inaccurate delivery of an ad campaign, including serving an ad campaign in an incomplete or inaccurate manner, in an incorrect geographical location or in an environment that is detrimental to the buyer’s brand health. Any such failure, malfunction, or disruption in service could result in damage to our reputation, our advertising clients withholding payment to us, buyers or sellers making claims or initiating litigation against us, and our giving credits to our buyer clients toward future advertising spend. In addition, the terms of our exclusive seller agreements generally require us to pay for a percentage of the ad requests delivered by such sellers, even if we are unable to deliver our solutions due to disruptions in our technology. As a result, defects or errors in our solutions could harm our reputation, result in significant costs to us, impair our buyers’ ability to deliver effective advertising campaigns and impair our ability to meet our fill obligations with sellers.

System failures could significantly disrupt our operations and cause us to lose buyers or sellers.

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 deliver video ads quickly and accurately and to process seller ad requests, 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 buyers or sellers.

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

We collect, store and transmit information of, or on behalf of, our buyers and sellers. 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 buyers or sellers may reduce the use of or stop using our solutions.

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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 sellers’ or buyers’ data 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 our buyers’ 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 with buyers or sellers 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 buyers or sellers 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 buyer or seller 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 services from our advertising clients.

Interruptions or delays in service from our third-party data center hosting facilities and other third-parties could impair the delivery of our solutions and harm our business.

We currently utilize three third-party data center hosting facilities, located in Boston, Massachusetts, Ashburn, Virginia and Santa Clara, California, and Amazon Web Services to deliver our solutions. All of our data storage and analytics are conducted on, and the video ad campaigns that are transacted through our buyer and seller platforms are processed through, servers in these facilities. 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. In addition, we utilize two third-party data center hosting facilities located in Santa Clara, California and New York, New York for corporate information technology communications, data storage, data processing and office automation. Any damage to, or failure of, these systems within our third-party data hosting facilities or our other third-party providers 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.

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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. At December 31, 2016, we had U.S. federal and state NOLs of $117.3 million and $65.7 million, respectively, and foreign NOLs of $8.2 million, $6.8 million and $0.1 million related to our international subsidiaries in United Kingdom, Germany and Brazil, respectively. The 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. A lack of future taxable income would adversely affect our ability to utilize these 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. 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 deliver video ads, and any limitations on the collection and use of this data could significantly diminish the value of our solutions.

Our ability to optimize the placement and scheduling of video advertisements for our buyers and to increase adoption of our solutions depends on our ability to successfully leverage data that we collect from our buyers, sellers, 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 deliver a video ad, we are often able to collect anonymous information about the placement of the video ad and the interaction of the user with the video ad. We, and our third-party data providers, currently employ various tracking technologies, such as cookies, pixels and automatic content recognition technology, to collect the data we use to conduct online video ad campaigns. These tracking technologies are used to collect information related to the consumer, such as demographic information and history of the consumer’s interactions with our advertisers’ and our sellers’ websites, and any video ads we deliver. We may also be able to collect information about the user’s location. As we collect and aggregate this data provided by billions of video ad impressions and the data acquired from third-party providers, we analyze it in order to optimize the placement and delivery of video ads across the advertising inventory provided to us by sellers. For example, we may use the collected information to limit the number of times a specific video ad is presented to the user, to provide a video ad to only certain types of users, or to provide a report to a buyer or seller regarding the performance of an advertising campaign or inventory, respectively.

Risks Related to Data Collected from Consumers

We participate in industry self-regulatory programs under which, in addition to other compliance obligations, we provide consumers with notice about our use of cookies and other tracking technologies and our collection and use of data in connection with the delivery of targeted advertising. In addition, consumers can, as of March 15, 2016, opt out of the placement or use of our cookies for online targeted advertising purposes by either deleting or disabling cookies on their browsers, visiting websites that allow consumers to place an opt-out cookie on their browsers, which instructs buyers and their service providers not to use certain data about the consumer’s online activity for the delivery of targeted advertising, or by downloading browser plug-ins and other tools that can be set to: (1) identify cookies and other tracking technologies used on websites; (2) prevent websites from placing third-party cookies and other tracking technologies on the consumer’s browser; or (3) block the delivery of online advertisements on websites and applications.

Internet users can, with increasing ease, implement practices or technologies that may limit our ability to collect and use data to deliver advertisements, or otherwise inhibit the effectiveness of our solution. 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.

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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 and target advertisements, 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 the placement of advertising for the benefit of our buyers, 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. Consumers may also elect to opt out of receiving targeted advertising specifically from our solutions.

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

In order to effectively operate our video advertising campaigns and other 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 data in our solutions. Although our arrangements with buyers and sellers generally permit us to collect data from advertising campaigns, some of our buyers and sellers do not allow us to collect some or all of this data or limit our use of this data, and future buyers and sellers may do so in the future. For example, sellers may not agree to permit us to place our data collection tags on their sites or agree to provide us with the data generated by interactions with the content on their sites. It would be difficult to comply with these requests, and to do so would cause us to spend significant amounts of resources. It could also make it difficult for us to deliver effective advertising campaigns that meet the demands of our buyers.

We and many of our buyers and 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 buyers or 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 deliver effective video advertising campaigns that meet the demands of our buyers.

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 and connected TV 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. For example, Google Inc. controls the Android operating system and also controls a significant number of mobile devices. 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 provide video ads on them, our ability to grow our business could be impaired.

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.

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Our subsidiary ScanScout, Inc. was in the past subject to an FTC inquiry regarding its use of “Flash” cookies. As a result of our acquisition of ScanScout in December 2010, we became subject to an FTC order that was issued in connection with the resolution of the FTC inquiry. The order requires that we do not misrepresent the extent to which data from or about a particular user or the user’s online activities is collected, used, disclosed, or shared, or the extent to which users may exercise control over the collection, use, disclosure, or sharing of data collected from or about them, their computers or devices, or their online activities. It also requires that we: (1) notify users that our websites collect information for the purpose of sending targeted advertisements, along with a hyperlink to an opt-out mechanism; (2) include a hyperlink to such opt-out mechanism within or immediately adjacent to display advertisements; (3) undertake reasonable efforts to develop and implement a hyperlink to such opt out mechanism within or immediately adjacent to video advertisements; and (4) engage in recordkeeping and reporting obligations. The obligations under the order remain in effect until the latter of December 14, 2031, or the date 20 years after the date, if any, on which the U.S. government or the FTC files a complaint in federal court alleging any violation of the order. A violation of the order could lead to an FTC action for civil penalties. In addition, ScanScout was subject to a putative class action legal proceeding regarding its use of “Flash” cookies, which was settled in March 2012 and dismissed with prejudice.

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 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 buyers and 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 buyers and 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.

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, domain names and patents 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.

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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 buyers or sellers, or of cookies, data stored in cookies, other user information, or other proprietary or confidential information.

We currently own three issued U.S. patents and one granted European patent, which we registered in France, Germany and Great Britain. Additionally, we currently own three pending U.S. patent applications that we are currently prosecuting with the U.S. Patent and Trademark Office, although there can be no assurance that any of these patent applications will ultimately be issued a patent. We also 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 patents, trademarks or other intellectual property rights may be challenged by others or invalidated through administrative process or litigation. While we have patents and certain patent applications pending, we may be unable to obtain patent protection for the technology covered in our patent applications. In addition, our existing patents and 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 additional 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.

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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 buyers and sellers;

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

· cause buyers or 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.

In addition, we may be exposed to claims that the content contained in ad campaigns violates the intellectual property or other rights of third-parties. Such claims could be made directly against us or against the sellers from whom we purchase ad inventory. Generally, under our agreements with sellers, we are required to indemnify the seller against any such claim with respect to an ad we served. We attempt to mitigate this exposure by generally requiring buyers to indemnify us for any damages from any such claims. There can be no assurance, however, that our buyers will have the ability to satisfy their indemnification obligations to us, and pursuing any claims for indemnification may be costly or unsuccessful. As a result, we may be required to satisfy our indemnification obligations to our sellers or claims against us with our assets. This result could harm our reputation, business, financial condition and results of operations.

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.

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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, and a significant percentage of our total spend from higher-function buying products is generated from advanced targeting solutions that rely on data licensed from third parties. 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. As disclosed in Item 9A, 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 availed ourselves in this annual report, 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.

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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 are causing our accounting to become complex. As a result of the introduction of our Tremor Video SSP, we use both gross and net revenue reporting, as opposed to our historical use only of gross reporting. Ongoing evolution of our business, and any future acquisitions, 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.

We have begun reporting a portion of our revenue on a net basis. The combination of gross and net revenue reporting may make our financial reporting more complex and difficult to understand.

The recognition of our revenue is governed by certain criteria that must be met and that determine whether we report revenue either on a gross basis, where third party inventory costs are reflected in cost of revenue, or on a net basis, where third party inventory costs reduce revenue. Before we introduced the Tremor Video SSP, we reported all of our revenue on a gross basis, but we have determined that we are required to report revenue from the Tremor Video SSP on a net basis.

The combination of net and gross revenue reporting may make our financial reporting more complex and difficult for investors to understand, and may make comparison of our results of operations to prior periods or other companies more difficult. We may experience significant fluctuations in revenue in future periods depending upon, in part, the nature of our sales and our reporting of such revenue. The need to consider the use of net reporting more broadly for different kinds of transactions as our business evolves would require application of judgment and could increase the potential for reporting errors.

In order to provide guidance or make other projections regarding our expectations of U.S. GAAP revenue for future periods, we must make estimates and assumptions about the mix of gross and net-reported transactions based upon the volumes and characteristics of the transactions we think will make up the total mix of revenue in the period covered by the projection. Those estimates and assumptions may be inaccurate when made, or may be rendered inaccurate by circumstances occurring after the guidance is given, such as changing the characteristics of our offerings or particular transactions in response to client demands, market developments, regulatory pressures, acquisitions, and other factors, In addition, the rules governing revenue recognition in our business are complex, and the rules or their interpretation may evolve. As a result, it is possible that our projections of U.S. GAAP revenue guidance may vary from actual results, or comparisons of our projections from period to period may be difficult.

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.

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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 31 st 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 January 1, 2016 and March 6, 2017, our stock price has ranged from $1.29 per share to $2.76 per share. In addition, the trading prices of the securities of 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 this Annual Report on Form 10-K, 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, acquisitions, 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; 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.

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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 March 6, 2017, we had 50,066,636 shares of common stock outstanding. In addition, the shares subject to outstanding warrants to purchase common stock and stock option awards for which 31,130 shares and 5,107,030 shares, respectively, were exercisable as of December 31, 2016 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 December 31, 2016, we had repurchased 2,861,632 shares of our common stock under the program for a total of approximately $6.0 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 December 31, 2016. 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.

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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.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

In 2014, we entered into a lease for our new headquarters at 1501 Broadway, New York, New York, for approximately 51,000 square feet of office space. The initial ten-year term of the lease commenced on January 7, 2015, and we relocated to this new office space in June 2015.

We also lease offices in Mountain View, California; San Francisco, California; Santa Monica, California; Atlanta, Georgia; Chicago, Illinois; Boston, Massachusetts; Southfield, Michigan; Irving, Texas; Melbourne, Australia; Sydney, Australia; London, England; Kuala Lumpur, Malaysia; São Paulo, Brazil; Auckland, New Zealand; and Singapore. We utilize third-party data center hosting facilities located in Santa Clara, California, Boston, Massachusetts, Ashburn, Virginia and New York, New York. We believe our facilities are adequate for our current and near-term needs.

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ITEM 3. LEGAL PROCEEDINGS

In November 2013, a putative class action lawsuit was filed in the United States District Court for the Southern District of New York against us, our directors, and certain of our executive officers alleging certain misrepresentations by us in connection with our IPO concerning our business and prospects. On March 5, 2015, the District Court granted our motion to dismiss and entered judgment in our favor and, on February 8, 2016, the United States Court of Appeals for the Second Circuit confirmed the judgment of the District Court.

In addition, from time to time we are involved in legal proceedings or subject to claims arising in the ordinary course of our business. Although the results of litigation and claims cannot be predicted with certainty, except as noted above we do not believe we are a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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Part II

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

Market Information

Our common stock has been listed on the New York Stock Exchange under the symbol “TRMR” since June 27, 2013. Prior to that time, there was no public market for our stock.

Holders of Record

As of December 31, 2016, there were approximately 76 holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.

Price Range of Our Common Stock

The following table sets forth for the indicated periods the intraday high and low sales prices per share for our common stock on the New York Stock Exchange.

	2016
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
High	$	2.04	$	2.13	$	2.10	$	2.76
Low	1.29		1.63		1.45		1.59

	2015
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
High	$	2.94	$	3.28	$	3.08	$	2.20
Low	2.01		2.20		1.79		1.75

Stock Price Performance Graph

This performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or incorporated by reference into any filing of Tremor Video, Inc. under the Securities Act of 1933, as amend ed, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

The following graph compares, for the period from June 26, 2013 through December 31, 2016, the cumulative total return on our common stock, the NYSE Composite Index and the Powershares S&P SmallCap Information Technology Portfolio Index. The graph assumes $100 was invested on June 26, 2013, in the common stock of Tremor Video, Inc., the NYSE Composite Index and the Powershares S&P SmallCap Information Technology Portfolio Index, and assumes the reinvestment of any dividends. The stock price performance on the following graph is not necessarily indicative of future stock price performance.

The comparisons shown in the graph below are based upon historical data. We caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock.

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Relative Price Performance

Dividend Policy

We have never declared or paid any dividends on our common stock or any other securities. We anticipate that we will retain all of our future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying cash dividends in the foreseeable future. Additionally, our ability to pay dividends on our common stock is limited by restrictions under the terms of the agreements governing our credit facility. Payment of future cash dividends, if any, will be at the discretion of the board of directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, the requirements of current or then-existing debt instruments and other factors the board of directors deems relevant.

Purchases of Equity Securities by the Issuer

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 $15.0 million 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.

In 2016, we repurchased 2,861,632 shares of our common stock in open market purchases under the Company’s share repurchase program for a total of approximately $6.0 million (at an average of $2.11 per share). As of December 31, 2016, approximately $9.0 million remained of our $15.0 million repurchase program. Refer to “Note 12 — Stockholders’ Equity” in the notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K.

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The following table summarizes repurchases of the Company’s Common Stock during the fourth quarter of 2016:

					Approximate
					Dollar Value of
				Total Number	Shares that
				of Shares	Remain
				Purchased as	Eligible for
				Part of	Purchase
	Number of	Average		Publically	under the
	Shares	Price Paid		Announced	Program
Period	Purchased	Per Share (1)		Program	(in thousands) (1)
Remaining repurchase authority at September 30, 2016.					$	13,477
October 1 — October 31, 2016	417,589	$	1.77	417,589	12,737
November 1 — November30, 2016	417,589	$	1.81	389,407	11,734
December 1 — December31, 2016	1,141,435	$	2.43	1,141,435	8,963
Total as of December 31, 2016	2,062,124	$	2.19	2,062,124	8,963

(1) Amounts include broker commissions

Recent Sales of Unregistered Securities

On September 8, 2015, we granted John Rego, our newly appointed Chief Financial Officer, options to purchase 570,000 shares of our common stock at an exercise price of $1.94 per share, the closing price of our common stock on the date of grant. On October 20, 2015, we granted John Walsh, our newly appointed Chief Technology Officer, options to purchase 350,000 shares of our common stock at an exercise price of $1.90 per share, the closing price of our common stock on the date of grant. On September 26, 2016, we granted Jennifer Catto, our newly appointed Chief Marketing Officer, options to purchase 125,000 shares of our common stock at an exercise price of $1.58 per share, the closing price of our common stock on the date of grant. These option grants were made outside of our stockholder approved equity compensation plans. The options are generally subject to the same terms and conditions as options granted under our 2013 Equity Incentive Plan, or 2013 Plan. A description of our 2013 Plan is set forth in “Note 14 - Stock-Based Compensation Expense — Stock Based Incentive Plans” in the notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K. The offers, sales and issuances of the securities described in this paragraph were exempt from registration under Regulation D promulgated under the Securities Act.

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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The following tables set forth our selected consolidated financial data. The following selected consolidated financial data for the years ended December 31, 2016, 2015, and 2014 and the selected consolidated balance sheet data as of December 31, 2016 and 2015 are derived from our audited consolidated financial statements that are included in Part II, Item 8 of this Annual Report on Form 10-K, which have been audited by Ernst & Young LLP, our independent registered public accounting firm. The selected consolidated financial data for the years ended December 31, 2013 and 2012 and the selected consolidated balance sheet data as of December 31, 2014, 2013 and 2012 are derived from audited consolidated financial statements that are not included in this Annual Report on Form 10-K. Our historical results are not necessarily indicative of the results to be expected in the future.

The following data should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in conjunction with the consolidated financial statements, related notes, and other financial information included elsewhere in this Annual Report on Form 10-K.

	Years Ended
	December 31,
	2016			2015			2014			2013			2012
				(dollars in thousands, except per share data)
Revenue	$	166,761		$	173,837		$	159,487		$	131,796		$	105,190
Cost of revenue	90,488			99,266			101,673			77,925			61,317
Gross profit	76,273			74,571			57,814			53,871			43,873

Operating expenses:
Technology and development (1)	21,045			20,171			16,992			11,637			8,144
Sales and marketing (1)(2)	48,361			48,879			42,623			38,496			35,042
General and administrative (1)	17,010			17,279			14,712			10,950			10,824
Depreciation and amortization	9,173			8,344			6,675			6,310			5,992
Mark-to-market	1,263			—			—			—			—
Impairment charges (3)	—			22,665			—			—			—
Total operating expenses	96,852			117,338			81,002			67,393			60,002

Loss from operations	(20,579		)	(42,767		)	(23,188		)	(13,522		)	(16,129		)

Interest and other income (expense):
Interest expense, net	(129		)	(10		)	(4		)	(127		)	(227		)
Other income (expense), net	(123		)	30			46			339			(8		)
Total interest and other income (expense), net	(252		)	20			42			212			(235		)

Loss before provision for income taxes	(20,831		)	(42,747		)	(23,146		)	(13,310		)	(16,364		)

Provision for income taxes	116			483			343			206			280

Net loss	$	(20,947	)	$	(43,230	)	$	(23,489	)	$	(13,516	)	$	(16,644	)

Basic and diluted net loss attributable to common stockholders (4)	$	(0.40	)	$	(0.84	)	$	(0.46	)	$	(1.02	)	$	(2.22	)

Basic and diluted weighted-average number of shares outstanding (5)(6)	52,279,738			51,684,397			50,637,541			28,761,700			7,499,986

Other Financial Data (unaudited):

Total spend (7)	$	254,212		$	203,882		$	159,487		$	131,796		$	105,190

Adjusted EBITDA (8)	$	(1,966	)	$	(4,637	)	$	(10,939	)	$	(2,112	)	$	(7,218	)

	As of
	December 31,
	2016		2015		2014		2013		2012
	(dollars in thousands)
Cash, cash equivalents and short-term investments (9)	$	43,160	$	59,887	$	77,787	$	92,691	$	32,533
Working capital	56,168		74,148		89,024		102,533		39,892
Total assets	154,225		168,124		178,005		190,560		129,723
Mandatorily redeemable convertible preferred stock	—		—		—		—		162,466
Total liabilities (10)	75,703		66,692		38,232		33,528		30,729
Total stockholders’ equity (deficit)	78,522		101,432		139,773		157,032		(63,472		)

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(1) Includes stock-based compensation expense as follows:

	Years Ended
	December 31,
	2016		2015		2014		2013		2012
	(dollars in thousands)
Technology and development	$	931	$	854	$	907	$	549	$	422
Sales and marketing	1,415		1,445		1,506		1,188		1,020
General and administrative	1,554		1,708		2,209		1,667		1,477
Total stock-based compensation expense	$	3,900	$	4,007	$	4,622	$	3,404	$	2,919

(2) Includes stock-based long-term incentive compensation expense of ($0.2) million, $0.4 million and $0.7 million for the years ended December 31, 2016, 2015 and 2013, respectively.

(3) Reflects impairment charges incurred during the year ended December 31, 2015 of (i) $20.9 million related to goodwill, (ii) $1.2 million related to certain intangible assets, and (iii) $0.6 million related to certain property and equipment. Refer to “Note 7 — Goodwill and Intangible Assets, Net in the notes to the consolidated financial statement included in Part II, Item 8 of this Form 10-K.

(4) For the year ended December 31, 2013, basic and diluted net loss per share attributable to common stockholders includes $15.8 million deemed dividend from the conversion of our Series F preferred stock on July 2, 2013. Refer to “Note 12 — Stockholders’ Equity” in the notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K.

(5) As a result of our operating losses incurred for the years ended December 31, 2016, 2015, 2014, 2013 and 2012, all potentially dilutive securities are anti-dilutive and, accordingly, basic and diluted weighted-average number of shares of common stock outstanding is equal for the years presented.

(6) For the year ended December 31, 2013, our basic and diluted weighted-average number of shares of common stock outstanding increased as a result of our IPO on July 2, 2013. Refer to “Note 12 — Stockholders’ Equity” in the notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K.

(7) We define total spend as the aggregate gross spend transacted through our platforms. Total spend does not represent revenue earned by us and is a non-GAAP financial measure. Total spend is a key measure used by management to assess our market share and scale, and is used to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. We believe total spend is a meaningful measurement of our operating performance because our ability to generate increases in total spend is strongly correlated to our ability to generate increases in revenue. However, use of total spend has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. One of the limitations of total spend is that other companies, including companies in our industry, may calculate total spend or similarly titled measures differently, which reduces its usefulness as a measure of comparison to other companies in our industry.

The following table presents a reconciliation of total spend to revenue, the most directly comparable U.S. GAAP measure, for each of the periods indicated:

	Years Ended
	December 31,
	2016		2015		2014		2013		2012
	(dollars in thousands)
Revenue	$	166,761	$	173,837	$	159,487	$	131,796	$	105,190
Add: Tremor Video SSP inventory costs (a)	87,451		30,045		—		—		—
Total spend	$	254,212	$	203,882	$	159,487	$	131,796	$	105,190

(a) We record revenue from our buyer platform on a gross basis, including costs of inventory. Accordingly, for revenue generated from our buyer platform, total spend is equivalent to revenue. We record revenue from the Tremor Video SSP net of inventory costs. Total spend through the Tremor Video SSP is equal to the revenue generated from the Tremor Video SSP plus associated costs of inventory. See “Note 2 — Summary of Significant Accounting Policies” in the notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K. The Tremor Video SSP was introduced in 2015. Therefore, for periods prior to 2015, total spend is equivalent to our U.S. GAAP revenue.

(8) Adjusted EBITDA represents our net loss before interest and other (income) expense, net, provision for income taxes, depreciation and amortization expense, and adjusted to eliminate the impact of non-cash stock-based compensation expense, non-cash stock-based long-term incentive compensation expense, non-cash impairment charges, executive severance costs, acquisition-related costs, mark-to-market expense, litigation costs associated with class action securities litigation and other adjustments. Adjusted EBITDA is a key measure used by management to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses we do not consider to be indicative of our core operating performance.

Adjusted EBITDA is a non-GAAP financial measure. Our use of adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) although depreciation and amortization expense are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash and capital expenditure requirements for such replacements or for new capital expenditure requirements; (b) Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; (c) Adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation; (d) Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; (e) Adjusted EBITDA does not reflect litigation costs associated with class action securities litigation; (f) Adjusted EBITDA does not reflect non-cash impairment charges associated with changes in the estimated fair value of our net assets compared to their carrying values; (g) Adjusted EBITDA does not reflect executive severance costs; (h) Adjusted EBITDA does not reflect acquisition-related costs and other adjustments; and (i) other companies, including companies in our industry, may calculate

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adjusted EBITDA or similarly titled measures differently, which reduces its usefulness as a comparative measure. Because of these and other limitations, you should consider adjusted EBITDA alongside our other U.S. GAAP-based financial performance measures, net loss and our other U.S. GAAP financial results. The following table presents a reconciliation of adjusted EBITDA to net loss, the most directly comparable U.S. GAAP measure, for each of the periods indicated:

	Years Ended
	December 31,
	2016			2015			2014			2013			2012
	(dollars in thousands)
Net loss	$	(20,947	)	$	(43,230	)	$	(23,489	)	$	(13,516	)	$	(16,644	)
Adjustments
Impairment charges (a)	—			22,665			—			—			—
Depreciation and amortization expense	9,173			8,344			6,675			6,310			5,992
Stock-based compensation expense	3,900			4,007			4,622			3,404			2,919
Executive severance costs (b)	163			1,458			—			—			—
Acquisition-related costs (c)	3,583			892			—			—			—
Mark-to-market (d)	1,263			—			—			—			—
Other adjustments (e)	520			—			—			—			—
Provision for income taxes	116			483			343			206			280
Litigation costs	194			328			279			82			—
Stock-based long-term incentive compensation expense (f)	(183		)	436			673			1,614			—
Total interest and other (income), net	252			(20		)	(42		)	(212		)	235
Total net adjustments				38,593			12,550			11,404			9,426
Adjusted EBITDA	$	(1,966	)	$	(4,637	)	$	(10,939	)	$	(2,112	)	$	(7,218	)

(a) Refer to footnote (3) above for a further description of our impairment charges incurred during the year ended December 31, 2015.

(b) Reflects severance costs incurred related to the termination of certain executives.

(d) Reflects acquisition-related costs incurred in connection with our acquisition of TVN. Refer to Note 3 — Fair Value Measurements and Note 6 — Acquisition in the notes to the consolidated financial statement included in Part II, Item 8 of this Form 10-K.

(e) Reflects amounts accrued in connection with a one-time change in our employee vacation policy.

(f) Refer to footnote (2) above and footnote (10) below for a further description of our stock-based long-term incentive compensation expense.

(9) At December 31, 2013, cash and cash equivalents includes $66.6 million in proceeds from the common stock issuance as a result of our IPO on July 2, 2013.

(10) At December 31, 2016, 2015 and 2014, accrued compensation, benefits and payroll taxes includes $0 million, $0.5 and $0.8 million of stock-based long-term incentive compensation expense, respectively, related to our long-term sales incentive compensation plan. Payments earned under the long-term sales incentive compensation plan for the 2015, 2014 and 2013 plan years were paid in stock-based awards in August 2016, 2015 and 2014, respectively.

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

You should read the following discussion of our financial condition and results of operations in conjunction with the consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Form 10-K, particularly in “Special Note Regarding Forward-Looking Statements” and “Risk Factors.”

Overview

Our buyer platform enables advertisers, agencies and other buyers of advertising, which we collectively refer to as buyers, to discover, buy, optimize and measure the effectiveness of their video ad campaigns across all screens, including computers, smartphones, tablets and TVs. . Our proprietary technology analyzes video content, detects viewer and system attributes, and leverages our large repository of stored and integrated third-party data to optimize the delivery of ad campaigns to achieve a broad spectrum of marketing goals — from audience reach to more sophisticated goals such as engagement, brand lift and viewability. Through our All-Screen optimization solution, buyers are able to choose a single campaign goal and our technology will optimize delivery of the campaign across a broad inventory pool to find the right viewer wherever they may be watching video, eliminating the need to allocate campaign budgets to a specific screen or device.

Our seller platform, the Tremor Video SSP, helps suppliers of video advertising inventory, or sellers, improve yield and maximize the value of their video inventory by enabling their programmatic sales efforts. Sellers on the Tremor Video SSP can make inventory available to buyers through an open exchange, where buyers bid on inventory in a robust auction environment, or through private marketplaces so that only selected buyers have the opportunity to purchase video ad inventory. Through the Tremor Video SSP, we provide sellers with tools to manage their supply hierarchies and demand tiers, and offer real-time reporting that allows sellers to effectively monitor bidding activity on their inventory. Buyers connect to sellers on the Tremor Video SSP through third-party demand side platforms, or third party DSPs, that are integrated directly with our seller platform. In addition, the Tremor Video SSP is one of many inventory sources that is connected to our buyer platform.

Advertising spend transacted on our platforms has grown significantly. Total spend (refer to “Key Metrics-Total Spend”) has increased from $159.5 million in 2014 to $203.9 million in 2015 and $254.2 million in 2016. Over the same period, our revenue went from $159.5 million in 2014 to $173.8 million in 2015 and $166.8 million in 2016, while our gross margin increased from 36.2% in 2014 to 42.9% in 2015 and 45.7% in 2016. Our net loss increased from $23.5 million in 2014 to $43.2 million in 2015 and decreased to $20.9 million in 2016. For 2015, our net loss includes $22.7 million of non-cash impairment charges to goodwill, certain intangible assets and property and equipment maintained at our former headquarters ( refer to note 5 in notes to Consolidated Financial Statements ). Our adjusted EBITDA (refer to “Key Metrics-Adjusted EBITDA”) has increased from a $10.9 million loss in 2014, to a $4.6 million loss in 2015, and a $2.0 million loss in 2016.

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Key Metrics

We monitor the key metrics set forth in the table below to help us evaluate growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts and assess our operational efficiencies. Revenue , gross margin and net loss are discussed under the headings “Components of our Results of Operations.” Total spend and Adjusted EBITDA are discussed immediately following the table below.

	Years Ended
	December 31,
	2016			2015			2014
	(dollars in thousands)
Revenue	$	166,761		$	173,837		$	159,487
Gross margin	45.7		%	42.9		%	36.2		%
Net loss	(20,947		)	(43,230		)	(23,489		)
Total spend	254,212			203,882			159,487
Adjusted EBITDA	(1,966		)	(4,637		)	(10,939		)

Total Spend

We define total spend as the aggregate gross spend transacted through our platforms. We record revenue from our buyer platform on a gross basis, including inventory costs. Accordingly, for our buyer platform total spend is equivalent to revenue. We record revenue from the Tremor Video SSP net of inventory costs. Total spend generated through the Tremor Video SSP is equal to the revenue generated from the Tremor Video SSP plus associated inventory costs. See Note 2 — Summary of Significant Accounting Policies” in notes to consolidated financial statements. The Tremor Video SSP was introduced in 2015. Therefore, for periods prior to 2015, total spend is equivalent to our reported revenue.

Total spend does not represent revenue earned by us and is a non-GAAP financial measure. We believe total spend is a meaningful measurement of our operating performance because our ability to generate increases in total spend is strongly correlated to our ability to generate increases in revenue. Total spend is a key measure used by management to assess our market share and scale, and is used to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. However, use of total spend has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. One of the limitations of total spend is that other companies, including companies in our industry, may calculate total spend or similarly titled measures differently, which reduces its usefulness as a measure of comparison to other companies in our industry. See footnote 7 to the table in “Item 6 —Selected Consolidated Financial Data” in this Annual Report on Form 10-K for a discussion of the limitations of total spend and a reconciliation of total spend to revenue, the most comparable U.S. GAAP measurement, for the years ended December 31, 2016, 2015 and 2014.

Within total spend, we closely monitor the percentage contributions among the following operational metrics: programmatic; non-programmatic higher-function; and non-programmatic media. Programmatic includes all spend transacted through the Tremor Video SSP, Tremor Video DSP, and agency trading desks. We define non-programmatic higher-function as non-programmatic spend running through our buyer platform that utilizes our higher-function products, including our all-screen optimization solution, advanced data targeting solutions and proprietary outcome-based pricing models. We define non-programmatic media as non-programmatic spend running through our buyer platform that is purchased without any of our higher-function products. We track these operational metrics in order to better understand how our clients are transacting on our platforms, which informs decisions as to the allocation of resources and capital. The table below shows the dollar and percentage contribution to total spend from each of programmatic, non-programmatic higher-function; and non-programmatic media.

	Years Ended
	December 31,
	2016		2015		2014
	(dollars in thousands)
Programmatic spend	$	138,271	$	70,388	$	14,070
Non-programmatic higher function spend	93,480		87,842		64,301
Non-programmatic media spend	22,461		45,652		81,116
Total spend	$	254,212	$	203,882	$	159,487

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Total spend increased 24.7% from $203.9 million during the year ended December 31, 2015 to $254.2 million during the twelve months ended December 31, 2016. The increase in total spend was primarily driven by a substantial increase in programmatic spend and an increase in non-programmatic higher-function spend, which was partially offset by a decrease in non-programmatic media spend. Within programmatic spend, there was a substantial increase in spend running through our seller platform, the Tremor Video SSP, which was partially offset by a decrease in programmatic spend from agency trading desks using our buyer platform on a managed service basis through insertion orders. We believe that programmatic spend will continue to increase in future periods, driven primarily by increases in spend from the Tremor Video SSP, while total spend from non-programmatic media will continue to decline.

