What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-03-10 compared with 2020-02-28 · 696 added, 563 removed, 1118 unchanged (53% of the section changed)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2020, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principles

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 9, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 2 to the financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to adoption of Accounting Standards Codification (ASC) 842, Leases.

The Company adopted ASC 842 using the modified retrospective transition method with optional transition relief.

As discussed in Note 2 to the financial statements, the Company has changed its method of accounting for revenue recognition as of January 1, 2018 due to adoption of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers .

The Company adopted ASC 606 using the modified retrospective method.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenues – Refer to Notes 2 and 3 to the financial statements

Critical Audit Matter Description

The Company applies the provisions of ASC 606, Revenue from Contracts with Customers , and all related applicable guidance.

The Company's contracts with customers may include multiple promised goods and services.

Contracts with multiple performance obligations typically consist of a mix of subscriptions to the Company's online database, customized data services, and delivery of periodic custom reports based on information obtained from the database.

In such cases, the Company identifies performance obligations by evaluating whether the promised goods and services are capable of being distinct and distinct within the context of the contract at contract inception.

Promised goods and services that are not distinct at contract inception are combined as one performance obligation.

Once the Company identifies the performance obligations, the Company will determine the transaction price based on contractually fixed amounts and an estimate of variable consideration.

In general, the transaction price is determined by estimating the fixed amount of consideration to which the Company is entitled for transfer of goods and services and all relevant sources and components of variable consideration.

Variable consideration is estimated based on the most likely amount or expected value approach, depending on which method the Company expects to better predict the amount of consideration to which it will be entitled.

Once the Company elects one of the methods to estimate variable consideration for a particular type of performance obligation, the Company will apply that method consistently.

The Company allocates the transaction price to each performance obligation based on

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relative standalone selling price ("SSP").

Judgment is exercised to determine the SSP of each distinct performance obligation.

The Company will constrain estimates of variable consideration based on its expectation of recovery from the customer.

The Company recognizes revenue when (or as) it satisfies a performance obligation by transferring promised goods or services to a customer.

Customers may obtain the control of promised goods or services over time or at a point in time.

Given the complexity of certain of the Company's contracts, we concluded that revenue recognition from these contracts represents a critical audit matter because of the judgments necessary for management to identify performance obligations, determine the transaction price, allocate transaction price to the performance obligations and recognize revenue when performance obligations are satisfied.

Performing audit procedures related to revenue recognition for these contracts required more extensive audit effort and a higher degree of auditor judgment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to evaluating the significant estimates and judgments used by management in the determination of the accounting for certain revenue contracts, including the identification of performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations and recognition of revenue when performance obligations are satisfied, included the following, among others:

• We tested the effectiveness of controls, including controls over the identification of performance obligations, determination of the transaction price, allocation of the transaction price, and determination of when performance obligations are satisfied.

• For a selection of revenue contracts identified as having more complex terms, we performed the following:

◦ Analysed the contract to determine if all arrangement terms that may have an impact on revenue recognition were identified and independently evaluated management's accounting for the contract.

◦ Tested management's identification of distinct performance obligations by evaluating whether the underlying goods, services, or both were capable of being distinct and distinct within the context of the contract.

◦ Tested the relative stand-alone selling prices by recalculating the stand-alone selling pricing of the performance obligations and evaluating the assumptions used by the Company to determine the standalone selling price for each distinct performance obligation.

We evaluated the methodology used to determine the standalone selling price by comparison to historical analyses prepared by the Company and practices observed in the industry.

We also tested the data used in the analysis.

◦ Tested the timing of revenue recognition by evaluating whether revenue should be recognized over time or at a point in time, and whether the revenue was recognized in the appropriate period by examining evidence of delivery or access to support the timing of revenue recognition based on the product or service type.

◦ Tested the mathematical accuracy of management's calculation of revenue.

◦ Obtained external confirmations evidencing the delivery of the performance obligation(s) and confirming there are no side agreements.

◦ With the assistance of professionals in our firm having expertise in the recognition of revenue, we evaluated revenue recognition in accordance with ASC 606.

Goodwill – Goodwill Impairment Analysis – Refer to Notes 2 and 9 to the financial statements

Critical Audit Matter Description

Goodwill is evaluated for impairment at least annually, as of October 1, by comparing the fair value of a reporting unit to its carrying value including goodwill.

The Company has a single reporting unit.

Accordingly, the impairment assessment for goodwill is performed at the enterprise level.

Goodwill is reviewed for possible impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value.

The carrying value of the reporting unit is reviewed utilizing a combination of the discounted cash flow model and a market value approach.

The estimated fair value of a reporting unit is determined based on assumptions regarding estimated future cash flows, discount rates, long-term growth rates and market values.

The Company monitors for events and circumstances that could negatively impact the key assumptions in determining fair value, including long-term growth rates, profitability, discount rates, volatility in the Company's market capitalization, general industry, and market and macro-economic conditions.

The Company completed its annual assessment on October 1, 2020, and there was no impairment of goodwill at the assessment date.

The goodwill balance was $418.3 million as of December 31, 2020.

We identified goodwill for the Company as a critical audit matter because of the significant judgments made by management to estimate the fair value of the reporting unit, specifically related to the selection of the discount rate and forecasts of future revenue.

