Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549  
 
FORM 10-Q
 
  (Mark One)
ý  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2018
OR
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
TELARIA, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
20-5480343
(State or another 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
Indicate by check mark whether the registrant (1) 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  ý     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  ý    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  o
 
Accelerated filer  x
 
Non-accelerated filer  o
 
Smaller reporting company  o
 
 
 
 
(Do not check if a
smaller reporting company)
 
Emerging growth company  x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ý
Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o  No  ý
As of May 3, 2018 , there were 52,170,958 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.
 
 


Table of Contents
TELARIA, INC
FORM 10-Q

 
TABLE OF CONTENTS
 
 
 
 
 
 
PAGE
PART I.
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II.
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
Item 5.
 
 
 
Item 6.
 
 
 
 
 
 
 
CERTIFICATIONS
 

2

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Part I — FINANCIAL INFORMATION 
Item 1. — Financial Statements
Telaria, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
 
March 31,
 
December 31,
 
2018
 
2017
 
(unaudited)
 
 
Assets
 

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
72,585

 
$
76,320

Accounts receivable, net
46,933

 
59,288

Prepaid expenses and other current assets
3,674

 
2,499

Total current assets
123,192

 
138,107

Long-term assets:
 
 
 
Property and equipment, net
1,909

 
3,194

Intangible assets, net
1,195

 
1,307

Goodwill
6,300

 
6,320

Deferred tax assets
332

 
332

Other assets
1,013

 
1,168

Total long-term assets
10,749

 
12,321

 
 
 
 
Total assets
$
133,941

 
$
150,428

 
 
 
 
Liabilities and stockholders’ equity
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued expenses
$
48,026

 
$
59,419

Deferred rent, short-term
859

 
808

Deferred income
585

 
674

Other current liabilities
49

 
53

Total current liabilities
49,519

 
60,954

Long-term liabilities:
 
 
 
Deferred rent
5,867

 
5,260

Deferred tax liabilities
331

 
338

Other non-current liabilities
53

 
737

Total liabilities
55,770

 
67,289

Commitments and contingencies


 


Stockholders’ equity:
 
 
 
Common stock, $0.0001 par value: 250,000,000 shares authorized as of March 31, 2018 and December 31, 2017, respectively; 55,968,481 and 55,136,038 shares issued and 52,122,985 and 51,290,542 outstanding as of March 31, 2018 and December 31, 2017, respectively
6

 
5

Treasury stock, at cost 3,845,496 shares as of March 31, 2018 and December 31, 2017
(8,443
)
 
(8,443
)
Additional paid-in capital
289,479

 
288,277

Accumulated other comprehensive loss
(302
)
 
(232
)
Accumulated deficit
(202,569
)
 
(196,468
)
Total stockholders’ equity
78,171

 
83,139

Total liabilities and stockholders’ equity
$
133,941

 
$
150,428


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Telaria, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
 
Three Months Ended March 31,
 
2018
 
2017
Revenue
$
9,601

 
$
6,139

Cost of revenue
1,028

 
764

Gross profit
8,573

 
5,375

 
 
 
 
Operating expenses:
 
 
 
Technology and development
2,308

 
2,425

Sales and marketing
6,293

 
6,526

General and administrative
4,998

 
4,873

Depreciation and amortization
1,801

 
1,021

Mark-to-market

 
55

Total operating expenses
15,400

 
14,900

 
 
 
 
Loss from continuing operations
(6,827
)
 
(9,525
)
 
 
 
 
Interest and other income (expense), net:
 
 
 
Interest expense
(3
)
 
(34
)
Other income, net
717

 
7

Total interest and other income (expense), net
714

 
(27
)
 
 
 
 
Loss from continuing operations before income taxes
(6,113
)
 
(9,552
)
 
 
 
 
Provision (benefit) for income taxes
14

 
(10
)
 
 
 
 
Loss from continuing operations, net of income taxes
(6,127
)
 
(9,542
)
 
 
 
 
Gain on sale of discontinued operations, net of income taxes
26

 

Income from discontinued operations, net of income taxes

 
2,682

Total income from discontinued operations, net of income taxes
26

 
2,682

 
 
 
 
Net loss
$
(6,101
)
 
$
(6,860
)
 
 
 
 
Net income (loss) per share — basic and diluted:
 
 
 
Loss from continuing operations, net of income taxes
(0.12
)
 
(0.19
)
Income from discontinued operations, net of income taxes

 
0.05

Net loss
(0.12
)
 
(0.14
)
 
 
 
 
Weighted-average number of shares of common stock outstanding:
 
 
 
Basic and diluted
51,827,685

 
49,998,547


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Telaria, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
 
Three Months Ended March 31,
 
2018
 
2017
Net loss
$
(6,101
)
 
$
(6,860
)
Other comprehensive loss:
 
 
 
Foreign currency translation adjustments
(70
)
 
86

Comprehensive loss
$
(6,171
)
 
$
(6,774
)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Telaria, Inc.
Condensed Consolidated Statement of Changes in Stockholders’ Equity
(in thousands, except share data)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
Common Stock
 
Treasury Stock
 
Additional
 
Other
 
 
 
Total
 
Share
 
Capital
 
Share
 
Capital
 
Paid-In Capital
 
Comprehensive Loss
 
Accumulated Deficit
 
Stockholders' Equity
Balance as of December 31, 2017
55,136,038

 
$
5

 
(3,845,496
)
 
$
(8,443
)
 
$
288,277

 
$
(232
)
 
$
(196,468
)
 
$
83,139

Exercise of stock options awards
314,711

 
1

 
 
 
 
 
1,018

 
 
 
 
 
1,019

Stock-based compensation expense
 
 
 
 
 
 
 
 
856

 
 
 
 
 
856

Common stock issued for settlement of restricted stock units net of 197,947 shares withheld to satisfy income tax withholding obligations
433,317

 
 
 
 
 
 
 
(912
)
 
 
 
 
 
(912
)
Common stock issuance in connection with employee stock purchase plan
84,415

 
 
 
 
 
 
 
240

 
 
 
 
 
240

Net loss
 
 
 
 
 
 
 
 
 
 
 
 
(6,101
)
 
(6,101
)
Foreign currency translation adjustment

 

 

 

 

 
(70
)
 

 
(70
)
Balance as of March 31, 2018
55,968,481

 
$
6

 
(3,845,496
)
 
$
(8,443
)
 
$
289,479

 
$
(302
)
 
$
(202,569
)
 
$
78,171


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Telaria, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
Three Months Ended March 31,
 
2018
 
2017
Cash flows from operating activities:
 

 
 

Net loss from continuing operations
$
(6,127
)
 
$
(9,542
)
Total income from discontinued operations
26

 
2,682

Adjustments required to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization expense
1,801

 
2,349

Bad debt expense

 
296

Mark-to-market expense

 
55

Compensation expense related to the acquisition contingent consideration

 
825

Loss on disposal of property and equipment
22

 

Stock-based compensation expense
856

 
1,016

Deferred tax benefit

 
(27
)
Net changes in operating assets and liabilities:
 
 
 
Decrease in accounts receivable
12,355

 
11,262

Increase in prepaid expenses, other current assets and other long-term assets
(1,020
)
 
(779
)
Decrease in accounts payable and accrued expenses
(11,590
)
 
(20,499
)
Decrease in other current liabilities
(4
)
 
(79
)
Increase/(decrease) in deferred rent and security deposits payable
658

 
(118
)
(Decrease)/increase in deferred income
(90
)
 
22

Decrease in other liabilities
(685
)
 

Net cash used in operating activities
(3,798
)
 
(12,537
)
 
 
 
 
Cash flows from investing activities:
 
 
 
Purchase of property and equipment
(256
)
 
(754
)
Net cash used in investing activities
(256
)
 
(754
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from the exercise of stock options awards
1,018

 
38

Proceeds from issuance of common stock under employee stock purchase plan
240

 
256

Principal portion of capital lease payments

 
(102
)
Treasury stock — repurchase of stock

 
(2,406
)
Tax withholdings related to net share settlements of restricted stock unit awards (RSUs)
(912
)
 
(654
)
Net cash provided by (used in) financing activities
346

 
(2,868
)
 
 
 
 
Net decrease in cash, cash equivalents and restricted cash
(3,708
)
 
(16,159
)
 
 
 
 
Effect of exchange rate changes in cash, cash equivalents and restricted cash
(27
)
 
261

 
 
 
 
Cash, cash equivalents and restricted cash at beginning of period
76,320

 
43,930

Cash, cash equivalents and restricted cash at end of period
$
72,585

 
$
28,032

 
 
 
 
Supplemental disclosure of cash flow activities:
 
 
 
Cash paid for income taxes
$

 
$
13

Cash paid for interest expense
$

 
$
52

Supplemental disclosure of non-cash investing and financing activities:
 
 
 
Purchase of property and equipment in accounts payable and accrued expenses
$
197

 
$
68

Common stock issued for settlement of RSUs
$
1,607

 
$
946


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Telaria, Inc.
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)