Adjusted EBITDA

Adjusted EBITDA represents our net loss before interest and other (income) expense, net, provision for income taxes, depreciation and amortization expense, and adjusted to eliminate the impact of non-cash stock-based compensation expense, non-cash stock-based long-term incentive compensation expense, non-cash impairment charges, executive severance costs, acquisition-related costs, mark-to-market expense, litigation costs associated with class action securities litigation and other adjustments. Adjusted EBITDA is a key measure used by management to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses we do not consider to be indicative of our core operating performance in calculating adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis.

Adjusted EBITDA is not a measure calculated in accordance with U.S. GAAP. See footnote 8 to the table in “Item 6 —Selected Consolidated Financial Data” in this Annual Report on Form 10-K for a discussion of the limitations of adjusted EBITDA and a reconciliation of adjusted EBITDA to net loss, the most comparable U.S. GAAP measurement, for the years ended December 31, 2016, 2015 and 2014.

Components of Operating Results

We operate in one segment, online video advertising services. The key elements of our operating results include:

Revenue

We generate revenue from buyers and sellers who use our platforms for the purchase and sale of video advertising inventory.

Through our buyer platform, we generate revenue by delivering video advertising campaigns for buyers. On our buyer platform we offer a number of different pricing models, including outcome-based pricing models where we are compensated only when viewers take certain actions or when certain campaign results are achieved, CPM-based pricing models where an advertiser pays based on the total number of ad impressions delivered and campaigns priced with a guaranteed demographic reach, or demo guarantees, where an advertiser pays based on the number of ad impressions delivered to a specific demographic. For campaigns sold on a CPM-basis, we recognize revenue upon delivery of impressions, or delivery of impressions to a specific target demographic for CPM-priced ad campaigns with demo guarantees. With respect to our outcome-based pricing models, we recognize revenue only when the specified action is taken or campaign result is achieved. Revenue generated from our buyer platform is reported on a gross basis, based primarily on our determination that we act as the primary obligor in the delivery of advertising campaigns for buyers through our buyer platform.

Through our seller platform, which was launched in 2015, we generate revenue by providing sellers with tools to programmatically manage and monetize their inventory. For transactions executed through our seller platform, we act as the agent on behalf of the seller that is making its inventory available to buyers. Revenue is recognized when the buyer purchases video advertising inventory from the seller on our seller platform. Revenue generated from the Tremor Video SSP is reported net of inventory costs that we remit to sellers.

Our revenue recognition policies are discussed in more detail in the section below titled “—Critical Accounting Policies and Estimates.”

Cost of Revenue, Gross Profit and Gross Margin

Our cost of revenue primarily represents video advertising inventory costs, third-party data licensing costs, research costs, third-party hosting fees, and third-party serving fees incurred to deliver video ads. The substantial majority of our cost of revenue for our buyer platform is attributable to video advertising inventory costs under seller contracts. Cost of revenue for our seller platform primarily consists of third-party hosting fees. We recognize cost of revenue on a seller-by-seller basis upon delivery of an ad impression.

Certain of our contracts with sellers contain minimum percentage fill rates on qualified video ad requests, which effectively means that we must purchase this inventory from our exclusive sellers even if we lack a video advertising campaign to deliver. We recognize the difference between our contractually required fill rate and the number of video ads actually delivered by us on the seller’s website, if any, as a cost of revenue as of the end of each applicable monthly period. Historically, the impact of the difference between the contractually required fill rate and the number of ads delivered has not been material. Costs owed to sellers but not yet paid are recorded in our consolidated balance sheets as accounts payable and accrued expenses.

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Gross margin is our gross profit expressed as a percentage of our total revenue. For our buyer platform, our gross margin is primarily impacted by video advertising inventory costs associated with delivering our advertisers campaigns relative to the revenue we generate from delivering such campaigns. Historically, our gross margin on our buyer platform has been positively affected by the relative contribution to our revenue from non-programmatic higher-function campaigns (i.e., campaigns purchased using our all-screen optimization solution, advanced targeting solutions or our proprietary outcome-based pricing models) compared to non-programmatic media campaigns, which are purchased on a CPM or demo-guarantee basis. Because we book campaigns from our Tremor Video SSP net of inventory costs, campaigns running through our seller platform generate substantially higher margins than campaigns running through our buyer platform, which is reported on a gross basis. As a result, in the future our gross margin will be impacted by the relative mix of revenue from our seller platform and our buyer platform.

Operating Expenses

Operating expenses consist of technology and development, sales and marketing, general and administrative depreciation and amortization expenses, and impairment charges. Salaries, incentive compensation, stock-based compensation and other personnel-related costs are the most significant components of each of these expense categories other than depreciation and amortization expenses and impairment charges. Our employee head count remained relatively stable with 328 employees at December 31, 2016 down slightly from 335 employees at December 31, 2015. We include stock-based compensation expense in connection with the grant of stock option awards or restricted stock unit awards in the applicable operating expense category based on the respective equity award recipient’s function.

Technology and Development Expense. Technology and development expense primarily consists of salaries, incentive compensation, stock-based compensation and other personnel-related costs for development, network operations and engineering personnel. Additional expenses in this category include costs related to the development, quality assurance and testing of new technology and maintenance and enhancement of existing technology and infrastructure as well as consulting, travel and other related overhead. We engage third-party consulting firms for various technology and development efforts, such as documentation, quality assurance and support. Due to the rapid development and changes in our business, we have expensed technology and development expenses in the same year that the costs are incurred. The number of employees in technology and development functions remained relatively stable with 103 employees at December 31, 2016 up slightly from 102 employees at December 31, 2015. We intend to continue to invest in our technology and development efforts, in particular as it relates to our programmatic solutions, by strategically hiring additional personnel and by using outside consulting firms for various initiatives. We believe continuing to invest in technology and development efforts is essential to maintaining our competitive position.

Sales and Marketing Expense. Sales and marketing expense primarily consists of salaries, incentive compensation, stock-based compensation and other personnel-related costs for our marketing, creative and sales and sales support employees. Additional expenses in this category include marketing programs, consulting, travel and other related overhead. The number of employees in sales and marketing functions remained relatively stable with 192 employees at December 31, 2016 from 195 employees at December 31, 2015. We expect our sales and marketing expense to increase in the foreseeable future to support our continued revenue growth.

General and Administrative Expense. General and administrative expense primarily consists of salaries, incentive compensation, stock-based compensation and other personnel-related costs for business operations, administration, finance and accounting, legal, information systems and human resources employees. Included in general and administrative expenses are consulting and professional fees, including legal, accounting and investor relations fees, insurance costs associated with compliance with the Sarbanes-Oxley Act and other public company corporate expenses, travel and other related overhead. The number of employees in general and administrative functions declined to 33 employees at December 31, 2016 from 38 employees at December 31, 2015. We expect our general and administrative expenses to increase in absolute dollars as a result of operating as a public company and the continuing growth of our business.

Depreciation and Amortization Expense. Depreciation and amortization expense primarily consists of our depreciation expense related to investments in property, equipment and software as well as the amortization of certain intangible assets.

Mark-to-market. Mark-to-market expense consist primarily of expense related to contingent consideration incurred in connection with our acquisition of The Video Network Pty Ltd ( refer to notes 3 and 6 in notes to consolidated financial statements ).

Impairment Charges . Impairment charges consist of write downs to goodwill and intangible assets related to historical acquisitions, as well as charges recorded in connection with the impairment of certain property and equipment located at our former headquarters that we vacated ( refer to note 5 and 7 in notes to consolidated financial statements ).

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Interest and Other Income, Net

Interest and other income, net consist primarily of interest income, interest expense and foreign exchange transaction gains and losses. Interest income is derived from interest received on our cash and cash equivalents. Interest expense is primarily attributable to interest paid on taxes and fees to local jurisdictions. As of December 31, 2016, we did not have any outstanding borrowings under our credit facility.

Provision for Income Taxes

Provision for income taxes consists of minimum U.S. state and local taxes, income taxes in foreign jurisdictions in which we conduct business and deferred income taxes.

Results of Operations

The following table is a summary of our consolidated statement of operations data for each of the periods indicated. The period-to-period comparisons of the results are not necessarily indicative of our results for future periods.

	Years Ended
	December 31,
	2016					2015					2014
	Amount			Percentage of Revenue		Amount			Percentage of Revenue		Amount			Percentage of Revenue
						(dollars in thousands)
Revenue	$	166,761		100.0	%	$	173,837		100.0	%	$	159,487		100.0	%
Cost of revenue	90,488			54.3		99,266			57.1		101,673			63.8
Gross profit	76,273			45.7		74,571			42.9		57,814			36.2

Operating expenses:
Technology and development	21,045			12.6		20,171			11.6		16,992			10.6
Sales and marketing	48,361			29.0		48,879			28.1		42,623			26.7
General and administrative	17,010			10.2		17,279			9.9		14,712			9.2
Depreciation and amortization	9,173			5.5		8,344			4.8		6,675			4.2
Mark-to-market	1,263			0.8		—			—		—			—
Impairment charges	—			—		22,665			13.0		—			—
Total operating expenses	96,852			58.1		117,338			67.4		81,002			50.7

Loss from operations	(20,579		)	(12.3	)	(42,767		)	(24.5	)	(23,188		)	(14.5	)
Total interest and other income, net	(252		)	(0.2	)	20			0.0		42			0.0
Loss before provision for income taxes	(20,831		)	(12.5	)	(42,747		)	(24.5	)	(23,146		)	(14.5	)
Provision for income taxes	116			0.1		483			0.3		343			0.2
Net loss	$	(20,947	)	(12.6	)%	$	(43,230	)	(24.8	)%	$	(23,489	)	(14.7	)%

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Comparison of Years Ended December 31, 2016 and 2015

	Years Ended				Change
	December 31,				Increase / (Decrease)
	2016		2015		Amount			Percentage
	(dollars in thousands)
Revenue	$	166,761	$	173,837	$	(7,076	)	(4.1	)%

Revenue. Our revenue during the twelve months ended December 31, 2016 decreased to $166.8 million from $173.8 million in the prior year period, despite an increase in total spend during the twelve months ended December 31, 2016 to $254.2 million from $203.9 million in the prior year period.

The decrease in our revenue for the twelve months ended December 31, 2016 compared to the prior year period, was primarily attributable to the change in the relative mix of the total spend being transacted through our buyer platform in favor of our seller platform, the Tremor Video SSP. Revenue from the Tremor Video SSP is booked net of inventory costs, compared to revenue from our buyer platform, which we report on a gross basis. Accordingly, each dollar spent through our buyer platform equates to a dollar of recognized revenue, while for our seller platform only a fraction of each dollar spent is recognized as revenue.

The increase in total spend was primarily driven by a $67.9 million increase in programmatic spend and a $5.6 million increase in non-programmatic higher-function spend, which was partially offset by a $23.2 million decrease in non-programmatic media spend. Within programmatic spend, there was a substantial increase in spend running through our seller platform, the Tremor Video SSP.

	Years Ended						Change
	December 31,						Increase / (Decrease)
	2016			2015			Amount			Percentage
	(dollars in thousands)
Cost of revenue	$	90,488		$	99,266		$	(8,778	)	(8.8	)%
Gross profit	76,273			74,571			1,702			2.3
Gross margin	45.7		%	42.9		%

Cost of Revenue, Gross Profit and Gross Margin. Our cost of revenue during the twelve months ended December 31, 2016 decreased to $90.5 million from $99.3 million for the same period in 2015. The decrease reflects a $13.9 million reduction in video advertising inventory costs, which were partially offset by a $5.1 million increase in costs related to data, ad serving, hosting and research. The reduction in video advertising inventory costs is largely due to an increase in the percentage of our total spend being transacted through our seller platform, which is recorded on a net basis and therefore does not have associated inventory costs. The increase in data, ad serving, hosting and research costs is driven by an increase in the total spend and total number of transactions being transacted through our platforms.

Our gross profit increased by $1.7 million compared to the prior year period, reflecting a decrease in our cost of revenue of $8.8, million which was partially offset by a decrease in revenue of $7.1 million year-over-year.

Our gross margin increased to 45.7% for the twelve months ended December 31, 2016 from 42.9% for the twelve months ended December 31, 2015. The increase in our gross margin is largely due to a change in the relative mix of the total spend being transacted through our buyer platform and the Tremor Video SSP compared to the prior year period. Revenue from the Tremor Video SSP generates substantially higher gross margins than our buyer platform since it is recorded net of inventory costs.

	Years Ended						Change
	December 31,						Increase / (Decrease)
	2016			2015			Amount		Percentage
	(dollars in thousands)
Technology and development expense	$	21,045		$	20,171		$	874	4.3	%
% of total revenue	12.6		%	11.6		%

Technology and Development. The increase in technology and development expense in 2016 compared to 2015 was primarily attributable to a $0.8 million increase in salaries, incentive compensation, stock-based compensation and other personnel-related costs, and a $0.6 million increase in professional fees and software and maintenance fees, which were partially offset by a $.5 million decrease in consulting expense.

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	Years Ended						Change
	December 31,						Increase / (Decrease)
	2016			2015			Amount			Percentage
	(dollars in thousands)
Sales and marketing expense	$	48,361		$	48,879		$	(518	)	(1.1	)%
% of total revenue	29.0		%	28.1		%

Sales and Marketing. The decrease in sales and marketing expense in 2016 compared to 2015 was primarily attributable to a $1.6 million decrease in marketing costs. This decrease was partially offset by a $0.7 million increase in salaries, incentive compensation, stock-based compensation and other personnel-related costs, a $0.2 million increase in consulting and travel and entertainment expenses, and a $0.2 million increase in overhead costs

	Years Ended						Change
	December 31,						Increase / (Decrease)
	2016			2015			Amount			Percentage
	(dollars in thousands)
General and administrative expense	$	17,010		$	17,279		$	(269	)	(1.6	)%
% of total revenue	10.2		%	9.9		%

General and Administrative. The decrease in general and administrative expense in 2016 compared to 2015 was primarily attributable to a $0.6 million decrease in in salaries, incentive compensation, stock-based compensation and other personnel-related costs and a $0.5 million decrease in legal and consulting fees, which were partially offset by an $0.8 million increase in accounting fees, professional development, recruiting fees, travel and entertainment expenses and other expenses.

	Years Ended						Change
	December 31,						Increase / (Decrease)
	2016			2015			Amount		Percentage
	(dollars in thousands)
Depreciation and amortization expense	$	9,173		$	8,344		$	829	9.9	%
% of total revenue	5.5		%	4.8		%

Depreciation and Amortization. The increase in depreciation and amortization expense in 2016 compared to 2015 was primarily attributable to increases in depreciation related to additional leasehold improvements to new office spaces and purchases of computer hardware and software related to our third-party data center hosting facilities.

	Years Ended						Change
	December 31,						Increase / (Decrease)
	2016			2015			Amount			Percentage
	(dollars in thousands)
Total impairment charges	$	—		$	22,665		$	(22,665	)	100.0	%
% of total revenue	—		%	13.0		%

Impairment Charges. During the twelve months ended December 31, 2016, there was no impairment of goodwill, intangible assets or property and equipment. During the year ended December 31, 2015, we recorded a goodwill impairment charge of $20.9 million and an intangible asset impairment charge of $1.2 million ( refer to note 7 in notes to consolidated financial statements ).

In addition, during 2015, we recorded an impairment charge of $0.6 million related to certain property and equipment at our former headquarters ( refer to note 5 in notes to consolidated financial statements ).

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	Years Ended						Change
	December 31,						Increase / (Decrease)
	2016			2015			Amount			Percentage
	(dollars in thousands)
Total interest and other income, net	$	(252	)	$	20		$	(272	)	N/A
% of total revenue	(0.2		)%	0.0		%

Total Interest and Other Income, Net. The decrease in total interest and other income, net in 2016 compared to 2015 was primarily attributable to a $0.3 loss on the sublease of office space, partially offset by an increase in other income related to income generated from the subletting of our former headquarters.

	Years Ended						Change
	December 31,						Increase / (Decrease)
	2016			2015			Amount			Percentage
	(dollars in thousands)
Provision for income taxes	$	116		$	483		$	(367	)	(76.0	)%
% of total revenue	0.1		%	0.3		%

Provision for Income Taxes. The decrease in provision for income taxes in 2016 compared to 2015 was primarily attributable to decreases in taxes incurred in our foreign jurisdictions as well as US local taxes.

Comparison of Years Ended December 31, 2015 and 2014

	Years Ended				Change
	December 31,				Increase / (Decrease)
	2015		2014		Amount		Percentage
	(dollars in thousands)
Revenue	$	173,837	$	159,487	$	14,350	9.0	%

Revenue. Our revenue during the twelve months ended December 31, 2015, increased to $173.8 million from $159.5 million in the prior year period. At the same time, our total spend increased to $203.9 million in 2015 from $159.5 million in 2014. The increase in total spend was primarily driven by a $56.3 million increase in programmatic spend and a $23.5 million increase in non-programmatic higher-function spend, which was partially offset by a $35.5 million decrease in non-programmatic media spend. Within programmatic spend, there was a substantial incremental contribution from our seller platform, the Tremor Video SSP, which was introduced in 2015.

	Years Ended						Change
	December 31,						Increase / (Decrease)
	2015			2014			Amount			Percentage
	(dollars in thousands)
Cost of revenue	$	99,266		$	101,673		$	(2,407	)	(2.4	)%
Gross profit	74,571			57,814			16,757			29.0
Gross margin	42.9		%	36.2		%

Cost of Revenue, Gross Profit and Gross Margin. Our cost of revenue during the twelve months ended December 31, 2015 decreased to $99.3 million from $101.7 million for the same period in 2014. The decrease reflects a $4.6 million reduction in video advertising inventory costs, which were partially offset by a $2.2 million increase in costs related to data, ad serving, hosting and research. The reduction in video advertising inventory costs is largely due to an increase in the percentage of our total spend being transacted through our seller platform, which is recorded on a net basis and therefore does not have associated inventory costs. The increase in data, ad serving, hosting and research costs is driven by an increase in the total spend and total number of transactions being transacted through our platforms.

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Our gross profit increased by $16.8 million compared to the prior year period, reflecting a decrease in our cost of revenue of $2.4 million which and an increase in revenue of $14.4 million year-over-year.

Our gross margin increased to 42.9% for the twelve months ended December 31, 2015 from 36.2% for the twelve months ended December 31, 2014. The increase in our gross margin is largely due to a change in the relative mix of the total spend being transacted through our buyer platform and the Tremor Video SSP compared to the prior year period. Revenue from the Tremor Video SSP generates substantially higher gross margins than our buyer platform since it is recorded net of inventory costs.

	Years Ended						Change
	December 31,						Increase / (Decrease)
	2015			2014			Amount		Percentage
	(dollars in thousands)
Technology and development expense	$	20,171		$	16,992		$	3,179	18.7	%
% of total revenue	11.6		%	10.6		%

Technology and Development. The increase in technology and development expense in 2015 compared to 2014 was primarily attributable to a $2.2 million increase in salaries, incentive compensation, stock-based compensation and other personnel-related costs, a $0.6 million increase in consulting fees, professional fees, software, and maintenance fees, and a $0.4 million increase in overhead costs.

	Years Ended						Change
	December 31,						Increase / (Decrease)
	2015			2014			Amount		Percentage
	(dollars in thousands)
Sales and marketing expense	$	48,879		$	42,623		$	6,256	14.7	%
% of total revenue	28.1		%	26.7		%

Sales and Marketing. The increase in sales and marketing expense in 2015 compared to 2014 was primarily attributable to a $4.7 million increase in salaries, severance costs, incentive compensation, stock-based compensation, and other personnel-related costs, a $1.3 million increase in software and professional fees and a $1.0 increase in overhead costs. These increases were partially offset by a $0.7 million decrease in consulting fees and marketing costs.

	Years Ended						Change
	December 31,						Increase / (Decrease)
	2015			2014			Amount		Percentage
	(dollars in thousands)
General and administrative expense	$	17,279		$	14,712		$	2,567	17.5	%
% of total revenue	9.9		%	9.2		%

General and Administrative. The increase in general and administrative expense in 2015 compared to 2014 was primarily attributable to a $1.2 million increase in professional fees, a $0.9 million increase in salaries, incentive compensation, stock-based compensation and other personnel-related costs and a $0.5 million increase in overhead costs.

	Years Ended						Change
	December 31,						Increase / (Decrease)
	2015			2014			Amount		Percentage
	(dollars in thousands)
Depreciation and amortization expense	$	8,344		$	6,675		$	1,669	25.0	%
% of total revenue	4.8		%	4.2		%

Depreciation and Amortization. The increase in depreciation and amortization expense in 2015 compared to 2014 was primarily attributable to increases in depreciation related to additional leasehold improvements to new office spaces and purchases of computer hardware and software related to our third-party data center hosting facilities.

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	Years Ended						Change
	December 31,						Increase / (Decrease)
	2015			2014			Amount		Percentage
	(dollars in thousands)
Total impairment charges	$	22,665		$	—		$	22,665	100.0	%
% of total revenue	13.0		%	—		%

Impairment Charges. During the year ended December 31, 2015, we recorded a goodwill impairment charge of $20.9 million and an intangible asset impairment charge of $1.2 million ( refer to note 7 in notes to consolidated financial statements ).

In addition, we recorded an impairment charge of $0.6 million related to certain property and equipment at our former headquarters period ( refer to note 5 in notes to consolidated financial statements ).

	Years Ended						Change
	December 31,						Increase / (Decrease)
	2015			2014			Amount			Percentage
	(dollars in thousands)
Total interest and other income, net	$	20		$	42		$	(22	)	N/A
% of total revenue	0.0		%	0.0		%

Total Interest and Other Income, Net. The decrease in total interest and other income, net in 2015 compared to 2014 was primarily attributable to $0.1 million increase in mark-to-market expenses related to our contingent consideration liability, partially offset by an increase in other income related to income generated from the subletting of our former headquarters.

	Years Ended						Change
	December 31,						Increase / (Decrease)
	2015			2014			Amount		Percentage
	(dollars in thousands)
Provision for income taxes	$	483		$	343		$	140	40.8	%
% of total revenue	0.3		%	0.2		%

Provision for Income Taxes. The increase in provision for income taxes in 2015 compared to 2014 was primarily attributable to an increase in estimated taxes incurred in our foreign jurisdictions.

Seasonality

Our revenue tends to be seasonal in nature and varies from quarter to quarter. During the first quarter, brand advertisers generally devote less of their budgets to ad spending and our exclusive sellers generally make a larger proportion of their ad inventory available to us. Under the terms of our contracts with exclusive sellers we are typically required to pay for a percentage of the ad requests delivered by such sellers, even if we are unable to deliver an ad to that inventory. As a result, this combination may result in lower revenue and gross margins for us during the first quarter of each calendar year.

Liquidity and Capital Resources

Working Capital

The following table summarizes our cash, cash equivalents and short-term investments, accounts receivable and working capital for the periods indicated:

	As of December 31,
	2016		2015		2014
	(dollars in thousands)
Cash, cash equivalents and short-term investments	$	43,160	$	59,887	$	77,787
Accounts receivable, net of allowance for doubtful accounts	79,027		70,778		46,765
Working capital	56,168		74,148		89,024

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Our cash and cash equivalents at December 31, 2016 were held for working capital purposes. We do not enter into investments for trading or speculative purposes. Our policy is to invest any cash in excess of our immediate requirements in investments designed to preserve the principal balance and provide liquidity. Accordingly, our cash and cash equivalents are invested primarily in demand deposit accounts and money market funds that are currently providing only a minimal return.

Sources of Liquidity

Our principal sources of liquidity are our cash and cash equivalents. Cash and cash equivalents consist primarily of cash on deposit with banks and investments in money market funds. Cash and cash equivalents were $43.1 million, $59.9 million and $77.8 million as of December 31, 2016, 2015 and 2014, respectively.

We are party to a loan and security agreement, which we refer to as our credit facility, with Silicon Valley Bank, which we refer to as our lender. Pursuant to the credit facility, which was amended and restated in January 2017, we can incur revolver borrowings up to the lesser of $35.0 million and a borrowing base equal to 80.0% of eligible accounts receivable. Any outstanding principal amounts borrowed under the credit facility must be paid at maturity. Interest accrues at a floating rate equal to the lender’s prime rate and is payable monthly. We are charged a fee of 0.35% of any unused borrowing capacity, which is payable quarterly. The credit facility also includes a letter of credit, foreign exchange and cash management facility up to the full amount of available credit. The credit facility matures in January 2018. While we had no outstanding borrowings under the credit facility as of December 31, 2016 and 2015, our lender has issued standby letters of credit in favor of the landlord of our headquarters totaling $2.3 million, which can be drawn down from amounts available under the credit facility.

The credit facility contains customary conditions to borrowings, events of default and negative covenants, including covenants that restrict our ability to dispose of assets, merge with or acquire other entities, incur indebtedness, incur encumbrances, make distributions to holders of our capital stock, make investments or engage in transactions with our affiliates. We are also subject to a financial covenant with respect to a minimum quick ratio, tested monthly, and trailing twelve-month Adjusted EBITDA, tested quarterly. Our obligations under the credit facility are secured by substantially all of our assets other than our intellectual property, although we have agreed not to encumber any of our intellectual property without the lender’s prior written consent. Subject to certain exceptions, we are also required to maintain all of our cash and cash equivalents at accounts with the lender. We were in compliance with all covenants as of December 31, 2016 and through the date of this filing.

Operating and Capital Expenditure Requirements

We believe our existing cash balances will be sufficient to meet our anticipated cash requirements through at least the next 12 months. If our available cash balances and available borrowings under our credit facility are insufficient to satisfy our liquidity requirements, we will need to raise additional funds to support our operations, and such funding may not be available to us on acceptable terms, or at all. If we are unable to raise additional funds when needed, our operations and ability to execute our business strategy could be adversely affected. We may seek to raise additional funds through equity, equity-linked or debt financings. If we raise additional funds through the incurrence of indebtedness, such indebtedness would have rights that are senior to holders of our equity securities and could contain covenants that restrict our operations. Any additional equity financing may be dilutive to our stockholders.

Historical Cash Flows

The following table summarizes our historical cash flows for the periods indicated:

	December 31,
	2016			2015			2014
	(dollars in thousands)
Net cash (used in) provided by:
Operating activities	$	(7,075	)	$	(7,959	)	$	(10,984	)
Investing activities	(2,933		)	(9,404		)	(4,026		)
Financing activities	(6,332		)	(386		)	202

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Operating Activities

Net cash (used in) operating activities is primarily influenced by the revenue our business generates, video advertising inventory costs and amounts of cash we invest in personnel and infrastructure to support the anticipated growth of our business. Net cash (used in) operating activities has been used to fund operations through changes in working capital, particularly in the areas of accounts receivable, accounts payable and accrued expenses, adjusted for non-cash expense items such as depreciation, amortization and stock-based compensation expenses.

In 2016, our net cash used in operating activities was $7.1 million and consisted of a net loss of $20.9 million and $3.8 million of cash used in working capital, which was partially offset by $17.7 million in adjustments for non-cash items. Adjustments for non-cash items primarily consisted of depreciation and amortization expense of $9.2 million, non-cash stock-based compensation expense of $3.9 million, mark-to-market expense of $1.3 million and compensation expense related to acquisition contingent consideration of $3.6 million, partially offset by a decrease of $0.3 million of non-cash stock based long-term incentive compensation expense. The $3.8 million of cash used in working capital primarily consisted of a $8.3 million increase in accounts receivable and a $3.4 million decrease in contingent consideration on acquisition, which was partially offset by a $6.7 million increase in accounts payable and accrued expenses, a $0.6 million increase in deferred rent liabilities and $0.6 million increase in prepaid expenses and other assets.

In 2015, our net cash used in operating activities was $8.0 million and consisted of a net loss of $43.2 million and $0.2 million of cash used in working capital, which was partially offset by $35.4 million in adjustments for non-cash items. Adjustments for non-cash items primarily consisted of $22.7 million in non-cash impairment charges, depreciation and amortization expense of $8.3 million and non-cash stock-based compensation expense of $4.4 million. The $0.2 million of cash used in working capital primarily consisted of a $22.7 million increase in accounts receivable and a $3.4 million increase in prepaid expenses and other current assets as a result of prepaid rent amounts for our new headquarters, future advertising and marketing events, which was partially offset by a $20.2 million increase in accounts payable and accrued expenses and a $5.7 million increase in deferred rent liabilities and net changes in other working capital.

In 2014, our net cash used in operating activities was $11.0 million and consisted of a net loss of $23.5 million, offset by $11.9 million in adjustments for non-cash items and $0.6 million of cash provided by working capital. Adjustments for non-cash items primarily consisted of depreciation and amortization expense of $6.7 million, non-cash stock-based compensation expense of $4.6 million and non-cash stock-based long-term incentive compensation expense of $0.7 million, partially offset by a $0.1 million net decrease in other non-cash items. The $0.6 million increase in cash resulting from changes in working capital primarily consisted of a $5.9 million increase in accounts payable and accrued expenses and $0.1 million net decrease in prepaid expenses and other current assets and liabilities as a result of prepaid rent amounts for new office space, future advertising and marketing events, which was partially offset by a $5.4 million increase in accounts receivable.

Investing Activities

Our investing activities consist of net cash used for purchases of property and equipment primarily related to leasehold improvements and, for 2015, cash used for an acquisition.

In 2016, our net cash used in investing activities was $2.9 million and consisted of purchase property and equipment primarily related to leasehold improvements for new office spaces and computer equipment for third-party data hosting facilities.

In 2015, our net cash used in investing activities was $9.4 million and consisted of $7.7 million used to purchase property and equipment primarily related to leasehold improvements for our new headquarters and $1.7 million used to acquire a business in Australia, net of cash acquired ( refer to note 6 in notes to consolidated financial statements ).

In 2014, our net cash used in investing activities was $4.0 million used primarily to purchase computer hardware and software related to our third-party data hosting facilities.

Financing Activities

Our financing activities consist of the repurchase of common stock, acquisition related payments and tax payments made on behalf of employees related to net share settlements of restricted stock unit awards and proceeds received from the exercise of stock option awards and issuance of common stock in connection with shares purchased under our ESPP.

In 2016, our net cash used in financing activities was $6.3 million and consisted of $6.0 million of purchases of common stock pursuant to our share repurchase program, $0.5 million used to pay tax withholdings on behalf of employees related to net share settlements of restricted stock unit awards and $0.4 million of payments related to contingent consideration on acquisition, partially offset by $0.6 million in proceeds received from the issuance of common stock in connection with shares purchased under our ESPP and the exercise of stock option awards.

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In 2015, our net cash used in financing activities was $0.4 million and consisted of $0.5 million used to pay tax withholdings on behalf of employees related to net share settlements of restricted stock unit awards, partially offset by $0.1 million in proceeds received from the exercise of stock option awards.

In 2014, our net cash provided by financing activities was $0.2 million and consisted of $0.8 million in proceeds received from the exercise of stock option awards, partially offset by $0.6 million used to pay tax withholdings on behalf of employees related to net share settlements of restricted stock unit awards.

Off-Balance Sheet Arrangements

As of December 31, 2016, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K, such as the use of unconsolidated subsidiaries, structured finance, special purpose entities or variable interest entities.

Contractual Obligations

The following table discloses aggregate information about material contractual obligations and periods in which payments were due as of December 31, 2016. Future events could cause actual payments to differ from these estimates.

	Payments Due by Period
	Total		Less Than 1 Year		1 - 3 Years		3 - 5 Years		More Than 5 Years
	(dollars in thousands)
Operating lease obligations (1)	$	35,199	$	5,495	$	9,863	$	9,199	$	10,642
Third-party licenses and services	16,353		16,353		—		—		—
Total contractual obligations	$	51,552	$	21,848	$	9,863	$	9,199	$	10,642

(1) Operating lease obligations includes those contractual obligations related to our non-cancellable office space lease agreements and co-location agreements.

The amounts in the table above are associated with agreements that are enforceable and legally binding, which specify significant terms including payment terms related to services and the approximate timing of the transaction. Obligations under the contract that we can cancel without a significant penalty are not included in the table.

Critical Accounting Policies and Estimates

We prepare our audited consolidated financial statements in accordance with U.S. GAAP. The preparation of audited consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe the estimates, assumptions and judgments involved in revenue recognition and deferred revenue, stock-based compensation expense, and accounting for income taxes have the greatest potential impact on our consolidated financial statements, and consider these to be our critical accounting policies and estimates.