Performing audit procedures to evaluate the reasonableness of management's estimates and assumptions related to selection of the

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discount rate and forecasts of future revenue required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasts of future revenue and the selection of the discount rate for the Company's goodwill impairment included the following, among others:

• We tested the effectiveness of controls over management's goodwill impairment evaluations, including those over the forecasts of future revenue and management's selection of the discount rate.

• We evaluated management's ability to accurately forecast revenue by comparing the actual results to management's historical projections from 2019.

• We evaluated the reasonableness of management's forecasted revenue by comparing the forecasts to:

◦ Historical revenue growth.

◦ Historical industry revenue growth rates and revenue growth rates of peer group companies.

◦ Economic forecasts considering the impact of macro-economic conditions.

◦ Internal communications to management and the Board of Directors.

◦ Forecasted information included in analyst and industry reports for the Company and certain of its peer group.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) discount rates by:

◦ Testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculation.

◦ Developing a range of independent estimates and comparing those to the discount rates selected by management.

• We evaluated the impact of changes in management's revenue forecasts from the October 1, 2020 annual measurement date to December 31, 2020.

/s/ Deloitte & Touche LLP

McLean, Virginia

February 27, 2020

March 9, 2021

We have served as the Company's auditor since 2017.

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COMSCORE, INC.

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(In thousands, except share and per share data)

December 31, 2019

December 31, 2018

As of December 31,

Current assets:

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Accounts receivable, net of allowances of $ 2,757 and $ 1,919 , respectively ($ 4,045 and $ 2,698 of accounts receivable attributable to related parties, respectively)

Prepaid expenses and other current assets ($1,180 and $484 attributable to related parties)

69,379 71,853

Prepaid expenses and other current assets ($ 1,496 and $ 1,180 attributable to related parties, respectively)

16,910 15,357

Total current assets 137,030 153,983

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Operating right-of-use assets 28,959 36,689

Other non-current assets

Deferred tax assets

Goodwill 418,327 416,418

Intangible assets, net 52,340 79,559

Deferred tax assets 2,741 2,374

Other non-current assets 7,600 2,979

Total assets $ 677,970 $ 723,695

Liabilities and Stockholders' Equity

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Accounts payable ($ 2,817 and $ 2,510 attributable to related parties, respectively)

$ 36,640 $ 44,804

Accrued expenses ($ 835 and $ 6,902 attributable to related parties, respectively)

Accrued litigation settlements

Contract liability ($1,519 and $2,521 attributable to related parties, respectively)

48,380 55,507

Contract liabilities ($ 3,538 and $ 1,519 attributable to related parties, respectively)

58,529 58,158

Customer advances 12,477 9,886

Warrant liability

Current portion of secured term note 12,644 —

Current operating lease liabilities 7,024 6,764

Deferred rent

Warrants liability 2,831 7,725

Other current liabilities 5,750 7,393

Total current liabilities 184,275 190,237

Secured term note

Financing derivatives (related party)

Senior secured convertible notes (related party) 192,895 184,075

Financing derivatives (related party) 11,300 21,587

Non-current operating lease liabilities 36,127 42,497

Deferred rent

Non-current contract liabilities 4,156 291

Deferred tax liabilities 627 287

Other non-current liabilities ($- and $251 attributable to related parties)

Non-current portion of secured term note — 12,463

Other non-current liabilities ($ 6,120 and $ — attributable to related parties, respectively)

19,600 13,284

Total liabilities 448,980 464,721

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Treasury stock, at cost, and 6,764,796 shares as of December 31, 2020 and 2019

( 229,984 ) ( 229,984 )

Total stockholders' equity 228,990 258,974

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See accompanying Notes to Consolidated Financial Statements.

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COMSCORE, INC.

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Years Ended December 31,

2020 2019 2018

$ 356,036 $ 388,645 $ 419,482

Cost of revenues (1) (2) (3)

180,712 199,622 200,220

Selling and marketing (1) (3)

70,220 89,145 108,395

Research and development (1) (3)

38,706 61,802 76,979

General and administrative (1) (2) (3)

Investigation and audit related (1)

55,783 66,419 84,535

Amortization of intangible assets 27,219 30,076 32,864

Impairment of right-of-use and long-lived assets 4,671 — —

Impairment of goodwill — 224,272 —

Impairment of intangible asset — 17,308 —

Settlement of litigation, net

Investigation and audit related — 4,305 38,338

Restructuring (3)

— 3,263 11,837

Settlement of litigation, net — 2,900 5,250

Total expenses from operations 377,311 699,112 558,418

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Interest expense, net (2)

( 35,805 ) ( 31,526 ) ( 16,465 )

Other income (expense), net 14,554 1,654 ( 1,464 )

Gain (loss) from foreign currency transactions

(Loss) gain from foreign currency transactions ( 4,490 ) 336 1,303

Loss before income taxes ( 47,016 ) ( 340,003 ) ( 155,562 )

Income tax benefit (provision)

Income tax (provision) benefit ( 902 ) 1,007 ( 3,706 )

Net loss $ ( 47,918 ) $ ( 338,996 ) $ ( 159,268 )

Net loss per common share:

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Comprehensive loss:

Other comprehensive (loss) income:

Net loss $ ( 47,918 ) $ ( 338,996 ) $ ( 159,268 )

Other comprehensive income (loss):

Foreign currency cumulative translation adjustment 5,303 ( 1,712 ) ( 4,397 )

Total comprehensive loss $ ( 42,615 ) $ ( 340,708 ) $ ( 163,665 )

(1) Excludes amortization of intangible assets, which is presented separately in the Consolidated Statements of Operations and Comprehensive Loss.