1. Organization and Description of Business  
Telaria, Inc. (the “Company”), formerly Tremor Video, Inc., provides a fully programmatic, software platform for premium publishers to analyze, manage and monetize their video advertising across internet connected devices.
On September 11, 2017, the Company filed an amendment to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to change the Company's name from “Tremor Video, Inc.” to “Telaria, Inc.”  In connection with the name change, the Company’s common stock began trading under a new NYSE ticker symbol, “TLRA,” and the corporate website address was changed to www.telaria.com.  
On August 7, 2017, the Company announced the sale of its buyer platform to an affiliate of Taptica International Ltd. (“Taptica”) for total consideration of $50,000 , subject to adjustment for working capital.  Refer to Note 3 in notes to consolidated financial statements. The buyer platform enabled advertisers, agencies and other buyers of advertising to discover, buy, optimize and measure the effectiveness of their video ad campaigns across all digital screens.  Following the strategic decision to sell the buyer platform, the Company is focused exclusively on offering a video management platform for publishers.
The Company is headquartered in the State of New York.  
2.  Summary of Significant Accounting Policies  
Basis of Presentation  
The accompanying unaudited interim condensed consolidated financial statements and condensed footnotes have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commissions (the “SEC”) regarding unaudited interim financial information.  In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s condensed consolidated balance sheets, statements of operations, comprehensive loss, changes in stockholders equity, and cash flows for the interim periods presented. Operating results for the interim periods presented are not necessarily indicative of the results of operations to be expected for the full year or the results for any future periods due to seasonal and other factors, including, but not limited to, as a result of the disposition of the buyer platform. Certain information and footnote disclosures normally included in the consolidated financial statements in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC. Accordingly, these unaudited interim condensed consolidated financial statements and condensed footnotes should be read in conjunction with the consolidated financial statements and accompanying notes thereto included in the Company’s Form 10-K for the year ended December 31, 2017 filed with the SEC on March 2, 2018. The Company’s Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations for the prior periods presented herein have been recast to reflect the results of its buyer platform business that was classified as discontinued operations during the third quarter of 2017. See Note 3 for additional information.  
Principles of Consolidation  
The unaudited interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.  All significant inter-company balances and transactions have been eliminated in the accompanying unaudited interim condensed consolidated financial statements.  
Use of Estimates  
The preparation of the Company’s Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts that are reported in the Condensed Consolidated Financial Statements and accompanying disclosures. Actual results could differ from those estimates. 

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Telaria, Inc.
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)
2.  Summary of Significant Accounting Policies (Continued)

Revenue Recognition
The Company generates revenue each time a transaction occurs on our platform based on a simple and transparent fee structure established with our publisher partners. The Company does not purchase and re-sell inventory from publishers and does not collect any fees directly from buyers integrated with our platform. The Company acts as an agent on behalf of publishers and revenue is recognized net of any inventory costs that we remit to publishers when a buyer purchases inventory from a publisher on our platform. 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 transaction. In determining whether the Company is acting as the principal or an agent, management followed 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 our publisher platform are reported on a net basis as we are not the primary obligor in our publisher platform transactions as: (1) another party is primarily responsible for fulfilling the contract and we do not have discretion in establishing prices and (2) we do not generally take on inventory risk.
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 condensed 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 and market conditions, using the straight-line method, over the requisite service period of each of the awards, net of actual 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; with modification defined as; (i) an event that increases the fair value of the award; (ii) changes the vesting period of the award; (iii) or changes the classification of the award from equity to liability or liability to equity, for employees, other service providers or non-employees at the date of modification.
For the three months ended March 31, 2018 and 2017, stock-based compensation recorded in continuing operations is as follows:
 
 
Three Months Ended March 31,
 
 
2018
 
2017
Stock-based compensation expense:
 
 
 
 
Technology and development
 
129

 
144

Sales and marketing
 
309

 
163

General and administrative
 
418

 
437

Total stock-based compensation expense in continuing operations
 
$
856

 
$
744



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Telaria, Inc.
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)
2.  Summary of Significant Accounting Policies (Continued)

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.
On December 22, 2017, the U.S. President signed the Tax Cuts and Jobs Act (the “Act”) into law. Effective January 1, 2018, among other changes, the Act (1) reduces the U.S. federal corporate tax rate from 35 percent to 21 percent, (2) changes the rules relating to net operating loss ("NOL") carryforwards and carrybacks, (3) eliminates the corporate alternative minimum tax ("AMT") and changes how existing AMT credits can be realized; and (4) requires companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries. As a result of the Act, no federal income tax provision related to regular or AMT taxes has been recorded for the period ended March 31, 2018.
Given the significance of the legislation, the U.S. Securities and Exchange Commission (the "SEC") staff issued Staff Accounting Bulletin No.118 ("SAB 118"), which allows registrants to record provisional amounts during a one-year "measurement period". During the measurement period, impacts of the law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared, or analyzed.  As of March 31, 2018, we have not recorded incremental accounting adjustments related to the Act as we continue to consider interpretations of its application.
The Tax Act did not have a material impact on our financial statements since our deferred temporary differences in the United States are fully offset by a valuation allowance and we do not have any significant off shore earnings from which to record the mandatory transition tax.
Net Income (Loss) Per Share Attributable to Common Stockholders
Basic net income (loss) per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period.
Diluted net income (loss) per share attributable to common stockholders is computed by dividing net income (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 loss from continuing operations, net of income taxes: (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.
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.

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Telaria, Inc.
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)
2.  Summary of Significant Accounting Policies (Continued)

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.
As of March 31, 2018 and December 31, 2017, the allowance for doubtful accounts was $359 .
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 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 collection is reasonably assured.  
During the three months ended March 31, 2018, there was one publisher that accounted for more than 10% of revenue. There were no publishers that accounted for more than 10% of revenue during the three months ended March 31, 2017. At March 31, 2018, and March 31, 2017 there were two DSPs that each accounted for more than 10% of outstanding accounts receivables, respectively.
Prepaid Expenses and Other Current Assets
The Company records prepaid expenses and other current assets at cost and expenses them in the period the services are provided or the goods are delivered. The Company’s prepaid expenses and other current assets consist of the following:
 
March 31, 2018
 
December 31,
2017
Prepaid expenses and other current assets
$
3,354

 
$
2,231

Prepaid rent
172

 
127

Deferred rental income
148

 
141

Total prepaid expenses and other current assets
$
3,674

 
$
2,499

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

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Telaria, Inc.
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)
2.  Summary of Significant Accounting Policies (Continued)

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.
For the three months ended March 31, 2018 and 2017, the Company recorded depreciation expense of $1,709 and $933 , respectively. As of March 31, 2018 and December 31, 2017, accumulated depreciation balance is $10,786 and $9,110 , respectively.
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.
The Company did not identify any impairment losses in continuing operations related to the Company's long-lived assets during the three months ended March 31, 2018 and 2017.
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 March 31, 2018 and December 31, 2017, and therefore, for the three months ended March 31, 2018 and for the year-ended December 31, 2017, no impairment losses related to goodwill were recorded.
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:

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Telaria, Inc.
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)
2.  Summary of Significant Accounting Policies (Continued)

Customer relationships
 
5 to 10 years
As of March 31, 2018 and December 31, 2017, accumulated amortization related to intangible assets with a definite useful life is $956 and $881 , respectively. Amortization expense recorded related to intangible assets with definite useful life for the three months ended March 31, 2018 and 2017 is $ 92 and $ 88 , respectively.
Accounts Payable and Accrued Expenses
The Company records accounts payable and accrued expenses at cost when the service is provided or when the related product is delivered. The Company’s accounts payable and accrued expenses consist of the following:
 
March 31, 2018
 
December 31,
2017
Trade accounts payable
$
37,969

 
$
48,736

Accrued compensation, benefits and payroll taxes
3,977

 
4,288

Accrued cost of sales
4,793

 
5,576

Other payables and accrued expenses
1,287

 
819

Total accounts payable and accrued expenses
$
48,026

 
$
59,419

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.
Recently Issued Accounting Pronouncements  
FASB Accounting Standards Update No. 2018-02 - Income Statement - Reporting Comprehensive Income (Topic 220)
In February 2018, Financial Accounting Standards Board, ("FASB") issued an Accounting Standards Update, ("ASU") No. 2018-02 Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The requirement is for public business entities to apply the guidance to annual reporting periods beginning after December 15, 2018 with early adoption permitted, including the interim periods. The Company is currently evaluating the impact the update will have on its condensed consolidated financial statements and related disclosures.

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Telaria, Inc.
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)
2.  Summary of Significant Accounting Policies (Continued)

FASB Accounting Standards Update No. 2017-09 - Compensation - Stock Compensation (Topic 718)
In September 2017, FASB issued an ASU No. 2017 - 09 Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU clarifies and eliminates the diversity of practice as to when a Company must account for the effects of a stock modification. In accordance with the guidance, an entity should not account for the effects of a modification unless all the following criteria are met: 1. The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification, 2. The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified, and 3. The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The requirement is for public business entities to apply the guidance prospectively to annual reporting periods beginning after December 15, 2017 with early adoption permitted, including in the interim periods. The Company adopted this update in the first quarter of 2018 on a prospective basis. The adoption of this update did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.
FASB Accounting Standards Update No. 2017-04 - Intangibles and Other (Topic 350)
In January 2017, FASB issued ASU No. 2017-04, Intangibles and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The pronouncement eliminates Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities). Now the entity compares the fair value of the reporting unit with its carrying amount. The requirement is for public business entities to apply the guidance to annual reporting periods beginning after December 15, 2019. Early adoption is permitted for interim or annual impairment tests after January 1, 2017. The Company does not believe the adoption of this ASU will have a material impact prospectively, to the Company’s condensed consolidated financial statements and related disclosures.
FASB Accounting Standards Update No. 2017-01 - Business Combinations (Topic 805)
In January 2017, FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business”. The amendment was issued to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this ASU provide a screen to determine when a set (inputs and processes that produce an output) is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. The requirement is for public business entities to apply the guidance to annual reporting periods beginning after December 15, 2017. The Company adopted this update on a prospective basis in the first quarter of 2018 with no material impact to the Company's condensed consolidated financial statements and related disclosures.
FASB Accounting Standards Update No. 2016-18 - Statement of Cash Flows (Topic 230)
In November 2016, FASB issued Accounting Standards Update ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash. This update requires that a Statement of Cash Flow explain the change during the period in the total cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash should be included with cash & cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Statement of Cash Flows. Public business entities should apply the guidance retrospectively to annual reporting periods beginning after December 15, 2017 with early adoption permitted. The Company adopted this update in the first quarter of 2018 with no impact to the Company's first quarter 2018 condensed consolidated financial statements and a $770 increase in cash used in operating activities on the Company's condensed and consolidated statements of cash flows for the first quarter of 2017.
FASB Accounting Standards Update No. 2016-15 - Classification of Certain Cash Receipts and Cash Payments  
In August 2016, the FASB issued an 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