Critical accounting policies and estimates are those we consider to be the most important to the portrayal of our financial condition and results of operations because they require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies and estimates include those related to the following:

Revenue Recognition and Deferred Revenue

We generate revenue from buyers and sellers who use our platforms for the purchase and sale of video advertising inventory. We recognize revenue when four basic criteria are met: (1) persuasive evidence exists of an arrangement with the client reflecting the terms and conditions under which the services will be provided; (2) services have been provided or delivery has occurred; (3) the fee is fixed or determinable; and (4) collection is reasonably assured. Collectability is assessed based on a number of factors, including the creditworthiness of a client and transaction history.

Through our buyer platform, we generate revenue by delivering video advertising campaigns for buyers. On our buyer platform we offer a number of different pricing models, including outcome-based pricing models where we are compensated only when viewers take certain actions or when certain campaign results are achieved, CPM-based pricing models where an advertiser pays based on the total number of ad impressions delivered and campaigns priced with demo guarantees, where an advertiser pays based on the number of ad impressions delivered to a specific demographic. For campaigns sold on a CPM-basis, we recognize revenue upon delivery of impressions, or delivery of impressions to a specific target demographic for CPM-priced ad campaigns with demo guarantees. With respect to our outcome-based pricing models, we recognize revenue only when the specified action is taken or campaign result is achieved. Revenue generated our buyer platform is reported on a gross basis, based primarily on our determination that we act as the primary obligor in the delivery of advertising campaigns for buyers through our buyer platform.

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The determination of whether revenue should be reported on a gross or net basis is based on an assessment of whether we are acting as the principal or an agent in the transactions. In determining whether we act as the principal or an agent, we follow the accounting guidance for principal-agent considerations. The determination of whether we are acting as a principal or an agent in a transaction involves judgment and is based on an evaluation of the terms of each arrangement, none of which are considered presumptive or determinative. Revenue generated, and costs incurred, related to our buyer platform are reported on a gross basis as we are the primary obligor and responsible for: (1) identifying and contracting with buyers and sellers; (2) responding to all service-related issues concerning the delivery of a campaign; (3) determining the ad inventory on which a campaign should run using our proprietary optimization and decisioning technology; (4) performing all billing and collection activities, including retaining credit risk; and (5) bearing responsibility for fulfillment of the advertising campaign. Revenue generated, and costs incurred, related to our seller platform are reported on a net basis as we are not the primary obligor in our seller platform transactions as: (1) the determination of whether to purchase inventory, and the price for such inventory, is generally determined by third party buyers (DSPs) through their real-time bidding technology; and (2) we do not generally take on inventory risk.

Deferred revenue arises as a result of contractual billings in excess of recognized revenue and differences between the timing of revenue recognition and receipt of cash from our clients.

Accounts Receivable, Net of Allowances for Doubtful Accounts

We carry our accounts receivable at net realizable value. On a periodic basis, our management evaluates our accounts receivable and determines whether to provide an allowance or if any accounts should be written down and charged to expense as a bad debt. The evaluation is based on a past history of collections, current credit conditions, the length of time the account is past due and a past history of write-downs. A receivable is considered past due if we have not received payments based on agreed-upon terms. We generally do not require any security or collateral to support our receivables.

We extend credit to customers and generally do not require any security or collateral. Accounts receivable are recorded at the invoiced amount. We carry our accounts receivable balances at net realizable value. We evaluate the collectability of our accounts receivable balances on a periodic basis and determine whether to provide an allowance or if any accounts should be written down and charged to expense as a bad debt. The evaluation is based on a past history of collections, current credit conditions, the length of time the account is past due and a past history of write-downs. A receivable balance is considered past due if we have not received payments based on agreed-upon terms.

Goodwill and Intangible Assets

Goodwill represents the excess of the aggregate purchase price paid over the fair value of the net tangible and intangible assets acquired. Intangible assets that are not considered to have an indefinite useful life are amortized over their useful lives. We evaluate the estimated remaining useful lives of purchased intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. Goodwill is not amortized, but rather is subject to an impairment test.

We evaluate goodwill and other intangible assets with indefinite lives for impairment annually, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We adopted FASB Accounting Standards Update (“ASU”) 2011-08, “Testing Goodwill for Impairment,” which gives companies the option to qualitatively assess whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.

We operate as one operating and reporting segment and, therefore, we assess goodwill for impairment annually as one singular reporting unit, using a two-step approach. The first step is to compare the fair value of the reporting unit to the carrying value of the net assets assigned to the reporting unit. If the fair value of the reporting unit is greater than the carrying value of the net assets assigned to the reporting unit, the assigned goodwill is not considered impaired. If the fair value is less than the reporting unit’s carrying value, step two is performed to measure the amount of the impairment, if any.

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During the year ended December 31, 2015, we determined that an impairment indicator was present that required us to perform an interim goodwill impairment analysis. This impairment indicator was a decrease in market capitalization below the carrying value of the Company’s net assets. During the three months ended September 30, 2015, the Company conducted an interim impairment test on its goodwill, based on which the Company determined that the implied fair value of goodwill was less than the reporting unit’s carrying value. As a result, the Company recorded a goodwill impairment loss of $20,890 to reduce the carrying value of goodwill to its implied fair value.

We also reviewed certain identifiable intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of intangible assets are measured by a comparison of the carrying amount of the asset or asset group, using an income approach, to future undiscounted net cash flows expected to be generated by the asset or asset group. If such assets are not recoverable, the impairment to be recognized, if any, is measured by the amount which the carrying amount of the assets exceeds the estimated fair value of the assets or asset group. As we operate as one business unit and our long-lived assets do not have identifiable cash flows that are independent of the other assets and liabilities of this business unit, the impairment testing on intangible assets is performed at the entity-level.

In connection with the interim goodwill impairment testing discussed above, we conducted an impairment testing on certain intangible assets, specifically related to our customer relationships acquired in a historical acquisition, which indicated that the estimated fair value of those intangible assets were below their carrying value. Accordingly, we recognized an impairment charge related to our intangible assets of $1.2 million during the three months ended September 30, 2015 to reduce the carrying values of these intangible assets to their estimated fair values. We did not identify any other impairment losses on our remaining intangible assets as of December 31, 2015.

Other than the impairment losses above, there were no additional impairment losses identified and no other indicators of impairment to goodwill and intangible assets for 2016, 2015, and 2014.

Stock-Based Compensation

We include stock-based compensation expense as part of operating expenses in connection with the grant or modification of stock option awards, restricted stock unit awards, employee stock purchase plan awards, and other equity awards to our directors, employees and consultants. We account for stock-based compensation in accordance with the authoritative accounting guidance on stock-based payment awards. Pursuant to the fair value recognition provisions of such guidance, stock-based payment awards are measured at the grant date based on the fair value of the award and is recognized as compensation expense, net of estimated forfeitures, over the requisite service period, which is generally the vesting period of the respective award. During the years ended December 31, 2016, 2015 and 2014, we recorded stock-based compensation expense of $3.9 million, $4.0 million and $4.6 million, respectively. Information about the assumptions used in the calculation of stock-based compensation expense is set forth in “Note 12 — Stock-Based Compensation Expense” in the notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K.

Income Taxes

Our income tax expense represents amounts paid or payable (or received or receivable) for the current year and includes any changes in deferred taxes during the year. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, as well as for operating loss and tax credit carry-forwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we expect to recover or settle those temporary differences. We recognize the effect of a change in tax rates on deferred tax assets and liabilities in the results of operations in the period that includes the enactment date.

Our deferred income tax expense represents the change during the period in deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. We reduce the measurement of a deferred tax asset, if necessary, by a valuation allowance if it is more likely than not that we will not realize some or all of the deferred tax asset. As a result of our historical operating performance and the cumulative net losses incurred to date, we do not have sufficient objective evidence to support the recovery of the deferred tax assets. Accordingly, we have established a valuation allowance against deferred tax assets for financial reporting purposes because we believe it is more likely than not that these deferred tax assets will not be realized.

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We account for uncertain tax positions by recognizing the financial statement effects of a tax position only when, based upon technical merits, it is “more-likely-than-not” that the position will be sustained upon examination. Potential interest and penalties associated with unrecognized tax positions are recognized in our provision for income taxes.

At December 31, 2016, we had U.S. federal and state net operating loss carryforwards, or NOLs, of $117.3 million and $65.7 million, respectively, and foreign net operating loss carryforwards of $8.2 million, $6.8 million and $0.1 million related to our international subsidiaries in United Kingdom, Germany and Brazil, respectively. The U.S. federal net operating losses will expire in various years beginning in 2027. Our foreign net operating loss carry-forwards can be carried forward without limitation in each respective country. A lack of future taxable income would adversely affect our ability to utilize these 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.

Recent Issued and Adopted Accounting Pronouncements

For information with respect to recent accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, refer to “Note 2 — Summary of Significant Accounting Policies” in the notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are exposed to market risk primarily related to changes in interest rates and foreign currency exchange rates. We do not use derivative financial instruments for speculative, hedging or trading purposes, although in the future we may enter into hedging arrangements to manage the risks described below.

Interest Rate Risk

We maintain cash and a short-term investment portfolio consisting mainly of highly liquid, short-term money market funds, which we consider to be cash and cash equivalents, respectively. The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk. Because our cash and cash equivalents have a relatively short maturity, our portfolio’s fair value is relatively insensitive to interest rate changes. These investments earn interest at variable rates and, as a result, decreases in market interest rates would generally result in decreased interest income. A 10% increase or decrease in interest rates occurring January 1, 2016 and sustained through the period ended December 31, 2016, would not have been material. We do not enter into investments for trading or speculative purposes. In future periods, we will continue to evaluate our investment policy relative to our overall objectives.

We were exposed to market risks related to fluctuations in interest rates related to our $35.0 million credit facility where an increase in interest rates may result in higher borrowing costs. Since we currently do not have any outstanding borrowings under our credit facility, the effect of a hypothetical 10% change in interest rates would not have any impact on our interest expense.

Foreign Currency Exchange Risk

Due to our i nternational operations, we are exposed to foreign exchange risk related to foreign denominated revenues and costs, which must be translated into U.S. dollars. Our primary exposures are related to non-U.S. dollar denominated sales and operating expenses primarily in Australia, Canada, Brazil, Singapore and the United Kingdom. In August 2015, we acquired a business located in Australia, and in connection with the acquisition we may be required to make future payments that are denominated in Australian dollars (refer to note 6 in notes to the consolidated financial statements). The effect of a 10% increase or decrease in exchange rates on foreign denominated cash, receivables and payables would not have been material for the periods presented. Substantially all of our advertiser contracts are currently denominated in U.S. dollars. Therefore, we have minimal foreign currency exchange risk with respect to our revenue. These exposures may change over time as our business practices evolve and if our exposure increases, adverse movements in foreign currency exchanges rates could have a material adverse impact on our financial results.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. We continue to monitor the impact of inflation in order to minimize its effects through pricing strategies, productivity improvements and cost reductions. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

TREMOR VIDEO, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
	Number
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	60

CONSOLIDATED FINANCIAL STATEMENTS:

Consolidated Balance Sheets as of December 31, 2016 and 2015	61

Consolidated Statements of Operations for the Years Ended December 31, 2016, 2015 and 2014	62

Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2016, 2015 and 2014	63

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2016, 2015 and 2014	64

Consolidated Statements of Cash Flows for the Years Ended December 31, 2016, 2015 and 2014	65

Notes to Consolidated Financial Statements	66

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Tremor Video, Inc.

We have audited the accompanying consolidated balance sheets of Tremor Video, Inc. (the “Company”) as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive loss, and changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2016. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Tremor Video, Inc. at December 31, 2016 and 2015, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles.

	/S/ ERNST & YOUNG LLP

New York, New York
March 10, 2017

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Tremor Video, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

	December 31,
	2016			2015
Assets
Current assets:
Cash and cash equivalents	$	43,160		$	59,887
Accounts receivable, net of allowance for doubtful accounts of $3 and $69 as of December 31, 2016 and 2015, respectively	79,027			70,778
Prepaid expenses and other current assets	2,405			3,721
Total current assets	124,592			134,386
Long-term assets:
Restricted cash	770			600
Property and equipment, net of accumulated depreciation of $11,282 and $6,716 as of December 31, 2016 and 2015, respectively	9,656			10,094
Intangible assets, net of accumulated amortization of $29,012 and $24,488 as of December 31, 2016 and 2015, respectively	6,922			11,469
Goodwill	10,758			10,781
Other assets	1,527			794
Total long-term assets	29,633			33,738
Total assets	$	154,225		$	168,124

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses	$	64,691		$	58,742
Deferred rent, short-term	704			401
Contingent consideration on acquisition, short-term	2,483			987
Deferred revenue	5			108
Capital leases, short-term	362			—
Other current liabilities	179			—
Total current liabilities	68,424			60,238
Long-term liabilities:
Deferred rent	6,072			5,237
Contingent consideration on acquisition	—			443
Deferred tax liabilities	447			510
Capital leases	760			—
Other liabilities	—			264
Total liabilities	75,703			66,692
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value: 250,000,000 shares authorized as of December 31, 2016 and 2015, respectively; 50,431,324 and 52,214,384 shares issued and outstanding as of December 31, 2016 and 2015, respectively	5			5
Treasury stock, at cost 2,861,632 and 0 shares, respectively	(6,037		)	—
Additional paid-in capital	283,486			279,136
Accumulated other comprehensive (loss) income	(331		)	(55		)
Accumulated deficit	(198,601		)	(177,654		)
Total stockholders’ equity	78,522			101,432
Total liabilities and stockholders’ equity	$	154,225		$	168,124

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

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Tremor Video, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share data)

	Years Ended
	December 31,
	2016			2015			2014

Revenue	$	166,761		$	173,837		$	159,487
Cost of revenue	90,488			99,266			101,673
Gross profit	76,273			74,571			57,814

Operating expenses:
Technology and development	21,045			20,171			16,992
Sales and marketing	48,361			48,879			42,623
General and administrative	17,010			17,279			14,712
Depreciation and amortization	9,173			8,344			6,675
Mark-to-market	1,263			—			—
Impairment charges	—			22,665			—
Total operating expenses	96,852			117,338			81,002

Loss from operations	(20,579		)	(42,767		)	(23,188		)

Interest and other income, net:
Interest expense	(129		)	(10		)	(4		)
Other income, net	(123		)	30			46
Total interest and other income, net	(252		)	20			42

Loss before provision for income taxes	(20,831		)	(42,747		)	(23,146		)

Provision for income taxes	116			483			343

Net loss	$	(20,947	)	$	(43,230	)	$	(23,489	)

Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.40	)	$	(0.84	)	$	(0.46	)

Weighted-average number of shares of common stock outstanding:
Basic and diluted	52,279,738			51,684,397			50,637,541

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

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Tremor Video, Inc.

Consolidated Statements of Comprehensive Loss

(in thousands)

	Years Ended
	December 31,
	2016			2015			2014

Net loss	$	(20,947	)	$	(43,230	)	$	(23,489	)
Other comprehensive loss
Foreign currency translation adjustments	(276		)	(153		)	(97		)
Comprehensive loss attributable to common stockholders	$	(21,223	)	$	(43,383	)	$	(23,586	)

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

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Tremor Video, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

(in thousands, except share data)

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

Balance as of December 31, 2013	49,998,274		$	5	—		267,767			195			(110,935		)	157,032
Exercise of stock options awards	773,411		—		—		767			—			—			767
Stock-based compensation expense	—		—		—		4,607			—			—			4,607
Common stock issued for settlement of restricted stock units net of 173,707 shares withheld to satisfy income tax withholding obligations	334,569		—		—		953			—			—			953
Net loss	—		—		—		—			—			(23,489		)	(23,489		)
Foreign currency translation adjustment	—		—		—		—			(97		)	—			(97		)
Balance as of December 31, 2014	51,106,254		5		—		274,094			98			(134,424		)	139,773
Exercise of stock options awards	165,292				—		108			—			—			108
Stock-based compensation expense	—		—		—		4,002			—			—			4,002
Common stock issued for settlement of restricted stock units net of 210,029 shares withheld to satisfy income tax withholding obligations	573,690		—		—		220			—			—			220
Common stock issuance in connection with employee stock purchase plan	369,148		—		—		712			—			—			712
Net loss	—		—		—		—			—			(43,230		)	(43,230		)
Foreign currency translation adjustment	—		—		—		—			(153		)	—			(153		)
Balance as of December 31, 2015	52,214,384			5	—			279,136			(55	)		(177,654	)		101,432
Exercise of stock options awards	167,367				—		161									161
Stock-based compensation expense					—		3,895									3,895
Common stock issued for settlement of restricted stock units net of 274,980 shares withheld to satisfy income tax withholding obligations	560,922				—		(205		)							(205		)
Common stock issuance in connection with employee stock purchase plan	350,283				—		499									499
Treasury stock — repurchase of stock	(2,861,632	)			(6,037	)										(6,037		)
Net loss					—								(20,947		)	(20,947		)
Foreign currency translation adjustment					—					(276		)				(276		)
Balance as of December 31, 2016	50,431,324		$	5	(6,037	)	$	283,486		$	(331	)	$	(198,601	)	$	78,522

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

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Tremor Video, Inc.
Consolidated Statements of Cash Flows

(in thousands)

	Years Ended
	December 31,
	2016			2015			2014
Cash flows from operating activities:
Net loss	$	(20,947	)	$	(43,230	)	$	(23,489	)
Adjustments required to reconcile net loss to net cash (used in) provided by operating activities:
Loss on sublease	246			—			—
Impairment charges	—			22,665			—
Depreciation and amortization expense	9,173			8,344			6,675
Stock-based compensation expense	3,900			4,007			4,622
Compensation expense related to the acquisition contingent consideration	3,568			—			—
Stock-based long-term incentive compensation expense (income)	(300		)	436			673
Mark-to-market expense (income)	1,263			113			(6		)
Bad debt recovery	(66		)	(87		)	(16		)
Deferred tax benefit	(92		)	(61		)	—
Loss on fixed asset disposal	23			—			—
Net changes in operating assets and liabilities:
Increase in accounts receivable	(8,277		)	(22,675		)	(5,394		)
(Increase) decrease in prepaid expenses and other assets	583			(3,381		)	299
Increase in accounts payable and accrued expenses	6,728			20,178			5,899
Increase in other current liabilities	179			—			—
Decrease in contingent consideration on acquisition	(3,406		)	—			—
Increase in deferred rent and security deposits payable	628			5,639			9
Increase in restricted cash	(170		)	—			—
Increase in deferred revenue	(103		)	93			(256		)
Net cash (used in) provided by operating activities	(7,070		)	(7,959		)	(10,984		)

Cash flows from investing activities:
Purchase of property and equipment	(2,933		)	(7,732		)	(4,026		)
Acquisition, net of cash acquired	—			(1,672		)	—
Net cash used in investing activities	(2,933		)	(9,404		)	(4,026		)

Cash flows from financing activities:
Proceeds from issuance of common stock under employee stock purchase plan	499			—			—
Decrease in contingent consideration on acquisition	(431		)	—			—
Proceeds from the exercise of stock option awards	161			108			767
Principal portion of capital lease payments	(19		)	—			—
Treasury stock — repurchase of stock	(6,037		)	—			—
Tax withholdings related to net share settlements of restricted stock units	(505		)	(494		)	(565		)
Net cash (used in) provided by financing activities	(6,332		)	(386		)	202

Net (decrease) increase in cash and cash equivalents	(16,335		)	(17,749		)	(14,808		)

Effect of exchange rate changes in cash and cash equivalents	(392		)	(151		)	(96		)

Cash and cash equivalents at beginning of year	59,887			77,787			92,691
Cash and cash equivalents at end of year	$	43,160		$	59,887		$	77,787

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

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

1. Organization and Description of Business

Tremor Video, Inc. (the “Company”) is an advertising technology company that provides software for video advertising effectiveness. The Company’s buyer and seller platforms enable seamless transactions in a premium video marketplace by offering control and transparency to its clients. The Company’s technology optimizes performance of video ad campaigns across all screens, including computers, smartphones, tablets and connected TVs, to make advertising more relevant for consumers and deliver maximum results for buyers and sellers.

On August 3, 2015 (the “Acquisition Date”), the Company acquired all of the outstanding shares of The Video Network Pty Ltd, an Australian proprietary limited company (“TVN”). Refer to note 6 for further discussion.

The Company is headquartered in the State of New York.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements and footnotes have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).

Principles of Consolidation

The consolidated financial statements include the accounts of Tremor Video, Inc. and its wholly-owned subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.

The operating results of TVN have been included in the consolidated financial statements since the date of acquisition on August 3, 2015.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company’s management evaluates estimates, including those related to fair values and useful lives of intangible assets, fair values of stock-based awards, income taxes, and contingent liabilities. Such estimates are based on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Concentrations of Credit Risk

Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.

All of the Company’s cash and cash equivalents are held at financial institutions that management believes to be of high credit quality. The Company’s cash and cash equivalents may exceed federally insured limits at times. The Company has not experienced any losses on cash and cash equivalents to date.

The Company determines collectability of its accounts receivable by performing ongoing credit evaluations and monitoring its customers’ accounts receivable balances. For new customers and their agents, which may be advertising agencies or other third-parties, the Company performs a credit check with an independent credit agency and may check credit references to determine creditworthiness. The Company only recognizes revenue when, among other factors, collection is reasonably assured.

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

2. Summary of Significant Accounting Policies (Continued)

During the years ended December 31, 2016, 2015 and 2014, there were no advertisers that accounted for more than 10% of revenue. At December 31, 2016 there was one advertiser that accounted for 13.3% of outstanding accounts receivables. At December 31, 2015, there were no advertisers that accounted for more than 10% of outstanding accounts receivables.

Cash and Cash Equivalents

The Company considers cash deposits and all highly liquid investments with an original maturity of three months or less to be cash equivalents. The fair value of the Company’s cash and cash equivalents approximates their cost plus accrued interest because of the short-term nature of the instruments.

Fair Value of Financial Instruments

The Company utilizes fair value measurements when required. The carrying amounts of cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, restricted cash, accounts payable and accrued expenses approximate fair values as of December 31, 2016 and 2015 due to the short-term nature of those instruments.

Restricted Cash

At December 31, 2016 and 2015, the Company had total restricted cash outstanding of $770 and $600, respectively, which was used to collateralize standby letters of credit for its former headquarters in New York, New York and additional office space in Mountain View, California.

Accounts Receivable, Net

The Company extends credit to customers and generally does not require any security or collateral. Accounts receivable are recorded at the invoiced amount. The Company carries its accounts receivable balances at net realizable value. Management evaluates the collectability of its accounts receivable balances on a periodic basis and determines whether to provide an allowance or if any accounts should be written down and charged to expense as bad debt. The evaluation is based on a past history of collections, current credit conditions, the length of time the account is past due and a past history of write-downs. An accounts receivable balance is considered past due if the Company has not received payments based on agreed-upon terms.

The following table presents the changes in the allowance for doubtful accounts:

	Years Ended
	December 31,
	2016			2015			2014
Allowance for doubtful accounts:
Beginning balance	$	69		$	883		$	959
Add: bad debt recovery (1)	(116		)	(87		)	(16		)
Less: write-offs and other adjustments (2)	50			(727		)	(60		)
Ending balance	$	3		$	69		$	883

(1) Collections of previously reserved amounts

(2) During 2015, the Company wrote off $666 in accounts receivable balances related to a customer that was previously reserved for in 2010 as doubtful accounts, which remained uncollectible.

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

2. Summary of Significant Accounting Policies (Continued)

Property and Equipment, Net

Property and equipment are stated at cost, less accumulated depreciation. Depreciation expense on property and equipment is calculated using the straight-line method over the following estimated useful lives:

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

Leasehold improvements are amortized over the shorter of the remaining life of the lease or the life of the asset. The cost of additions, and expenditures that extend the useful lives of existing assets, are capitalized, while repairs and maintenance costs are charged to operations as incurred.

Impairment of Long-Lived Assets

The Company periodically reviews long-lived assets, which consists of its property and equipment and intangible assets, for impairment in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360, “Accounting for the Impairment or Disposal of Long-Lived Assets,” whenever events or changes in circumstances indicate that the carrying amount of an asset is impaired or the estimated useful lives are no longer appropriate. If indicators of impairment exist and the undiscounted projected cash flows associated with such assets are less than the carrying amount of the asset, an impairment loss is recorded to write the assets down to their estimated fair values. Fair value is estimated based on discounted future cash flows.

During the year ended December 31, 2015, the Company identified certain impairment indicators and conducted an impairment testing on certain property and equipment located at its former headquarters and certain intangible assets, specifically related to its customer relationships acquired in a historical acquisition, which indicated that the estimated fair value of these long-lived assets were below their carrying value. Accordingly, the Company recognized impairment charges of $566 and $1,209 related to its property and equipment and intangible assets, respectively, during the year ended December 31, 2015 to reduce the carrying values of these long-lived assets to their estimated fair values.

Other than the impairment losses above, the Company has not identified any other impairment losses on the remaining long-lived assets during the years ended December 31, 2016, 2015 and 2014.

Goodwill and Intangible Assets, Net

Goodwill represents the excess of the aggregate purchase price paid over the fair value of the net tangible and intangible assets acquired. Intangible assets that are not considered to have an indefinite useful life are amortized over their useful lives. The Company evaluates the estimated remaining useful lives of purchased intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. Goodwill is not amortized, but rather is subject to an impairment test.

The Company evaluates goodwill and other intangible assets with indefinite lives for impairment annually as of October 1st, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company adopted FASB Accounting Standards Update (“ASU”) 2011-08, “Testing Goodwill for Impairment,” which gives companies the option to qualitatively assess whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.

The Company operates as one operating and reporting segment and, therefore, the Company assesses goodwill for impairment annually as one singular reporting unit, using a two-step approach. The first step is to compare the fair value of the reporting unit to the carrying value of the net assets assigned to the reporting unit. If the fair value of the reporting unit is greater than the carrying value of the net assets assigned to the reporting unit, the assigned goodwill is not considered impaired. If the fair value is less than the reporting unit’s carrying value, step two is performed to measure the amount of the impairment, if any.

The Company did not identify any impairment of its goodwill at December 31, 2016 and 2014, and therefore, for the years ended December 31, 2016 and 2014, no impairment losses related to goodwill were recorded.

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

2. Summary of Significant Accounting Policies (Continued)

During the year ended December 31, 2015, the Company determined that an impairment indicator was present that required us to perform an interim goodwill impairment analysis prior to October 1st for the reporting unit. This impairment indicator was a decrease in market capitalization below the carrying value of the Company’s net assets. During the three months ended September 30, 2015, the Company conducted an interim impairment test on its goodwill, based on which the Company determined that the implied fair value of goodwill was less than the reporting unit’s carrying value. As a result, the Company recorded a goodwill impairment loss of $20,890 to reduce the carrying value of goodwill to its implied fair value.

The Company also reviews certain identifiable intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of intangible assets are measured by a comparison of the carrying amount of the asset or asset group, using an income approach, to future undiscounted net cash flows expected to be generated by the asset or asset group. If such assets are not recoverable, the impairment to be recognized, if any, is measured by the amount which the carrying amount of the assets exceeds the estimated fair value of the assets or asset group. As the Company operates as one business unit and our long-lived assets do not have identifiable cash flows that are independent of the other assets and liabilities of this business unit, the impairment testing on intangible assets is performed at the entity-level.

Intangible assets that are not considered to have an indefinite useful life are amortized over their estimated useful lives on a straight-line method as follows:

Technology		5 to 7 years
Customer relationships		5 to 10 years
Trademarks and trade names		5 to 7 years

Deferred rent liability

The Company recognizes and records rent expense related to its lease agreements, which include rent holidays, rent escalation provisions and renewal options, on a straight-line basis beginning on the commencement date over the term of the lease. The term of the lease begins on the date of possession, which is generally when the Company enters the leased premises. The Company does not assume renewal option terms in its determination of the lease term unless such renewal option is reasonably expected to be exercised upon lease inception. Any lease incentives, which may be in the form of reduced rent payments, rent holidays or landlord incentives, are considered in determining the straight-line rent expense to be recorded over the lease term.

Differences between straight-line rent expense and actual rent payments are recorded as a deferred rent liability and presented as either a current or long-term liability in the consolidated balance sheets based on the term of the respective lease agreements.

Revenue Recognition and Deferred Revenue

The Company generates revenue from buyers and sellers who use its platforms for the purchase and sale of video advertising inventory. The Company recognizes revenue when four basic criteria are met: (1) persuasive evidence exists of an arrangement with the client reflecting the terms and conditions under which the services will be provided; (2) services have been provided or delivery has occurred; (3) the fee is fixed or determinable; and (4) collection is reasonably assured. Collectability is assessed based on a number of factors, including the creditworthiness of a client and transaction history.

For campaigns running through the Company’s buyer platform, the Company offers a number of different pricing models, including outcome-based pricing models where the Company is compensated only when viewers take certain actions or when certain campaign results are achieved, fixed cost per thousand impressions, or CPM, based pricing models where an advertiser pays based on the total number of ad impressions delivered and campaigns priced with a guaranteed demographic reach, or demo guarantees, where an advertiser pays based on the number of ad impressions delivered to a specific demographic. For campaigns sold on a CPM-basis, the Company recognizes revenue upon delivery of impressions, or delivery of impressions to a specific target demographic for CPM-priced ad campaigns with demo guarantees. With respect to the Company’s outcome-based pricing models, the Company recognizes

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

2. Summary of Significant Accounting Policies (Continued)

revenue only when the specified action is taken or campaign result is achieved. Revenue generated from the Company’s buyer platform is reported on a gross basis, based primarily on the Company’s determination that it acts as the primary obligor in the delivery of advertising campaigns for buyers through the Company’s buyer platform.

For transactions executed through the Company’s seller platform, which was launched in 2015, the Company acts as the agent on behalf of the seller that is making its inventory available to buyers. Revenue is recognized when the buyer purchases video advertising inventory from the seller on the Company’s seller platform. Revenue generated from the Tremor Video SSP is reported net of inventory costs that the Company remits to sellers.

The determination of whether revenue should be reported on a gross or net basis is based on an assessment of whether the Company is acting as the principal or an agent in the Company’s transactions. In determining whether the Company acts as the principal or an agent, the Company follows the accounting guidance for principal-agent considerations. The determination of whether the Company is acting as a principal or an agent in a transaction involves judgment and is based on an evaluation of the terms of each arrangement, none of which are considered presumptive or determinative. Revenue generated, and costs incurred, related to the Company’s buyer platform are reported on a gross basis as the Company is the primary obligor and responsible for: (1) identifying and contracting with buyers and sellers; (2) responding to all service-related issues concerning the delivery of a campaign; (3) determining the ad inventory on which a campaign should run using the Company’s proprietary optimization and decisioning technology; (4) performing all billing and collection activities, including retaining credit risk; and (5) bearing responsibility for fulfillment of the advertising campaign. Revenue generated, and costs incurred, related to the Company’s seller platform are reported on a net basis as the Company is not the primary obligor in its seller platform transactions as: (1) the determination of whether to purchase inventory, and the price for such inventory, is generally determined by third party buyers (DSPs) through their real-time bidding technology; and (2) the Company does not generally take on inventory risk.

The license fees for the Company’s licensed analytics solutions are based on the number of impressions being analyzed through these solutions. The Company recognizes revenue with respect to these solutions on a cost per impression basis based on the number of impressions being analyzed in a given month. Typically, the Company’s license terms are for one year periods. In limited cases, the Company charges a minimum monthly fee. The Company has discontinued selling its licensed analytics solutions as of December 31, 2015.

As of December 31, 2016 and 2015, there were $5 and $108, respectively, of amounts either billed in excess of recognized revenue or for services for which cash payments were received in advance of the Company’s performance of the service under the arrangement and recorded as deferred revenue in the accompanying consolidated balance sheets.

Cost of Revenue

Cost of revenue primarily represents video advertising inventory costs, costs of third-party data licenses, research costs, third-party hosting fees, and third-party serving fees incurred to deliver video ads. Substantially all of the cost of revenue for the Company’s buyer platform is attributable to video advertising inventory costs under seller contracts. The Company recognizes cost of revenue on a seller-by-seller basis upon delivery of an ad impression. Cost of revenue for the Company’s seller platform primarily consists of third-party hosting fees.