(2) Transactions with related parties are included in the line items above as follows (refer to Footnote 13 , Related Party Transactions, of the Notes to Consolidated Financial Statements for additional information):

Years Ended December 31,

2020 2019 2018

Revenues $ 13,314 $ 17,464 $ 12,662

Cost of revenues 10,094 10,490 11,239

Selling and marketing

Research and development

General and administrative 316 776 650

Investigation and audit related

Interest (expense) income, net

Interest expense, net ( 24,480 ) ( 23,494 ) ( 16,023 )

(3) Stock-based compensation expense is included in the line items above as follows:

Years Ended December 31,

2020 2019 2018

Cost of revenues $ 1,288 $ 1,852 $ 6,349

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Total stock-based compensation expense $ 10,073 $ 16,558 $ 37,619

(3) Excludes amortization of intangible assets, which is presented separately in the Consolidated Statements of Operations and Comprehensive Loss.

See accompanying Notes to Consolidated Financial Statements.

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COMSCORE, INC.

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(In thousands, except share data)

Common Stock Additional

Capital Accumulated

Comprehensive

Treasury stock, at cost

Loss Accumulated

Deficit Treasury stock, at cost Total

Stockholders'

Balance as of December 31, 2016

Foreign currency translation adjustment

Unrealized gain on marketable securities, net of tax

Subscription Receivable

Restricted stock units vested

Payments for taxes related to net share settlement of equity awards

Stock-based compensation

Shares Amount

Balance as of December 31, 2017 57,289,047 $ 60 $ 1,407,717 $ ( 6,224 ) $ ( 609,091 ) $ ( 135,970 ) $ 656,492

Adoption of ASC 606 — — — — ( 736 ) — ( 736 )

Net loss — — — — ( 159,268 ) — ( 159,268 )

Foreign currency translation adjustment — — — ( 4,397 ) — — ( 4,397 )

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Adoption of ASC 842 — — — — ( 46 ) — ( 46 )

Net loss — — — — ( 338,996 ) — ( 338,996 )

Foreign currency translation adjustment — — — ( 1,712 ) — — ( 1,712 )

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Balance as of December 31, 2019 70,065,130 $ 70 $ 1,609,358 $ ( 12,333 ) $ ( 1,108,137 ) $ ( 229,984 ) $ 258,974

Net loss — — — — ( 47,918 ) — ( 47,918 )

Foreign currency translation adjustment — — — 5,303 — — 5,303

Exercise of Common Stock options, net 75,000 — 143 — — — 143

Interest paid in Common Stock 1,474,201 2 3,058 — — — 3,060

Restricted stock units vested 1,363,152 1 3,064 — — — 3,065

Payments for taxes related to net share settlement of equity awards ( 38,937 ) — ( 117 ) — — — ( 117 )

Stock-based compensation — — 6,480 — — — 6,480

Balance as of December 31, 2020 72,938,546 $ 73 $ 1,621,986 $ ( 7,030 ) $ ( 1,156,055 ) $ ( 229,984 ) $ 228,990

See accompanying Notes to Consolidated Financial Statements.

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COMSCORE, INC.

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Years Ended December 31,

2020 2019 2018

Operating activities :

Adjustments to reconcile net loss to net cash used in operating activities:

Non-cash operating lease expense

Amortization expense of finance leases

Net loss $ ( 47,918 ) $ ( 338,996 ) $ ( 159,268 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Amortization of intangible assets 27,219 30,076 32,864

Impairment of goodwill

Impairment of intangible asset

Depreciation 14,064 12,778 17,259

Stock-based compensation expense 10,073 16,558 37,619

Non-cash interest expense on senior secured convertible notes (related party) 9,180 17,374 —

Accretion of debt discount 7,571 6,242 4,812

Non-cash operating lease expense 5,555 5,369 —

Impairment of right-of-use and long-lived assets 4,671 — —

Provision for bad debts 1,693 727 966

Stock-based compensation

Deferred tax (benefit) provision

Amortization expense of finance leases 1,652 2,413 —

Amortization of deferred financing costs 1,560 1,078 955

Change in fair value of interest make-whole derivative 871 — —

Deferred tax provision (benefit) 10 ( 3,727 ) 2,019

Change in fair value of financing derivatives ( 10,287 ) ( 5,100 ) 14,226

Change in fair value of warrant liability ( 4,894 ) 2,411 —

Impairment of goodwill — 224,272 —

Impairment of intangible asset — 17,308 —

Change in fair value of investment in equity securities — 2,324 ( 1,443 )

Non-cash interest expense on senior secured convertible notes (related party)

Accretion of debt discount

Amortization of deferred financing costs

Gain on forgiveness of obligation

Accrued litigation settlements to be settled in Common Stock

Other 37 ( 2 ) 568

Changes in operating assets and liabilities:

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Prepaid expenses and other assets ( 6,283 ) 2,198 ( 2,891 )

Insurance recoverable on litigation settlements

Accounts payable, accrued expenses, and other liabilities ( 17,095 ) 10,438 ( 4,955 )

Contract liability and customer advances 7,341 ( 3,477 ) ( 30,013 )

Deferred rent

Current operating lease liability ( 6,327 ) ( 7,638 ) —

Net cash used in operating activities

Insurance recoverable on litigation settlements — — 10,000

Net cash provided by (used in) operating activities 717 ( 4,636 ) ( 72,575 )