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Telaria, Inc.
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)
2.  Summary of Significant Accounting Policies (Continued)

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. The Company adopted this update in the first quarter of 2018 with no material impact to the Company's condensed consolidated financial statements and related disclosures.
FASB Accounting Standards Update No. 2016-02 — Leases (Topic 842)  
In February 2016, the FASB issued ASU No. 2016-02, Leases, 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 condensed consolidated financial statements and related disclosures.
FASB Accounting Standards Update No. 2014-09 — Revenue from Contracts with Customers  
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers 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.  In August 2015, The FASB issued ASU No. 2015-14, Revenue from Contracts with Customers, Deferral of the Effective Date, which 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. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers, Principal vs. Agent Consideration (Reporting Gross versus Net), which clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. The Company adopted the new standard in the first quarter of 2018 using the modified retrospective approach, with no material impact to the Company's condensed consolidated financial statements and related disclosures.
3.  Disposition of Buyer Platform  
On August 7, 2017, the Company announced the sale of its buyer platform to Taptica for total consideration of $50,000 , subject to adjustment for working capital. In connection with the transaction, we entered into a transition services agreement, as amended, pursuant to which we agreed to provide certain services to Taptica through May 31, 2018.
The proceeds from the sale included $1,000 for the right to use the name, “Tremor Video, DSP,” for a period of 18 months following the closing. The Company is currently recognizing the $1,000 in other income within the Condensed Consolidated Statements of Operations ratably over the 18 months period.
In February of 2018, the Company entered into an amended agreement with Taptica to transfer all rights, title and interest in the name "Tremor Video" to Taptica upon achievement of certain payment milestones under a commercial agreement between the parties, which are expected to be received in the second quarter of 2018. Upon receipt of such payments, the remaining balance of $1,000 related to the transfer of the trademark will be recorded in other income.
In connection with the closing of the transaction, the Company recognized a gain on sale of discontinued operations, net of tax of $14,626 . Included in the measurement of the gain were estimates for the income taxes due on the gain and the additional cash consideration expected from the buyer related to a closing date net working capital sales price adjustment. The Company finalized such net working capital adjustments and recorded an adjustment of $26 to the gain on sale of discontinued operations, net of tax for the three months ended March 31, 2018.

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Telaria, Inc.
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)
3.  Disposition of Buyer Platform (Continued)

The following table presents the major financial lines constituting the results of operations for discontinued operations to the net income from discontinued operations, net of tax, presented separately in the Condensed Consolidated Statements of Operations:
 
Three Months Ended March 31,
 
2018
 
2017
Revenue
$

 
$
35,261

Cost of sales

 
21,259

Gross profit

 
14,002

 
 
 
 
Operating expenses:
 
 
 
Technology and development

 
3,236

Sales and marketing

 
6,527

General administrative

 
210

Depreciation and Amortization

 
1,328

Total operating expenses

 
11,301

Operating income of discontinued operations before income taxes

 
2,701

Provision for income tax on discontinued operations

 
19

Income from discontinued operations, net of income taxes
$

 
$
2,682

 
 
 
 
Gain on sale of discontinued operations before income taxes
26

 

Provision for income taxes on sale of discontinued operations

 

Gain on sale of discontinued operations, net of income taxes
26

 

 
 
 
 
Total income from discontinued operations, net of income taxes
$
26

 
$
2,682

The following table presents supplemental cash flow information of the discontinued operations:
 
Three Months Ended March 31,
 
2018
 
2017
Non-cash adjustments to net cash from operating activities:
 

 
 

Depreciation and amortization
$

 
$
1,328

Stock based compensation expense
$

 
$
272

Cash used in investing activities:
 
 
 
Capital expenditures
$

 
$
346

4.  Acquisitions  
On August 3, 2015 , ("Acquisition Date"), the Company acquired all of the outstanding shares of The Video Network Pty, Ltd, an Australian limited liability company, ("TVN").  As consideration for the acquisition, 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). In addition, the former stockholders of TVN (“TVN Sellers”) were eligible to receive 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 was also contingent on continued employment of certain TVN Sellers (the “TVN Employee Sellers”). 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.

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Telaria, Inc.
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)
4.  Acquisitions (Continued)

For the three months ended March 31, 2017, the Company recorded $55 in mark-to market expense related to the change in contingent consideration for TVN Sellers that were not required to remain employed with the Company and $825 of compensation related expense in connection with the continued employment of the TVN Employee Sellers in sales and marketing expense in the condensed consolidated statement of operations. As of December 31, 2017, all contingent consideration related to the purchase of TVN had been paid.
5.  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 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  
 
March 31, 2018
 
December 31, 2017
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 

 
 

 
 
 
 
 
 

Money market funds (1)
54,021

 

 

 
54,021

 
53,853

 

 

 
53,853

Total assets
54,021

 

 

 
54,021

 
53,853

 

 

 
53,853

(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 $18,564 and $22,467 of operating cash balances as of March 31, 2018 and December 31, 2017, respectively. 
6.  Changes in Accumulated Other Comprehensive Loss  
The following tables provide the components of accumulated other comprehensive loss income: 
 
Foreign
Currency
Translation
Adjustment
 
Total
Beginning balance at December 31, 2017
$
(232
)
 
$
(232
)
Other comprehensive loss (1)
(70
)
 
(70
)
Ending balance at March 31, 2018
$
(302
)
 
$
(302
)
 

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Telaria, Inc.
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)
6.  Changes in Accumulated Other Comprehensive Loss (Continued)

 
Foreign
Currency
Translation
Adjustment
 
Total
Beginning balance at December 31, 2016
$
(331
)
 
$
(331
)
Other comprehensive loss (1)
86

 
86

Ending balance at March 31, 2017
$
(245
)
 
$
(245
)
 
(1)   
For the three months ended March 31, 2018 and 2017 , there were no reclassifications to or from accumulated other comprehensive (loss) income. 
7.  Net Loss Per Share of Common Stock  
 
Three Months Ended
March 31,
 
2018
 
2017
Numerator:
 

 
 

Loss from continuing operations, net of income taxes
$
(6,127
)
 
$
(9,542
)
Income from discontinued operations, net of income taxes
26

 
2,682

Net loss
$
(6,101
)
 
$
(6,860
)
 
 
 
 
Denominator:
 
 
 
Weighted-average number of shares of common stock outstanding for basic and diluted net loss per share
51,827,685

 
49,998,547

 
 
 
 
Basic and diluted net income (loss) per share:
 
 
 
Net loss from continuing operations
$
(0.12
)
 
$
(0.19
)
Net income from discontinued operations

 
0.05

Net loss
$
(0.12
)
 
$
(0.14
)
The following securities were outstanding during the periods presented below and have been excluded from the calculation of diluted net loss from continuing operations per share, net loss per share and net income from discontinued operations per share of common stock because the effect is anti-dilutive:
 
Three Months Ended
March 31,
 
2018
 
2017
Warrants to purchase common stock

 
31,130

Stock option awards
7,107,364

 
6,306,296

Restricted stock unit awards
2,537,561

 
4,788,010

Total anti-dilutive securities
9,644,925

 
11,125,436


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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations  
The following discussion and analysis of our financial condition, results of operations and cash flows should be read in conjunction with (1) the unaudited interim consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and (2) the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended December 31, 2017 included in the Annual Report on Form 10-K filed with the SEC on March 2, 2018.  This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act.  These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would” or the negative or plural of these words or similar expressions or variations.  Such forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements.  Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors”, set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in our other SEC filings, including our Annual Report on Form 10-K filed with the SEC on March 2, 2018.  You should not rely upon forward-looking statements as predictions of future events.  Furthermore, such forward-looking statements speak only as of the date of this report.  Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.  We will disclose material non-public information through one or more of the following channels: our investor relations website (http://investor.telaria.com), the social media channels identified on our investor relations website, press releases, SEC filings, public conference calls and webcasts.  
Overview  
Telaria, Inc. provides a fully programmatic, software platform for premium publishers to analyze, manage and monetize their video advertising. Our platform is built specifically for digital video and to support the unique requirements of connected TV, mobile and over-the-top content. We provide publishers with real-time analytics and decisioning tools to optimize their video advertising business, and offer a holistic video monetization solution that allows publishers to efficiently sell their inventory however they want to transact.
Our technology enables publishers to manage and deliver their directly sold and programmatic video inventory through a single platform, allowing them to get a complete picture of their sales efforts and gain important insights into the value of their video inventory across channels. Our platform is integrated with leading third-party demand-side platforms, or DSPs, through server-to-server integrations, which enable publishers to programmatically connect with buyers through private marketplaces or open auctions with significantly reduced latency and response time. In addition, publishers manage their directly sold video inventory through our newly introduced Advanced TV ad server, which was built specifically to meet the unique requirements of CTV.
We provide a full suite of tools for publishers to control their video inventory and protect the integrity of their brand. For instance, through our inventory pricing and presentation controls, publishers are able to define supply hierarchies and demand tiers, set minimum price floors, establish advertiser and category-level black and white lists to manage potential sales channel conflicts, and set pacing and forecasting parameters for campaigns. Our brand safety controls provide publishers with essential tools to ensure that the delivery of an ad campaign does not interfere with the consumer viewing experience, including ad creative review tools, the ability to filter out repetitive ads, and ad-pod features that allow for the serving of multiple ads at once in a manner analogous to commercial breaks in traditional linear television.
Our platform provides publishers with up-to-the-second reporting through a live dashboard and reporting suite, which allows them to effectively monitor buying patterns and make real-time changes to take advantage of market dynamics, as well as extensive analytics that leverage billions of historical data points to drive long term monetization strategy. In addition, clients utilize our inventory intelligence dashboard to access first and third-party data that provides valuable insights into their inventory such as performance, viewability and audience data. This data can then be used by publishers to segment their inventory and create incremental value. We also offer real-time diagnostic capabilities and full transactional transparency to our publisher partners so that they have a complete picture of how their inventory is represented in the marketplace and can immediately identify and act to resolve any issues impacting revenue generation.
We have built long-standing relationships with premium video publishers, and we believe the scale and quality of our client base makes us an important partner to video ad buyers. We provide our platform internationally in Europe, Latin America, and the Asia Pacific regions. Buyers on our platform include some of the largest brand advertisers in the world and our platform is integrated with the leading video volume buyers in digital advertising. We generate revenue each time a transaction occurs on our platform based on a simple and transparent fee structure established with our publisher partners. We

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do not purchase and re-sell inventory from publishers and do not collect any fees directly from DSPs integrated with our platform.