Certain of the Company’s contracts with sellers contain minimum percentage fill rates on qualified video ad requests, which effectively means that the Company must purchase this inventory from its exclusive sellers even if the Company lacks a video advertising campaign to deliver to these video ad impressions. The Company recognizes the difference between the contractually required fill rate and the number of video ads actually delivered on the seller’s website, if any, as a cost of revenue as of the end of each applicable monthly period. Historically, the impact of the difference between the contractually required fill rate and the number of ads delivered has not been material. Costs owed to sellers but not yet paid are recorded in the consolidated balance sheets as accounts payable and accrued expenses.

Technology and Development Expenses

Technology and development costs primarily consist of salaries, incentive compensation, stock-based compensation and other personnel-related costs for development, network operations and engineering personnel. Additional expenses in this category include costs related to development, quality assurance and testing of new technology, maintenance and enhancement of the Company’s existing technology and infrastructure as well as consulting, travel and other related overhead. The Company engages third-party

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

2. Summary of Significant Accounting Policies (Continued)

consulting firms for various technology and development efforts, such as documentation, quality assurance, and support. Due to the rapid development and changes in the Company’s business and underlying technology to date, the Company has expensed development costs in the same period that those costs were incurred.

Sales and Marketing Expenses

Sales and marketing expenses primarily consist of salaries, incentive compensation, stock-based compensation and other personnel-related costs for sales, marketing and creative employees and the buyer focused, seller focused and licensing solution focused sales and sales support employees. Additional expenses in this category include marketing programs, consulting, travel and other related overhead. These costs are expensed when incurred and are included in sales and marketing expenses.

Advertising costs, which are comprised of print and internet advertising, were $18 , $26, and $688 for the years ended December 31, 2016, 2015 and 2014, respectively.

Stock-Based Compensation Expenses

The Company accounts for stock-based compensation expense under FASB ASC 718, “Compensation—Stock Compensation,” which requires the measurement and recognition of stock-based compensation expense based on estimated fair values, for all stock-based payment awards made to employees, and FASB ASC 505-50, “ Equity-Based Payments to Non-Employees ,” which requires the measurement and recognition of stock-based compensation expense based on the estimated fair value of services or goods being received, for all stock-based payment awards made to other service providers and non-employees.

The Company measures its stock-based payment awards based on its estimate of the fair value of such award using an option-pricing model, for stock option awards, and the fair value of the Company’s common stock on the date of grant, for restricted stock unit awards. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated statements of operations.

The Company recognizes compensation expenses for the value of its stock-based payment awards, which have graded vesting criteria based on service conditions, using the straight-line method, over the requisite service period of each of the awards, net of estimated forfeitures.

In the event of modification of the conditions on which stock-based payment awards were granted, an additional expense is recognized for any modification that increases the total fair value of the stock-based payment arrangement or is otherwise beneficial to the employee, other service provider or non-employee at the modification date.

Income Taxes

Income taxes represents amounts paid or payable (or received or receivable) for the current year and includes any changes in deferred taxes during the year. The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as for operating loss and tax credit carry-forwards. The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which the Company expects to recover or settle those temporary differences. The Company recognizes the effect of a change in tax rates on deferred tax assets and liabilities in the results of operations in the period that includes the enactment date. Deferred income tax expense represents the change during the period in deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as non-current. The Company reduces the measurement of a deferred tax asset, if necessary, by a valuation allowance if it is more likely than not that the Company will not realize some or all of the deferred tax asset. As a result of the Company’s historical operating performance and the cumulative net losses incurred to date, the Company does not have sufficient objective evidence to support the recovery of the deferred tax assets. Accordingly, the Company has established a valuation allowance against substantially all of its deferred tax assets for financial reporting purposes because the Company believes it is more likely than not that these deferred tax assets will not be realized. The Company accounts for uncertain tax positions by recognizing the financial statement effects of a tax position only when, based upon technical merits, it is “more-likely-than-not” that the position will be sustained upon examination. Potential interest and penalties associated with unrecognized tax positions are recognized in its provision for income taxes in the consolidated statements of operations.

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

2. Summary of Significant Accounting Policies (Continued)

Net Loss Per Share Attributable to Common Stockholders

Basic net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period.

Diluted net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period, adjusted to reflect potentially dilutive securities using the treasury stock method for warrants to purchase common stock, stock option awards and restricted stock unit awards. Due to the Company’s net loss attributable to common stockholders: (i) warrants to purchase common stock; (ii) stock option awards; and (iii) restricted stock unit awards were not included in the computation of diluted net loss per share attributable to common stockholders, as the effects would be anti-dilutive. Accordingly, basic and diluted net loss per share attributable to common stockholders is equal for the years presented.

Comprehensive Loss

Comprehensive loss consists of foreign currency translation adjustments. Total comprehensive loss and its components are presented in the accompanying consolidated statements of comprehensive loss.

Foreign Currency Translation Adjustments

The functional currency of the Company’s international subsidiaries is their local currency. The Company translates the financial statements of these subsidiaries to U.S. dollars using period-end exchange rates for assets and liabilities, and average exchange rates for revenue and expenses. Translation gains and losses are recorded in accumulated other comprehensive (loss) income as a component of stockholders’ equity. During the years ended December 31, 2016, 2015 and 2014, foreign currency translation adjustment losses of $276, $153, and $97 respectively, were recorded as a component of comprehensive loss in the consolidated financial statements. Realized and unrealized transaction gains and losses are included in the consolidated statements of operations in the period in which they occur, except on inter-company balances considered to be long-term. Transaction gains and losses on inter-company balances which are considered to be long-term are recorded in accumulated other comprehensive (loss) income. The Company considers its inter-company balances to be long-term in nature. Net (losses) gains resulting from transactions denominated in foreign currencies was accounted for in the Company’s consolidated statements of operations and totaled $(21), $(4), and $(14) during the years ended December 31, 2016, 2015 and 2014, respectively.

Recently Issued Accounting Pronouncements

FASB Accounting Standards Update No. 2016-15 — Classification of Certain Cash Receipts and Cash Payments

In August 2016, the FASB issued Accounting Standards Update (“ASU”), which clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. The new guidance also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. This update is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact that the update will have on its consolidated financial statements and related disclosures.

FASB Accounting Standards Update No. 2016-09 — Compensation — Stock Compensation (Topic 718)

In March 2016, the FASB issued Accounting Standards Update (“ASU”), which identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. This update is effective for fiscal years beginning after December 15, 2016 including interim periods within that reporting period, with early adoption permitted. The Company is currently evaluating the impact that the update will have on its consolidated financial statements and related disclosures.

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

2. Summary of Significant Accounting Policies (Continued)

FASB Accounting Standards Update No. 2016-02 — Leases (Topic 842)

In February 2016, the FASB issued an Accounting Standards Update (“ASU”), which clarifies and improves existing authoritative guidance related to leasing transactions. This update will require the recognition of lease assets and lease liabilities on the balance sheet and disclosing information about material leasing arrangements. This update is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact that the update will have on its consolidated financial statements and related disclosures.

FASB Accounting Standards Update No. 2015-17 — Income Taxes (“Topic 740”): Balance Sheet Classification of Deferred Taxes

In November 2015, the FASB issued an Accounting Standards Update (“ASU”), which requires deferred tax assets and liabilities be classified and presented as non-current on the balance sheet. This update is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company adopted this update in the fourth quarter of 2015 on a prospective basis. All prior year balances were not retrospectively adjusted. The adoption of this update did not have a material impact on the Company’s consolidated financial statements and related disclosures.

FASB Accounting Standards Update No. 2015-16 — Business Combinations (“Topic 805”): Simplifying the Accounting for Measurement-Period Adjustments

In September 2015, the FASB issued an ASU, which eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Pursuant to this update, acquirers must recognize measurement-period adjustments in the period in which they determine the amounts, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. This guidance is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company is currently evaluating the impact that the update will have on its consolidated financial statements and related disclosures.

FASB Accounting Standards Update No. 2014-09 — Revenue from Contracts with Customers

In May 2014, the FASB issued an ASU that provides a comprehensive model for recognizing revenue with customers. This update clarifies and replaces all existing revenue recognition guidance within U.S. GAAP and may be adopted retrospectively for all periods presented or adopted using a modified retrospective approach. This update is effective for annual and interim periods beginning after December 15, 2016. In July 2015, FASB deferred the effective date by one year to December 15, 2017 (beginning with the Company’s first quarter in 2018) and permitting early adoption of the standard, but not before the original effective date of December 15, 2016. The Company will adopt the new standard in the first quarter of 2018 and expects to apply the modified retrospective approach.

We are in the initial stages of our evaluation of the impact of the new standard on our accounting policies, processes, and system requirements. We have assigned internal resources in addition to the engagement of a third party service provider to assist in the evaluation. Implementation efforts, to date, have included training on the new standard and preparing initial gap assessments on the Company’s significant revenue streams through its buyer and seller platforms.

While we continue to assess the potential impacts of the new standard, including the areas described above, we do not know or cannot reasonably estimate quantitative information related to the impact of the new standard on our financial statements at this time. However, as the implementation efforts progress through 2017, the Company will continue to provide updated disclosures within its periodic filings on Form 10-Q.

3. Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs when determining fair value. If a financial instrument uses inputs that fall in different levels of the hierarchy, the

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

3. Fair Value Measurements (Continued)

instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation. The three-tiers are defined as follows:

· Level 1 . Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities;

· Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

· Level 3. Unobservable inputs for which there is little or no market data requiring the Company to develop its own assumptions.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

	December 31, 2016					December 31, 2015
	Level 1		Level 2	Level 3	Total	Level 1		Level 2		Level 3		Total
Assets:
Money market funds (1)	$	33,710			33,710	$	41,584	$	—	$	—	$	41,584
Total assets	$	33,710			33,710	$	41,584	$	—	$	—	$	41,584
Liabilities:
Contingent consideration on acquisition liability (2)	$			2,483	2,483	$	—	$	—	$	1,430	$	1,430
Total liabilities	$			2,483	2,483	$	—	$	—	$	1,430	$	1,430

(1) Money market funds are included within cash and cash equivalents in the Company’s consolidated balance sheets. As short-term, highly liquid investments readily convertible to known amounts of cash, the Company’s money market funds have carrying values that approximates its fair value. Amounts above do not include $9,450 and $18,303 of operating cash balances as of December 31, 2016 and 2015, respectively.

(2) On the Acquisition Date, the Company acquired all of the outstanding shares of TVN. In connection with the acquisition, the former stockholders of TVN (“TVN Sellers”) are eligible to receive future cash payments over a term of two years contingent on the operating performance of TVN in reaching certain financial milestones in each of the periods from July 1, 2015 to June 30, 2016 (the “Year 1 Earn-Out Period”) and the period from July 1, 2016 to June 30, 2017 (the “Year 2 Earn-Out Period”), a portion of which is also contingent on continued employment of certain TVN Sellers (the “TVN Employee Sellers”) by the Company. In estimating the fair value of the contingent consideration, the Company used a Monte-Carlo valuation model based on future expectations on reaching financial milestones, other management assumptions (including operating results, business plans, anticipated future cash flows, and marketplace data), and the weighted-probabilities of possible payments. These assumptions were based on significant inputs not observed in the market and, therefore, represent a Level 3 measurement. Subsequent to the date of acquisition, the Company re-measured the estimated fair value of the contingent consideration at each reporting date with any changes in fair value recorded in the Company’s statements of operations. Any changes in the unobservable inputs could significantly impact the estimated fair value of the contingent consideration.

Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

The following table represents the changes in the Company’s Level 3 instruments measured at fair value on a recurring basis for the year ended December 31, 2016 :

	2016
Beginning balance at January 1, 2016	$	1,430
Compensation expense (1)	3,568
Mark-to-market expense (2)	1,263
Contingent consideration payments (3)	(3,837		)
Foreign currency translation adjustment	59
Ending balance at December 31, 2016	$	2,483

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

3. Fair Value Measurements (Continued)

(1) Represents contingent consideration attributable to the TVN Employee Sellers that has been recorded during the twelve months ended December 31, 2016. Refer to the table above regarding assumptions used for Level 3 instruments, and note 6 for further discussion of contingent consideration payments owed in connection with the Company’s acquisition of TVN.

(2) Reflects expense incurred based on the Company’s re-measurement, at December 31, 2016, of the estimated fair value of the contingent consideration relating to the TVN Sellers that are not required to remain employed with the Company as a condition to earning such contingent consideration. Amounts recorded as mark-to-market expense relating to Level 3 instruments are recorded in operating expense. Refer to the table above regarding assumptions used for Level 3 instruments, and note 6 for further discussion of contingent consideration payments owed in connection with the Company’s acquisition of TVN.

(3) During the three months ended September 30, 2016, the Company paid the TVN Employee Sellers and TVN Sellers, $2,741 and $1,096, respectively, based on the performance of TVN during the Year 1 Earn-Out Period.

4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of:

	December 31,
	2016		2015

Prepaid expenses and other current assets	$	2,240	$	2,790
Prepaid rent	19		165
Leasehold improvement incentives	55		766
Deferred rental income	91		—
Total prepaid expenses and other current assets	$	2,405	$	3,721

5. Property and Equipment, Net

Property and equipment, net consisted of:

	December 31,
	2016			2015

Leasehold improvements	$	8,524		$	6,863
Computer hardware	8,909			6,774
Furniture and fixtures	1,708			1,636
Computer software	1,571			1,344
Office equipment	226			193
Total	20,938			16,810
Less: accumulated depreciation	(11,282		)	(6,716		)
Total property and equipment, net of accumulated depreciation	$	9,656		$	10,094

The depreciation expense related to property and equipment was $ 4,649, $3,404, and $1,840 for the years ended December 31, 2016, 2015 and 2014, respectively. The Company disposed of assets with a cost basis of $107 and accumulated depreciation of $84 during the year ended December 31, 2016.

The Company recorded a $566 (includes disposal costs of $22) impairment charge for the year ended December 31, 2015. This impairment charge represents the remaining net carrying values of certain property and equipment located at its former headquarters, which were vacated and impaired during 2015 based on changes in expected use of the asset that indicated the carry amount may not be recoverable. Accordingly, the Company recorded a reduction of $2,251 to the cost and $1,707 to the accumulated depreciation balances.

The Company entered into capital leases for the acquisition of $1,141 of computer hardware for its data center in Ashburn, Virginia. As of December 31, 2016, these assets were not placed in service and as such, no depreciation expense has been recorded for 2016.

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

6. Acquisition

On the Acquisition Date, the Company acquired all of the outstanding shares of TVN. As consideration for the acquisition of the equity of TVN, the Company made an initial payment to the TVN Sellers of $3,040 Australian dollars ($2,217 U.S. dollars based on the currency exchange rate on the Acquisition Date), subject to certain adjustments as set forth in the acquisition agreement, and is required to make payments of $380 Australian dollars ($277 U.S. dollars based on the currency exchange rate on the Acquisition Date) on each of the first and second anniversary of the closing, respectively. Subsequent to the Acquisition Date, the Company paid an additional $661 Australian dollars ($482 U.S. dollars based on the currency exchange rate on the payment date) to the TVN Sellers for certain working capital adjustments.

In addition, the TVN Sellers are eligible to receive future cash payments over a term of two years contingent on the operating performance of TVN in reaching certain financial milestones for the Year 1 Earn-Out Period and Year 2 Earn-Out Period, a portion of which is also contingent on continued employment of certain TVN Employee Sellers. Subsequent to the Acquisition Date, the Company and TVN Sellers agreed to modify certain financial milestones and reduced the eligible contingent payments from $12,200 Australian dollars ($8,896 U.S. dollars based on the currency exchange rate on the Acquisition Date) to $10,470 Australian dollars ($7,651 U.S. dollars based on the currency exchange rate on the modification date).

In estimating the fair value of the contingent cash consideration, the Company used a Monte-Carlo valuation model based on future expectations on reaching such financial milestones, other management assumptions (including operating results, business plans, anticipated future cash flows, and marketplace data), and the weighted-probabilities of possible payments. Refer to note 3 for further discussion on assumptions used to estimate the fair value of the contingent consideration.

As of the Acquisition Date, the Company estimated the fair value of the contingent consideration to be $3,870 Australian dollars ($2,822 U.S. dollars based on the currency exchange rate on the Acquisition Date), of which the Company recorded $1,122 Australian dollars ($818 U.S. dollars based on the currency exchange rate on the Acquisition Date) as purchase consideration for TVN related to TVN Sellers that are not subject to continued employment. This amount has been included within total liabilities in the Company’s consolidated balance sheet.

As of December 31, 2016, the estimated fair value of the contingent cash consideration for the Year 2 Earn-Out Period is $5,350 Australian dollars ($3,863 U.S. dollars based on the currency exchange rate at the balance sheet date). The Company made a payment to the TVN Sellers for an amount of $4,990 Australian Dollars ($3,837 U.S. Dollars based on the currency exchange rate on the date of payment, August 16, 2016) paid during the three months ended September 30, 2016 based on the performance of TVN during the Year 1 Earn-Out Period.

For the TVN Employee Sellers, the payment of the contingent cash consideration is dependent upon continued employment through the date of payment. As a result, the estimated fair value of the contingent cash consideration relating to such TVN Employee Sellers was excluded from the purchase consideration and such amounts will be recorded as compensation expense over the Year 1 Earn-Out Period and Year 2 Earn-Out Period. The estimated fair value of the contingent cash consideration related to such TVN Employee Sellers as of December 31, 2016 for the Year 2 Earn-Out Period is $3,821 Australian dollars ($2,760 U.S. dollars based on the currency exchange rate at the balance sheet date). For the year ended December 31, 2016, the Company recorded $3,568 in compensation-related expenses in connection with the continued employment of the TVN Employee Sellers within sales and marketing expenses in its consolidated statements of operations.

For the TVN Sellers the estimated fair value of the contingent cash consideration as of December 31, 2016 for the Year 2 Earn-Out Period is $1,529 Australian dollars ($1,103 U.S. dollars based on the currency exchange rate at the balance sheet date). For the year ended December 31, 2016, the Company recorded $1,263 in mark-to-market expense in the Company’s consolidated statements of operations.

The total consideration transferred in the acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed at the Acquisition Date, and are subject to adjustment during a measurement period of up to one year from the Acquisition Date. The measurement period provides the Company with the ability to adjust the fair values of acquired assets and liabilities assumed for new information that is obtained about events and circumstances that existed as of the Acquisition Date. Goodwill recognized in the TVN acquisition is not deductible for tax purposes.

The results of operations of TVN have been included in the Company’s consolidated statements of operations since the Acquisition Date.

7. Goodwill and Intangible Assets, Net

Goodwill is tested annually for impairment or more frequently if impairment indicators are present. The Company operates as one operating and reporting segment and, therefore, the Company assesses goodwill for impairment annually as one singular reporting unit, using a two-step approach. The first step is to compare the fair value of the reporting unit to the carrying value of the net assets assigned to the reporting unit. If the fair value of the reporting unit is greater than the carrying value of the net assets assigned to the reporting unit, the assigned goodwill is not considered impaired. If the fair value is less than the reporting unit’s carrying value, step two is performed to measure the amount of the impairment, if any.

The Company did not identify any impairment of the goodwill at December 31, 2016 and 2014, and therefore, for the years ended December 31, 2016 and 2014, no impairment losses related to goodwill were recorded.

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

7. Goodwill and Intangible Assets, Net (continued)

in market capitalization below the carrying value of the Company’s net assets. During the three months ended September 30, 2015, the Company conducted an interim impairment test on its goodwill, based on which the Company determined that the implied fair value of goodwill was less than the reporting unit’s carrying value. As a result, the Company recorded a goodwill impairment loss of $20,890 to reduce the carrying value of goodwill to the implied fair value. The changes in the carrying amount of goodwill as of December 31, 2016 and 2015 were as follows:

	2016			2015
Beginning balance as of January 1,	$	10,781		$	29,719
Acquisition-related goodwill	—			1,251
Impairment of goodwill	—			(20,890		)
Purchase price adjustment related to acquisition (1)	—			651
Foreign exchange impact	(23		)	50
Ending balance as of December 31,	$	10,758		$	10,781

The Company also reviews certain identifiable intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of intangible assets are measured by a comparison of the carrying amount of the asset or asset group, using an income approach, to future undiscounted net cash flows expected to be generated by the asset or asset group. If such assets are not recoverable, the impairment to be recognized, if any, is measured by the amount which the carrying amount of the assets exceeds the estimated fair value of the assets or asset group. As the Company operates as one business unit and the Company’s long-lived assets do not have identifiable cash flows that are independent of the other assets and liabilities of this business unit, the impairment testing on intangible assets is performed at the entity-level.

In connection with the interim impairment testing on goodwill that occurred during the three months ended September 30, 2015, the Company also conducted an impairment testing on certain intangible assets, specifically related to its customer relationships acquired in a historical acquisition, which indicated that the estimated fair value of those intangible assets were below their carrying value. Accordingly, the Company recognized an impairment charge related to its intangible assets of $1,209 during the year ended December 31, 2015 to reduce the carrying values of these intangible assets to their estimated fair values.

Information regarding the Company’s acquisition-related intangible assets, net is as follows:

	December 31, 2016
	Gross Carrying		Accumulated		Net Carrying
	Amount		Amortization		Amount
Technology	$	24,500	(21,513	)	2,987
Customer relationships (1)	9,714		(6,016	)	3,698
Trademarks and trade name	1,670		(1,483	)	187
Domain name	50		—		50
Total acquisition-related intangible assets, net	$	35,934	(29,012	)	6,922

	December 31, 2015
	Gross Carrying		Accumulated			Net Carrying
	Amount		Amortization			Amount
Technology	$	24,500	$	(18,116	)	$	6,384
Customer relationships (2)	9,737		(5,113		)	4,624
Trademarks and trade name (2)	1,670		(1,259		)	411
Domain name (3)	50		—			50
Total acquisition-related intangible assets, net	$	35,957	$	(24,488	)	$	11,469

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

7. Goodwill and Intangible Assets, Net (continued)

(1) The decrease of $23 from December 31, 2015 to December 31,2016 results from the foreign exchange impact

(2) In connection with the Company’s acquisition of TVN during the year ended December 31, 2015, the Company acquired the following identifiable acquisition-related intangible assets (a) $2,045 (including impact of foreign exchange transaction loss of $3) in customer relationships, and (b) $21 in trademarks and tradenames.

(3) This intangible asset is considered to have an indefinite useful life and, therefore, not subject to amortization.

Amortization expense amounted to $4,524, $4,940 and $4,835 for the years ended December 31, 2016, 2015 and 2014, respectively. The estimated future amortization expenses of the acquisition-related intangible assets that are considered to have a definite life, as of December 31, 2016, for the next five years and thereafter are as follows:

2017	4,059
2018	884
2019	884
2020	848
2021	197
2022 and thereafter	—
Total (1)	$	6,872

(1) Total estimated future amortization expenses exclude any intangible assets considered to have an indefinite useful life.

8. Income Taxes

The components of the Company’s loss before income tax provision for the years ended December 31, 2016, 2015 and 2014 are as follows:

	Years Ended
	December 31,
	2016			2015			2014
Loss before provision for income taxes:
Domestic	$	(14,412	)	$	(41,611	)	$	(22,248	)
Foreign	(6,419		)	(1,136		)	(898		)
Total loss before provision for income taxes	$	(20,831	)	$	(42,747	)	$	(23,146	)

The Company’s income tax provision, which consists of minimum U.S. state and local taxes and taxes from foreign jurisdictions, consists of the following:

	Years Ended
	December 31,
	2016			2015			2014
Provision for current income taxes:
U.S. federal	$	—		$	—		$	—
U.S. state and local	(37		)	361			328
Foreign	245			183			15
Total provision for current income taxes	208			544			343
Benefit for deferred income taxes:
U.S. federal	—			—			—
U.S. state and local	—			—			—
Foreign	(92		)	(61		)	—
Total benefit for deferred income taxes	(92		)	(61		)	—
Total provision for income taxes	$	116		$	483		$	343

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

8. Income Taxes (Continued)

A reconciliation between the U.S. federal statutory income tax rate to the effective tax rate, by applying such rates to loss before income tax provision, for the years ended December 31, 2016, 2015 and 2014 are as follows:

	Years Ended
	December 31,
	2016		2015		2014

U.S. federal statutory income tax rate	(34.00	)%	(34.00	)%	(34.00	)%
State income tax rate, net of U.S. federal tax benefit	(0.18	)	0.85		0.94
Stock-based compensation expense	1.40		1.06		2.70
Acquisition related costs	5.77		—		—
Mark-to-market expense	2.04		—		—
Change in income tax rates	3.04		0.35		1.73
Change in deferred tax asset valuation	21.12		14.91		28.71
Goodwill impairment charge	—		16.61		—
Other	1.37		1.35		1.40
Effective tax rate	0.56	%	1.13	%	1.48	%

Significant components of the Company’s deferred tax assets and liabilities are summarized as follows:

	December 31,
	2016			2015
Deferred tax assets:
Net operating losses and tax credits	$	46,336		$	43,990
Stock-based compensation expense	3,883			3,579
Deferred rent	1,483			1,148
Depreciation and amortization expense	61			631
Accrued expenses	192			234
Allowance for doubtful accounts	1			19
Other	95			157
Total deferred tax assets before valuation allowance	52,051			49,758
Less: valuation allowance	(50,211		)	(45,932		)
Total deferred tax assets, net of valuation allowance	1,840			3,826

Deferred tax liabilities:
Intangible assets	(2,277		)	(4,324		)
Depreciation and amortization expense	—			—
Other	(10		)	(12		)
Total deferred tax liabilities	(2,287		)	(4,336		)

Total deferred tax liabilities, net	$	(447	)	$	(510	)

For financial and tax reporting purposes, the Company incurred net operating losses in each period since its inception and, therefore, a significant portion of the deferred tax assets recognized relate to such net operating losses. In determining whether the Company may realize the benefits from these deferred tax assets, the Company considers all available objective and subjective evidence, both positive and negative. Based on the weight of such evidence, a valuation allowance on a jurisdiction by jurisdiction basis is necessary for some portion, or all, of the deferred tax assets since the Company cannot be assured that, more likely than not, such amounts will be realized. Based on the available objective and subjective evidence, including the Company’s history of net operating losses, management believes it is more likely than not that the deferred tax assets will not be fully realizable at December 31, 2016 and 2015. Accordingly, the Company provided a valuation allowance on substantially all of its deferred tax asset balance to reflect the uncertainty regarding the realizability of these assets for the periods presented.

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

8. Income Taxes (Continued)

For the year ended December 31, 2016, the Company’s valuation allowance has increased by $4,279 to $50,211 compared to December 31, 2015.

As of December 31, 2016, the Company has U.S. federal and state net operating loss carry-forwards of approximately $117,308 and $65,659, respectively, and foreign net operating loss carry-forwards of $8,153, $6,787 and $99 related to its international subsidiaries in the United Kingdom, Germany and Brazil respectively, which are available to reduce future taxable income in those jurisdictions. The U.S. federal net operating losses will expire in various years beginning in 2027 through 2036. The Company’ foreign net operating loss carry-forwards can be carried forward without limitation in each respective country. The U.S. federal net operating losses includes acquired tax loss carry-forwards of Transpera, Inc. (“Transpera”) and ScanScout, Inc. (“ScanScout”), which are subject to limitation on future utilization under Section 382 of the Internal Revenue Code of 1986 (“Section 382”). Section 382 imposes limitations on the availability of a company’s net operating losses after a more than 50 percentage point ownership change occurs. It is estimated that the effect of Section 382 will generally limit the amount of the net operating loss carry-forwards of Transpera and ScanScout that are available to offset future taxable income to approximately $160 and $2,220, respectively, annually. The overall determination of the annual loss limitation is subject to interpretation, and, therefore, the annual loss limitation could be subject to change.

Included in the U.S. federal and state net operating loss carry-forwards, but not included in the table above, is approximately $3,885 of net operating losses from excess tax deductions attributable to equity compensation. The tax benefit of the excess tax deduction attributable to stock-based compensation expense will be recorded to additional paid-in-capital when it reduces U.S. federal income taxes payable.

The Company did not record any amounts related to uncertain tax positions or tax contingencies at December 31, 2016 and 2015. As of December 31, 2016 and 2015, the primary tax jurisdictions in which the Company is subject to tax were the U.S. federal and state jurisdictions (primarily the State and City of New York), Australia, Canada, Singapore, Malaysia, New Zealand, Brazil and United Kingdom. Since the Company is in a net operating loss position, the Company is generally subject to U.S. federal and state income tax examinations by tax authorities for all years for which a net operating loss carry-forward is available. The Company’s open tax years extend back to 2005. In the event that the Company concludes that it is subject to interest or penalties arising from uncertain tax positions, the Company will record interest and penalties as a component of provision for income taxes. No amounts of interest or penalties were recognized in the consolidated statements of operations for the years ended December 31, 2016, 2015 and 2014.

9. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of:

	December 31,
	2016		2015

Trade accounts payable	$	49,074	$	42,692
Accrued compensation, benefits and payroll taxes (1)	7,023		8,423
Accrued cost of sales	7,559		5,127
Other payables and accrued expenses	1,035		2,500
Total accounts payable and accrued expenses	$	64,691	$	58,742

(1) At December 31, 2016 and 2015, accrued compensation, benefits and payroll taxes includes $0 and $491 of stock-based long-term incentive compensation expense, respectively, related to the Company’s long-term sales incentive compensation plan. Payments earned under the plan for the 2015 plan year were made in stock-based awards to participants that remain employed with the Company through June 30, 2016 and were paid in August 2016. The Company did not offer the long-term sales incentive compensation plan for 2016.

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

10. Credit Facility

The Company is party to a Loan and Security Agreement (“Loan Agreement”) with Silicon Valley Bank (“SVB”), dated as of June 7, 2007, which was amended and restated by the parties on January 27, 2017 (the “Restated Loan Agreement”).

On October 20, 2014, the Company amended its Loan Agreement to, among other things, increase the Company’s revolving credit facility from $25,000 to $32,500, add a letter of credit, foreign exchange and cash management facility in an aggregate amount of $2,500 and extend the maturity date to December 30, 2016.

On October 21, 2014, SVB issued an irrevocable standby letter of credit in the amount of $1,532 in favor of the landlord as additional collateral pursuant to the terms of the Company’s lease for its new headquarters. The irrevocable standby letter of credit can be drawn down from amounts available under the credit facility, was for a one-year term, which expired on October 21, 2015, and was automatically extended for an additional one-year term to October 21, 2016. In connection with delivery by the landlord of additional space under the Company’s lease for its headquarters, on December 11, 2015, the Company amended the irrevocable standby letter of credit to increase the amount from $1,532 to $2,332.

On January 27, 2017, the Company and SVB entered into the Restated Loan Agreement. Under the Restated Loan Agreement, the Company can incur revolver borrowings up to the lesser of $35,000 and a borrowing base equal to 80.0% of eligible accounts receivable. Any outstanding principal amounts borrowed under the Restated Loan Agreement must be paid at maturity. Interest accrues at a floating rate equal to SVB’s prime rate and is payable monthly. In addition, the Company is required to pay a fee of 0.35% of any unused borrowing capacity, which is payable quarterly. The Restated Loan Agreement also includes a letter of credit, foreign exchange and cash management facility up to the full amount of available credit. The credit facility matures in January 2018.

The Restated Loan Agreement contains customary conditions to borrowings, events of default and negative covenants, including covenants that restrict the Company’s ability to dispose of assets, merge with or acquire other entities, incur indebtedness, incur encumbrances, make distributions to holders of capital stock, make investments or engage in transactions with affiliates. The Company is also subject to a financial covenant with respect to minimum quick ratio, tested monthly, and trailing twelve-month Adjusted EBITDA, tested quarterly. The Company’s obligations under the credit facility are secured by substantially all of its assets other than its intellectual property, although the Company has agreed not to encumber any of its intellectual property without the lender’s prior written consent. Subject to certain exceptions, the Company is required to maintain all of its cash and cash equivalents at accounts with the Lender.

As of December 31, 2015, December 31, 2016, and the date of this filing, the Company had no outstanding borrowings under the credit facility; however, the SVB has issued an irrevocable standby letter of credit in the amount of $2,332 in favor of the landlord as additional collateral pursuant to the terms of the Company’s lease for its headquarters, which can be drawn down from amounts available under the facility.