Investing activities :

Sales of marketable securities

Purchases of property and equipment

Capitalized internal-use software costs ( 15,078 ) ( 11,500 ) ( 9,608 )

Net cash (used in) provided by investing activities

Purchases of property and equipment ( 477 ) ( 2,736 ) ( 4,206 )

Proceeds from sale of investment in equity securities — 3,776 —

Net cash used in investing activities ( 15,555 ) ( 10,460 ) ( 13,814 )

Financing activities :

Proceeds from borrowings on senior secured convertible notes (related party)

Debt issuance costs

Principal payments on finance leases ( 1,754 ) ( 2,535 ) —

Principal payments on capital lease and software license arrangements ( 367 ) ( 2,070 ) ( 9,006 )

Payments for taxes related to net share settlement of equity awards ( 117 ) ( 1,267 ) ( 5,263 )

Proceeds from the exercise of stock options 142 1,191 2,855

Proceeds from private placement, net of issuance costs paid — 19,752 —

Proceeds from secured term note — 13,000 —

Secured term note issuance costs — ( 350 ) —

Proceeds from private placement, net of issuance costs paid

Financing proceeds received on subscription receivable (related party)

Proceeds from sale-leaseback financing transaction — 4,252 —

Proceeds from the exercise of stock options

Payments for taxes related to net share settlement of equity awards

Principal payments on finance leases

Principal payments on capital lease and software license arrangements

Net cash provided by (used in) financing activities

Proceeds from borrowings on senior secured convertible notes (related party) — — 100,000

Senior secured convertible notes issuance costs — — ( 5,146 )

Financing proceeds received on subscription receivable (related party) — — 9,679

Net cash (used in) provided by financing activities ( 2,096 ) 31,973 93,119

Effect of exchange rate changes on cash, cash equivalents and restricted cash 902 ( 302 ) ( 1,657 )

Net increase (decrease) in cash, cash equivalents and restricted cash

Net (decrease) increase in cash, cash equivalents and restricted cash ( 16,032 ) 16,575 5,073

Cash, cash equivalents and restricted cash at beginning of period 66,773 50,198 45,125

Cash, cash equivalents and restricted cash at end of period $ 50,741 $ 66,773 $ 50,198

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As of December 31,

2020 2019 2018

Cash and cash equivalents $ 31,126 $ 46,590 $ 44,096

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Total cash, cash equivalents and restricted cash $ 50,741 $ 66,773 $ 50,198

Years Ended December 31,

2020 2019 2018

Supplemental cash flow disclosures :

Interest paid ($ 21,420 , $ 3,046 and $ 7,484 of interest paid in 2020, 2019, and 2018 attributable to related party, respectively)

$ 23,792 $ 4,081 $ 8,136

Income taxes paid, net of refunds 1,182 1,191 1,260

Supplemental non-cash activities :

Settlement of restricted stock unit liability $ 3,065 $ 4,611 $ 15,818

Assets acquired through finance leases and software obligations 1,109 4,277 1,737

Leasehold improvements acquired through lease incentives

Change in accounts payable and accrued expenses related to capital expenditures 395 456 1,149

Leasehold improvements acquired through lease incentives 394 2,050 —

Fair value of warrants issued in private placement — 10,798 —

Repurchase of Common Stock in exchange for senior secured convertible notes — — 94,021

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Insurance recovery on litigation settlement — — 27,232

Common Stock warrants issued with senior secured convertible notes

Fair value of financing derivatives issued with senior secured convertible notes — — 17,574

Common Stock warrants issued with senior secured convertible notes — — 5,733

Notes Option derivative liability settlement — — 5,700

Modification of debt in consideration for the reduction of the senior secured convertible note minimum cash balance requirement — — 4,000

Settlement of restricted stock unit liability

Fair value of warrants issued in private placement

See accompanying Notes to Consolidated Financial Statements.

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COMSCORE, INC.

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Operating segments are defined as components of a business that can earn revenues and incur expenses for which discrete financial information is available that is evaluated on a regular basis by the chief operating decision maker ("CODM").

The Company's CODM is its principal executive officer, who decides how to allocate resources and assess performance.

The Company's CODM is its Chief Executive Officer, who decides how to allocate resources and assess performance.

The Company has one operating segment.

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The Company's CODM reviews consolidated results of operations to make decisions, allocate resources and assess performance and does not evaluate the profit or loss from any separate geography or product line.

On March 31, 2019, Bryan Wiener resigned as the Company's Chief Executive Officer ("CEO") and director and Sarah Hofstetter resigned as the Company's President, effective immediately.

On the same day, the Company appointed Dale Fuller as Interim CEO, and Mr.

Fuller assumed the role of CODM.

On November 4, 2019, Mr.

Fuller resigned as Interim CEO and William Livek was appointed as CEO and Executive Vice Chairman, and Mr.

Livek assumed the role of CODM.

Uses and Sources of Liquidity and Management's Plans

The Company's primary need for liquidity is to fund working capital requirements and capital expenditures of its business.

Since 2017, the Company has implemented certain organizational restructuring plans to reduce staffing levels, exit certain geographic regions, and rationalize its leased properties, to enable the Company to decrease its global costs, more effectively align resources to business priorities, and maintain compliance with its financial covenants, as described in Footnote 4 , Long-Term Debt .