Historically, we operated a buyer platform business in addition to offering our video management platform for publishers. We recently made the strategic decision to focus our business exclusively on offering our video management platform for publishers, and on August 7, 2017, we announced that we had completed the sale of the assets and liabilities primarily related to our buyer platform to an affiliate of Taptica International Ltd. or Taptica, for total consideration of $50 million, subject to adjustment for working capital. As a result of the sale, we no longer provide a buyer platform solution. Accordingly, the results of operations for the buyer platform are reflected as discontinued operations in our financial statements for all periods presented herein.

On September 27, 2017, we changed our name from “Tremor Video, Inc.” to “Telaria, Inc.” In connection with the name change, our NYSE ticker symbol was changed to “TLRA” and our corporate website address was changed to www.telaria.com. 

For the quarter ended March 31, 2018, our revenue from continuing operations increased to $ 9.6 million , compared to $ 6.1 million  for the quarter ended March 31, 2017, an increase of  56.4% .  Over the same period, our gross margin increased to  89.3%  for the quarter ended March 31, 2018, compared to 87.6%  for the quarter ended March 31, 2017. Our loss from continuing operations, net of income taxes decreased from a loss of  $9.5 million for the quarter ended March 31, 2017 to a loss from continuing operations, net of income taxes of  $6.1 million for the quarter ended March 31, 2018, and our Adjusted EBITDA (refer to “Key Metrics-Adjusted EBITDA”) increased from a loss of  $6.7 million to a loss of  $3.3 million for the same respective periods.

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 from continuing operations, net of income taxes are discussed under the headings “Components of our Results of Operations.”  Adjusted EBITDA is discussed immediately following the table below. 
 
Three Months Ended
March 31,
 
2018
 
2017
 
(dollars in thousands)
(unaudited)
Revenue
$
9,601

 
$
6,139

Gross margin
89.3
%
 
87.6
%
Loss from continuing operations, net of income taxes
(6,127
)
 
(9,542
)
Adjusted EBITDA
$
(3,325
)
 
$
(6,748
)
 
Adjusted EBITDA  
Adjusted EBITDA represents our loss from continuing operations, net of income taxes, before depreciation and amortization expense, total interest and other expense (income), net, provision (benefit) for income taxes, and as adjusted to eliminate the impact of non-cash stock-based compensation expense, acquisition-related costs, mark-to-market expense, executive severance, retention and recruiting costs, expenses for transitional services, 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 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 tax payments that may represent a reduction in cash available to us; (d) Adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation; (e) Adjusted EBITDA does not reflect acquisition-related costs, executive severance, retention and

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recruiting costs, expenses for transitional services and other adjustments that may represent a reduction in cash available to us; and (f) other companies, including companies in our industry, may calculate 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 loss from continuing operations, net of income taxes, the most directly comparable U.S. GAAP measure, for each of the periods indicated.
 
Three Months Ended
March 31,
 
2018
 
2017
 
(dollars in thousands)
(unaudited)
Loss from continuing operations, net of income taxes
$
(6,127
)
 
$
(9,542
)
Adjustments:
 

 
 

Depreciation and amortization expense
1,801

 
1,021

Total interest and other income (expense), net
(714
)
 
27

Provision (benefit) for income taxes
14

 
(10
)
Stock-based compensation expense
856

 
744

Acquisition-related costs (1)

 
825

Mark-to-market expense (2)

 
55

Executive severance, retention and recruiting costs
143

 
30

Expenses for transitional services (3)
389

 

Other adjustments (4)
313

 
102

Total net adjustments
2,802

 
2,794

Adjusted EBITDA
$
(3,325
)
 
$
(6,748
)
 
(1)  
For the three months ended March 31, 2017, reflects acquisition-related costs incurred in connection with our acquisition of The Video Network Pty, Ltd, an Australian proprietary limited company ("TVN").  Includes compensation-related expenses related to contingent consideration payments to certain TVN sellers that were subject to continued employment. Refer to Note 4 - Acquisition, in the notes to the condensed consolidated financial statements.
(2)
Reflects expense incurred based on the re-measurement, at March 31, 2017, of the estimated fair value of earn-out payments that were paid in connection with the acquisition of TVN and which were not conditioned on continued employment. Refer to Note 4 - Acquisition in the notes to the condensed consolidated financial statements. 
(3)  
Reflects costs incurred providing transitional services following the sale of our buyer platform.
(4)
For the three months ended March 31, 2018, reflects rent expense for our future corporate headquarters, which are currently unoccupied. For the three months ended March 31, 2017, reflects amounts accrued in connection with a one-time change in our employee vacation policy for the first quarter of 2017.
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 each time a transaction occurs on our platform based on a simple and transparent fee structure established with our publisher partners. We do not purchase and re-sell inventory from publishers and do not collect any fees directly from buyers. We act as an agent on behalf of publishers and revenue is recognized, net of any inventory costs that we remit to publishers, when a buyer purchases inventory from a publisher on our platform.

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Cost of Revenue, Gross Profit and Gross Margin  
Our cost of revenue primarily consists of third party hosting fees and licensing fees for third party data. Costs owed to publishers but not yet paid are recorded in our consolidated balance sheets and included as part of accounts payable and accrued expenses.
Gross margin is our gross profit expressed as a percentage of our total revenue. 
Operating Expenses  
Operating expenses consist of technology and development, sales and marketing, general and administrative, depreciation and amortization and mark-to-market expenses.  Salaries, incentive compensation, stock-based compensation and other personnel-related costs are the most significant components of each of technology and development, sales and marketing and general and administrative expenses. 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. We expect our operating expenses to continue to increase in future periods, to support our continued growth.
Technology and Development Expense.  Technology and development expense primarily consists of salaries, incentive compensation, stock-based compensation and other personnel-related costs for product development and engineering personnel. Additional expenses in this category include travel and other related overhead. Due to the rapid development and changes in our business, we have expensed all technology and development expenses in the same period that the costs were incurred. We intend to continue to invest in our technology and development efforts. 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 and sales and sales support employees.  Additional expenses in this category include marketing programs, travel and other related overhead. 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.  Additional expenses in this category include legal, accounting, investor relations and other professional fees, insurance, public company expenses, including costs associated with becoming compliant with the Sarbanes-Oxley Act, travel and other related overhead. We expect our general and administrative expenses to increase in absolute dollars in future periods as a result of incurring additional expenses becoming compliant with the Sarbanes-Oxley Act.
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 Expense.  Mark-to-market expense consists primarily of expense related to contingent consideration incurred in connection with our acquisition of TVN in August 2015 (refer to note 4 in notes to condensed consolidated financial statements). 
Interest and Other Income (Expense), Net  
Interest and other income (expense), 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 March 31, 2018, and December 31, 2017, we did not have any outstanding borrowings under our credit facility.
Provision (Benefit) for Income Taxes  
Provision (benefit) 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 statements 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.  The results of operations of our buyer platform are included in “Income from discontinued operations, net of income taxes.” 

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Three Months Ended
March 31,
 
2018
 
2017
 
Amount
 
Percentage
of Revenue
 
Amount
 
Percentage
of Revenue
 
(dollars in thousands)
Consolidated Statements of Operations Data:
 

 
 

 
 

 
 

Revenue
$
9,601

 
100
 %
 
$
6,139

 
100.0
 %
Cost of revenue
1,028

 
10.7

 
764

 
12.5

Gross profit
8,573

 
89.3

 
5,375

 
87.6

 
 
 
 
 
 
 
 
Operating expenses:
 

 
 

 
 

 
 

Technology and development
2,308

 
24.0

 
2,425

 
39.5

Sales and marketing
6,293

 
65.6

 
6,526

 
106.3

General and administrative
4,998

 
52.1

 
4,873

 
79.4

Depreciation and amortization
1,801

 
18.8

 
1,021

 
16.6

Mark-to-market

 

 
55

 
0.9

Total operating expenses
15,400

 
160.4

 
14,900

 
242.7

 
 
 
 
 
 
 
 
Loss from continuing operations
(6,827
)
 
(71.1
)
 
(9,525
)
 
(155.2
)
Total interest and other (expense) income, net
714

 
7.4

 
(27
)
 
(0.4
)
Loss from continuing operations before provision for income taxes
(6,113
)
 
(63.7
)
 
(9,552
)
 
(155.6
)
Provision (benefit) for income taxes
14

 
0.2

 
(10
)
 
(0.2
)
Loss from continuing operations, net of income taxes
(6,127
)
 
(63.8
)
 
(9,542
)
 
(155.4
)%
Income from discontinued operations, net of income taxes
26

 
0.3

 
2,682

 
43.7

Net loss
$
(6,101
)
 
(63.6
)%
 
$
(6,860
)
 
(111.7
)%
 
Comparison for the Three Months Ended March 31, 2018 and 2017  
 
Three Months Ended
March 31,
 
Change
Increase/ (Decrease)
 
2018
 
2017
 
Amount
 
Percentage
 
(dollars in thousands)
Revenue
$
9,601

 
$
6,139

 
$
3,462

 
56.4
%
 
Revenue  
Our revenue during the three months ended March 31, 2018 increased to $9.6 million from $6.1 million for the same period in 2017, an increase of 56.4% . The increase in our revenue resulted from an increase in the amount of spend being transacted through our platform, including spend transacted by our former buyer platform following its sale to Taptica in August 2017.
 