11. Commitments and Contingencies

Capital Leases

During various dates in the fourth quarter of 2016, the Company entered into four capital leases for the acquisition of $1,141 of computer hardware for its data center in Ashburn, Virginia. The term of each lease is three years and the aggregate remaining principal balance as of December 31, 2016 was $1,122.

As of December 31, 2016, future minimum payment commitments required under the Company’s capital leases, are as follows:

	Principal		Interest		Total
2017	$	362	$	115	$	477
2018	384		69		453
2019	376		21		397
Total capital lease commitments	$	1,122	$	205	$	1,327

Operating Commitments

The Company leases office space under non-cancellable operating lease agreements that expire at various dates. In addition, the Company utilizes co-location services for its servers and other computer hardware. These services are multi-year, non-cancellable

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

11. Commitments and Contingencies (Continued)

agreements that are similar in form to a lease on office space. The Company also contracted for other marketing services under various non-cancellable agreements that expire at various dates through 2026.

As of December 31, 2016, future minimum payment commitments required under the Company’s non-cancellable office space leases, including the lease for its headquarters and for its former headquarters (which the Company subleases), co-location agreements and third-party licenses, net of aggregate future sublease income, for the next five years and thereafter are as follows:

2017	$	21,948
2018	5,028
2019	4,835
2020	5,066
2021	4,133
2022 and thereafter	10,642
Total minimum operating commitments	51,652
Less: non-cancelable sublease income	(7,578		)
Total operating commitments	$	44,074

Total rent expense recorded within operating income in the consolidated statements of operations for the years ended December 31, 2016, 2015 and 2014 were $3,493, $3,295, and $1,733, respectively. In addition, the Company recorded expense of $1,292 and $353 and income of $1,686 and $578 for the years ended December 2016 and 2015, respectively, within other income, net in the consolidated statements of operations.

Letters of Credit

At December 31, 2016 and 2015, the Company had an outstanding letter of credit of $450 and $600, respectively, related to its former headquarters in New York, New York. Refer to note 10 for further discussion on the Company’s standby letter of credit relating to its New Lease.

At December 31, 2016, the Company had an outstanding letter of credit of $320 related to new office space in Mountain View, California.

Legal Contingencies

The Company is occasionally involved with various claims and litigation during the normal course of business. Reserves are established in connection with such matters when a loss is probable and the amount of such loss can be reasonably estimated. As of December 31, 2016 and 2015, no reserves were recorded. The determination of probability and the estimation of the actual amount of any such loss are inherently unpredictable, and it is therefore possible that the eventual outcome of such claims and litigation could exceed the estimated reserves, if any. Based upon the Company’s experience, current information and applicable law, it generally does not believe it is reasonably probable that any proceedings or possible related claims will have a material effect on its financial statements. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

In November 2013, a putative class action lawsuit was filed in the United States District Court for the Southern District of New York (the “District Court”) against the Company, its directors and certain of its executive officers, alleging certain misrepresentations by the Company in connection with its initial public offering concerning its business and prospects. On March 5, 2015, the District Court granted the Company’s motion to dismiss the lawsuit and entered judgment in the Company’s favor and on February 8, 2016, the United States Court of Appeals for the Second Circuit confirmed the judgment of the District Court.

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

12. Stockholders’ Equity

Stock Repurchases

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. As of December 31, 2016, $8,963 remained of our $15,000 repurchase program. For accounting purposes, common stock repurchased under our stock repurchase program is recorded based upon the purchase date of the applicable trade. Such repurchased shares are held in treasury and are presented using the cost method.

We repurchased the following shares of common stock under the above-described repurchase program during 2016:

	Shares	Amount(1)
First Quarter	—	$	—
Second Quarter	177,980	339
Third Quarter	621,528	1,183
Fourth Quarter	2,062,124	4,515
Total	2,861,632	$	6,037

(1) Amounts include broker commissions

For accounting purposes, common stock repurchased under our stock repurchase program is recorded based upon the purchase date of the applicable trade. Such repurchased shares are held in treasury and are presented using the cost method.

Warrants to Purchase Common Stock

Prior to the Company’s IPO in 2013, the Company issued certain warrants to purchase preferred stock in connection with its financing arrangements. These warrants to purchase preferred stock were exercisable at any time prior to expiration. The Company concluded that freestanding warrants and other similar instruments on shares that are redeemable (either put-able or mandatorily redeemable) were accounted for as liabilities, regardless of the timing of the redemption feature or price, even though the underlying shares may be classified as equity.

On July 2, 2013, in connection with the closing of the Company’s IPO, all of the Company’s outstanding warrants to purchase preferred stock were converted into warrants to purchase common stock in the aggregate of 142,534 shares of common stock. This conversion resulted in the warrants to purchase common stock being reclassified to additional paid-in capital.

Mark-to-market income related to the fair value measurement of these warrants to purchase preferred stock was $313 for the year ended December 31, 2013 (through July 2, 2013).

On July 25, 2013, SVB exercised, in full, the following warrants to acquire common stock pursuant to a cashless net exercise: (i) warrants to acquire 17,607 shares of common stock, net of 14,052 shares of common stock tendered to the Company, at an exercise price of $3.79 per share, with an expiration date of February 8, 2020, (ii) warrants to acquire 16,210 shares of common stock, net of 19,321 shares of common stock tendered to the Company, at an exercise price of $4.64 per share, with an expiration date of December 7, 2018 and (iii) warrants to acquire 30,250 shares of common stock, net of 5,270 shares of common stock tendered to the Company, at an exercise price of $1.27 per share, with an expiration date of June 7, 2017. The number of shares tendered to the Company to satisfy the exercise price for the warrants was based on the closing price of the Company’s common stock on July 24, 2013. In aggregate, the Company issued 64,067 shares of common stock to SVB in connection with these exercises.

On June 26, 2016, 8,694 warrants at an exercise price of $5.76 per share expired.

The following table summarizes the Company’s outstanding warrants to purchase common stock as of December 31, 2016:

		Exercise Price		Warrants
Grant Date	Expiration Date	Per Share		Outstanding
October 28, 2013	June 30, 2017	$	2.46	31,130

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

13. Changes in Accumulated Other Comprehensive (Loss) Income

The following table provides the components of accumulated other comprehensive (loss) income:

	Foreign
	Currency
	Translation
	Adjustment			Total
Beginning balance at January 1, 2016	$	(55	)	$	(55	)
Other comprehensive loss (1)	(276		)	(276		)
Ending balance at December 31, 2016	$	(331	)	$	(331	)

	Foreign
	Currency
	Translation
	Adjustment			Total
Beginning balance at January 1, 2015	$	98		$	98
Other comprehensive loss (1)	(153		)	(153		)
Ending balance at December 31, 2015	$	(55	)	$	(55	)

(1) For the years ended December 31, 2016 and 2015, there were no reclassifications to or from accumulated other comprehensive (loss) income.

14. Stock-Based Compensation Expense

The Company included stock-based compensation expense related to all of the Company’s stock-based payments awards in various operating expense categories for the years ended December 31, 2016, 2015 and 2014 as follows:

	Years Ended
	December 31,
	2016		2015		2014
Stock-based compensation expense:
Technology and development	$	931	$	854	$	907
Sales and marketing (1)	1,415		1,445		1,506
General and administrative	1,554		1,708		2,209
Total stock-based compensation expense	$	3,900	$	4,007	$	4,622

(1) Includes $0, $5, and $15 in stock-based compensation expense related to a non-employee third-party stock grant issued in 2016, 2015, and 2014 respectively.

Stock-Based Incentive Plans

On June 26, 2013, the Company adopted the 2013 Equity Incentive Plan (the “2013 Plan”). The Company has stock option awards outstanding under five stock-based incentive plans as of December 31, 2016, including, in each case, two plans that were assumed as part of the acquisition of ScanScout. The Company has restricted stock unit awards outstanding, under its 2013 Plan, as of December 31, 2016.

The Company’s initial share reserve under the 2013 Plan upon adoption was 1,333,333 shares of common stock. The number of shares reserved for issuance under the 2013 Plan increases automatically on the first day of January of each year, for a period of ten years, continuing through and including January 1, 2023, by the lesser of 4% of the total number of shares of common stock on the immediately preceding December 31 st , or a lesser number of shares determined by the Company’s board of directors. The maximum

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

14. Stock-Based Compensation Expense (Continued)

term for stock option awards granted under the 2013 Plan may not exceed ten years from the date of grant. The 2013 Plan will terminate ten years from the date of approval unless it is terminated earlier by the compensation committee of the board of directors.

Stock Option Awards Outstanding

The following table presents summary information of the Company’s stock option awards outstanding and exercisable under all plans as of December 31, 2016:

	Options Outstanding				Options Exercisable
		Weighted				Weighted
		Average	Weighted			Average	Weighted
		Remaining	Average			Remaining	Average
		Contractual	Exercise			Contractual	Exercise
	Options	Life	Price		Options	Life	Price
Range of Exercise Prices	Outstanding	(Years)	Per Share		Exercisable	(Years)	Per Share

$0.26 – $0.44	26,013	.54	$	.44	26,013	.54	$	.44
$0.53 – $0.84	48,998	1.36	.69		48,998	1.36	.69
$1.11 – $1.49	1,181,400	4.4	1.39		856,400	2.50	1.27
$1.90 – $3.72	1,231,580	8.44	2.09		442,828	8.07	2.17
$4.27 – $5.90	3,600,608	4.59	4.56		3,435,325	4.47	4.57
$8.15 – $9.64	337,233	6.45	8.28		297,466	6.44	8.27
	6,425,832	5.35	3.65		5,107,030	4.52	3.96

The following table presents summary information of the Company’s stock option awards outstanding and exercisable under all plans as of December 31, 2016:

	Number of		Weighted
	Stock Option		Average
	Awards		Exercise Price
	Outstanding		Per Share
Stock option awards outstanding as of December 31, 2015	7,006,472		$	3.79
Stock option awards granted (1)	325,000		1.69
Stock option awards forfeited	(738,273	)	4.68
Stock option awards exercised	(167,367	)	.96
Stock option awards outstanding as of December 31, 2016	6,425,832		3.65

Stock option awards vested and exercisable as of December 31, 2016	5,107,030		3.96

(1) Includes an employment inducement award granted to the Company’s newly appointed Chief Marketing Officer (“CMO”) on September 26, 2016. This award was comprised of stock options to purchase 125,000 shares of the Company’s common stock at an exercise price of $1.59 per share. The exercise price represents the closing price of the Company’s common stock on the date of grant. The award was issued outside of the Company’s stockholder approved equity compensation plans, but is 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.

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

14. Stock-Based Compensation Expense (Continued)

Other selected information is as follows:

	Years Ended
	December 31,
	2016		2015		2014

Aggregate fair value of stock option awards vested	$	1,418	$	1,869	$	3,116
Aggregate intrinsic value of outstanding stock option awards	1,969		1,100		2,252
Aggregate intrinsic value of stock option awards exercised	155		311		2,407
Weighted-average grant-date fair value per share of stock option awards granted	0.57		0.80		1.84
Cash proceeds received from stock option awards exercised	161		108		767

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 estimated at the time the stock option awards are granted based on actual historical pre-vesting forfeitures and revised, if necessary in subsequent periods, if actual forfeitures differ from those initial estimates to derive the Company’s best estimate of stock option awards that are expected to vest. 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.

The following table presents the assumptions for stock option awards granted during the years ended December 31, 2016, 2015 and 2014:

	2016	2015	2014

Volatility	33% - 32%	34% - 43%	48% - 49%
Risk-free interest rate	1.24% - 1.57%	1.60% - 1.73%	1.77% - 2.01%
Expected life (in years)	5.80 - 6.03	6.00 - 6.06	5.74 - 6.00
Dividend yield	0.00%	0.00%	0.00%

There was $1,129 of total unrecognized compensation cost related to non-vested stock option awards granted under the Company’s equity incentive plans as of December 31, 2016. This cost is expected to be recognized over a weighted-average period of 2.56 years.

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

14. Stock-Based Compensation Expense (Continued)

Non-vested Restricted Stock Unit (RSU) Awards Outstanding

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 year ended December 31, 2016:

	Number of		Weighted
	Restricted		Average
	Stock		Grant Date
	Awards		Fair Value
	Outstanding		Per Share
Non-vested restricted stock unit awards outstanding as of December 31, 2015	2,370,803		$	2.66
Restricted stock unit awards granted	3,046,681		1.81
Restricted stock unit awards forfeited	(831,290	)	2.23
Restricted stock unit awards vested	(835,902	)	2.32
Non-vested restricted stock unit awards outstanding as of December 31, 2016	3,750,292		2.07

	Years Ended
	December 31,
	2016		2015		2014

Aggregate grant date fair value of restricted stock unit awards outstanding	$	7,763	$	6,306	$	4,438

Restricted stock unit awards are generally granted at the fair market value of the Company’s common stock on the date of grant and vest on an annual basis over periods up to four years. Forfeitures are estimated at the time the restricted stock unit awards are granted based on actual historical pre-vesting forfeitures and revised, if necessary in subsequent periods, if actual forfeitures differ from those initial estimates to derive the Company’s best estimate of restricted stock unit awards that are expected to vest.

As restricted stock unit awards vest, they are settled on a net-share basis. Upon settlement, certain shares underlying each restricted stock unit award are withheld to satisfy income tax withholding obligations, which is based on the value of the restricted stock unit award on the settlement date as determined by the closing fair market value of the Company’s common stock, relating to the employees’ minimum statutory obligation.

There were $5,995 of total unrecognized compensation cost related to non-vested restricted stock unit awards granted under the Company’s equity incentive plans as of December 31, 2016. This cost is expected to be recognized over a weighted-average period of 3.0 years.

Employee Stock Purchase Plan

On April 22, 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 on June 16, 2014. 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.

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.

No more than 2,000,000 shares of common stock are reserved for future issuance under the 2014 ESPP. As of December 31, 2016, the Company had 1,280,569 shares of common stock reserved for future issuance under the 2014 ESPP.

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

14. Stock-Based Compensation Expense (Continued)

The fair value for each award under the 2014 ESPP was 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. Forfeitures are estimated at the beginning of the offering period based on actual historical pre-vesting forfeitures and revised, if necessary in subsequent periods, if actual forfeitures differ from those initial estimates to derive the Company’s best estimate of shares that are expected to be purchased. 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.

For the years ended December 31, 2016 and 2015, the following assumptions were used for awards issued under the 2014 ESPP:

	2016	2015
V olatility	32% - 35%	28% - 35%
R isk-free interest rate	0.46% - 0.49%	0.07% - 0.22%
Expected life (in years)	0.50	0.50
Dividend yield	0.00%	0.00%

There was $29 of total unrecognized compensation cost related to awards under the 2014 ESPP as of December 31, 2016. This cost is expected to be recognized over a weighted-average period of less than one year.

15. Net Loss Per Share Attributable to Common Stockholders

The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders:

	Years Ended
	December 31,
	2016			2015			2014
Numerator:
Net loss attributable to common stockholders	$	(20,947	)	$	(43,230	)	$	(23,489	)

Denominator:
Weighted-average number of shares of common stock outstanding for basic and diluted net loss per share attributable to common stockholders	52,279,738			51,684,397			50,637,541

Basic and diluted net loss per share attributable to common stockholders	$	(0.40	)	$	(0.84	)	$	(0.46	)

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

	Years Ended
	December 31,
	2016	2015	2014

Warrants to purchase common stock	31,130	39,824	39,824
Stock option awards	6,425,832	7,006,472	6,825,142
Restricted stock unit awards	3,750,292	2,370,803	1,161,705
Total anti-dilutive securities outstanding	10,207,254	9,417,099	8,026,671

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

16. Employee Benefit Plan

The Company maintains a defined contribution retirement plan available to all eligible U.S. employees pursuant to Section 401(k) of the U.S. Internal Revenue Code (the “401(k) Plan”). Pursuant to the Company’s 401(k) Plan, participating U.S. employees may defer a portion of their pre-tax earnings, subject to annual IRS contribution limits. The Company began a discretionary contribution matching of employee’s contributions in February 2014. The Company matched 50% of each participant’s eligible contributions, up to a maximum employer matching contribution of 3% of each participant’s eligible base salary. Participants will vest in such discretionary employer matching contributions over a three-year graded vesting period.

Total employer matching contributions to the Company’s 401(k) Plan for the year ended December 31, 2016, 2015 and 2014 were $558, $745, and $461, respectively.

17. Supplemental Disclosure of Cash Flow Information

	Years Ended
	December 31,
	2016		2015		2014
Supplemental disclosure of cash flow activities:
Cash paid for income taxes	$	941	$	505	$	—
Cash paid for interest expense	$	12	$	10	$	5

Supplemental disclosure of non-cash investing and financing activities:
Common stock issued for settlement of restricted stock unit awards	$	1,020	$	1,308	$	1,087
Purchase of property and equipment in accounts payable and accrued expenses	$	158	$	1,093	$	365
Contingent consideration on acquisition	$	—	$	926	$	—

18. Segment and Geographic Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, in deciding how to allocate resources and assess performance. The Company’s chief operating decision maker is its Chief Executive Officer (“CEO”). The Chief Executive Officer reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. As such, the Company has concluded that its operations constitute one operating and reportable segment.

Substantially all assets were held in the United States as of each December 31, 2016 and 2015, and substantially all revenue was generated through sales personnel in the United States for the years ended December 31, 2016, 2015 and 2014.

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Tremor Video, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

19. Quarterly Results of Operations (Unaudited)

	Three Months Ended
2016	March 31,			June 30,		September 30,		December 31,

Revenue	$	34,565		37,107		41,281		53,808
Gross profit	$	16,218		17,200		18,583		24,272
Net loss	$	(11,074	)	(5,855	)	(3,617	)	(401	)
Basic and diluted net loss per share (1)	$	(0.21	)	(0.11	)	(0.07	)	(0.01	)
Basic and diluted weighted-average number of shares outstanding (2)	52,372,857			52,633,054		52,473,601		51,644,295

	Three Months Ended
2015	March 31,			June 30,		September 30,		December 31,

Revenue	$	38,052		42,404		41,624		51,757
Gross profit	$	16,193		18,010		17,600		22.768
Net loss	$	(6,950	)	(5,240	)	(28,622	)	(2,418	)
Basic and diluted net loss per share (1)	$	(0.14	)	(0.10	)	(0.55	)	(0.05	)
Basic and diluted weighted-average number of shares outstanding (2)	51,217,220			51,445,613		51,875,785		52,186,221

(1) Basic and diluted net loss per share is computed independently for each of the quarters presented. Therefore, the sum of all quarterly basic and diluted net loss per share may not equal the annual basic and diluted net loss per share.

(2) Due to the Company’s net losses, all potentially dilutive securities are anti-dilutive and, therefore, basic and diluted weighted average common shares outstanding are equal for all periods presented.

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

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Interim Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2016. Based on the evaluation of our disclosure controls and procedures as of December 31, 2016, our Interim Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance level.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining effective internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. Our internal controls over financial reporting are designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements in accordance with the U.S. GAAP, including those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Our Interim Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control - Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO Framework. The assessment included an evaluation of the design of the Company’s internal control over financial reporting and testing of the operational effectiveness of those controls. Based on these assessments, we concluded that our internal control over financial reporting was effective as of December 31, 2016.

This annual report does not include an audit or attestation report from our registered public accounting firm regarding our internal control over financial reporting. Our management’s report was not subject to audit or attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this annual report for so long as we remain an “emerging growth company” under the Jumpstart Our Business Startups Act.

Changes in Internal Control over Financial Reporting

In response to the previously disclosed material weakness existing as of December 31, 2015 in our controls related to principal-agent considerations around revenue recognition, during fiscal 2016 we made certain personnel changes within our finance organization and implemented enhanced processes and procedures related to the review of principal-agent considerations around revenue recognition, including the addition of finance personnel with technical accounting expertise who will review non-routine complex transactions and the engagement of an additional third party service provider to supplement the aforementioned team as needed. As a result of the remediation activities in place, as of December 31, 2016, management concluded that the above referenced material weaknesses has been remediated and our internal control over financial reporting was effective as of December 31, 2016.

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There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended December 31, 2016 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

While our management, including our Interim Chief Executive Officer and Chief Financial Officer, designs our disclosure controls and procedures and internal control over financial reporting to provide reasonable assurance of achieving their objectives at a reasonable assurance level, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake and, as discussed above, during the year ended December 31, 2015, we recently identified a material weakness in our internal control over financial reporting. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item is incorporated by reference to our Proxy Statement for our 2017 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2016.

Code of Conduct

We have adopted a Code of Business Conduct and Ethics, or Code of Conduct, which applies to all of our employees, executive officers and directors. A copy of our Code of Conduct can be found on our website ( www.tremorvideo.com ) under “Corporate Governance.” The contents of our website are not a part of this report.

The nominating and corporate governance committee of our board of directors is responsible for overseeing the Code of Conduct and must approve any waivers of the Code of Conduct for employees, executive officers and directors. We expect that any amendments to the Code of Conduct, or any waivers of its requirements, will be disclosed on our website.

ITEM 11. EXECUTIVE COMPENSATION

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

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)

1. Consolidated Financial Statements: Our consolidated financial statements are listed in the “Index to Consolidated Financial Statements” included in Part II, Item 8 of this Annual Report on Form 10-K.

2. Financial Statement Schedules: All financial statement schedules have been omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto.

3. Exhibits: See the Exhibit Index immediately following the signature page of this Annual Report on Form 10-K.

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SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized on March 10, 2017.

	TREMOR VIDEO, INC.

	By:	/s/ Paul Caine
		Paul Caine
		Interim Chief Executive Officer

	Date: March 10, 2017


	By:	/s/ John Rego
		John Rego
		Chief Financial Officer


	Date: March 10, 2017

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POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Paul Caine, John Rego and Aaron Saltz, and each of them, as his true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said agents, proxies and attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming that all said agents, proxies and attorneys-in-fact, or any of them or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date

/s/ Paul Caine
Paul Caine	Interim Chief Executive Officer and Director (Principal Executive Officer)	March 10, 2017
/s/ John Rego
John Rego	Chief Financial Officer (Principal Accounting and Financial Officer)	March 10, 2017

/s/ Rachel Lam
Rachel Lam	Director	March 10, 2017

/s/ Warren Lee
Warren Lee	Director	March 10, 2017

/s/ James Rossman
James Rossman	Director	March 10, 2017

/s/ Robert Schechter
Robert Schechter	Director	March 10, 2017

/s/ Kevin Thompson
Kevin Thompson	Director	March 10, 2017

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Exhibit Index

The agreements set forth on this Exhibit Index may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties were made solely for the benefit of the other parties to the applicable agreement and:

· were not intended to be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

· may have been qualified in such agreements by disclosures that were made to the other party in connection with the negotiation of the applicable agreement;

· may apply contract standards of “materiality” that are different from “materiality” under the applicable security laws; and

· were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement.

The Company acknowledges that notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Form 10-K not misleading. Additional information about the Company may be found elsewhere in this Annual Report on Form 10-K and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov. See “Available Information” under Item 1 of Part I.

Incorporated by Reference

Filed

Exhibit No.

Description of Exhibit

Form

File No.

Exhibit

Filing Date

Herewith

3.1

Amended and Restated Certificate of Incorporation, as amended to date and as currently in effect.

8-K

001-35982

3.1

7/5/2013

3.2

Bylaws, as amended to date and as currently in effect.

S-1/A

333-188813

3.4

6/14/2013

4.1

Specimen stock certificate evidencing shares of common stock.

S-1/A

333-188813

4.1

6/14/2013

4.2

Amended and Restated Warrant to Purchase Common Stock issued by Tremor Video, Inc. to Venture Lending & Leasing IV, LLC, with an expiration date of June 30, 2017.

10-Q

001-35982

10.2

11/14/2013

10.1

Sixth Amended and Restated Investors’ Rights Agreement by and among the Registrant and certain of its stockholders, dated as of September 6, 2011.

S-1

333-188813

10.1

5/23/2013

10.2

Amended and Restated Loan and Security Agreement by and between the Registrant and Silicon Valley Bank, dated as of January 27, 2017.

10.3

Agreement of Lease by and between the Registrant and Twenty-Three R.P. Associates, dated as of July 26, 2010 (as modified by the First Amendment to Lease dated November 1, 2010).

S-1

333-188813

10.3

5/23/2013

10.4+

Tremor Media, Inc. 2006 Stock Incentive Plan, as amended.

S-1

333-188813

10.4

5/23/2013

10.5+

Form of Stock Option Agreement under Tremor Media, Inc. 2006 Stock Incentive Plan.

S-1

333-188813

10.5

5/23/2013

10.6+

Tremor Media, Inc. 2008 Stock Plan, as amended.

S-1

333-188813

10.6

5/23/2013

10.7+

Form of Stock Option Agreement under Tremor Media, Inc. 2008 Stock Plan.

S-1

333-188813

10.7

5/23/2013

10.8+

ScanScout, Inc. 2006 Stock Plan.

S-1

333-188813

10.8

5/23/2013

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Incorporated by Reference

10.9+

Form of Stock Option Agreement under ScanScout, Inc. 2006 Stock Plan.

S-1

333-188813

10.9

5/23/2013

10.10+

ScanScout, Inc. 2009 Equity Incentive Plan.

S-1

333-188813

10.10

5/23/2013

10.11+

Form of Stock Option Agreement under ScanScout, Inc. 2009 Equity Incentive Plan.

S-1

333-188813

10.11

5/23/2013

10.12+

Form of 2013 Equity Incentive Plan as amended.

Proxy

001-35982

App. A

4/15/2013

10.13+

Form of Incentive Stock Option Agreement under 2013 Equity Incentive Plan.

S-1/A

333-188813

10.13

6/14/2013

10.14+

Form of Nonqualified Stock Option Agreement under 2013 Equity Incentive Plan.

S-1/A

333-188813

10.14

6/14/2013

10.15+

Form of Restricted Stock Unit Award Agreement under 2013 Equity Incentive Plan.

S-1/A

333-188813

10.15

6/14/2013

10.16+

Form of Restricted Stock Unit Grant Notice under 2013 Equity Incentive Plan.

S-1/A

333-188813

10.16

6/14/2013

10.17+

Non-Employee Director Compensation Plan.

10.18+

Form of Indemnification Agreement by and between Registrant and each of its directors and executive officers.

S-1

333-188813

10.18

5/23/2013

10.19+

Employment Offer Letter by and between the Company and William Day, dated December 9, 2010.

S-1

333-188813

10.19

5/23/2013

10.21+

Employment Offer Letter by and between the Company and Adam Lichstein, dated December 8, 2010.

S-1

333-188813

10.22

5/23/2013

10.22+

Employment Offer Letter by and between the Company and Lauren Wiener, dated September 25, 2012.

S-1

333-188813

10.23

5/23/2013

10.23+

Tremor Video, Inc. 2014 Employee Stock Purchase Plan.

10-Q

001-35982

10.1

8/14/2014

10.24*

Agreement of Lease by and between the Company and Paramount Leasehold, L.P., dated as of October 27, 2014 (as amended by the First Amendment of Lease dated as of December 15, 2014).

10-K

001-35982

10.25

3/16/2015

10.25*

Second Amendment to the Agreement of Lease, by and between the Company and Paramount Leasehold, L.P., dated as of October 27, 2014

10-Q

001-35982

10.1

5/10/2016

10.26+

Employment Offer Letter by and between the Company and John Rego, dated August 3, 2015.

10-Q

001-35982

10.1

11/9/2015

10.27+

Employment Offer Letter by and between the Company and John Walsh, dated October 1, 2015.

10-K

001-35982

10.28

3/15/2016

21.1

List of subsidiaries.

23.1

Consent of Independent Registered Public Accounting Firm.

24.1

Power of Attorney (included in signature page).

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Incorporated by Reference

31.1

Certification of the Chief Executive Officer of Tremor Video, Inc. pursuant to rule 13a-14 under the Securities Exchange Act of 1934.

31.2

Certification of the Chief Financial Officer of Tremor Video, Inc. pursuant to rule 13a-14 under the Securities Exchange Act of 1934.

32.1†

Certification of the Chief Executive Officer of Tremor Video, Inc. pursuant to18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2†

Certification of the Chief Financial Officer of Tremor Video, Inc. pursuant to18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

XBRL Instance Document.

101.SCH

XBRL Taxonomy Extension Schema.

101.CAL

XBRL Taxonomy Extension Calculation Linkbase.

101.DEF

XBRL Taxonomy Extension Definition Linkbase.

101.LAB

XBRL Taxonomy Extension Labels Linkbase.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase.

+ Indicates management contract or compensatory plan.

† In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Annual Report on Form 10-K and will not be deemed “filed” for purpose of Section 18 of the Securities Exchange Act of 1934, as amended. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

* Certain portions of this exhibit omitted and filed separately with the U.S. Securities and Exchange Commission pursuant to a request for confidential treatment.

Exhibit 10.2

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “ Agreement ”) dated as of January 27, 2017 (the “ Effective Date ”) by and between SILICON VALLEY BANK , a California corporation with a loan production office located at 505 5 th Avenue, 11 th Floor, New York, New York 10017 (“ Bank ”), and TREMOR VIDEO, INC. , a Delaware corporation (“ Borrower ”), provides the terms on which Bank shall lend to Borrower and Borrower shall repay Bank. The parties agree as follows:

A. Bank and Borrower have previously entered into that certain Loan and Security Agreement dated as of June 7, 2007, between Borrower and Bank as amended by a certain First Loan Modification Agreement dated as of December 8, 2008, as further amended by a certain Second Loan Modification Agreement dated as of December 7, 2009, as further amended by a certain Third Loan Modification Agreement dated as of February 7, 2010, as further amended by a certain Fourth Loan Modification Agreement dated as of March 7, 2011, as further amended by a certain Fifth Loan Modification Agreement dated as of December 30, 2011, as further amended by a certain Sixth Loan Modification Agreement dated as of October 20, 2014, and as further amended by a certain Seventh Loan Modification Agreement dated as of December 28, 2016 (as the same has been amended, modified, supplemented or restated, the “ Prior Loan Agreement ”).

B. Borrower and Bank have agreed to amend and restate, and replace, the Prior Loan Agreement in its entirety. Bank and Borrower hereby agree that the Prior Loan Agreement is amended and restated in its entirety as follows:

1. ACCOUNTING AND OTHER TERMS

Accounting terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 13. All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein.

2. LOAN AND TERMS OF PAYMENT

2.1 Promise to Pay . Borrower hereby unconditionally promises to pay Bank the outstanding principal amount of all Credit Extensions and accrued and unpaid interest thereon as and when due in accordance with this Agreement.

2.1.1 Revolving Advances.

(a) Availability . Subject to the terms and conditions of this Agreement, Bank shall make Advances not exceeding the Availability Amount. Amounts borrowed under the Revolving Line may be repaid and, prior to the Revolving Line Maturity Date, reborrowed, subject to the applicable terms and conditions precedent herein.

(b) Termination; Repayment . The Revolving Line terminates on the Revolving Line Maturity Date, when the principal amount of all Advances, the unpaid interest thereon, and all other Obligations relating to the Revolving Line shall be immediately due and payable.

2.1.2 Letters of Credit Sublimit.

(a) As part of the Revolving Line, Bank shall issue or have issued Letters of Credit denominated in Dollars or a Foreign Currency for Borrower’s account. The aggregate Dollar Equivalent of the face amount of outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve) may not exceed (i) the lesser of (A) the Revolving Line or (B) the Borrowing Base minus (ii) the sum of all outstanding principal amounts of any Advances, minus (iii) the sum of all amounts used for Cash Management Services, and minus (iv) the FX Reduction Amount.

(b) If, on the Revolving Line Maturity Date (or the effective date of any termination of this Agreement), there are any outstanding Letters of Credit, then on such date Borrower shall provide to Bank cash collateral in an amount equal to one hundred five percent (105.0%) for Letters of Credit denominated in Dollars or one hundred ten percent (110.0%) for Letters of Credit denominated in a Foreign Currency, in each case of the aggregate Dollar Equivalent of the face amount of all such Letters of Credit plus all interest, fees, and costs due or estimated by Bank to become due in connection therewith, to secure all of the Obligations relating to such Letters of Credit. All Letters of Credit shall be in form and substance acceptable to Bank in its sole discretion and shall be subject to the terms and conditions of Bank’s standard Application and Letter of Credit Agreement (the “ Letter of Credit Application ”). Borrower agrees to execute any further documentation in connection with the Letters of Credit as Bank may reasonably request. Borrower further agrees to be bound by the regulations and interpretations of the issuer of any Letters of Credit guarantied by Bank and opened for Borrower’s account or by Bank’s interpretations of any Letter of Credit issued by Bank for Borrower’s account, and Borrower understands and agrees that Bank shall not be liable for any error, negligence, or mistake, whether of omission or commission, in following Borrower’s instructions or those contained in the Letters of Credit or any modifications, amendments, or supplements thereto.