For additional information related to the restructuring plans, refer to Footnote 16 , Organizational Restructuring .

The Company has secured the following long-term financing in order to increase its available working capital and fund ongoing operations:

During 2018 , the Company entered into certain agreements with funds affiliated with or managed by Starboard Value LP (collectively, "Starboard"), pursuant to which the Company issued and sold to Starboard a total of $ 204.0 million in senior secured convertible notes as well as warrants to purchase shares of the Company's common stock, par value $ 0.001 per share (the "Common Stock") in exchange for $ 100.0 million in cash and 4,000,000 shares of Common Stock.

For additional information, refer to Footnote 4 , Long-term Debt .

• During 2018, the Company entered into certain agreements with funds affiliated with or managed by Starboard Value LP (collectively, "Starboard"), pursuant to which the Company issued and sold to Starboard a total of $ 204.0 million in senior secured convertible notes (the "Notes") as well as warrants to purchase shares of the Company's common stock, par value $ 0.001 per share (the "Common Stock") in exchange for $ 100.0 million in cash and 4,000,000 shares of Common Stock.

For additional information, refer to Footnote 4 , Debt .

• On June 26, 2019, the Company issued 2,728,513 shares of Common Stock and four series of warrants in a private placement to CVI Investments, Inc.

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For additional information, refer to Footnote 5 , Stockholders' Equity.

On December 31, 2019 , the Company's wholly owned subsidiary, Rentrak B.V., entered into an agreement with several third parties (collectively the "Noteholder") for a secured term note (the "Secured Term Note") in exchange for gross proceeds $ 13.0 million .

• On December 31, 2019, the Company's wholly owned subsidiary, Rentrak B.V., entered into an agreement with several third parties (collectively the "Noteholder") for a secured promissory note (the "Secured Term Note") in exchange for gross proceeds of $ 13.0 million.

The Secured Term Note matures on December 31, 2021, is cash collateralized, and has an annual interest rate of 9.75 % that is payable monthly in arrears.

For additional information, refer to Footnote 4 , Long-term Debt .

As of December 31, 2019, the Company was in compliance with its covenants under the senior secured convertible notes and the Secured Term Note.

Liquidity could be negatively affected by a decrease in demand for the Company's products and services or additional losses from operations, as well as payment of expenses incurred in prior periods.

Liquidity could also be negatively affected if the Company elects to pay its interest liability on the senior secured convertible notes (currently set at 12.0 % per year) in cash in lieu of Common Stock.

Finally, liquidity could be significantly affected if the Company is unable to maintain compliance with the affirmative and negative covenants in the senior secured convertible notes and the Secured Term Note, including the minimum cash balance requirements.

The Company continues to be focused on maintaining flexibility in terms of sources, amounts, and the timing of any potential financing, refinancing or strategic transaction, in order to best position the Company for future success.

The Company believes that its sources of funding, after taking into account the restructuring and financing transactions described above, as well as the availability of the rights offering described in Footnote 4 , Long-term Debt , will be sufficient to satisfy the Company's estimated liquidity needs and allow the Company to remain in compliance with its covenants under the senior secured convertible notes and the Secured Term Note for at least one year after the date that these financial statements are issued.

However, the Company cannot

predict with certainty the outcome of its actions to generate liquidity, including the availability of additional financing, or whether such actions would generate the expected liquidity as currently planned.

For additional information, refer to Footnote 4 , Debt .

As of December 31, 2020, the Company was in compliance with its covenants under the Notes and the Secured Term Note.

On January 7, 2021, the Company entered into separate Securities Purchase Agreements with each of Charter Communications Holding Company, LLC ("Charter"), Qurate Retail, Inc.

("Qurate") and Pine Investor, LLC ("Pine"), pursuant to which, at the closing of the transactions contemplated thereby (the "Transactions"), the Company will issue and sell (a) to Charter, 27,509,203 shares of Series B Convertible Preferred Stock in exchange for $ 68.0 million, (b) to Qurate, 27,509,203 shares of Series B Convertible Preferred Stock in exchange for $ 68.0 million and (c) to Pine, 27,509,203 shares of Series B Convertible Preferred Stock in exchange for $ 68.0 million.

The proceeds of the Transactions will be used to repay the Notes issued to Starboard.

Additionally, in connection with the closing, the Company expects to repay the Secured Term Note and certain transaction-related expenses with cash from its balance sheet.

The Transactions and related matters were approved by the Company's stockholders on March 9, 2021 and are expected to be completed on or around March 10, 2021.

Repayment of the Notes and the Secured Term Note will result in the termination of the affirmative and negative covenants set forth in these instruments, including the Notes covenant requiring maintenance of certain minimum cash balances (currently $ 40.0 million), and is expected to improve the Company's financial position and liquidity.

As a result, the Company believes the approved Transactions will provide it with adequate sources of funding to satisfy its estimated liquidity needs for at least one year after the date that these financial statements are issued.

However, the Company cannot predict with certainty the outcome of its actions to generate liquidity or whether such actions would generate the expected liquidity as currently planned.

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Summary of Significant Accounting Policies

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Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation.

Specifically, current capital lease obligations have been aggregated within other current liabilities on the Consolidated Balance Sheets.

Non-current capital lease obligations have been aggregated within other non-current liabilities on the Consolidated Balance Sheets.

Specifically, current accrued litigation settlements have been aggregated within other current liabilities on the Consolidated Balance Sheets.