Three Months Ended
March 31,
 
Change
Increase / (Decrease)
 
2018
 
2017
 
Amount
 
Percentage
 
(dollars in thousands)
Cost of revenue
$
1,028

 
$
764

 
$
264

 
34.6
%
Gross profit
8,573

 
5,375

 
3,198

 
59.5
%
Gross margin
89.3
%
 
87.6
%
 
 

 
 

Cost of Revenue, Gross Profit and Gross Margin  
Our cost of revenue during the three months ended March 31, 2018, increased to $1.0 million from $0.8 million for the three months ended March 31, 2017. The increase in our cost of revenue primarily reflects an increase in hosting fees corresponding with additional spend being transacted through our platform. 

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For the three months ended March 31, 2018, gross profit was $8.6 million , an increase of $3.2 million , or 59.5% , compared to the prior year period.
Our gross margin increased to 89.3% for the three months ended March 31, 2018 from 87.6% for the three months ended March 31, 2017. 
 
Three Months Ended
March 31,
 
Change
Increase / (Decrease)
 
2018
 
2017
 
Amount
 
Percentage
 
(dollars in thousands)
Technology and development expense
$
2,308

 
$
2,425

 
$
(117
)
 
(4.8
)%
% of total revenue
23.8
%
 
39.5
%
 
 

 
 

 
Technology and Development Expense  
The decrease in technology and development expense during the three months ended March 31, 2018, compared to the three months ended March 31, 2017, was primarily attributable to a $0.1 million decrease in salaries, incentive compensation, stock-based compensation and overhead costs.
 
Three Months Ended
March 31,
 
Change
Increase / (Decrease)
 
2018
 
2017
 
Amount
 
Percentage
 
(dollars in thousands)
Sales and marketing expense
$
6,293

 
$
6,526

 
$
(233
)
 
(3.6
)%
% of total revenue
64.8
%
 
106.3
%
 
 

 
 

 
Sales and Marketing Expense  
The decrease in sales and marketing expense during the three months ended March 31, 2018, compared to the three months ended March 31, 2017, was attributable to a $0.3 million decrease in bad debt expense and a $0.2 million decrease in salaries, incentive compensation, stock-based compensation, and marketing costs, which was partially offset by a $0.3 million increase in overhead costs.
 
Three Months Ended
March 31,
 
Change
Increase / (Decrease)
 
2018
 
2017
 
Amount
 
Percentage
 
(dollars in thousands)
General and administrative expense
$
4,998

 
$
4,873

 
$
125

 
2.6
%
% of total revenue
51.5
%
 
79.4
%
 
 

 
 

 
General and Administrative   Expense  
The increase in general and administrative expense during the three months ended March 31, 2018, compared to the three months ended March 31, 2017, was primarily attributable to a $0.3 million increase in salaries, incentive compensation, stock-based compensation and other personnel-related costs, which was partially offset by a $0.2 million decrease in legal fees.

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Three Months Ended
March 31,
 
Change
Increase / (Decrease)
 
2018
 
2017
 
Amount
 
Percentage
 
(dollars in thousands)
Depreciation and amortization expense
$
1,801

 
$
1,021

 
$
780

 
76.4
%
% of total revenue
18.6
%
 
16.6
%
 
 

 
 

 
Depreciation and Amortization Expense  
The increase in depreciation and amortization expense during the three months ended March 31, 2018 compared to the three months ended March 31, 2017 was primarily attributable to accelerated depreciation on leasehold improvements and furniture and fixtures that will not be moved to our new corporate headquarters.
 
Three Months Ended
March 31,
 
Change
Increase / (Decrease)
 
2018
 
2017
 
Amount
 
Percentage
 
(dollars in thousands)
Mark-to-market expense
$

 
$
55

 
$
(55
)
 
(100.0
)%
% of total revenue
NM

 
0.9
%
 
 

 
 

 
Mark-to-Market Expense  
Mark-to-market expense related to the Company’s re-measurement of the estimated fair value of contingent consideration that was due in connection with the acquisition of TVN (refer to note 4 in the notes to condensed consolidated financial statements).   Contingent consideration was paid in full as of September 30, 2017 and as a result, there was no mark-to-market expense during the three months ended March 31, 2018.
 
Three Months Ended
March 31,
 
Change
Increase / (Decrease)
 
2018
 
2017
 
Amount
 
Percentage
 
(dollars in thousands)
Total interest and other (expense) income, net
$
714

 
$
(27
)
 
$
741

 
(2,744.4
)%
% of total revenue
7.4
%
 
(0.4
)%
 
 

 
 

 
Interest and Other Income (Expense), Net  
The increase in total interest and other income (expense), net during the three months ended March 31, 2018, compared to the three months ended March 31, 2017, was primarily attributable to an increase of $0.4 million in transitional services income related to services provided to the acquirer following the sale of our buyer platform, $0.2 million relating to licenses of intellectual property and the remaining increase attributable to interest income.

 
Three Months Ended
March 31,
 
Change
Increase / (Decrease)
 
2018
 
2017
 
Amount
 
Percentage
 
(dollars in thousands)
Provision (benefit) for income taxes
$
14

 
$
(10
)
 
$
24

 
(240.0
)%
% of total revenue
0.1
%
 
(0.2
)%
 
 

 
 

 
Provision (benefit) for income taxes  
The provision (benefit) for income taxes for the three month periods ended March 31, 2018 and 2017 is immaterial for both periods.

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Income from Discontinued Operations  
In August 2017, we completed the sale of our buyer platform to Taptica. The consideration received was $50 million, subject to adjustment for working capital (refer to Note 3 in the condensed consolidated financial statements).  The results of our buyer platform have been recast as discontinued operations. 
For the three months ended March 31, 2018, income from discontinued operations consisted of final working capital adjustments.
Liquidity and Capital Resources  
Our Condensed Consolidated Statement of Cash Flows (Unaudited) includes cash flows from discontinued operations related to our buyer platform.  Except for disclosures related to our working capital, liquidity and cash flows, or unless otherwise specified, disclosures in this management’s discussion and analysis of financial condition and results of operations relate solely to our continuing operations.  
Working Capital  
The following table summarizes our cash and cash equivalents, accounts receivable, net of allowance for doubtful accounts and working capital for the periods indicated:
 
As of
March 31,
 
2018
2017
 
(dollars in thousands)
Cash and cash equivalents
$
72,585

$
28,032

Accounts receivable, net of allowance for doubtful accounts
46,933

23,558

Working capital
$
73,673

$
71,511

Our cash and cash equivalents at March 31, 2018 were held for working capital purposes. We do not enter 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  
Cash and Cash Equivalents  
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 $72.6 million and $76.3 million as of March 31, 2018 and December 31, 2017, respectively.
Credit Facility  
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 we can incur revolver borrowings up to the lesser of $25.0 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 2020.  While we had no outstanding borrowings under the credit facility as of March 31, 2018 and December 31, 2017, 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 Adjusted EBITDA for trailing periods which vary from three to twelve months, 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

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maintain all of our cash and cash equivalents at accounts with the lender. We were in compliance with all covenants as of March 31, 2018 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:
 
Three Months Ended
March 31,
 
2018
 
2017
 
(dollars in thousands)
Net cash provided by (used in):
 

 
 

Operating activities
$
(3,798
)
 
$
(12,537
)
Investing activities
(256
)
 
(754
)
Financing activities
346

 
(2,868
)
 
Operating Activities  
Net cash used in operating activities is primarily influenced by the revenue our business generates, our costs of revenue, and amounts of cash we invest in personnel and infrastructure to support 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. 
During the three months ended March 31, 2018, our net cash used in operating activities was $3.8 million and consisted of a loss from continuing operations, net of income taxes of $6.1 million , and a $0.4 million decrease in net cash resulting from changes in working capital, which was partially offset by $2.7 million in adjustments for non-cash items. The components of our net loss from continuing operations are described in greater detail above under “Results of Operations”. Adjustments for non-cash items consisted of $1.8 million in depreciation and amortization expense and $0.9 million in non-cash stock-based compensation expense. The decrease in cash resulting from changes in our working capital of $0.4 million during the three months ended March 31, 2018 consisted of a $11.6 million decrease in accounts payable and accrued expense, a $1.0 million increase in prepaid expenses and other current assets, and a $0.9 million decrease in other changes in our working capital, partially offset by a $12.4 million decrease in accounts receivable and a $0.7 million increase in deferred rent and other current liabilities.
During the three months ended March 31 2017, our net cash used in operating activities was $12.5 million and consisted of a loss from continuing operations, net of income taxes of $9.5 million and a $10.2 million decrease in net cash resulting from changes in working capital, which was partially offset by income from discontinued operations, net of income taxes of $2.7 million and adjustments for non-cash items of $4.5 million . Adjustments for non-cash items primarily consisted of $2.3 million in depreciation and amortization expense, $1.0 million in non-cash stock-based compensation expense, $0.9 million in mark-to-market expense related to our acquisition of TVN and $0.3 million of other net adjustments for non-cash items. The decrease in cash resulting from changes in our working capital during the three months ended March 31, 2017 primarily consisted of a $20.5 million net decrease in accounts payable and accrued expenses, a $0.8 million increase in prepaid expenses and other current assets and $0.2 million in deferred rent and other current liabilities, partially offset by an increase of $11.3 million in accounts receivable.