(c) The obligation of Borrower to immediately reimburse Bank for drawings made under Letters of Credit shall be absolute, unconditional, and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, such Letters of Credit, and the Letter of Credit Application.

(d) Borrower may request that Bank issue a Letter of Credit payable in a Foreign Currency. If a demand for payment is made under any such Letter of Credit, Bank shall treat such demand as an Advance to Borrower of the Dollar Equivalent of the amount thereof (plus fees and charges in connection therewith such as wire, cable, SWIFT or similar charges).

(e) To guard against fluctuations in currency exchange rates, upon the issuance of any Letter of Credit payable in a Foreign Currency, Bank shall create a reserve (the “ Letter of Credit Reserve ”) under the Revolving Line in an amount equal to a percentage (which percentage shall be determined by Bank in its sole discretion) of the face amount of such Letter of Credit. The amount of the Letter of Credit Reserve may be adjusted by Bank from time to time to account for fluctuations in the exchange rate. The availability of funds under the Revolving Line shall be reduced by the amount of such Letter of Credit Reserve for as long as such Letter of Credit remains outstanding.

2.1.3 Foreign Exchange Sublimit. As part of the Revolving Line, Borrower may enter into foreign exchange contracts with Bank under which Borrower commits to purchase from or sell to Bank a specific amount of Foreign Currency (each, a “ FX Contract ”) on a specified date (the “ Settlement Date ”). FX Contracts shall have a Settlement Date of at least one (1) FX Business Day after the contract date. The aggregate FX Reduction Amount at any one time may not exceed (i) the lesser of (A) the Revolving Line or (B) the Borrowing Base minus (ii) the sum of all outstanding principal amounts of any Advances, minus (ii) the sum of all amounts used for Cash Management Services, and minus (iii) the aggregate Dollar Equivalent of the face amount of any outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve). The amount otherwise available for Credit Extensions under the Revolving Line shall be reduced by the FX Reduction Amount. Any amounts needed to fully reimburse Bank for any amounts not paid by Borrower in connection with FX Contracts will accrue interest at the interest rate applicable to Advances. Subject to Section 4.1, if, on the Revolving Line Maturity Date, there are any outstanding FX Forward Contracts, then on such date Borrower shall provide to Bank cash collateral in an amount consistent with Bank’s current foreign exchange contracts policies to secure all of the Obligations relating to such FX Forward Contracts.

2.1.4 Cash Management Services Sublimit . Borrower may use the Revolving Line for Bank’s cash management services, which may include merchant services, direct deposit of payroll, business credit card, and check cashing services identified in Bank’s various cash management services agreements (collectively, the “ Cash Management Services ”) in an aggregate amount not to exceed (i) lesser of (A) the Revolving Line or (B) the Borrowing Base, minus (ii) the sum of all outstanding principal amounts of any Advances, minus (ii) the aggregate Dollar Equivalent of the face amount of any outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve), and minus (iv) the FX Reduction Amount. Any amounts Bank pays on behalf of Borrower for any Cash Management Services will accrue interest at the interest rate applicable to Advances. Subject to Section 4.1, if, on the Revolving Line Maturity Date, there are any outstanding Cash Management Services, then on such date Borrower shall provide to Bank cash collateral in an amount consistent with Bank’s current cash management services policies to secure all of the Obligations relating to such Cash Management Services.

2.2 Overadvances . If, at any time, the outstanding principal amount of any Advances exceeds the lesser of either the Revolving Line or the Borrowing Base, Borrower shall immediately pay to Bank in cash the amount of such excess (such excess, the “ Overadvance ”). Without limiting Borrower’s obligation to repay Bank any Overadvance, Borrower agrees to pay Bank interest on the outstanding amount of any Overadvance, on demand, at the Default Rate.

2.3 Payment of Interest on the Credit Extensions.

(a) Interest Rate . Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the Prime Rate, which interest shall be payable monthly in accordance with Section 2.3(d) below.

(b) Default Rate . Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bear interest at a rate per annum which is four percent (4.0%) above the rate that is otherwise applicable thereto (the “ Default Rate ”). Fees and expenses which are required to be paid by Borrower pursuant to the Loan Documents (including, without limitation, Bank Expenses) but are not paid when due shall bear interest until paid at a rate equal to the highest rate applicable to the Obligations. Payment or acceptance of the increased interest rate provided in this Section 2.3(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Bank.

(c) Adjustment to Interest Rate . Changes to the interest rate of any Credit Extension based on changes to the Prime Rate shall be effective on the effective date of any change to the Prime Rate and to the extent of any such change.

(d) Payment; Interest Computation . Interest is payable monthly on the Payment Date and shall be computed on the basis of a 360-day year for the actual number of days elapsed. In computing interest, (i) all payments received after 2:00 p.m. Eastern time on any day shall be deemed received at the opening of business on the next Business Day, and (ii) the date of the making of any Credit Extension shall be included and the date of payment shall be excluded; provided, however, that if any Credit Extension is repaid on the same day on which it is made, such day shall be included in computing interest on such Credit Extension.

2.4 Fees . Borrower shall pay to Bank:

(a) Commitment Fee . A fully earned, non-refundable commitment fee of Thirty Five Thousand Dollars ($35,000.00), on the Effective Date;

(b) Unused Revolving Line Facility Fee . A fee (the “ Unused Revolving Line Facility Fee ”), payable quarterly, in arrears, in an amount equal to thirty five-hundredths of one percent (0.35%) per annum of the average unused portion of the Revolving Line, as determined by Bank. The unused portion of the Revolving Line, for purposes of this calculation, shall be calculated on a calendar year basis and shall equal the difference between (i) the Revolving Line and (ii) the average for the period of the daily closing balance of the Revolving Line outstanding (including any amounts used for Cash Management Services), plus the sum of the aggregate Dollar Equivalent of the face amount of outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve) and the FX Reduction Amount. Borrower shall not be entitled to any credit, rebate or repayment of any Unused Revolving Line Facility Fee previously earned by Bank pursuant to this Section 2.4(b) notwithstanding any termination of the Agreement or the suspension or termination of Bank’s obligation to make loans and advances hereunder;

(c) Termination Fee . Upon termination of this Agreement or the Revolving Line by the Borrower for any reason prior to the Revolving Line Maturity Date, in addition to the payment of any other amounts then-owing, a termination fee in an amount equal to one percent (1.0%) of the Revolving Line, provided that no termination fee shall be charged if the credit facility hereunder is replaced with a new facility from Bank; and

(d) Bank Expenses . All Bank Expenses (including reasonable attorneys’ fees and expenses for documentation and negotiation of this Agreement) incurred through and after the Effective Date, when due (or, if no stated due date, upon demand by Bank).

Unless otherwise provided in this Agreement or in a separate writing by Bank, Borrower shall not be entitled to any credit, rebate, or repayment of any fees earned by Bank pursuant to this Agreement notwithstanding any termination of this Agreement or the suspension or termination of Bank’s obligation to make loans and advances hereunder. Bank may deduct amounts owing by Borrower under the clauses of this Section 2.4 pursuant to the terms of Section 2.5(c). Bank shall provide Borrower written notice of deductions made from the Designated Deposit Account pursuant to the terms of the clauses of this Section 2.4.

2.5 Payments; Application of Payments; Debit of Accounts.

(a) All payments to be made by Borrower under any Loan Document shall be made in immediately available funds in Dollars, without setoff or counterclaim, before 2:00 p.m. Eastern time on the date when due. Payments of principal and/or interest received after 2:00 p.m. Eastern time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment shall be due the next Business Day, and additional fees or interest, as applicable, shall continue to accrue until paid.

(b) Prior to the occurrence of an Event of Default, payments shall be applied as directed by Borrower. Upon and during the continuance of an Event of Default, Bank has the exclusive right to determine the order and manner in which all payments with respect to the Obligations may be applied and Borrower shall have no right to specify the order or the accounts to which Bank shall allocate or apply any payments required to be made by Borrower to Bank or otherwise received by Bank under this Agreement when any such allocation or application is not specified elsewhere in this Agreement.

(c) Bank may debit any of Borrower’s deposit accounts, including the Designated Deposit Account, for principal and interest payments or any other amounts Borrower owes Bank when due. These debits shall not constitute a set-off but shall be credited against Obligations due and payable.

3. CONDITIONS OF LOANS

3.1 Conditions Precedent to Initial Credit Extension . Bank’s obligation to make the initial Credit Extension is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, such documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate, including, without limitation:

(a) duly executed original signatures of Borrower to the Loan Documents to which it is a party;

(b) duly executed original signatures of Borrower to the Control Agreement(s);

(c) the Operating Documents and long-form good standing certificates of Borrower certified (other than with respect to Borrower’s by-laws) by the Secretary of State of Delaware, the Secretary of the Commonwealth (or equivalent agency) of Massachusetts, and the Secretary of State (or equivalent agency) of New York, each as of a date no earlier than sixty (60) days prior to the Effective Date;

(d) duly executed signatures to the completed Borrowing Resolutions for Borrower;

(e) certified copies, dated as of a recent date, of financing statement searches, as Bank may request, accompanied by written evidence (including any UCC termination statements) that the Liens indicated in any such financing statements either constitute Permitted Liens or have been or, in connection with the initial Credit Extension, will be terminated or released;

(f) the Perfection Certificate of Borrower, together with the duly executed original signature thereto;

(g) a bailee’s waiver in favor of Bank by each of (i) Sungard, (ii) Zayo Group Holdings and (iii) Raging Wire Data Centers, Inc., together with the duly executed original signatures thereto;

(h) a legal opinion of Borrower’s counsel (authority and enforceability) dated as of the Effective Date together with the duly executed original signature thereto;

(i) evidence reasonably satisfactory to Bank that the insurance policies and endorsements required by Section 6.5 hereof are in full force and effect, together with appropriate evidence showing lender loss payable and/or additional insured clauses or endorsements in favor of Bank; and

(j) payment of the fees and Bank Expenses then due as specified in Section 2.4 hereof.

3.2 Conditions Precedent to all Credit Extensions . Bank’s obligations to make each Credit Extension, including the initial Credit Extension, is subject to the following conditions precedent:

(a) except as otherwise provided in Section 3.4, timely receipt of an executed Payment/Advance Form;

(b) the representations and warranties in this Agreement shall be true, accurate, and complete in all material respects on the date of the Payment/Advance Form and on the Funding Date of each Credit Extension; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no Event of Default shall have occurred and be continuing or result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and warranties in this Agreement remain true, accurate, and complete in all material respects; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; and

(c) in Bank’s reasonable discretion, there has not been any material impairment in the general affairs, results of operation, financial condition or the prospect of repayment of the Obligations, or any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Bank.

3.3 Covenant to Deliver . Borrower agrees to deliver to Bank each item required to be delivered to Bank under this Agreement as a condition precedent to any Credit Extension. Borrower expressly agrees that a Credit Extension made prior to the receipt by Bank of any such item shall not constitute a waiver by Bank of Borrower’s obligation to deliver such item, and the making of any Credit Extension in the absence of a required item shall be in Bank’s sole discretion.

3.4 Procedures for Borrowing . Subject to the prior satisfaction of all other applicable conditions to the making of a Credit Extension set forth in this Agreement, to obtain a Credit Extension (other than Credit Extensions under Sections 2.1.2 or 2.1.4), Borrower shall notify Bank (which notice shall be irrevocable) by electronic mail, facsimile, or telephone by 12:00 noon Eastern time on the Funding Date of the Credit Extension. Together with any such electronic or facsimile notification, Borrower shall deliver to Bank by electronic mail or facsimile a completed Payment/Advance Form executed by a Responsible Officer or his or her designee. Bank may rely on any telephone notice given by a person whom Bank believes is a Responsible Officer or designee. Bank shall credit the Credit Extensions to the Designated Deposit Account. Bank may make Credit Extensions under this Agreement based on instructions from a Responsible Officer or his or her designee or without instructions if the Credit Extensions are necessary to meet Obligations which have become due.

4. CREATION OF SECURITY INTEREST

4.1 Grant of Security Interest. Borrower hereby grants Bank, to secure the payment and performance in full of all of the Obligations, a continuing security interest in, and pledges to Bank, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof.

If this Agreement is terminated, Bank’s Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations) are repaid in full in cash. Upon payment in full in cash of the Obligations (other than inchoate indemnity obligations) and at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at the sole cost and expense of Borrower, release its Liens in the Collateral and all rights therein shall revert to Borrower.

4.2 Priority of Security Interest . Borrower represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens that are permitted pursuant to the terms of this Agreement to have superior priority to Bank’s Lien under this Agreement). If Borrower shall acquire a commercial tort claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the general details thereof and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Bank.

4.3 Authorization to File Financing Statements . Borrower hereby authorizes Bank to file financing statements, without notice to Borrower, with all appropriate jurisdictions to perfect or protect Bank’s interest or rights hereunder, including a notice that any disposition of the Collateral, by either Borrower or any other Person, shall be deemed to violate the rights of Bank under the Code.

5. REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants as follows:

5.1 Due Organization, Authorization; Power and Authority . Borrower is duly existing and in good standing as a Registered Organization in its jurisdiction of formation and is qualified and licensed to do business and is in good standing in any jurisdiction in which the conduct of its business or its ownership of property requires that it be qualified except where the failure to do so could not reasonably be expected to have a material adverse effect on Borrower’s business. In connection with this Agreement, Borrower has delivered to Bank a completed certificate signed by Borrower, entitled “Perfection Certificate”. Borrower represents and warrants to Bank that (a) Borrower’s exact legal name is that indicated on the Perfection Certificate and on the signature page hereof; (b) Borrower is an organization of the type and is organized in the jurisdiction set forth in the Perfection Certificate; (c) the Perfection Certificate accurately sets forth Borrower’s organizational identification number or accurately states that Borrower has none; (d) the Perfection Certificate accurately sets forth Borrower’s place of business, or, if more than one, its chief executive office as well as Borrower’s mailing address (if different than its chief executive office); (e) Borrower (and each of its predecessors) has not, in the past five (5) years, changed its jurisdiction of formation, organizational structure or type, or any organizational number assigned by its jurisdiction; and (f) all other information set forth on the Perfection Certificate pertaining to Borrower and each of its Subsidiaries is accurate and complete (it being understood and agreed that Borrower may from time to time update certain information in the Perfection Certificate after the Effective Date to the extent permitted by one or more specific provisions in this Agreement). If Borrower is not now a Registered Organization but later becomes one, Borrower shall promptly notify Bank of such occurrence and provide Bank with Borrower’s organizational identification number.

The execution, delivery and performance by Borrower of the Loan Documents to which it is a party have been duly authorized, and do not (i) conflict with any of Borrower’s organizational documents, (ii) contravene, conflict with, constitute a default under or violate any material Requirement of Law, (iii) contravene, conflict or violate any applicable order, writ, judgment, injunction, decree, determination or award of any Governmental Authority by which Borrower or any of its Subsidiaries or any of their property or assets may be bound or affected, (iv) require any action by, filing, registration, or qualification with, or Governmental Approval from, any Governmental Authority (except such Governmental Approvals which have already been obtained and are in full force and effect ( or are being obtained pursuant to Section 6.1(b) )) or (v) conflict with, contravene, constitute a default or breach under, or result in or permit the termination or acceleration of, any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which it is a party or by which it is bound in which the default could reasonably be expected to have a material adverse effect on Borrower’s business.

5.2 Collateral . Borrower has good title to, rights in, and the power to transfer each item of the Collateral upon which it purports to grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens. Borrower has no Collateral Accounts at or with any bank or financial institution other than Bank or Bank’s Affiliates except for the Collateral Accounts described in the Perfection Certificate delivered to Bank in connection herewith and which Borrower has taken such actions as are necessary to give Bank a perfected security interest therein, pursuant to the terms of Section 6.6(b). The Accounts are bona fide, existing obligations of the Account Debtors.

The Collateral is not in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate. None of the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificate or as permitted pursuant to Section 7.2.

All Inventory is in all material respects of good and marketable quality, free from material defects.

Borrower is the sole owner of the Intellectual Property which it owns or purports to own except for (a) non-exclusive licenses granted to its customers in the ordinary course of business, (b) over-the-counter software that is commercially available to the public, and (c) material Intellectual Property licensed to Borrower and noted on the Perfection Certificate. Each Patent which Borrower owns or purports to own and which is material to Borrower’s business is, to Borrower’s knowledge, valid and enforceable, and no part of the Intellectual Property which Borrower owns or purports to own and which is material to Borrower’s business has been judged invalid or unenforceable, in whole or in part. To the best of Borrower’s knowledge, no claim has been made that any part of the Intellectual Property the Borrower owns violates the rights of any third party except to the extent such claim would not reasonably be expected to have a material adverse effect on Borrower’s business.

Except as noted on the Perfection Certificate, Borrower is not a party to, nor is it bound by, any Restricted License.

5.3 Accounts Receivable .

(a) For any Eligible Account in any Borrowing Base Certificate, all statements made and all unpaid balances appearing in all invoices, instruments and other documents evidencing such Eligible Accounts are and shall be true and correct and all such invoices, instruments and other documents, and all of Borrower’s Books are genuine and in all respects what they purport to be. Whether or not an Event of Default has occurred and is continuing, Bank may notify any Account Debtor owing Borrower money of Bank’s security interest in such funds and verify the amount of such Eligible Account.

(b) All sales and other transactions underlying or giving rise to each Eligible Account shall comply in all material respects with all applicable laws and governmental rules and regulations. Borrower has no knowledge of any actual or imminent Insolvency Proceeding of any Account Debtor whose accounts are Eligible Accounts in any Borrowing Base Certificate. To the best of Borrower’s knowledge, all signatures and endorsements on all documents, instruments, and agreements relating to all Eligible Accounts are genuine, and all such documents, instruments and agreements are legally enforceable in accordance with their terms.

5.4 Litigation . Except as disclosed on the Perfection Certificate as of the Effective Date, there are no actions or proceedings pending or, to the knowledge of any Responsible Officer, threatened in writing by or against Borrower or any of its Subsidiaries involving more than, individually or in the aggregate, One Hundred Fifty Thousand Dollars ($150,000.00).

5.5 Financial Statements; Financial Condition . All consolidated financial statements for Borrower and any of its Subsidiaries delivered to Bank fairly present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated results of operations for the periods covered thereby. There has not been any material deterioration in Borrower’s consolidated financial condition since the date of the most recent financial statements submitted to Bank.

5.6 Solvency . The fair salable value of Borrower’s consolidated assets (including goodwill minus disposition costs) exceeds the fair value of Borrower’s liabilities; Borrower is not left with unreasonably small capital after the transactions in this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature.

5.7 Regulatory Compliance . Borrower is not an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act of 1940, as amended. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors). Borrower (a) has complied in all material respects with all Requirements of Law, and (b) has not violated any Requirements of Law, in each case, where the failure to comply with or the violation of could reasonably be expected to have a material adverse effect on its business. None of Borrower’s or any of its Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each of its Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all Governmental Authorities that are necessary to continue their respective businesses as currently conducted.

5.8 Subsidiaries; Investments . Borrower does not own any stock, partnership, or other ownership interest or other equity securities except for Permitted Investments.

5.9 Tax Returns and Payments; Pension Contributions . Borrower has timely filed, or has obtained valid extensions for the filing of, all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except (a) to the extent such taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor, or (b) if such taxes, assessments, deposits and contributions do not, individually or in the aggregate, exceed Fifty Thousand Dollars ($50,000.00).

To the extent Borrower defers payment of any contested taxes, Borrower shall (i) notify Bank in writing of the commencement of, and any material development in, the proceedings, and (ii) post bonds or take any other steps required to prevent the governmental authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a Permitted Lien. Borrower is unaware of any claims or adjustments proposed for any of Borrower’s prior tax years which could result in additional taxes becoming due and payable by Borrower. Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from participation in, and has not permitted partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

5.10 Use of Proceeds . Borrower shall use the proceeds of the Credit Extensions as working capital, and to fund its general business requirements and not for personal, family, household or agricultural purposes.

5.11 Full Disclosure . No written representation, warranty or other statement of Borrower in any certificate or written statement given to Bank, as of the date such representation, warranty, or other statement was made, taken together with all such written certificates and written statements given to Bank, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading (it being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).

5.12 Definition of “Knowledge . ” For purposes of the Loan Documents, whenever a representation or warranty is made to Borrower’s knowledge or awareness, to the “best of” Borrower’s knowledge, or with a similar qualification, knowledge or awareness means the actual knowledge, after reasonable investigation, of any Responsible Officer.

6. AFFIRMATIVE COVENANTS

Borrower shall do all of the following:

6.1 Government Compliance.

(a) Maintain its and all its Subsidiaries’ legal existence and good standing in their respective jurisdictions of formation and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse effect on Borrower’s business or operations. Borrower shall comply, and have each Subsidiary comply, with all laws, ordinances and regulations to which it is subject the non-compliance with which would reasonably be expected to have a material adverse effect on Borrower’s business.

(b) Obtain all of the Governmental Approvals necessary for the performance by Borrower of its obligations under the Loan Documents to which it is a party and the grant of a security interest to Bank in all of the Collateral. Borrower shall promptly provide copies of any such obtained Governmental Approvals to Bank.

6.2 Financial Statements, Reports, Certificates. Provide Bank with the following:

(a) Borrowing Base Reports . Within thirty (30) days after the last day of each month, aged listings of accounts receivable and accounts payable (by invoice date) (the “ Borrowing Base Reports ”);

(b) Borrowing Base Certificate . Within thirty (30) days after the last day of each month and together with the Borrowing Base Reports, a duly completed Borrowing Base Certificate signed by a Responsible Officer;

(c) Monthly Financial Statements . As soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated balance sheet and income statement covering Borrower’s consolidated operations for such month certified by a Responsible Officer and in a form reasonably acceptable to Bank (the “ Monthly Financial Statements ”);

(d) Monthly Compliance Certificate . Within thirty (30) days after the last day of each month and together with the Monthly Financial Statements, a duly completed Compliance Certificate signed by a Responsible Officer, certifying that as of the end of such month, except as set forth therein, Borrower was in full compliance with all of the terms, conditions and covenants set forth in this Agreement, and setting forth calculations showing compliance with the financial covenants set forth in this Agreement and such other information as Bank may reasonably request;

(e) Board Projections . As soon as available, but no later than the earlier to occur of (i) forty-five (45) days after the end of each fiscal year of Borrower or (ii) ten (10) days after Board approval, and not more than ten (10) days after Board approval of any material updates or changes thereto, annual Board-approved operating budget and financial projections, in a form of presentation reasonably acceptable to Bank;

(f) Annual Audited Financial Statements . As soon as available, but no later than one hundred twenty (120) days after the last day of Borrower’s fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm reasonably acceptable to Bank;

(g) Other Statements . Within five (5) days of delivery, copies of all statements, reports and notices made available to Borrower’s security holders or to any holders of Subordinated Debt;

(h) SEC Filings . Within five (5) days of filing, copies of all periodic and other reports, proxy statements and other materials filed by Borrower with the SEC, any Governmental Authority succeeding to any or all of the functions of the SEC or distributed to its shareholders, as the case may be. Documents required to be delivered pursuant to the terms of this Agreement (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which Borrower posts such documents, or provides a link thereto, on Borrower’s website on the Internet at Borrower’s website address; provided, however, Borrower shall promptly notify Bank in writing (which may be by electronic mail) of the posting of any such documents;

(i) Legal Action Notice . A prompt report of any legal actions pending or threatened in writing against Borrower or any of its Subsidiaries that would reasonably be expected to result in damages or costs to Borrower or any of its Subsidiaries of, individually or in the aggregate, One Hundred Fifty Thousand Dollars ($150,000.00) or more;

(j) Stock Repurchase Report . On the first Business Day of each month, a report, in form and substance satisfactory to Bank, setting forth the number of repurchases of common stock completed at any time during the preceding month and the total amount paid by Borrower in connection with such repurchases; and

(k) Other Financial Information . Other financial information reasonably requested by Bank.

6.3 Inventory; Returns . Keep all Inventory in good and marketable condition, free from material defects. Returns and allowances between Borrower and its Account Debtors shall follow Borrower’s customary practices as they exist at the Effective Date. Borrower must promptly notify Bank of all returns, recoveries, disputes and claims that involve more than One Hundred Thousand Dollars ($100,000.00).

6.4 Taxes; Pensions . Timely file, and require each of its Subsidiaries to timely file, all required tax returns and reports and timely pay, and require each of its Subsidiaries to timely pay, all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower and each of its Subsidiaries, except for deferred payment of any taxes contested pursuant to the terms of Section 5.9 hereof, and shall deliver to Bank, on demand, appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms.

6.5 Insurance.

(a) Keep its business and the Collateral insured for risks and in amounts standard for companies in Borrower’s industry and location and as Bank may reasonably request. Insurance policies shall be in a form, with financially sound and reputable insurance companies that are not Affiliates of Borrower, and in amounts that are satisfactory to Bank. All property policies shall have a lender’s loss payable endorsement showing Bank as the sole lender loss payee. All liability policies shall show, or have endorsements showing, Bank as an additional insured. Bank shall be named as lender loss payee and/or additional insured with respect to any such insurance providing coverage in respect of any Collateral.

(b) Ensure that proceeds payable under any property policy are, at Bank’s option, payable to Bank on account of the Obligations. Notwithstanding the foregoing, (a) so long as no Event of Default has occurred and is continuing, Borrower shall have the option of applying the proceeds of any casualty policy up to Three Hundred Thousand Dollars ($300,000.00) in the aggregate for all losses under all casualty policies, toward the replacement or repair of destroyed or damaged property; provided that any such replaced or repaired property (i) shall be of equal or like value as the replaced or repaired Collateral and (ii) shall be deemed Collateral in which Bank has been granted a first priority security interest, and (b) after the occurrence and during the continuance of an Event of Default, all proceeds payable under such casualty policy shall, at the option of Bank, be payable to Bank on account of the Obligations

(c) At Bank’s request, Borrower shall deliver certified copies of insurance policies and evidence of all premium payments. Each provider of any such insurance required under this Section 6.5 shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to Bank, that it will give Bank twenty (20) days prior written notice before any such policy or policies shall be materially altered or canceled. If Borrower fails to obtain insurance as required under this Section 6.5 or to pay any amount or furnish any required proof of payment to third persons and Bank, Bank may make all or part of such payment or obtain such insurance policies required in this Section 6.5, and take any action under the policies Bank deems prudent.

6.6 Accounts.

(a) Maintain all of Borrower’s and all Borrower’s Subsidiaries operating accounts with Bank and all of Borrower’s and such Subsidiaries’ cash or securities in excess of that amount used for Borrower’s or such Subsidiaries’ current operations shall be maintained or administered through Bank and Bank’s Affiliates. Notwithstanding the foregoing, for any calendar quarter, if during the immediately preceding calendar quarter, Borrower and Borrower’s Subsidiaries maintained unrestricted and unencumbered cash and Cash Equivalents with Bank and Bank’s affiliates with an average daily balance of no less than Thirty Million Dollars ($30,000,000.00), as tested for the entire quarter on the last day of such quarter, Borrower may maintain cash or securities in excess of that amount used for Borrower’s or such Subsidiaries’ current operations in non-operating accounts at financial institutions other than Bank and Bank’s Affiliates.

(b) Provide Bank five (5) days prior written notice before establishing any Collateral Account at or with any bank or financial institution other than Bank or Bank’s Affiliates. For each Collateral Account that Borrower at any time maintains, Borrower shall cause the applicable bank or financial institution (other than Bank) at or with which any Collateral Account is maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Bank’s Lien in such Collateral Account in accordance with the terms hereunder which Control Agreement may not be terminated without the prior written consent of Bank. The provisions of the previous sentence shall not apply to (a) Borrower’s account numbers ending 360 and 650 (last three digits) with JP Morgan Chase Bank NA that are disclosed on the Perfection Certificate for a period of up to thirty (30) days following the Effective Date and (b) deposit accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of Borrower’s employees and identified to Bank by Borrower as such.

(c) As and when directed by Bank in writing from time to time, at Bank’s option and at the sole and exclusive discretion of Bank (regardless of whether an Event of Default has occurred), Borrower shall direct each Account Debtor (and each depository institution where proceeds of Accounts are on deposit) to remit payments with respect to the Accounts to a lockbox account established with Bank or to wire transfer payments to a cash collateral account that Bank controls.

6.7 Financial Covenants .

(a) Adjusted Quick Ratio . Maintain at all times, to be tested as of the last day of each month, to be computed on a consolidated basis, an Adjusted Quick Ratio of at least 1.20 to 1.0.

(b) Adjusted EBITDA . Maintain at all times, to be tested as of the last day of each calendar quarter, Adjusted EBITDA for the twelve (12) month period ending on such day of at least: (i) negative Seven Million Five Hundred Thousand Dollars (-$7,500,000.00) for the twelve (12) month period ending December 31, 2016; (ii) negative Six Million Five Hundred Thousand Dollars (-$6,500,000.00) for the twelve (12) month period ending March 31, 2017; (iii) negative Six Million Dollars (-$6,000,000.00) for the twelve (12) month period ending June 30, 2017; (iv) negative Three Million Five Hundred Thousand Dollars (-$3,500,000.00) for the twelve (12) month period ending September 30, 2017; and (v) Zero Dollars ($0.00) for the twelve (12) month period ending December 31, 2017.

6.8 Protection of Intellectual Property Rights.

(a) (i) Protect, defend and maintain the validity and enforceability of the Intellectual Property that is material to Borrower’s business, except to the extent that Bank gives its prior written consent or if Borrower determines in good faith and upon consultation of its legal counsel that the foregoing is not in the best interests of Borrower; (ii) promptly advise Bank in writing upon it becoming aware of material infringements or any other event that could reasonably be expected to materially and adversely affect the value of its Intellectual Property; and (iii) not allow any Intellectual Property material to Borrower’s business to be abandoned, forfeited or dedicated to the public without Bank’s written consent.

(b) Provide written notice to Bank within ten (10) days of entering or becoming bound by any Restricted License (other than over-the-counter software that is commercially available to the public). Borrower shall take such steps as Bank reasonably requests to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for (i) any Restricted License to be deemed “Collateral” and for Bank to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such Restricted License, whether now existing or entered into in the future, and (ii) Bank to have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with Bank’s rights and remedies under this Agreement and the other Loan Documents.

6.9 Litigation Cooperation . From the date hereof and continuing through the termination of this Agreement, make available to Bank, without expense to Bank, Borrower and its officers, employees and agents and Borrower’s books and records, to the extent that Bank may deem them reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by or against Bank with respect to any Collateral or relating to Borrower.

6.10 Access to Collateral; Books and Records . Allow Bank, or its agents, at reasonable times, on three (3) Business Days’ notice (provided no notice is required if an Event of Default has occurred and is continuing), to inspect the Collateral and audit and copy Borrower’s Books. Such inspections or audits shall be conducted no more often than twice every twelve (12) months unless an Event of Default has occurred and is continuing. The foregoing inspections and audits shall be at Borrower’s expense, and the charge therefor shall be One Thousand Dollars ($1,000.00) per person per day (or such higher amount as shall represent Bank’s then-current standard charge for the same), plus reasonable out-of-pocket expenses. In the event Borrower and Bank schedule an audit more than ten (10) days in advance, and Borrower cancels or seeks to reschedule the audit with less than ten (10) days written notice to Bank, then (without limiting any of Bank’s rights or remedies), Borrower shall pay Bank a fee of One Thousand Dollars ($1,000.00) plus any out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated costs and expenses of the cancellation or rescheduling.

6.11 Further Assurances . Execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank’s Lien in the Collateral or to effect the purposes of this Agreement. Deliver to Bank, within five (5) days after the same are sent or received, copies of all correspondence, reports, documents and other filings with any Governmental Authority regarding compliance with or maintenance of Governmental Approvals or Requirements of Law or that could reasonably be expected to have a material effect on any of the Governmental Approvals or otherwise on the operations of Borrower or any of its Subsidiaries.

6.12 Clean-up Period . Cause all Obligations in connection with Advances to be paid down to Zero Dollars ($0.00) for a period of five (5) consecutive days during the first quarter of each fiscal year of Borrower.