In addition, non-current contract liabilities are now separately reported from other non-current liabilities on the Consolidated Balance Sheets.

Use of Estimates and Judgments in the Preparation of the Consolidated Financial Statements

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Fair Value of Financial Instruments

Due to their short-term nature, the carrying amounts reported in the Company's Consolidated Financial Statements approximate the fair value for cash and cash equivalents, restricted cash including certificates of deposit, accounts receivable, accounts payable

and accrued expenses, the current portion of contract liability and customer advances.

The carrying values of finance lease obligations approximate their fair value as the interest rates for the lease term approximate market rates (Level 2).

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The fair values of the Company's financing derivatives are estimated using forward projections and are discounted back at rates commensurate with the remaining term of the related derivatives.

The fair value of the interest reset liability is determined based on an estimate for the Company's credit rating, the premium attributable to the payment-in-kind feature of the senior secured convertible notes ("Notes"), and premium estimates for company-specific risk factors (together, the credit adjusted discount rate), the Company's Common Stock price at measurement date, the observable volatility of the Common Stock and risk-free rate.

The fair value of the interest reset liability is determined based on an estimate for the Company's credit rating, the premium attributable to the payment-in-kind feature of the Notes, and premium estimates for company-specific risk factors (together, the credit adjusted discount rate), the Company's Common Stock price at measurement date, the observable volatility of the Common Stock and risk-free rate.

The fair value of the change in control redemption derivative liabilities is determined based on the probability of change of control, credit adjusted discount rate, and risk-free rate.

The fair value of the Notes is determined using the credit adjusted discount rate, the Company's Common Stock price at the valuation date, risk-free rate and volatility commensurate with the remaining term of the Notes.

The fair value of the Company's Secured Term Note is determined using future cash flows that are discounted back at a risk-free rate commensurate with the expected remaining term of the debt.

The fair value of the Company's interest make-whole derivative is estimated using forward projections of estimated cash payments at the closing date discounted back to the valuation date at rates commensurate with the estimated remaining term of the related derivative.

Cash and Cash Equivalents

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Restricted Cash

Restricted cash represents the Company's cash collateral requirements under the Secured Term Note, outstanding letters of credit, international payroll processing exposures, and corporate credit card obligations.

As of December 31, 2019 and 2018, the Company had $ 20.2 million and $ 6.1 million of restricted cash, respectively, of which $ 1.0 million was held in certificates of deposit as of both December 31, 2019 and 2018.

As of December 31, 2019, certificates of deposit in the amount of $ 0.9 million will mature within the next one year .

Restricted cash represents the Company's cash collateral requirements under the Secured Term Note, outstanding letters of credit, and corporate credit card obligations.

As of December 31, 2020 and 2019, the Company had $ 19.6 million and $ 20.2 million of restricted cash, respectively, of which $ 0.5 million and $ 1.0 million was held in certificates of deposit as of December 31, 2020 and 2019, respectively.

As of December 31, 2020, certificates of deposit in the amount of $ 0.1 million will mature within one year.

Allowance for Doubtful Accounts

The Company generally grants uncollateralized credit terms to its customers and maintains an allowance for doubtful accounts to reserve for uncollectible receivables.

Allowances are based on management's judgment, which considers historical collection experience, a specific review of all significant outstanding receivables, an assessment of company-specific credit conditions and general economic conditions.

Allowances are based on management's judgment, which considers historical collection experience adjusted for current conditions or expected future conditions based on reasonable and supportable forecasts, a specific review of all significant outstanding receivables, an assessment of company-specific credit conditions and general economic conditions.

For 2020, management considered the impact of the COVID-19 pandemic, including customer payment delays and requests from customers to revise contractual payment terms, in determining the Company's allowance for doubtful accounts which resulted in an increase of the allowance.

The following is a summary of the allowance for doubtful accounts:

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Beginning Balance $ ( 1,919 ) $ ( 1,597 )

Bad debt expense ( 1,693 ) ( 727 )

Recoveries ( 300 ) ( 481 )

Write-offs 1,155 886

Ending Balance $ ( 2,757 ) $ ( 1,919 )

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The costs to purchase and develop internal-use software are capitalized from the time that the preliminary project stage is completed, and it is considered probable that the software will be used to perform the function intended, until the time the software is placed in service for its intended use.

Any costs incurred during

subsequent efforts to upgrade and enhance the functionality of the software are also capitalized.

Once this software is ready for use in the Company's products, these costs are amortized on a straight-line basis over the estimated useful life of the software, which is typically assessed to be 3 to 5 years.

During the years ended December 31, 2019 and 2018 the Company capitalized $ 11.9 million and $ 9.6 million in internal-use software costs, respectively.

The Company depreciated $ 4.8 million and $ 1.3 million in capitalized internal-use software costs during the years ended December 31, 2019 and 2018, respectively.

No amounts were capitalized in 2017.

Any costs incurred during subsequent efforts to upgrade and enhance the functionality of the software are also capitalized.

Once this software is ready for use in

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the Company's products, these costs are amortized on a straight-line basis over the estimated useful life of the software, which is typically assessed to be 3 to 5 years.

During the years ended December 31, 2020, 2019 and 2018 the Company capitalized $ 15.0 million, $ 11.9 million, and $ 9.6 million in internal-use software costs, respectively.