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Investing Activities  
For the three months ended March 31, 2018 and March 31, 2017, our net cash used by investing activities was $0.3 million and $0.8 million , respectively, and consisted of the purchase of property and equipment. 
Financing Activities  
For the three months ended March 31, 2018, our net cash provided by financing activities was $0.3 million , which consisted of $1.0 million in proceeds received from the exercise of stock option awards, $0.2 million of proceeds received in connection with shares purchased under our ESPP, partially offset by $0.9 million tax payments on behalf of employees related to net share settlements of restricted stock unit awards.
For the three months ended March 31, 2017, our net cash used in financing activities was $2.9 million , which consisted primarily of purchases of common stock pursuant to our share repurchase program of $2.4 million and tax payments on behalf of employees related to net share settlements of restricted stock unit awards of $0.7 million , partially offset by proceeds received in connection with shares purchased under our ESPP and the exercise of stock option awards of $0.3 million
Off-Balance Sheet Arrangements  
During the periods presented, 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. 
Critical Accounting Policies and Significant Judgments and Estimates
We prepare our unaudited interim consolidated financial statements in accordance with U.S. GAAP.  The preparation of unaudited interim 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 unaudited interim consolidated financial statements, and consider these to be our critical accounting policies and estimates. 
There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the U.S. Securities and Exchange Commission on March 2, 2018.
Item 3. Quantitative and Qualitative Disclosures 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, 2018 and sustained through the period ended March 31, 2018, 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 $25.0 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. 

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Foreign Currency Exchange Risk  
Due to our international 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 expenses and revenue primarily in  the United Kingdom, Europe, Singapore, Australia, New Zealand and Malaysia.  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.  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.  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.
Item 4. 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’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to 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 Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2018. Based on the evaluation of our disclosure controls and procedures as of March 31, 2018, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2018, our disclosure controls and procedures were effective at a reasonable assurance level. 
Changes in Internal Control over Financial Reporting  
There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 
Inherent Limitations on Effectiveness of Controls  
While our management, including our Chief Executive Officer and Chief Financial Officer, design our disclosure controls and procedures and internal control over financial reporting to provide reasonable assurance of achieving their objectives, 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.  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. 

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Table of Contents

Part II  — OTHER INFORMATION  
Item 1. Legal Proceedings.  
The Company is from time to time involved with various claims and litigation arising during the normal course of business. Although the results of litigation and claims cannot be predicted with certainty, 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 the Company because of defense and settlement costs, diversion of management resources and other factors.
Item 1A. Risk Factors.  
There have been no material changes to our risk factors as compared to the risk factors described in our Annual Report on Form 10-K for the year end December 31, 2017, filed with the SEC on March 2, 2018. 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.  
(a)          Recent Sales of Unregistered Equity Securities 
None 
(b)          Use of Proceeds 
None. 
(c)  Issuer Purchases of Equity Securities 
None
Item 3.  Defaults upon Senior Securities.  
Not applicable.
Item 4.  Mine Safety Disclosures.  
Not applicable. 
Item 5. Other Information.  
Not applicable.

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Item 6. Exhibits.  
(a)                   List of Exhibits 
Exhibit Number
 
Exhibit Description
 
 
 
10.1+
 
 
 
 
31.1+
 
 
 
 
31.2+
 
 
 
 
32.1++
 
 
 
 
32.2++
 
 
 
 
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 Label Linkbase.
 
 
 
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase.
 
+                             Filed herewith. 
++                      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 Quarterly Report on Form 10-Q 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.

31

Table of Contents

SIGNATURES  
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 
TELARIA, INC.
 
 
 
 
By:
/s/ Mark Zagorski
 
Mark Zagorski
 
Chief Executive Officer
 
 
Date:
May 8, 2018
 
 
 
TELARIA, INC.
 
 
 
 
By:
/s/ John S. Rego
 
John S. Rego
 
Senior Vice President and Chief Financial Officer
 
 
Date:
May 8, 2018
 
 
 
 

32

FIRST AMENDMENT
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this Amendment ”) is entered into as of January 26, 2018, between SILICON VALLEY BANK , a California corporation with a loan production office located at 387 Park Avenue South, 2nd Floor, New York, New York 10016 (“ Bank ”), and (b) TELARIA, INC. (f/k/a Tremor Video, Inc.), a Delaware corporation, with its chief executive office located at 1501 Broadway, Suite 801, New York, New York 10036 (the “ Borrower ”).
RECITALS
A.     Bank and Borrower have entered into that certain Amended and Restated Loan and Security Agreement dated as of January 27, 2017 (as the same may from time to time be amended, modified, supplemented or restated, the “Loan Agreement”).
B.     Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.
C.     Borrower has requested that Bank amend the Loan Agreement to (a) extend the Revolving Line Maturity Date and (b) make certain other revisions to the Loan Agreement as more fully set forth herein.
D.     Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:
1. Definitions. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.
2.      Amendments to Loan Agreement.
2.1      Section 2.1.1 ( Revolving Advances ). Subsection (a) of Section 2.1.1 is deleted in its entirety and replaced with the following:
“    (a)    Subject to the terms and conditions of this Agreement and to the deduction of Reserves, 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.”

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2.2      Section 2.2 ( Overadvances ). Section 2.2 is amended by deleting the reference to “the Default Rate” therein and inserting in lieu thereof “a per annum rate equal to the rate that is otherwise applicable to Advances plus four percent (4.0%)”.
2.3      Section 3.2 ( Conditions Precedent to all Credit Extensions ). Subsections (a) and (b) of Section 3.2 are deleted in their entirety and replaced with the following:
“    (a)    timely receipt of the Credit Extension request and any materials and documents required by Section 3.4;
(b)    the representations and warranties in this Agreement shall be true, accurate, and complete in all material respects on the date of the proposed Credit Extension 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”
2.4      Section 3.4 ( Procedures for Borrowing ). Section 3.4 is deleted in its entirety and replaced with the following:

“     3.4    Procedures for Borrowing . Subject to the prior satisfaction of all other applicable conditions to the making of an Advance (other than Advances under Sections 2.1.2 or 2.1.4) set forth in this Agreement, to obtain an Advance, Borrower (via an individual duly authorized by an Administrator) shall notify Bank (which notice shall be irrevocable) by electronic mail by 12:00 p.m. Eastern time on the Funding Date of the Advance. Such notice shall be made by Borrower through Bank’s online banking program, provided, however, if Borrower is not utilizing Bank’s online banking program, then such notice shall be in a written format acceptable to Bank that is executed by an Authorized Signer. Bank shall have received satisfactory evidence that the Board has approved that such Authorized Signer may provide such notices and request Advances. In connection with any such notification, Borrower must promptly deliver to Bank by electronic mail or through Bank’s online banking program such reports and information, including without limitation, sales journals, cash

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receipts journals, accounts receivable aging reports, as Bank may reasonably request. Bank shall credit proceeds of an Advance to the Designated Deposit Account. Bank may make Advances under this Agreement based on instructions from an Authorized Signer or without instructions if the Advances are necessary to meet Obligations which have become due.”

2.5      Section 5.3 (Accounts Receivable) . Section 5.3 is hereby deleted in its entirety and replaced with the following:

“     5.3    Accounts Receivable .

(a)    For each Account with respect to which Advances are requested, on the date each Advance is requested and made, such Account shall be an Eligible Account.
(b)    For any Eligible Account included in any current Borrowing Base Report, all statements made and all unpaid balances appearing in all invoices, instruments and other documents evidencing the 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. 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 Report. 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.”
2.6      Section 6.2 (Financial Statements, Reports, Certificates) . Subsections (a) and (b) of Section 6.2 are hereby deleted in their entirety and replaced with the following:

“     (a)      Accounts Receivable and Accounts Payable Reports . Within thirty (30) days after the last day of each month, aged listings of accounts receivable and accounts payable (by invoice date) and a detailed Account Debtor listing;
(b)      Borrowing Base Reports . Within thirty (30) days after the end of each month, a Borrowing Base Report (and any schedules related thereto and including any other information requested by Bank with respect to Borrower’s Accounts);”     
2.7      Section 6.6 (Accounts) . Subsection (c) of Section 6.6 is hereby deleted in its entirety and replaced with the following:
“    (c)    Intentionally omitted.”

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2.8      Section 6.7 (Financial Covenants) . Subsection (b) of Section 6.7 is hereby deleted in its entirety and replaced with the following:

“    (b)     Adjusted EBITDA . Maintain at all times, to be tested as of the last day of each calendar quarter, Adjusted EBITDA for the following periods 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) Zero Dollars ($0.00) for the three (3) month period ending December 31, 2017; (v) (-$1,000,000.00) for the six (6) month period ending March 31, 2018; and (vi) Zero Dollars ($0.00) for the nine (9) month period ending June 30, 2018 and the twelve (12) month periods ending September 30, 2018 and December 31, 2018.

With respect to any period ending after December 31, 2018, Bank will propose the Adjusted EBITDA covenant levels for any such period in its reasonable discretion based upon, among other factors, budgets, sales projections, operating plans and other financial information with respect to Borrower that Bank deems relevant, including, without limitation, Borrower’s annual financial projections approved by the Board.  With respect thereto, Borrower’s failure to agree in writing (which agreement shall be set forth in a written amendment to this Agreement) on or before February 28, 2019 to any covenant levels proposed by Bank in its reasonable discretion with respect to the 2019 calendar year shall result in an immediate Event of Default for which there shall be no grace or cure period.”