6.13 Post-Closing Requirements . Deliver to Bank, in form and substance reasonably satisfactory to Bank, (a) within thirty (30) days after the Effective Date, an endorsement to Borrower’s property insurance policy naming Bank as lender’s loss payee with respect to each of Borrower’s leased locations and each location where Borrower maintains assets with a third party and (b) within forty-five (45) days of the Effective Date, a bailee’s waiver in favor of Bank by Equinix, together with the duly executed original signature thereto.

7. NEGATIVE COVENANTS

Until such time as the Loan Documents are terminated and all Obligations repaid in full (other than inchoate indemnity obligations), Borrower shall not do any of the following without Bank’s prior written consent:

7.1 Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b) of surplus, worn-out or obsolete Equipment that is, in the reasonable judgment of Borrower, no longer economically practicable to maintain or no longer useful in the ordinary course of business of Borrower; (c) consisting of Permitted Liens, Permitted Investments, Permitted Acquisitions or Permitted Capital Transactions; (d) by means of non-exclusive licenses for the use of the property of Borrower or its Subsidiaries in the ordinary course of business; (e) by means of leases or subleases of real property; (f) consisting of Borrower’s use or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of this Agreement or the other Loan Document; (g) consisting of sales of capital stock by Borrower, including without limitation sales of or retirements of capital stock to satisfy tax obligations in connection with the vesting of restricted stock unit awards so long as such sales or retirements of capital stock are not prohibited by Section 7.2 hereof; (h) among its Subsidiaries or from a Subsidiary to Borrower; and (i) of other property having a fair market value not to exceed One Hundred Fifty Thousand Dollars ($150,000.00) in the aggregate from and after the Effective Date.

7.2 Changes in Business, Management, Control, or Business Locations. (a) Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or dissolve; (c) fail to provide notice to Bank of any Key Person departing from or ceasing to be employed by Borrower within ten (10) days after such Key Person’s departure from Borrower; or (d) permit or suffer any Change in Control.

Borrower shall not, without at least thirty (30) days prior written notice to Bank: (1) add any new offices or business locations, including warehouses (unless such new offices or business locations contain less than One Hundred Fifty Thousand Dollars ($150,000.00) in Borrower’s assets or property) or deliver any portion of the Collateral valued, individually or in the aggregate, in excess of One Hundred Fifty Thousand Dollars ($150,000.00) to a bailee at a location other than to a bailee and at a location already disclosed in the Perfection Certificate, (2) change its jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal name, or (5) change any organizational number (if any) assigned by its jurisdiction of organization. If Borrower intends to deliver any portion of the Collateral valued, individually or in the aggregate, in excess of One Hundred Fifty Thousand Dollars ($150,000.00) to a bailee, and Bank and such bailee are not already parties to a bailee agreement governing both the Collateral and the location to which Borrower intends to deliver the Collateral, then Borrower will first receive the written consent of Bank, and such bailee shall execute and deliver a bailee agreement in form and substance satisfactory to Bank.

7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person (including, without limitation, by the formation of any Subsidiary) except for purchases or other acquisitions by Borrower or any Subsidiary of Borrower of (x) the capital stock in a Person that, upon the consummation thereof, will be a Subsidiary (including as a result of a merger or consolidation) or (y) all or substantially all of the assets of, or assets constituting one or more business units of, any Person (each, a “ Permitted Acquisition ”); provided that, with respect to each such purchase or other acquisition:.

(a) the newly-created or acquired Subsidiary (or assets acquired in connection with an asset sale) shall be (a) in the same or a related line of business as that conducted by Borrower on the date hereof, or (b) in a business that is ancillary to and in furtherance of the line of business as that conducted by Borrower on the date hereof;

(b) all transactions related to such purchase or acquisition shall be consummated in all material respects in accordance with all requirements of law;

(c) no Borrower or Subsidiary shall, as a result of or in connection with any such purchase or acquisition, assume or incur any direct or contingent liabilities (whether relating to environmental, tax, litigation or other matters) that, as of the date of such purchase or acquisition, could reasonably be expected to have a material adverse effect on Borrower’s business;

(d) Borrower shall give the Bank at least ten (10) Business Days’ prior written notice of any such purchase or acquisition;

(e) Borrower shall provide to the Bank as soon as available but in any event not later than five (5) Business Days after the execution thereof, a copy of any executed purchase agreement or similar agreement with respect to any such purchase or acquisition;

(f) (a) immediately before and immediately after giving effect to any such purchase or other acquisition, no Event of Default shall have occurred and be continuing, (b) immediately after giving effect to such purchase or other acquisition and for the twelve (12) month period following the consummation of such purchase or acquisition on a pro forma basis, Borrower and its Subsidiaries shall be in compliance with the covenants set forth in Section 6.7, based upon financial statements delivered to the Bank at least five (5) Business Days prior to such acquisition or other purchase which give effect, on a pro forma basis, to such acquisition or other purchase;

(g) no Indebtedness is assumed or incurred in connection with any such purchase or acquisition other than Permitted Indebtedness and no Liens are assumed or incurred in connection with any such purchase or acquisition other than Permitted Liens;

(h) such purchase or acquisition shall not be opposed by the target’s or seller’s (as applicable) board of directors or equivalent governing body;

(i) (a) the aggregate amount of the consideration, including cash and the value of any non-cash consideration (including any deferred payment Obligations), for all such purchases or acquisitions shall not exceed Twenty-Five Million Dollars ($25,000,000.00) in any twelve-month period and (b) the aggregate amount of the cash consideration for all such purchases or acquisitions shall not exceed Ten Million Dollars ($10,000,000.00) in any twelve-month period;

(j) the assets being acquired are located within the United States or such other jurisdiction acceptable to Bank in its sole discretion;

(k) Borrower shall have delivered to the Bank, at least five (5) Business Days prior to the date on which any such purchase or other acquisition is to be consummated (or such later date as is agreed by the Bank in its sole discretion), a certificate of a Responsible Officer of Borrower, in form and substance reasonably satisfactory to the Bank, certifying that all of the requirements set forth in this definition have been satisfied or will be satisfied on or prior to the consummation of such purchase or other acquisition;

(l) immediately after giving effect to such purchase or acquisition, the unrestricted and unencumbered cash and Cash Equivalents maintained by Borrower and its Subsidiaries with Bank and Bank’s Affiliates is equal to or greater than Fifteen Million Dollars ($15,000,000.00);

(m) such purchase or acquisition and the company or assets being acquired are accretive in all material respects;

(n) Borrower is a surviving legal entity following such purchase or acquisition; and

(o) simultaneously with the closing of such transaction, if requested by Bank in its sole discretion, any newly acquired and/or formed entity must, contemporaneously with the closing of such transaction (or later if agreed by Bank in its sole discretion) become a “Borrower” under this Agreement and the other Loan Documents and become subject to all rights and obligations of this Agreement and the other Loan Documents, and must execute and deliver to Bank an assumption agreement acceptable to Bank as well as such other documents and agreements as required by Bank in connection with the target becoming a Borrower and granting a Lien in favor of Bank on the Collateral.

The forgoing definition of a Permitted Acquisition shall also apply to any acquisition of a company that would be a Subsidiary if majority owned by Borrower but is made as a minority Investment by the Borrower instead.

A Subsidiary may merge or consolidate into another Subsidiary or into Borrower or its assets may be acquired by another Subsidiary or by Borrower.

7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness.

7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to the first priority security interest granted herein, or enter into any agreement, document, instrument or other arrangement (except with or in favor of Bank) with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s or any Subsidiary’s Intellectual Property, except in each case as is otherwise permitted in Section 7.1 hereof and the definition of Permitted Liens herein.

7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except pursuant to the terms of Section 6.6(b) hereof.

7.7 Distributions; Investments. (a) Pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock, provided that Borrower may (i) convert any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange thereof, (ii) pay dividends solely in common stock; (iii) repurchase shares of common stock so long as an Event of Default does not exist at the time of such repurchase and would not exist after giving effect to such repurchase, provided such repurchases do not exceed in the aggregate Fifteen Million Dollars ($15,000,000.00) minus the amount of any such repurchases conducted during the period commencing on March 29, 2016 through and including the date immediately prior to the Effective Date; and (iv) retire any shares of capital stock of the Borrower otherwise issuable upon conversion of any restricted stock unit award to satisfy any tax obligations with respect to such restricted stock unit awards ((i) through (iv), collectively, “ Permitted Capital Transactions ”); or (b) directly or indirectly make any Investment (including, without limitation, by the formation of any Subsidiary) other than Permitted Investments or Permitted Acquisitions, or permit any of its Subsidiaries to do so.

7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower, except for transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person, it being understood that Borrower’s institutional venture capital stockholders and Affiliates may provide equity and/or unsecured debt or equity financing (including convertible debt) to Borrower subject to the terms hereof.

7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt, except under the terms of the subordination, intercreditor, or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating to the Subordinated Debt which would increase the amount thereof, provide for earlier or greater principal, interest, or other payments thereon, or adversely affect the subordination thereof to Obligations owed to Bank.

7.10 Compliance. Become an “investment company” or a company controlled by an “investment company”, under the Investment Company Act of 1940, as amended, or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any Credit Extension for that purpose; (a) fail to meet the minimum funding requirements of ERISA, (b) permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur, or (c) fail to comply with the Federal Fair Labor Standards Act, the occurrence of any of the conditions described in clauses (a) through (c) which could reasonably be expected to have a material adverse effect on Borrower’s business; or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower’s business, or permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

7.11 TVN Acquisition Payments . Make or permit any payment related to or in connection with Borrower’s acquisition of The Video Network Pty Ltd. other than earn-out payments and milestone payments made after the Effective Date in an aggregate amount not to exceed Seven Million Australian Dollars (AU$7,000,000.00) at any time (the “ Permitted TVN Acquisition Payments ”)(provided that no such payments may be made to The Video Network Pty Ltd. if an Event of Default has occurred and is continuing).

7.12 Going Private . Take or consent to the taking of any action or transaction or series of related actions or transactions that would or foreseeably could result in Borrower “going private,” including, but not limited to, any one or more of the following actions or transactions: (a) repurchase any outstanding shares of Borrower from the holder or holders thereof except to the extent otherwise permitted hereby; (b) consent to the purchase of outstanding shares of Borrower by any person (including, without limitation, pursuant to a tender offer) for the announced purpose of, or which Borrower knows or should know could result in, taking Borrower private; (c) terminate the registration of Borrower’s securities under the Exchange Act, whether by the filing of a Form 15 or otherwise; (d) cease filing with the Securities and Exchange Commission any or all reports required under Section 13 or Section 15(d) of the Exchange Act; or (e) de-list, de-qualify or de-register any of Borrower’s securities from any securities exchange or market on which they are currently or in the future listed, qualified or registered for trading, or cease filing or fail to timely file with any such exchange or market any or all reports with required under FINRA or other rule or regulation of such exchange or market.

8. EVENTS OF DEFAULT

Any one of the following shall constitute an event of default (an “ Event of Default ”) under this Agreement:

8.1 Payment Default . Borrower fails to (a) make any payment of principal or interest on any Credit Extension when due, or (b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day cure period shall not apply to payments due on the Revolving Line Maturity Date). During the cure period, the failure to make or pay any payment specified under clause (b) hereunder is not an Event of Default (but no Credit Extension will be made during the cure period);

8.2 Covenant Default.

(a) Borrower fails or neglects to perform any obligation in Sections 6.2, 6.4, 6.5, 6.6, 6.7, 6.8(b), 6.10, 6.12 or 6.13, or violates any covenant in Section 7; or

(b) Borrower fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement contained in this Agreement or any Loan Documents, and as to any default (other than those specified in this Section 8) under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure the default within ten (10) days after the occurrence thereof; provided, however, that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no Credit Extensions shall be made during such cure period). Cure periods provided under this section shall not apply to financial covenants or any other covenants set forth in clause (a) above;

8.3 Intentionally omitted .

8.4 Attachment; Levy; Restraint on Business.

(a) (i) The service of process seeking to attach, by trustee or similar process, any funds of Borrower or of any entity under the control of Borrower (including a Subsidiary) on deposit with Bank or Bank’s Affiliates, or (ii) a notice of lien or levy is filed against any of Borrower’s assets by any Governmental Authority, and the same under either subclause (i) or (ii) hereof are not, within ten (10) days after the occurrence thereof, discharged or stayed (whether through the posting of a bond or otherwise); provided, however, no Credit Extensions shall be made during any ten (10) day cure period; or

(b) (i) any material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee or receiver, or (ii) any court order enjoins, restrains, or prevents Borrower from conducting all or any material part of its business;

8.5 Insolvency . (a) Borrower is unable to pay its debts (including trade debts) as they become due or otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower and is not dismissed or stayed within thirty (30) days (but no Credit Extensions shall be made while any of the conditions described in clause (a) exist and/or until any Insolvency Proceeding is dismissed);

8.6 Other Agreements . There is, under any agreement to which Borrower is a party with a third party or parties, (a) any default resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount individually or in the aggregate in excess of One Hundred Thousand Dollars ($100,000.00); or (b) any breach or default by Borrower, the result of which could have a material adverse effect on Borrower’s business;

8.7 Judgments; Penalties . One or more fines, penalties or final judgments, orders or decrees for the payment of money in an amount, individually or in the aggregate, of at least One Hundred Thousand Dollars ($100,000.00) (not covered by independent third-party insurance as to which liability has been accepted by such insurance carrier) shall be rendered against Borrower by any Governmental Authority, and the same are not, within ten (10) days after the entry, assessment or issuance thereof, discharged, satisfied, or paid, or after execution thereof, stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration of any such stay (provided that no Credit Extensions will be made prior to the satisfaction, payment, discharge, stay, or bonding of such fine, penalty, judgment, order or decree);

8.8 Misrepresentations . Borrower or any Person acting for Borrower makes any representation, warranty, or other statement now or later in this Agreement, any Loan Document or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and such representation, warranty, or other statement is incorrect in any material respect when made;

8.9 Subordinated Debt . Any document, instrument, or agreement evidencing the subordination of any Subordinated Debt shall for any reason be revoked or invalidated or otherwise cease to be in full force and effect, any Person shall be in breach thereof or contest in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder, or the Obligations shall for any reason not have the priority contemplated by this Agreement in respect of such Subordinated Debt; or

8.10 Governmental Approvals . Any Governmental Approval shall have been (a) revoked, rescinded, suspended, modified in an adverse manner or not renewed in the ordinary course for a full term or (b) subject to any decision by a Governmental Authority that designates a hearing with respect to any applications for renewal of any of such Governmental Approval or that could result in the Governmental Authority taking any of the actions described in clause (a) above, and such decision or such revocation, rescission, suspension, modification or non-renewal described in clauses (a) or (b) either (i) has caused, or could reasonably be expected to cause, a material adverse effect on Borrower’s business, or (ii) adversely affects the legal qualifications of Borrower or any of its Subsidiaries to hold such Governmental Approval in any applicable jurisdiction and such revocation, rescission, suspension, modification or non-renewal could reasonably be expected to affect the status of or legal qualifications of Borrower or any of its Subsidiaries to hold any Governmental Approval in any other jurisdiction.

9. BANK’S RIGHTS AND REMEDIES

9.1 Rights and Remedies . Upon the occurrence and during the continuance of an Event of Default, Bank may, without notice or demand, do any or all of the following:

(a) declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank);

(b) stop advancing money or extending credit for Borrower’s benefit under this Agreement or under any other agreement between Borrower and Bank;

(c) demand that Borrower (i) deposit cash with Bank in an amount equal to (x) one hundred five percent (105.0%) of the Dollar Equivalent of the aggregate face amount of all Letters of Credit denominated in Dollars remaining undrawn, and (y) one hundred ten percent (110.0%) of the Dollar Equivalent of the aggregate face amount of all Letters of Credit denominated in a Foreign Currency remaining undrawn (plus, in each case, all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment)), to secure all of the Obligations relating to such Letters of Credit, as collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in advance all letter of credit fees scheduled to be paid or payable over the remaining term of any Letters of Credit;

(d) terminate any FX Contracts;

(e) verify the amount of, demand payment of and performance under, and collect any Accounts and General Intangibles constituting Collateral, settle or adjust disputes and claims directly with Account Debtors for amounts on terms and in any order that Bank considers advisable, and notify any Person owing Borrower money of Bank’s security interest in such funds;

(f) make any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the Collateral. Borrower shall assemble the Collateral if Bank requests and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank’s rights or remedies;

(g) apply to the Obligations (i) any balances and deposits of Borrower it holds, or (ii) any amount held by Bank owing to or for the credit or the account of Borrower;

(h) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, Patents, Copyrights, mask works, rights of use of any name, trade secrets, trade names, Trademarks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this Section, Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit;

(i) place a “hold” on any account maintained with Bank and/or deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any Control Agreement or similar agreements providing control of any Collateral;

(j) demand and receive possession of Borrower’s Books; and

(k) exercise all rights and remedies available to Bank under the Loan Documents or at law or equity, including all remedies provided under the Code (including disposal of the Collateral pursuant to the terms thereof).

9.2 Power of Attorney . Borrower hereby irrevocably appoints Bank as its lawful attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of Default, to: (a) endorse Borrower’s name on any checks or other forms of payment or security; (b) sign Borrower’s name on any invoice or bill of lading for any Account or drafts against Account Debtors; (c) settle and adjust disputes and claims about the Accounts directly with Account Debtors, for amounts and on terms Bank determines reasonable; (d) make, settle, and adjust all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect or continue the perfection of Bank’s security interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations have been satisfied in full and Bank is under no further obligation to make Credit Extensions hereunder. Bank’s foregoing appointment as Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed and Bank’s obligation to provide Credit Extensions terminates.

9.3 Protective Payments . If Borrower fails to obtain the insurance called for by Section 6.5 or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document or which may be required to preserve the Collateral, Bank may obtain such insurance or make such payment, and all amounts so paid by Bank are Bank Expenses and immediately due and payable, bearing interest at the then highest rate applicable to the Obligations, and secured by the Collateral. Bank will make reasonable efforts to provide Borrower with notice of Bank obtaining such insurance at the time it is obtained or within a reasonable time thereafter. No payments by Bank are deemed an agreement to make similar payments in the future or Bank’s waiver of any Event of Default.

9.4 Application of Payments and Proceeds Upon Default . If an Event of Default has occurred and is continuing, Bank shall have the right to apply in any order any funds in its possession, whether from Borrower account balances, payments, proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, or otherwise, to the Obligations. Bank shall pay any surplus to Borrower by credit to the Designated Deposit Account or to other Persons legally entitled thereto; Borrower shall remain liable to Bank for any deficiency. If Bank, directly or indirectly, enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, Bank shall have the option, exercisable at any time, of either reducing the Obligations by the principal amount of the purchase price or deferring the reduction of the Obligations until the actual receipt by Bank of cash therefor.

9.5 Bank’s Liability for Collateral . So long as Bank complies with reasonable banking practices regarding the safekeeping of the Collateral in the possession or under the control of Bank, Bank shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage or destruction of the Collateral.

9.6 No Waiver; Remedies Cumulative . Bank’s failure, at any time or times, to require strict performance by Borrower of any provision of this Agreement or any other Loan Document shall not waive, affect, or diminish any right of Bank thereafter to demand strict performance and compliance herewith or therewith. No waiver hereunder shall be effective unless signed by the party granting the waiver and then is only effective for the specific instance and purpose for which it is given. Bank’s rights and remedies under this Agreement and the other Loan Documents are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is not an election and shall not preclude Bank from exercising any other remedy under this Agreement or other remedy available at law or in equity, and Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s delay in exercising any remedy is not a waiver, election, or acquiescence.

9.7 Demand Waiver . Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is liable.

10. NOTICES

All notices, consents, requests, approvals, demands, or other communication by any party to this Agreement or any other Loan Document must be in writing and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by electronic mail or facsimile transmission; (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address, facsimile number, or email address indicated below. Bank or Borrower may change its mailing or electronic mail address or facsimile number by giving the other party written notice thereof in accordance with the terms of this Section 10.

If to Borrower:	Tremor Video, Inc.
	1501 Broadway, Suite 801
	New York, New York 10036
	Attn:	Aaron Saltz
	Email:	asaltz@Tremorvideo.com

with a copy to:	Cooley LLP
	1114 Avenue of the Americas
	New York, New York 10036
	Attn:	J. Peyton Worley
	Fax:	(212) 479-6275
	Email:	pworley@cooley.com

If to Bank:	Silicon Valley Bank
	505 5 th Avenue, 11 th Floor
	New York, New York 10017
	Attn:	Jon Wolter
	Fax:	(212) 688-5994
	Email:	JWolter@svb.com

with a copy to:	Riemer & Braunstein LLP
	Three Center Plaza
	Boston, Massachusetts 02108
	Attn:	David A. Ephraim, Esquire
	Fax:	(617) 880-3456
	Email:	DEphraim@riemerlaw.com

11. CHOICE OF LAW, VENUE, AND JURY TRIAL WAIVER

Except as otherwise expressly provided in any of the Loan Documents, New York law governs the Loan Documents without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in New York, New York; provided, however, that nothing in this Agreement shall be deemed to operate to preclude Bank from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Bank. Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Borrower hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth in, or subsequently provided by Borrower in accordance with, Section 10 of this Agreement and that service so made shall be deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.

BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL .

This Section 11 shall survive the termination of this Agreement.

12. GENERAL PROVISIONS

12.1 Termination Prior to Revolving Line Maturity Date; Survival . All covenants, representations and warranties made in this Agreement continue in full force in accordance with its terms until this Agreement has terminated pursuant to its terms and all Obligations (other than inchoate indemnity obligations and any other obligations, which by their terms, are to survive the termination of this Agreement) have been satisfied. So long as Borrower has satisfied the Obligations (other than inchoate indemnity obligations, and any other obligations which, by their terms, are to survive the termination of this Agreement), this Agreement may be terminated prior to the Revolving Line Maturity Date by Borrower, effective three (3) Business Days after written notice of termination is given to Bank. Those obligations that are expressly specified in this Agreement as surviving this Agreement’s termination shall continue to survive notwithstanding this Agreement’s termination.

12.2 Successors and Assigns . This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not assign this Agreement or any rights or obligations under it without Bank’s prior written consent (which may be granted or withheld in Bank’s discretion). Bank has the right, without the consent of or notice to Borrower, to sell, transfer, assign, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights, and benefits under this Agreement and the other Loan Documents.

12.3 Indemnification. Borrower agrees to indemnify, defend and hold Bank and its directors, officers, employees, agents, attorneys, or any other Person affiliated with or representing Bank (each, an “ Indemnified Person ”) harmless against: (i) all obligations, demands, claims, and liabilities (collectively, “ Claims ”) claimed or asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (ii) all losses or expenses (including Bank Expenses) in any way suffered, incurred, or paid by such Indemnified Person as a result of, following from, consequential to, or arising from transactions between Bank and Borrower relating to the Loan Documents (including reasonable attorneys’ fees and expenses), except for Claims and/or losses directly caused by such Indemnified Person’s gross negligence or willful misconduct.

This Section 12.3 shall survive until all statutes of limitation with respect to the Claims, losses, and expenses for which indemnity is given shall have run.

12.4 Time of Essence . Time is of the essence for the performance of all Obligations in this Agreement.

12.5 Severability of Provisions . Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision.

12.6 Correction of Loan Documents . Bank may correct patent errors and fill in any blanks in the Loan Documents consistent with the agreement of the parties.

12.7 Amendments in Writing; Waiver; Integration . No purported amendment or modification of any Loan Document, or waiver, discharge or termination of any obligation under any Loan Document, shall be enforceable or admissible unless, and only to the extent, expressly set forth in a writing signed by the party against which enforcement or admission is sought. Without limiting the generality of the foregoing, no oral promise or statement, nor any action, inaction, delay, failure to require performance or course of conduct shall operate as, or evidence, an amendment, supplement or waiver or have any other effect on any Loan Document. Any waiver granted shall be limited to the specific circumstance expressly described in it, and shall not apply to any subsequent or other circumstance, whether similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waiver. The Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of the Loan Documents merge into the Loan Documents.

12.8 Counterparts . This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, is an original, and all taken together, constitute one Agreement.

12.9 Confidentiality . In handling any confidential information, Bank shall exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may be made: (a) to Bank’s Subsidiaries or Affiliates (who shall be bound by the terms of this Section 12.9) (such Subsidiaries and Affiliates, together with Bank, collectively, “ Bank Entities ”); (b) to prospective transferees or purchasers of any interest in the Credit Extensions (provided, however, Bank shall use its best efforts to obtain any prospective transferee’s or purchaser’s agreement to the terms of this provision); (c) as required by law, regulation, subpoena, or other order; (d) to Bank’s regulators or as otherwise required in connection with Bank’s examination or audit; (e) as Bank reasonably considers appropriate in exercising remedies under the Loan Documents; and (f) to third-party service providers of Bank so long as such service providers have executed a confidentiality agreement with Bank with terms no less restrictive than those contained herein. Confidential information does not include information that is either: (i) in the public domain or in Bank’s possession when disclosed to Bank, or becomes part of the public domain (other than as a result of its disclosure by Bank in violation of this Agreement) after disclosure to Bank; or (ii) disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the information.

Bank Entities may use anonymous forms of confidential information for aggregate datasets, for analyses or reporting, and for any other uses not expressly prohibited in writing by Borrower. The provisions of the immediately preceding sentence shall survive termination of this Agreement.

12.10 Right of Set Off. Borrower hereby grants to Bank, a lien, security interest and right of set off as security for all Obligations to Bank, whether now existing or hereafter arising upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of Bank or any entity under the control of Bank (including a Bank subsidiary) or in transit to any of them. At any time after the occurrence and during the continuance of an Event of Default, without demand or notice, Bank may set off the same or any part thereof and apply the same to any liability or obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

12.11 Electronic Execution of Documents . The words “execution,” “signed,” “signature” and words of like import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity and enforceability as a manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act.

12.12 Captions . The headings used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.

12.13 Construction of Agreement . The parties mutually acknowledge that they and their attorneys have participated in the preparation and negotiation of this Agreement. In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the uncertainty to exist.

12.14 Relationship . The relationship of the parties to this Agreement is determined solely by the provisions of this Agreement. The parties do not intend to create any agency, partnership, joint venture, trust, fiduciary or other relationship with duties or incidents different from those of parties to an arm’s-length contract.

12.15 Third Parties . Nothing in this Agreement, whether express or implied, is intended to: (a) confer any benefits, rights or remedies under or by reason of this Agreement on any persons other than the express parties to it and their respective permitted successors and assigns; (b) relieve or discharge the obligation or liability of any person not an express party to this Agreement; or (c) give any person not an express party to this Agreement any right of subrogation or action against any party to this Agreement.

12.16 Amended and Restated Agreement . This Agreement amends and restates, in its entirety, and replaces, the Prior Loan Agreement. This Agreement is not intended to, and does not, novate the Prior Loan Agreement and Borrower reaffirms that the existing security interest created by the Prior Loan Agreement is and remains in full force and effect.

13. DEFINITIONS

13.1 Definitions . As used in the Loan Documents, the word “shall” is mandatory, the word “may” is permissive, the word “or” is not exclusive, the words “includes” and “including” are not limiting, the singular includes the plural, and numbers denoting amounts that are set off in brackets after the “$” (ie $(12,345)) are negative. As used in this Agreement, the following capitalized terms have the following meanings:

“ Account ” is any “account” as defined in the Code with such additions to such term as may hereafter be made, and includes, without limitation, all accounts receivable and other sums owing to Borrower.

“ Account Debtor ” is any “account debtor” as defined in the Code with such additions to such term as may hereafter be made.

“ Adjusted EBITDA ” for any period shall mean, as calculated on a consolidated basis with respect to Borrower and its Subsidiaries the sum, without duplication, of the amounts for such period of, (a) Net Income, plus (b) to the extent deducted in the calculation of Net Income, (i) Interest Expense, (ii) income tax expense, (iii) depreciation expense and amortization expense, (iv) non-cash stock-based compensation expenses, (v) earn-out payments in connection with Borrower’s acquisition of The Video Network Pty Ltd. in an aggregate amount not to exceed Three Million Six Hundred Thousand Dollars ($3,600,000.00) in the aggregate in any twelve (12) month period, and (vi) without duplication of (i) through (v) above, other add-backs approved by Bank on a case-by-case basis in its sole discretion.

“ Adjusted Quick Ratio ” is, as calculated on a consolidated basis for Borrower and its Subsidiaries, the ratio of (a) Quick Assets to (b) Current Liabilities minus the current portion of Deferred Revenue.

“ Advance ” or “ Advances ” means a revolving credit loan (or revolving credit loans) under the Revolving Line.

“ Affiliate ” is, with respect to any Person, each other Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person’s managers and members.

“ Agreement ” is defined in the preamble hereof.

“ Authorized Signer ” is any individual listed in Borrower’s Borrowing Resolution who is authorized to execute the Loan Documents, including any Credit Extension request, on behalf of Borrower.

“ Availability Amount ” is (a) the lesser of (i) the Revolving Line or (ii) the amount available under the Borrowing Base, minus (b) the aggregate Dollar Equivalent of the face amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) plus an amount equal to the Letter of Credit Reserve, minus (c) the FX Reduction Amount, minus (d) any amounts used for Cash Management Services, minus (e) the outstanding principal balance of any Advances.

“ Bank ” is defined in the preamble hereof.

“ Bank Entities ” is defined in Section 12.9.

“ Bank Expenses ” are all audit fees and expenses, costs, and expenses (including reasonable attorneys’ fees and expenses) for preparing, amending, negotiating, administering, defending and enforcing the Loan Documents (including, without limitation, those incurred in connection with appeals or Insolvency Proceedings) or otherwise incurred with respect to Borrower.

“ Board ” means Borrower’s board of directors.

“ Borrower ” is defined in the preamble hereof.

“ Borrower’s Books ” are all Borrower’s books and records including ledgers, federal and state tax returns, records regarding Borrower’s assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information.

“ Borrowing Base ” is eighty percent (80.0%) of Eligible Accounts, as reasonably determined by Bank from Borrower’s most recent Borrowing Base Certificate; provided, however, that Bank has the right to decrease the foregoing percentage in its good faith business judgment to mitigate the impact of events, conditions, contingencies, or risks which may adversely affect the Collateral or its value.

“ Borrowing Base Certificate ” is that certain certificate in the form attached hereto as Exhibit B .

“ Borrowing Base Report ” is defined in Section 6.2(a).

“ Borrowing Resolutions ” are, with respect to any Person, those resolutions adopted by such Person’s board of directors (and, if required under the terms of such Person’s Operating Documents, stockholders) and delivered by such Person to Bank approving the Loan Documents to which such Person is a party and the transactions contemplated thereby, together with a certificate executed by its secretary on behalf of such Person certifying (a) such Person has the authority to execute, deliver, and perform its obligations under each of the Loan Documents to which it is a party, (b) that set forth as a part of or attached as an exhibit to such certificate is a true, correct, and complete copy of the resolutions then in full force and effect authorizing and ratifying the execution, delivery, and performance by such Person of the Loan Documents to which it is a party, (c) the name(s) of the Person(s) authorized to execute the Loan Documents, including any Credit Extension request, on behalf of such Person, together with a sample of the true signature(s) of such Person(s), and (d) that Bank may conclusively rely on such certificate unless and until such Person shall have delivered to Bank a further certificate canceling or amending such prior certificate.

“ Business Day ” is any day that is not a Saturday, Sunday or a day on which Bank is closed, and if any determination of a “Business Day” shall relate to an FX Contract, the term “Business Day” shall mean a day on which dealings are carried on in the country of settlement of the Foreign Currency.

“ Cash Equivalents ” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc.; and (c) Bank’s certificates of deposit issued maturing no more than one (1) year after issue and (d) money market funds offered by Bank or its Affiliates.

“ Cash Management Services ” is defined in Section 2.1.4.

“ Change in Control ” means (a) at any time, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of forty-nine percent (49.0%) or more of the ordinary voting power for the election of directors of Borrower (determined on a fully diluted basis) other than by the sale of Borrower’s equity securities in a public offering or to venture capital or private equity investors so long as Borrower identifies to Bank the venture capital or private equity investors at least seven (7) Business Days prior to the closing of the transaction and provides to Bank a description of the material terms of the transaction; (b) during any period of twelve (12) consecutive months, a majority of the members of the board of directors or other equivalent governing body of Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body; or (c) at any time, Borrower shall cease to own and control, of record and beneficially, directly or indirectly, one hundred percent (100.0%) of each class of outstanding capital stock of each Subsidiary of Borrower free and clear of all Liens (except Liens created by this Agreement) except for Subsidiaries acquired as part of or resulting from joint ventures permitted pursuant to subsection (j) of the definition of Permitted Investments.