The Company depreciated $ 9.1 million, $ 4.8 million and $ 1.3 million in capitalized internal-use software costs during the years ended December 31, 2020 2019, and 2018 respectively.

Certain costs incurred for implementation, setup, and other upfront activities in a hosting arrangement that is a service contract are capitalized within other non-current assets in the Consolidated Balance Sheets.

Once the implementation has been completed, the capitalized amounts are amortized on a straight-line basis over the remaining noncancelable term of the hosting arrangement, including options to extend the hosting arrangement when it is reasonably certain the options will be exercised.

The Company capitalized $ 1.0 million of implementation costs in 2019.

No expenses were recognized in 2019, 2018 or 2017.

The Company capitalized $ 3.2 million and $ 1.0 million of implementation costs during the years ended December 31, 2020 and 2019.

Amortization of these costs has not commenced as the implementation activities are not complete.

Goodwill and Intangible Assets

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Additionally, the Company considers income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss.

The Company monitors for events and circumstances that could negatively impact the key assumptions in determining fair value, including long-term revenue growth projections, profitability, discount rates, volatility in the Company's market capitalization, general industry, and market and macro-economic conditions.

The Company monitors for events and circumstances that could negatively impact the key assumptions in determining fair value, including long-term growth projections, profitability, discount rates, volatility in the Company's market capitalization, general industry, and market and macro-economic conditions.

It is possible that future changes in such circumstances, or in the variables associated with the judgments, assumptions and estimates used in assessing the fair value of the reporting unit, would require the Company to record a non-cash impairment charge.

The Company completed its annual assessment on October 1, 2020, and there was no impairment of goodwill at the assessment date.

The Company performed an interim analysis as of June 30, 2019 and determined that goodwill was then impaired.

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The Company completed its annual assessment on October 1, 2019, and there was no additional impairment of goodwill at the assessment date.

There were no goodwill impairment charges recognized during the years ended December 31, 2018 and 2017.

No goodwill impairment charges were recognized during the year ended December 31, 2018.

Intangible assets with finite lives are generally amortized using the straight-line method over the following useful lives:

Useful Lives (Years)

Acquired methodologies/technology

Acquired methodologies and technology 2 to 7

Acquired software 3

Customer relationships

Intellectual property

Impairment of Long-Lived Assets

Customer relationships 3 to 7

Intellectual property 2 to 13

Trade Names 2 to 6

Impairment of Right-of-use and Long-Lived Assets

The Company's long-lived assets consist of property and equipment and finite-lived intangible assets.

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If an indication of impairment is present, the Company compares the estimated undiscounted future cash flows to be generated by the asset group to its carrying amount.

Recoverability measurement and estimation of undiscounted cash flows are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

Recoverability measurement and estimation of undiscounted cash flows are

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grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

If the undiscounted future cash flows are less than the carrying amount of the asset group, the Company records an impairment loss equal to the excess of the asset group's carrying amount over its fair value.

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Refer to Footnote 9 , Goodwill and Intangible Assets for further information.

There were no impairment charges recognized during the years ended December 31, 2018 and 2017 or subsequent to June 30, 2019.

The Company applies the provisions of Accounting Standards Codification ("ASC") 360, Property, Plant and Equipment , to determine whether right-of-use ("ROU") assets and related long-lived assets may be impaired.

The Company evaluates its ROU and long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of such assets may not be recoverable.

For facility lease ROU and related long-lived assets, the Company compares the estimated undiscounted cash flows generated by a sublease to the current carrying value of the ROU and related long-lived assets.

If the undiscounted cash flows are less than the carrying value of the ROU and related long-lived assets, the Company records an impairment loss equal to the excess of the ROU and long-lived assets' carrying value over their fair value consistent with other long-lived assets.

The Company performed an interim analysis as of March 31, 2020, as changes in market conditions indicated the carrying value of certain facility lease ROU and other long-lived assets may not be recoverable, and determined that certain ROU assets, and related leasehold improvements, were impaired.

The Company recorded a $ 4.7 million non-cash impairment charge related to its ROU assets, and related leasehold improvements, with corresponding reductions of $ 2.8 million and $ 1.9 million to the operating right-of-use assets and property and equipment, net line items, respectively, in the Consolidated Balance Sheet.

The impairment charge was driven by changes in the Company's projected undiscounted cash flows for certain properties, primarily as a result of changes in the real estate market related to the COVID-19 pandemic, that led to an increase in the estimated marketing time, and a reduction of expected receipts, for properties on the market for sublease.

The fair value of these ROU assets, and related leasehold improvements, was estimated using an income approach and a discount rate of 12 %.

Although the Company believes that the carrying values of its long-lived assets are appropriately stated as of December 31, 2020, future changes in strategy or market conditions, significant technological developments or significant changes in legal or regulatory factors could significantly impact these judgments and require adjustments to recorded asset balances.

Accounting for Warrants

In June 2019, the Company issued warrants to CVI in connection with the private placement described above.

In 2019, the Company issued warrants to CVI in connection with the private placement described in Footnote 1 , Organization .

The warrants were determined to be freestanding financial instruments that qualify for liability treatment as a result of a net cash settlement feature associated with a cap on the issuance of shares under certain circumstances.

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therefore, the sale of this investment did not result in a gain or loss in the Consolidated Statements of Operations and Comprehensive Loss.

The Company applies the provisions of Accounting Standards Codification ("ASC") 842, Leases .

The Company's lease portfolio is comprised of three major classes.