2.9      Section 6.14 (Accounts Receivable), Section 6.15 (Remittance of Proceeds) and Section 6.16 ( Online Banking ). Sections 6.14, 6.15 and 6.16 are hereby inserted immediately following Section 6.13:
“     6.14    Accounts Receivable.
(a)     Schedules and Documents Relating to Accounts . Borrower shall deliver to Bank transaction reports and schedules of collections, as provided in Section 6.2, on such forms as are reasonably acceptable to Bank; provided, however, that Borrower’s failure to execute and deliver the same shall not affect or limit Bank’s Lien and other rights in all of Borrower’s Accounts, nor shall Bank’s failure to advance or lend against a specific Account affect or limit Bank’s Lien and other rights therein. If requested by Bank, Borrower shall furnish Bank with copies (or, at Bank’s reasonable request, originals) of all contracts, orders, invoices, and other similar documents, and all shipping instructions, delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale or

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disposition of which gave rise to such Accounts. In addition, Borrower shall deliver to Bank, on its reasonable request, the originals of all instruments, chattel paper, security agreements, guarantees and other documents and property evidencing or securing any Accounts, in the same form as received, with all necessary indorsements, and copies of all credit memos.
(b)     Disputes . Borrower shall promptly notify Bank of all disputes or claims relating to Accounts which are included as Eligible Accounts in the most recent Borrowing Base Report in excess of One Hundred Thousand Dollars ($100,000.00) in the aggregate existing at any time. Borrower may forgive (completely or partially), compromise, or settle any Account for less than payment in full, or agree to do any of the foregoing so long as (i) Borrower does so in good faith, in a commercially reasonable manner, in the ordinary course of business, in arm’s-length transactions, and reports the same to Bank in the regular reports provided to Bank; (ii) no Event of Default has occurred and is continuing; and (iii) after taking into account all such discounts, settlements and forgiveness, the total outstanding Advances will not exceed the lesser of the Revolving Line or the Borrowing Base.
(c)     Collection of Accounts . Borrower shall direct Account Debtors to deliver or transmit all proceeds of Accounts into a lockbox account, or such other “blocked account” as specified by Bank, provided that payments by check may be delivered or transmitted via electronic deposit capture into a “blocked account” as specified by Bank (either such account, the “ Cash Collateral Account ”). Whether or not an Event of Default has occurred and is continuing, Borrower shall immediately deliver all payments on and proceeds of Accounts to the Cash Collateral Account. Subject to Bank’s right to maintain a reserve pursuant to Section 6.14(d), so long as no Event of Default is continuing, all amounts received in the Cash Collateral Account shall be transferred on a daily basis to Borrower’s operating account with Bank. Borrower hereby authorizes Bank to transfer to the Cash Collateral Account any amounts that Bank reasonably determines are proceeds of the Accounts (provided that Bank is under no obligation to do so and this allowance shall in no event relieve Borrower of its obligations hereunder).
(d)     Reserves . Notwithstanding any terms in this Agreement to the contrary, at times when an Event of Default is continuing, Bank may hold any proceeds of the Accounts and any amounts in the Cash Collateral Account (including amounts otherwise required to be transferred to Borrower’s operating account with Bank) as a reserve to be applied to any Obligations regardless of whether such Obligations are then due and payable.
(e)     Verifications; Confirmations; Credit Quality; Notifications . Bank may, from time to time, (i) verify and confirm directly with the respective Account Debtors the validity, amount and other matters relating to the Accounts,

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either in the name of Borrower or Bank or such other name as Bank may choose, and notify any Account Debtor of Bank’s security interest in such Account and/or (ii) conduct a credit check of any Account Debtor to approve any such Account Debtor’s credit. Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing, Bank will notify and consult with Borrower prior to making any direct contact with an Account Debtor.
(f)     No Liability . Bank shall not be responsible or liable for any shortage or discrepancy in, damage to, or loss or destruction of, any goods, the sale or other disposition of which gives rise to an Account, or for any error, act, omission, or delay of any kind occurring in the settlement, failure to settle, collection or failure to collect any Account, or for settling any Account in good faith for less than the full amount thereof, nor shall Bank be deemed to be responsible for any of Borrower’s obligations under any contract or agreement giving rise to an Account. Nothing herein shall, however, relieve Bank from liability for its own gross negligence or willful misconduct.”
6.15      Remittance of Proceeds. Except as otherwise provided in Section 6.14(c), and except with respect to Transfers pursuant to subsections (a) and (g) of Section 7.1, deliver, in kind, all proceeds arising from the disposition of any Collateral to Bank in the original form in which received by Borrower not later than three (3) Business Days after receipt by Borrower, to be applied to the Obligations; provided that, if no Event of Default has occurred and is continuing, Borrower shall not be obligated to remit to Bank the proceeds of the sale of worn out or obsolete Equipment disposed of by Borrower in good faith in an arm’s length transaction for an aggregate purchase price of Twenty Five Thousand Dollars ($25,000.00) or less (for all such transactions in any fiscal year). Borrower agrees that it will not commingle proceeds of Collateral required to be delivered to Bank hereunder with any of Borrower’s other funds or property, but will hold such proceeds separate and apart from such other funds and property and in an express trust for Bank. Nothing in this Section 6.15 limits the restrictions on disposition of Collateral set forth elsewhere in this Agreement.

6.16    Online Banking.
(a)    Utilize Bank’s online banking platform for all matters requested by Bank which shall include, without limitation (and without request by Bank for the following matters), uploading information pertaining to Accounts and Account Debtors, requesting approval for exceptions, requesting Credit Extensions, and uploading financial statements and other reports required to be delivered by this Agreement (including, without limitation, those described in Section 6.2 of this Agreement).

(b)    Comply with the terms of the “Banking Terms and Conditions” and ensure that all persons utilizing the online banking platform are

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duly authorized to do so by an Administrator. Bank shall be entitled to assume the authenticity, accuracy and completeness on any information, instruction or request for a Credit Extension submitted via the online banking platform and to further assume that any submissions or requests made via the online banking platform have been duly authorized by an Administrator.”

2.10      Subsections (i), (l) and (m) in Section 7.3 are hereby deleted in their entirety and replaced with the following:
“    (i)     immediately after giving effect to such purchase or acquisition, Borrower and its Subsidiaries shall have an Adjusted Quick Ratio of at least 1.50 to 1.0, based upon financial statements delivered to the Bank at least five (5) Business Days prior to such purchase or acquisition which give effect, on a pro forma basis, to such purchase or 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 Ten Million Dollars ($10,000,000.00);”

“     (m)     such purchase or acquisition and the company or assets being acquired are accretive in all material respects;”

2.11      Section 8.2 (Covenant Default) . Subsection (a) of Section 8.2 is hereby deleted in its entirety and replaced with the following:

“    (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, 6.13, 6.14(c) or 6.16 or violates any covenant in Section 7; or”

2.12      Section 9.2 ( Power of Attorney ). Section 9.2 is deleted in its entirety and replaced with the following:
“     9.2    Power of Attorney . Borrower hereby irrevocably appoints Bank as its lawful attorney-in-fact, exercisable following the occurrence and during the continuance of an Event of Default, to: (a) endorse Borrower’s name on any checks, payment instruments, 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) demand, collect, sue, and give releases to any Account Debtor for monies due, settle and adjust disputes and claims about the Accounts directly with Account Debtors, and compromise, prosecute, or defend any action, claim, case, or proceeding about any Collateral (including filing a claim or voting a claim in any bankruptcy case in Bank’s or Borrower’s name, as Bank chooses); (d) make, settle, and adjust all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance, security interest, or other

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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 (other than inchoate indemnity obligations) have been satisfied in full and the Loan Documents have been terminated. 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 (other than inchoate indemnity obligations) have been fully repaid and performed and the Loan Documents have been terminated.”

2.13      Section 13 ( Definitions ). The defined terms “Borrowing Base Certificate”, “Borrowing Base Reports” and “Payment/Advance Form” and their corresponding definitions appearing in Section 13.1 are hereby deleted in their entirety.
2.14      Section 13.1 ( Definitions ). The following defined terms and their definitions set forth in Section 13.1 are hereby deleted in their entirety and replaced with the following:

“    “ 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, (vi) executive severance, (vii) restructuring costs relating to subletting Borrower’s location at 1501 Broadway, New York, New York in an aggregate amount not to exceed Three Million Five Hundred Thousand Dollars ($3,500,000.00) and (viii) without duplication of (i) through (vii) above, other add-backs approved by Bank on a case-by-case basis in its sole discretion.”
“    “ 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. For purposes of the definition of Eligible Accounts but not for any other provision of this Agreement, Affiliate shall include a Specified Affiliate.”
“    “ Borrowing Base ” is eighty percent (80.0%) of Eligible Accounts, as reasonably determined by Bank from Borrower’s most recent Borrowing Base

8



Report (and as may subsequently be updated by Bank based upon information received by Bank including, without limitation, Accounts that are paid and/or billed following the date of the Borrowing Base Report); 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.”
“    “ Revolving Line ” is an aggregate principal amount equal to Twenty Five Million Dollars ($25,000,000.00).”
“    “ Revolving Line Maturity Date ” is January 26, 2020.”