“ Claims ” is defined in Section 12.3.

“ Code ” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of New York; provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the State of New York, the term “ Code ” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.

“ Collateral ” is any and all properties, rights and assets of Borrower described on Exhibit A .

“ Collateral Account ” is any Deposit Account, Securities Account, or Commodity Account.

“ Commodity Account ” is any “commodity account” as defined in the Code with such additions to such term as may hereafter be made.

“ Compliance Certificate ” is that certain certificate in the form attached hereto as Exhibit C .

“ Contingent Obligation ” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation, in each case, directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation” does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any guarantee or other support arrangement.

“ Control Agreement ” is any control agreement entered into among the depository institution at which Borrower maintains a Deposit Account or the securities intermediary or commodity intermediary at which Borrower maintains a Securities Account or a Commodity Account, Borrower, and Bank pursuant to which Bank obtains control (within the meaning of the Code) over such Deposit Account, Securities Account, or Commodity Account.

“ Copyrights ” are any and all copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.

“ Credit Extension ” is any Advance, Overadvance, Letter of Credit, FX Contract, amount utilized for Cash Management Services, or any other extension of credit by Bank for Borrower’s benefit.

“ Current Liabilities ” are all obligations and liabilities of Borrower and its Subsidiaries to Bank, plus, without duplication, the aggregate amount of Borrower’s and its Subsidiaries’ Total Liabilities that mature within one (1) year.

“ Default Rate ” is defined in Section 2.3(b).

“ Deferred Revenue ” is all amounts received or invoiced in advance of performance under contracts and not yet recognized as revenue.

“ Deposit Account ” is any “deposit account” as defined in the Code with such additions to such term as may hereafter be made.

“ Designated Deposit Account ” is the multicurrency account denominated in Dollars, account number ending 359 (last three digits), maintained by Borrower with Bank.

“ Dollars , ” “ dollars ” or use of the sign “ $ ” means only lawful money of the United States and not any other currency, regardless of whether that currency uses the “$” sign to denote its currency or may be readily converted into lawful money of the United States.

“ Dollar Equivalent ” is, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in a Foreign Currency, the equivalent amount therefor in Dollars as determined by Bank at such time on the basis of the then-prevailing rate of exchange in San Francisco, California, for sales of the Foreign Currency for transfer to the country issuing such Foreign Currency.

“ Effective Date ” is defined in the preamble hereof.

“ Eligible Accounts ” means Accounts which arise in the ordinary course of Borrower’s business that meet all Borrower’s representations and warranties in Section 5.3. Bank reserves the right at any time after the Effective Date to adjust any of the criteria set forth below and to establish new criteria in its good faith business judgment. Unless Bank otherwise agrees in writing, Eligible Accounts shall not include:

(a) Accounts for which the Account Debtor is Borrower’s Affiliate, officer, employee, or agent;

(b) Accounts that the Account Debtor has not paid within one hundred twenty (120) days of invoice date regardless of invoice payment period terms;

(d) Accounts owing from an Account Debtor if fifty percent (50%) or more of the Accounts owing from such Account Debtor have not been paid within one hundred twenty (120) days of invoice date;

(e) Accounts owing from an Account Debtor which does not have its principal place of business in the United States, Canada, France, Germany, Italy, Japan or the United Kingdom;

(f) Accounts billed from and/or payable to Borrower outside of the United States (sometimes called foreign invoiced accounts);

(g) Accounts owing from an Account Debtor to the extent that Borrower is indebted or obligated in any manner to the Account Debtor (as creditor, lessor, supplier or otherwise — sometimes called “contra” accounts, accounts payable, customer deposits or credit accounts) (but only to the extent of such credits, adjustments and/or discounts given to an Account Debtor by Borrower in the ordinary course of its business);

(h) Accounts owing from an Account Debtor which is a United States government entity or any department, agency, or instrumentality thereof unless Borrower has assigned its payment rights to Bank and the assignment has been acknowledged under the Federal Assignment of Claims Act of 1940, as amended;

(i) Accounts for demonstration or promotional equipment, or in which goods are consigned, or sold on a “sale guaranteed”, “sale or return”, “sale on approval”, or other terms if Account Debtor’s payment may be conditional;

(j) Accounts owing from an Account Debtor where goods or services have not yet been rendered to the Account Debtor (sometimes called memo billings or pre-billings);

(k) Accounts subject to contractual arrangements between Borrower and an Account Debtor where payments shall be scheduled or due according to completion or fulfillment requirements where the Account Debtor has a right of offset for damages suffered as a result of Borrower’s failure to perform in accordance with the contract (sometimes called contracts accounts receivable, progress billings, milestone billings, or fulfillment contracts);

(l) Accounts owing from an Account Debtor the amount of which may be subject to withholding based on the Account Debtor’s satisfaction of Borrower’s complete performance (but only to the extent of the amount withheld; sometimes called retainage billings);

(m) Accounts subject to trust provisions, subrogation rights of a bonding company, or a statutory trust;

(n) Accounts owing from an Account Debtor that has been invoiced for goods that have not been shipped to the Account Debtor unless Bank, Borrower, and the Account Debtor have entered into an agreement acceptable to Bank in its reasonable discretion wherein the Account Debtor acknowledges that (i) it has title to and has ownership of the goods wherever located, (ii) a bona fide sale of the goods has occurred, and (iii) it owes payment for such goods in accordance with invoices from Borrower (sometimes called “bill and hold” accounts);

(o) Accounts for which the Account Debtor has not been invoiced;

(p) Accounts that represent non-trade receivables or that are derived by means other than in the ordinary course of Borrower’s business;

(q) Accounts for which Borrower has permitted Account Debtor’s payment to extend beyond one hundred twenty (120) days;

(r) Accounts arising from chargebacks, debit memos or other payment deductions taken by an Account Debtor;

(s) Accounts arising from product returns and/or exchanges (sometimes called “warranty” or “RMA” accounts);

(t) Accounts in which the Account Debtor disputes liability or makes any claim (but only up to the disputed or claimed amount), or if the Account Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out of business;

(u) Accounts owing from an Account Debtor with respect to which Borrower has received Deferred Revenue (but only to the extent of such Deferred Revenue);

(v) Accounts owing from an Account Debtor, whose total obligations to Borrower exceed twenty-five percent (25%) of all Accounts, for the amounts that exceed that percentage, unless Bank approves in writing; and

(w) Accounts for which Bank in its good faith business judgment determines collection to be doubtful, including, without limitation, accounts represented by “refreshed” or “recycled” invoices.

“ Equipment ” is all “equipment” as defined in the Code with such additions to such term as may hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.

“ ERISA ” is the Employee Retirement Income Security Act of 1974, and its regulations.

“ Event of Default ” is defined in Section 8.

“ Exchange Act ” is the Securities Exchange Act of 1934, as amended.

“ Foreign Currency ” means lawful money of a country other than the United States.

“ Funding Date ” is any date on which a Credit Extension is made to or for the account of Borrower which shall be a Business Day.

“ FX Business Day ” is any day when (a) Bank’s Foreign Exchange Department is conducting its normal business and (b) the Foreign Currency being purchased or sold by Borrower is available to Bank from the entity from which Bank shall buy or sell such Foreign Currency.

“ FX Contract ” is defined in Section 2.1.3.

“ FX Reduction Amount ” means, with respect to a given FX Contract, the notional amount thereof multiplied by the currency exchange risk factor for the currencies involved in the FX Contract, multiplied by the current foreign exchange spot rates, in each instance as determined and calculated by Bank in its sole discretion.

“ GAAP ” is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination.

“ General Intangibles ” is all “general intangibles” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation, all Intellectual Property, claims, income and other tax refunds, security and other deposits, payment intangibles, contract rights, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind.

“ Governmental Approval ” is any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.

“Governmental Authority ” is any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization.

“ Indebtedness ” is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations, and (d) Contingent Obligations.

“ Indemnified Person ” is defined in Section 12.3.

“ Insolvency Proceeding ” is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

“ Intellectual Property ” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following:

(a) its Copyrights, Trademarks and Patents;

(b) any and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-how, and operating manuals;

(d) any and all design rights which may be available to such Person;

(e) any and all claims for damages by way of past, present and future infringement of any of the foregoing, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the Intellectual Property rights identified above; and

(f) all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.

“ Interest Expense ” means for any fiscal period, interest expense (whether cash or non-cash) determined in accordance with GAAP for the relevant period ending on such date, including, in any event, interest expense with respect to any Credit Extension and other Indebtedness of Borrower and its Subsidiaries, including, without limitation or duplication, all commissions, discounts, or related amortization and other fees and charges with respect to letters of credit and bankers’ acceptance financing and the net costs associated with interest rate swap, cap, and similar arrangements, and the interest portion of any deferred payment obligation (including leases of all types).

“ Inventory ” is all “inventory” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is temporarily out of Borrower’s custody or possession or in transit and including any returned goods and any documents of title representing any of the above.

“ Investment ” is any beneficial ownership interest in any Person (including stock, partnership interest or other securities), and any loan, advance or capital contribution to any Person.

“ Key Person ” is each of Borrower’s Chief Executive Officer and Chief Financial Officer.

“ Letter of Credit” means a standby letter of credit issued by Bank or another institution based upon an application, guarantee, indemnity or similar agreement on the part of Bank as set forth in Section 2.1.2.

“ Letter of Credit Application ” is defined in Section 2.1.2.

“ Letter of Credit Reserve ” has the meaning set forth in Section 2.1.2.

“ Lien ” is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other encumbrance of any kind, whether voluntarily incurred or arising by operation of law or otherwise against any property.

“ Loan Documents ” are, collectively, this Agreement and any schedules, exhibits, certificates, notices, and any other documents related to this Agreement, the Perfection Certificate, any subordination agreement, any note, or notes or guaranties executed by Borrower, and any other present or future agreement by Borrower with or for the benefit of Bank in connection with this Agreement, all as amended, restated, or otherwise modified.

“ Monthly Financial Statements ” is defined in Section 6.2(c).

“ Net Income ” means, as calculated on a consolidated basis for Borrower and its Subsidiaries, for any period as at any date of determination, the net profit (or loss), after provision for taxes, of Borrower and its Subsidiaries for such period taken as a single accounting period.

“ Obligations ” are Borrower’s obligations to pay when due any debts, principal, interest, fees, the Unused Revolving Line Facility Fee, the Termination Fee, Bank Expenses, and other amounts Borrower owes Bank now or later, under this Agreement, the other Loan Documents, including, without limitation, all obligations relating to letters of credit (including reimbursement obligations for drawn and undrawn letters of credit), cash management services, and foreign exchange contracts, if any, including any interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and to perform Borrower’s duties under the Loan Documents.

“ Operating Documents ” are, for any Person, such Person’s formation documents, as certified by the Secretary of State (or equivalent agency) of such Person’s jurisdiction of organization on a date that is no earlier than thirty (30) days prior to the Effective Date, and, (a) if such Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto.

“ Overadvance ” is defined in Section 2.2.

“ Patents ” means all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.

“ Payment/Advance Form ” is that certain form attached hereto as Exhibit D .

“ Payment Date ” is the first (1 st ) day of each calendar month.

“ Perfection Certificate ” is defined in Section 5.1.

“ Permitted Acquisition ” is defined in Section 7.3.

“ Permitted Capital Transactions ” is defined in Section 7.7.

“ Permitted Indebtedness ” is:

(a) Borrower’s Indebtedness to Bank under this Agreement and the other Loan Documents;

(b) Indebtedness existing on the Effective Date which is shown on the Perfection Certificate;

(d) unsecured Indebtedness to trade creditors incurred in the ordinary course of business;

(e) Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business;

(f) Indebtedness in respect of customer deposits and advance payments received from customers for goods and services sold in the ordinary course of business in an amount not to exceed One Hundred Thousand Dollars ($100,000.00);

(g) Indebtedness consisting of capitalized leases of any Person outstanding prior to the date on which such Person becomes a Subsidiary (in a transaction otherwise permitted hereunder) or is merged or consolidated with or into Borrower or any Subsidiary and, in each case, not created in contemplation of or in connection with such event;

(h) Indebtedness secured by Permitted Liens or that constitutes a Permitted Investment;

(i) Indebtedness of any Subsidiary to Borrower, provided that, to the extent such Indebtedness was or is an Investment by Borrower in the Subsidiary, such Investment will be subject to the cap on Investments in Subsidiaries set forth in subsection (l) of the definition of Permitted Investments;

(j) Indebtedness in the form of (i) purchase price adjustments, earn-outs, deferred compensation, or other arrangements representing acquisition consideration or deferred payments of a similar nature incurred in connection with any Permitted Acquisition, provided that such Indebtedness is subject to a subordination agreement in form and substance satisfactory to Bank and (ii) the Permitted TVN Acquisition Payments;

(k) to the extent constituting Indebtedness obligations, Indebtedness incurred in connection with the financing of insurance premiums in the ordinary course of business;

(l) other unsecured Indebtedness in an aggregate amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000.00) at any time outstanding; and

(m) extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (l) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be.

“ Permitted Investments ” are:

(a) Investments (including, without limitation, Subsidiaries) existing on the Effective Date which are shown on the Perfection Certificate;

(b) Investments consisting of Cash Equivalents and any other Investments administered through Bank;

(c) Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of Borrower;

(d) Investments consisting of deposit accounts (but only to the extent that Borrower is permitted to maintain such accounts pursuant to Section 6.6 of this Agreement) in which, if a Control Agreement is required pursuant to Section 6.6(b), Bank has a first priority perfected security interest;

(e) Investments accepted in connection with Transfers permitted by Section 7.1;

(f) Investments consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plans or agreements approved by the Board;

(g) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business;

(h) Investments consisting of notes receivable of, or other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business, provided that this paragraph (h) shall not apply to Investments of Borrower in any Subsidiary;

(i) Permitted Acquisitions (including the creation of any Subsidiary necessary to or for the consummation thereof) to the extent that, if requested by Bank, the surviving entity executes a joinder to this Agreement to cause such entity to become a co-borrower hereunder;

(j) joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the non-exclusive licensing of technology, the development of technology or the providing of technical support, provided that any cash Investments by Borrower do not exceed Two Hundred Fifty Thousand Dollars ($250,000.00) in the aggregate in any fiscal year;

(k) repurchases of stock permitted by Section 7.7;

(l) Investments in Borrower’s Subsidiaries for the ordinary and necessary operating expenses of such Subsidiaries in an aggregate amount not to exceed Six Million Dollars ($6,000,000.00) per calendar year; and

(m) Investments by a Subsidiary in other Subsidiaries.

“ Permitted Liens ” are:

(a) Liens existing on the Effective Date which are shown on the Perfection Certificate or arising under this Agreement and the other Loan Documents;

(b) Liens for taxes, fees, assessments or other government charges or levies, either not delinquent or being contested in good faith and for which Borrower maintains adequate reserves on Borrower’s Books, if they have no priority over any of Bank’s Liens, and statutory Liens securing claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other Persons imposed without action of such parties, provided, they have no priority over any of Bank’s Lien and the aggregate amount of such Liens does not at any time exceed Fifty Thousand Dollars ($50,000.00);

(c) purchase money Liens or capital leases (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of the Equipment securing no more than One Million Five Hundred Thousand Dollars ($1,500,000.00) in the aggregate amount outstanding, or (ii) existing on Equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the Equipment;

(d) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase;

(e) Liens arising from attachments or judgments, orders, or decrees in circumstances not constituting an Event of Default under Sections 8.4 and 8.7;

(f) Liens of carriers, warehousemen, suppliers, or other Persons that are possessory in nature arising in the ordinary course of business so long as such Liens attach only to Inventory, securing liabilities in the aggregate amount not to exceed Fifty Thousand Dollars ($50,000.00) and which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto;

(g) Liens to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations incurred in the ordinary course of business (other than Liens imposed by ERISA);

(h) deposits to secure the performance of bids, trade contracts (other than for borrowed money), contracts for the purchase of property permitted hereunder, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case, incurred in the ordinary course of business and not representing an obligation for borrowed money in an amount not to exceed One Hundred Thousand Dollars ($100,000.00);

(i) Liens in favor of other financial institutions arising in connection with Borrower’s deposit and/or securities accounts held at such institutions, provided that (i) if a Control Agreement is required pursuant to Section 6.6(b), Bank has a first priority perfected security interest in the amounts held in such deposit and/or securities accounts and (ii) such accounts are permitted to be maintained pursuant to Section 6.6 of this Agreement;

(j) easements, rights of way, and zoning restrictions on real property that do not materially interfere with or impair the use or operation thereof and leases or subleases of real property; and

(k) non-exclusive licenses of intellectual property granted to third parties in the ordinary course of business.

“ Permitted TVN Acquisition Payments ” is defined in Section 7.11 of this Agreement.

“ Person ” is any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.

“ Prime Rate ” is the rate of interest per annum from time to time published in the money rates section of The Wall Street Journal or any successor publication thereto as the “prime rate” then in effect; provided that, in the event such rate of interest is less than zero, such rate shall be deemed to be zero for purposes of this Agreement; and provided further that if such rate of interest, as set forth from time to time in the money rates section of The Wall Street Journal, becomes unavailable for any reason as determined by Bank, the “Prime Rate” shall mean the rate of interest per annum announced by Bank as its prime rate in effect at its principal office in the State of California (such Bank announced Prime Rate not being intended to be the lowest rate of interest charged by Bank in connection with extensions of credit to debtors); provided that, in the event such rate of interest is less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

“ Prior Loan Agreement ” is defined in Recital A of this Agreement.

“ Quick Assets ” is, on any date, Borrower’s consolidated unrestricted cash and Cash Equivalents maintained at Bank and Bank’s Affiliates, plus net billed accounts receivable of Borrower and Borrower’s Subsidiaries.

“ Registered Organization ” is any “registered organization” as defined in the Code with such additions to such term as may hereafter be made.

“ Requirement of Law ” is as to any Person, the organizational or governing documents of such Person, and any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“ Responsible Officer ” is any of the Chief Executive Officer, President and Chief Financial Officer of Borrower.

“ Restricted License ” is any material license or other agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property, or (b) for which a default under or termination of could interfere with the Bank’s right to sell any Collateral.

“ Revolving Line ” is an aggregate principal amount equal to Thirty Five Million Dollars ($35,000,000.00).

“ Revolving Line Maturity Date ” is 364 days from the Effective Date.

“ SEC ” shall mean the Securities and Exchange Commission, any successor thereto, and any analogous Governmental Authority.

“ Securities Account ” is any “securities account” as defined in the Code with such additions to such term as may hereafter be made.

“ Settlement Date ” is defined in Section 2.1.3.

“ Subordinated Debt ” is indebtedness incurred by Borrower subordinated to all of Borrower’s now or hereafter indebtedness to Bank (pursuant to a subordination, intercreditor, or other similar agreement in form and substance satisfactory to Bank entered into between Bank and the other creditor), on terms acceptable to Bank.

“ Subsidiary ” is, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless the context otherwise requires, each reference to a Subsidiary herein shall be a reference to a Subsidiary of Borrower.

“ Total Liabilities ” is on any day, obligations that should, under GAAP, be classified as liabilities on Borrower’s and its Subsidiaries’ consolidated balance sheets, including all Indebtedness.

“ Trademarks ” means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.

“ Transfer ” is defined in Section 7.1.

“ Unused Revolving Line Facility Fee ” is defined in Section 2.4(b).

[ Signature page follows. ]

IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed as of the Effective Date.

BORROWER:

TREMOR VIDEO, INC.

By:	/s/John Rego
Name:	John Rego
Title:	Chief Financial Officer


BANK:

SILICON VALLEY BANK

By:	/s/ Jonathan Wolter
Name:	Jonathan Wolter
Title:	Vice President

Signature Page to Amended and Restated Loan and Security Agreement

EXHIBIT A — COLLATERAL DESCRIPTION

The Collateral consists of all of Borrower’s right, title and interest in and to the following personal property:

All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles (except as provided below), commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts, certificates of deposit, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and

all Borrower’s Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.

Notwithstanding the foregoing, the Collateral does not include any Intellectual Property; provided, however, the Collateral shall include all Accounts and all proceeds of Intellectual Property. If a judicial authority (including a U.S. Bankruptcy Court) would hold that a security interest in the underlying Intellectual Property is necessary to have a security interest in such Accounts and such property that are proceeds of Intellectual Property, then the Collateral shall automatically, and effective as of the Effective Date, include the Intellectual Property to the extent necessary to permit perfection of Bank’s security interest in such Accounts and such other property of Borrower that are proceeds of the Intellectual Property.

Pursuant to the terms of a certain negative pledge arrangement with Bank, Borrower has agreed not to encumber any of its Intellectual Property without Bank’s prior written consent.

EXHIBIT B — BORROWING BASE CERTIFICATE

Borrower: Tremor Video, Inc.
Lender: Silicon Valley Bank
Commitment Amount: $35,000,000.00

ACCOUNTS RECEIVABLE
1 Accounts Receivable (invoiced) Book Value as of	$
2 Additions (Please explain on next page)	$
3 Less: Intercompany / Employee / Non-Trade Accounts	$
4 NET TRADE ACCOUNTS RECEIVABLE	$

ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
5 120 Days Past Invoice Date	$
6 Credit Balances over 120 Days	$
7 Balance of 50% over 120 Day Accounts (Cross-Age or Current Affected)	$
8 Foreign Account Debtor Accounts (non-U.S./Canada/France/Germany/Italy/ Japan/United Kingdom)	$
9 Foreign Invoiced and/or Collected Accounts	$
10 Contra / Customer Deposit Accounts	$
11 U.S. Government Accounts	$
12 Promotion or Demo Accounts; Guaranteed Sale or Consignment Sale Accounts	$
13 Accounts with Memo or Pre-Billings	$
14 Contract Accounts; Accounts with Progress / Milestone Billings	$
15 Accounts for Retainage Billings	$
16 Trust / Bonded Accounts	$
17 Bill and Hold Accounts	$
18 Unbilled Accounts	$
19 Non-Trade Accounts (If not already deducted above)	$
20 Accounts with Extended Term Invoices (Net 120+)	$
21 Chargebacks Accounts / Debit Memos	$
22 Product Returns / Exchanges	$
23 Disputed Accounts; Insolvent Account Debtor Accounts	$
24 Deferred Revenue	$
25 Other (Please explain on next page)	$
26 Concentration Limits	$
27 TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS	$

28 Eligible Accounts (#4 minus #27)	$
29 ELIGIBLE AMOUNT OF ACCOUNTS (80.0% of #28)	$

BALANCES
30 Maximum Loan Amount	$	35,000,000.00
31 Total Funds Available (Lesser of #29 or #30, minus amounts outstanding under sublimits)	$
32 Present balance owing on Line of Credit	$
33 RESERVE POSITION (#31 minus #32)	$

[Continued on following page.]

Explanatory comments from previous page:

The undersigned represents and warrants that this is true, complete and correct, and that the information in this Borrowing Base Certificate complies with the representations and warranties in the Amended and Restated Loan and Security Agreement between the undersigned and Silicon Valley Bank.

COMMENTS:		BANK USE ONLY
		Received by:
TREMOR VIDEO, INC.				AUTHORIZED SIGNER

By:		Date:
	Authorized Signer	Verified:
			AUTHORIZED SIGNER
		Date:
Date:		Compliance Status:			Yes No

EXHIBIT C

COMPLIANCE CERTIFICATE

Date:

TO: SILICON VALLEY BANK

FROM: TREMOR VIDEO, INC.

The undersigned authorized officer of TREMOR VIDEO, INC. (“Borrower”) certifies that under the terms and conditions of the Amended and Restated Loan and Security Agreement between Borrower and Bank (the “Agreement”):

(1) Borrower is in complete compliance for the period ending with all required covenants except as noted below; (2) there are no Events of Default; (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement; and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank.

Attached are the required documents as appropriate supporting the certification. The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

Please indicate compliance status by circling Yes/No under “Complies” column.

Reporting Covenants	Required	Complies

Monthly financial statements with Compliance Certificate	Monthly within 30 days	Yes No
Annual financial statements (Audited)	FYE within 120 days	Yes No
10-Q, 10-K and 8-K	Within 5 days after filing with SEC	Yes No
Borrowing Base Certificate A/R & A/P Agings	Monthly within 30 days	Yes No
Board-approved Projections	Earlier of FYE within 45 days or 10 days of Board approval, and within 10 days of updates/amendments	Yes No
Stock Repurchase Reports	First Business Day of each month	Yes No

Financial Covenants	Required	Actual	Complies

Maintain at all times:
Adjusted Quick Ratio (at all times) (tested monthly)	> 1.20:1.0	:1.0	Yes No
Adjusted EBITDA (twelve-month) (tested quarterly)	> *	$	Yes No

* As set forth in Section 6.9(b) of the Agreement

The following financial covenant analyses and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”)

TREMOR VIDEO, INC.	BANK USE ONLY

	Received by:
By:		AUTHORIZED SIGNER
Name:	Date:
Title:
	Verified:
				AUTHORIZED SIGNER
	Date:

	Compliance Status:		Yes No

Schedule 1 to Compliance Certificate

Financial Covenant of Borrower

In the event of a conflict between this Schedule and the Agreement, the terms of the Agreement shall govern.

Dated:

NOTE — All calculations below are on a consolidated basis with respect to Borrower and its Subsidiaries.

I. Adjusted Quick Ratio (at all times) (tested monthly) (Section 6.9(a))

Required : 1.20:1.00

Actual :

A.	Aggregate value of the unrestricted cash and cash equivalents of Borrower and its Subsidiaries maintained at Bank and Bank’s Affiliates	$

B.	Aggregate value of net billed accounts receivable of Borrower and its Subsidiaries	$

C.	Quick Assets (sum of lines A and B)	$

D.	Aggregate value of Obligations to Bank	$

E.	Aggregate value of liabilities that should, under GAAP, be classified as liabilities on Borrower’s and its Subsidiaries’ consolidated balance sheet, including all Indebtedness, and not otherwise reflected in line D above, that matures within one (1) year	$

F.	Current Liabilities (the sum of lines D and E)	$

G.	Aggregate value of the current portion of amounts received or invoiced by Borrower and/or its Subsidiaries in advance of performance under contracts and not yet recognized as revenue	$

H.	Line F minus line G	$

I.	Adjusted Quick Ratio (line C divided by line H)

Is line I equal to or greater than 1.20:1:00?

o No, not in compliance

o Yes, in compliance

II. Adjusted EBITDA (trailing twelve month) (tested quarterly) (Section 6.9(b))

Required : $ *

*As set forth in Section 6.9(b) of the Agreement.

Actual : $

A.	Net Income	$

B.	To the extent included in the determination of Net Income

	1. Interest Expense	$

	2. Income Tax Expense	$

	3. Depreciation	$

	4. Amortization	$

	5. Non-cash stock-based compensation expense	$

	6. Earn-out payments in connection with Borrower’s acquisition of The Video Network Pty Ltd. in an aggregate amount not to exceed $3,600,000 in the aggregate in any 12-month period	$

	7. Other add-backs approved by Bank	$

	8. The sum of lines 1 through 7	$

C.	Adjusted EBITDA (line A plus lines B.8)	$

Is line C equal to or greater than the required amount set forth above?

o No, not in compliance

o Yes, in compliance

EXHIBIT D — LOAN PAYMENT/ADVANCE REQUEST FORM

DEADLINE FOR SAME DAY PROCESSING IS NOON EASTERN TIME

Fax To:

Date:

LOAN PAYMENT:

		TREMOR VIDEO, INC.

From Account #		To Account #
	(Deposit Account #)		(Loan Account #)

Principal $		and/or Interest $
Authorized Signature:		Phone Number:
Print Name/Title:

LOAN ADVANCE:

Complete Outgoing Wire Request section below if all or a portion of the funds from this loan advance are for an outgoing wire.

From Account #			To Account #
	(Loan Account #)			(Deposit Account #)

Amount of Advance $

All Borrower’s representations and warranties in the Amended and Restated Loan and Security Agreement are true, correct and complete in all material respects on the date of the request for an advance; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date:

Authorized Signature:				Phone Number:
Print Name/Title:

OUTGOING WIRE REQUEST:

Complete only if all or a portion of funds from the loan advance above is to be wired.

Deadline for same day processing is noon, Eastern Time

Beneficiary Name:

Amount of Wire: $

Beneficiary Bank:

Account Number:

City and State:

Beneficiary Bank Transit (ABA) #:

Beneficiary Bank Code (Swift, Sort, Chip, etc.):

(For International Wire Only)

Intermediary Bank:

Transit (ABA) #:

For Further Credit to:

Special Instruction:

By signing below, I (we) acknowledge and agree that my (our) funds transfer request shall be processed in accordance with and subject to the terms and conditions set forth in the agreements(s) covering funds transfer service(s), which agreements(s) were previously received and executed by me (us).

Authorized Signature:					2 nd Signature (if required):
Print Name/Title:					Print Name/Title:
Telephone #:					Telephone #:

Exhibit 10.17

SUMMARY OF NON-EMPLOYEE DIRECTOR COMPENSATION POLICY

Pursuant to our non-employee director compensation policy, non-employee directors will be compensated $55,000 annually for their services and will not receive any additional compensation for any regular board meeting attended. Our lead non-employee director will receive an additional annual retainer of $20,000. Non-employee directors will receive $5,000 annually for serving on the audit committee, compensation committee, and nominating and corporate governance committee. In addition, directors who are chairpersons of a particular committee will also receive additional annual compensation of $15,000 for the audit committee, and $10,000 for the compensation committee, and $7,500 for the nominating and corporate governance committee. Non-employee directors will also be reimbursed for their reasonable out-of-pocket expenses incurred in attending meetings of our board of directors. Non-employee directors will be granted annually equity-based awards having an aggregate grant date fair value of $75,000 in the form of restricted stock units. Any restricted stock unit grant will vest in full on the meeting date of the next annual stockholders’ meeting. Newly appointed directors will receive equity-based awards having an aggregate grant date fair value of $200,000 which may be in the form of stock options, restricted stock units, or a combination of both. These awards will vest on the one-year anniversary of the date of appointment.

Exhibit 21.1

Subsidiaries of Tremor Video, Inc.

Subsidary Name		Jurisdiction of Incorporation
Tremor Video GmbH		Germany
Tremor Video Video Limited		England and Wales
TremorVideo Pte. Ltd.		Singapore
Tremor Video Canada, Inc.		Delaware, USA
ScanScout, Inc.		Delaware, USA
Transpera, Inc.		Delaware, USA
Tremor Video (Australia) Pty Ltd		Australia
The Video Network Pty Ltd.		Australia
TVN Pte. Ltd.		Singapore
Tremor Video SDN. BHD.		Malaysia
Tremor Video (NZ) Limited		New Zealand
Tremor Video Brazil Publicidade Ltda.		Brazil

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (Forms S-8 No. 333-189682, 333-197585, 333-201985, 333-206282 and 333-210242) of Tremor Video, Inc. of our report dated March 10, 2017, with respect to the consolidated financial statements of Tremor Video, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 2016.

	/S/ ERNST & YOUNG LLP
New York, New York
March 10, 2017

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A)

I, Paul Caine, certify that:

1. I have reviewed this Annual Report on Form 10-K of Tremor Video, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 10, 2017	/s/ Paul Caine
	Paul Caine
	Interim Chief Executive Officer
	( Principal Executive Officer )

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A)

I, John Rego, certify that:

1. I have reviewed this Annual Report on Form 10-K of Tremor Video, Inc.;

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 10, 2017	/s/ John Rego
	John Rego
	Chief Financial Officer
	( Principal Financial Officer )

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Paul Caine, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of Tremor Video, Inc. on Form 10-K for the fiscal year ended December 31, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Tremor Video, Inc.

	TREMOR VIDEO, INC.

	By:	/s/ Paul Caine
		Paul Caine
		Interim Chief Executive Officer

	Date: March 10, 2017

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, John Rego, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of Tremor Video, Inc. on Form 10-K for the fiscal year ended December 31, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Tremor Video, Inc.

	TREMOR VIDEO, INC.

	By:	/s/ John Rego
		John Rego
		Chief Financial Officer

	Date: March 10, 2017