2.15      Section 13.1 ( Definitions ). The preamble in the definition of “Eligible Accounts” set forth in Section 13.1 is hereby deleted in its entirety and replaced with the following:

“    “ Eligible Accounts ” means Accounts owing to Borrower which arise in the ordinary course of Borrower’s business that meet all Borrower’s representations and warranties in Section 5.3, that have been, at the option of Bank, confirmed in accordance with Section 6.14(e) of this Agreement, and are due and owing from Account Debtors deemed creditworthy by Bank in its good faith business judgment. 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:”

2.16      Section 13.1 ( Definitions ). Subsections (a), (e), (q) and (t) in the definition of “Eligible Accounts” set forth in Section 13.1 are hereby deleted in their entirety and replaced with the following:
“    (a)    Accounts (i) for which the Account Debtor is Borrower’s Affiliate, officer, employee, investor, or agent, or (ii) that are intercompany Accounts;”

“    (e)    Accounts owing from an Account Debtor (i) which does not have its principal place of business in the United States, Australia, Canada, France, Germany, Italy, Japan, New Zealand or the United Kingdom or (ii) whose billing address (as set forth in the applicable invoice for such Account) is not in the United States, Australia, Canada, France, Germany, Italy, Japan, New Zealand or the United Kingdom;”

“    (q)    Accounts for which Borrower has permitted Account Debtor’s payment to extend beyond one hundred twenty (120) days (including Accounts with a due date that is more than one hundred twenty (120) days from invoice date);”    


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“    (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 (whether voluntary or involuntary), or becomes insolvent, or goes out of business;”

2.17      Section 13.1 (Definitions) . The definition of “Eligible Accounts” in Section 13.1 is hereby amended by deleting “.” where it appears at the end thereof and inserting in lieu thereof “; and”, and then inserting the following:

“    (x)    Accounts in which Bank does not have a first priority, perfected security interest under all applicable laws;

(y)    Accounts with or in respect of accruals for marketing allowances, incentive rebates, price protection, cooperative advertising and other similar marketing credits, unless otherwise approved by Bank in writing;

(z)    Accounts with customer deposits and/or with respect to which Borrower has received an upfront payment, to the extent of such customer deposit and/or upfront payment; and

(aa)    Accounts billed and/or payable in a Currency other than Dollars.”    

2.18      Section 13 ( Definitions ). The following new defined terms are hereby inserted alphabetically in Section 13.1:
“    “ Administrator ” is an individual that is named:

(a)     as an “Administrator” in the “SVB Online Services” form completed by Borrower with the authority to determine who will be authorized to use SVB Online Services (as defined in the “Banking Terms and Conditions”) on behalf of Borrower; and

(b)     as an Authorized Signer of Borrower in an approval by the Board.”

“    “ Borrowing Base Report ” is that certain report of the value of certain Collateral in the form specified by Bank to Borrower from time to time.”

“    “ Cash Collateral Account ” is defined in Section 6.14(c).”

“    “ Currency ” is coined money and such other banknotes or other paper money as are authorized by law and circulate as a medium of exchange.”

“    “ Reserves ” means, as of any date of determination, such amounts as Bank may from time to time establish and revise in its good faith business judgment,

10



reducing the amount of Advances and other financial accommodations which would otherwise be available to Borrower (a) to reflect events, conditions, contingencies or risks which, as determined by Bank in its good faith business judgment, do or may adversely affect (i) the Collateral or any other property which is security for the Obligations or its value (including without limitation any increase in delinquencies of Accounts), (ii) the assets, business or prospects of Borrower or any Guarantor, or (iii) the security interests and other rights of Bank in the Collateral (including the enforceability, perfection and priority thereof); or (b) to reflect Bank's reasonable belief that any collateral report or financial information furnished by or on behalf of Borrower or any Guarantor to Bank is or may have been incomplete, inaccurate or misleading in any material respect; or (c) in respect of any state of facts which Bank determines constitutes an Event of Default or may, with notice or passage of time or both, constitute an Event of Default.”

“    “ Specified Affiliate ” is any Person (a) more than ten percent (10.0%) of whose aggregate issued and outstanding equity or ownership securities or interests, voting, non-voting or both, are owned or held directly or indirectly, beneficially or of record, by Borrower, and/or (ii) whose equity or ownership securities or interests representing more than ten percent (10.0%) of such Person’s total outstanding combined voting power are owned or held directly or indirectly, beneficially or of record, by Borrower.”

2.19      Exhibit B (Borrowing Base Certificate) . The Borrowing Base Certificate (as defined in the Loan Agreement until the date of this Amendment) appearing as Exhibit B to the Loan Agreement is deleted in its entirety and replaced with the following: “ Exhibit B – Intentionally Omitted” .
2.20      Exhibit C (Compliance Certificate) . The Compliance Certificate appearing as Exhibit C to the Loan Agreement is deleted in its entirety and replaced with the Compliance Certificate attached as Schedule 1 hereto.
2.21      Exhibit D (Payment/Advance Form) . The Payment/Advance Form (as defined in the Loan Agreement until the date of this Amendment) appearing as Exhibit D to the Loan Agreement is deleted in its entirety and replaced with the following: “ Exhibit D – Intentionally Omitted” .
3.      Post-Closing Condition . Borrower hereby acknowledges and agrees that Borrower will deliver to Bank, on or before the date that is thirty (30) days from the date of this Amendment, in form and substance reasonably satisfactory to Bank, a certificate of good standing/foreign qualification from the State of Michigan dated as of a date no earlier than thirty (30) days prior to the date on which such certificate is delivered to Bank. Borrower acknowledges and agrees that the failure of Borrower to satisfy any requirements set forth in the immediately preceding sentence within thirty (30) days from the date of this Amendment shall result in an immediate Event of Default under the Loan Agreement for which there shall be no grace or cure period.

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4.      Limitation of Amendments.
4.1      The amendments set forth in Section 2, above, are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document.
4.2      This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.
5.      Representations and Warranties. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:
5.1      Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date and except as reflected on the updated Perfection Certificate delivered in connection with this Amendment), and (b) no Event of Default has occurred and is continuing;
5.2      Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;
5.3      The organizational documents of Borrower previously delivered to Bank remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;
5.4      The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized; and
5.5      This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.
6.      Perfection Certificate . Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in a certain Perfection Certificate dated as of January 26, 2018, and acknowledges, confirms and agrees the disclosures and information Borrower provided to Bank in said Perfection Certificate have not changed, as of the date hereof. Borrower hereby acknowledges and agrees that all references in the Loan Agreement to the Perfection Certificate shall mean the Perfection Certificate as described in this paragraph.

12



7.      Integration . This Amendment and 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 this Amendment and the Loan Documents merge into this Amendment and the Loan Documents.
8.      Counterparts. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.
9.      Effectiveness and Payment of Fees and Expenses . This Amendment shall be deemed effective upon (a) the due execution and delivery to Bank of this Amendment by each party hereto, and (b) Borrower’s payment of the Initial Installment (as defined below). Borrower shall pay to Bank a fully-earned, non-refundable amendment fee in an amount equal to Seventy Thousand Dollars ($70,000.00), which fee shall be deemed fully earned on the date of this Amendment and shall be due and payable as follows: (i) Thirty Five Thousand Dollars ($35,000.00) on the date of this Amendment (the “Initial Installment”) and (ii) Thirty Five Thousand Dollars ($35,000.00) on the earliest to occur of (A) the date that is one (1) year from the date of this Amendment, (B) the occurrence of an Event of Default, or (C) the termination of the Loan Agreement. In addition, Borrower shall pay Bank’s legal fees and expenses incurred in connection with this Amendment.
[Signature page follows.]


13



IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.



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Schedule 1

EXHIBIT C
COMPLIANCE CERTIFICATE

Date:                 

TO:    SILICON VALLEY BANK                        
FROM: TELARIA, INC.
The undersigned authorized officer of TELARIA, 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 Report, A/R & A/P Agings and
Account Debtor listing
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 (tested quarterly)
>  _______*
$ _______
Yes No

* As set forth in Section 6.9(b) of the Agreement




g
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.”)
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
TELARIA, INC.


By:    
Name:    
Title:    

BANK USE ONLY

Received by: _____________________
AUTHORIZED SIGNER
Date: _________________________

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?

  No, not in compliance                        Yes, in compliance

II.      Adjusted EBITDA (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. Executive severance

$__________
 
8. Restructuring costs relating to subletting Borrower’s location at 1501 Broadway, New York, New York in an aggregate amount not to exceed $3,500,000

$__________

 
9. Other add-backs approved by Bank

$__________
 
10. The sum of lines 1 through 9
$__________

C.
Adjusted EBITDA (line A plus lines B.10)
$__________

Is line C equal to or greater than the required amount set forth above?

  No, not in compliance                        Yes, in compliance





2191034.6




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Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A)
I, Mark Zagorski, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Telaria, 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:
May 8, 2018
/s/ Mark Zagorski
 
 
Mark Zagorski
 
 
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 Quarterly Report on Form 10-Q of Telaria, 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:
May 8, 2018
/s/ John S. Rego
 
 
John S. Rego
 
 
Senior Vice President and Chief Financial Officer
 
 
(Principal Executive 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
 
In connection with the Quarterly Report of Telaria, Inc. (the ࿽Company࿽) on Form 10-Q for the period ended March 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the ࿽Report࿽), the undersigned, Mark Zagorski,  Chief Executive Officer, certifies, pursuant to 18 U.S.C. Section 1350, that:
 
1.                      the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
2.                      the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Date:
May 8, 2018
/s/ Mark Zagorski
 
 
Mark Zagorski
 
 
Chief Executive Officer
 
 
(Principal Executive Officer)



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
 
In connection with the Quarterly Report of Telaria, Inc. (the ࿽Company࿽) on Form 10-Q for the period ended March 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the ࿽Report࿽), the undersigned, John S. Rego, Senior Vice President and Chief Financial Officer, certifies, pursuant to 18 U.S.C. Section 1350, that:
 
1.                     the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
2.                      the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Date:
May 8, 2018
/s/ John S. Rego
 
 
John S. Rego
 
 
Senior Vice President and Chief Financial Officer
 
 
(Principal Financial Officer)