The Company adopted ASC 842, Leases , with an initial application date of January 1, 2019, using the modified retrospective method with optional transaction relief, under which the Company did not restate prior comparative periods and instead recorded an adjustment to stockholders' equity as of the date of initial implementation for the cumulative impact of adoption.

The adoption of ASC 842 did not have a material impact on the Consolidated Statements of Operations and Comprehensive Loss.

The Company's lease portfolio is comprised of two major classes.

Real estate leases, which are the majority of the Company's leased assets, are accounted for as operating leases.

Computer equipment and automobile leases, which comprise the remaining two major lease classes in the Company's portfolio, are generally accounted for as finance leases.

Computer equipment leases are generally accounted for as finance leases.

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The Company determines if an arrangement is a lease at inception by evaluating whether the arrangement conveys the right to use an identified asset and whether the Company obtains substantially all of the economic benefits from and has the ability to direct the use of the asset.

Right-of-use ("ROU") assets and lease liabilities are recognized at the lease commencement date based on the present value of the future minimum lease payments over the lease term.

ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of the future minimum lease payments over the lease term.

Operating ROU assets also include the impact of any lease incentives.

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The Company records a financing obligation, and the assets that are included in the failed sale-leaseback transaction remain on the Consolidated Balance Sheets until the end of the lease term.

Change in Accounting Policy

The Company adopted ASC 842, with an initial application date of January 1, 2019, using the modified retrospective transition method with optional transition relief, under which the Company did not restate prior comparative periods and instead recorded an adjustment to stockholders' equity as of the date of initial implementation for the cumulative impact of adoption.

As part of the transition, the Company implemented new internal controls and key system functionality to enable the preparation of financial information on adoption, and elected the following practical expedients:

Not to reassess whether any expired or existing contracts are or contain leases.

Not to reassess the lease classification for any expired or existing leases.

Not to reassess initial direct costs for any existing leases.

The hindsight practical expedient in determining the lease term.

The practical expedient whereby the lease and non-lease components will not be separated for all classes of assets.

Not to record ROU assets and corresponding lease liabilities with a lease term of 12 months or less.

The Company has elected to net its sublease exit liabilities recognized under ASC 420, Exit or Disposal Cost Obligations as an adjustment to the opening ROU asset for the corresponding head lease established upon the adoption of ASC 842.

Sublease exit liabilities had a carrying value of $ 2.5 million as of December 31, 2018.

Upon adoption, ASC 842 had an impact on the Consolidated Balance Sheets but did not have an impact on the Consolidated Statements of Operations and Comprehensive Loss.

The adoption of ASC 842 impacted the Company's previously reported results as follows:

(In thousands)

As previously reported as of December 31, 2018

New lease standard adjustments

As adjusted as of January 1, 2019

Operating right-of-use assets

Property and equipment, net

Current capital lease obligations

Current restructuring accrual

Current deferred rent

Current operating lease liabilities

Non-current restructuring accrual

Non-current deferred rent

Non-current capital lease obligations

Non-current operating lease liabilities

Stockholders' equity

Foreign Currency

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The gain or loss resulting from the process of translating a foreign subsidiary's functional currency financial statements into U.S.

Dollars ("USD") is reflected as foreign currency cumulative translation adjustment and reported as a component of accumulated other comprehensive loss.

Dollars ("USD") is reflected as foreign currency cumulative translation adjustment and reported as a component of accumulated other

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comprehensive loss.

The translation adjustment for intercompany foreign currency loans that are permanent in nature are also recorded as accumulated other comprehensive loss.

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Once the Company identifies the performance obligations, the Company will determine the transaction price based on contractually fixed amounts and an estimate of variable consideration.

The Company allocates the transaction price to each performance obligation based on relative standalone selling price ("SSP").

The Company allocates the transaction price to each performance obligation based on relative SSP.

Judgment is exercised to determine the SSP of each distinct performance obligation.

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Some sources of variable consideration such as refunds, penalties, or allowances will reduce transaction price.

In some instances, the Company may have non-cash consideration or elements of consideration payable to the customer, which will also be included in the transaction price.

These sources of variable consideration are relatively infrequent and generally not significant.

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The Company recognizes revenue net of sales taxes remitted to government authorities.

In general, transaction price is determined by estimating the fixed amount of consideration to which the Company is entitled for transfer of goods and services and all relevant

sources and components of variable consideration.

In general, transaction price is determined by estimating the fixed amount of consideration to which the Company is entitled for transfer of goods and services and all relevant sources and components of variable consideration.

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If a product is sold outside of the narrow band of prices, it will be assigned the midpoint of the narrow band for purposes of allocating transaction price on a relative SSP basis.

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Customers may have the right to cancel their contracts by providing a written notice of cancellation, although most subscription-based contracts are non-cancelable.

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The Company assesses each contract to determine if the revenue and expense should be presented gross or net.

In some instances, the Company may provide free distinct goods or services as a form of non-cash consideration to the counterparty.

The Company recognizes revenue for these contracts to the extent that SSP is established for distinct services provided.

Any excess consideration above the established SSP of services is presented as an offset to cost of revenues in the Consolidated Statements of Operations and Comprehensive Loss.

Nonmonetary transactions represent data exchanges, which may consist of digital usage and general demographic data.

The data obtained through nonmonetary transactions differs from the data provided by the Company in the exchange.

Under ASC 606, the transaction price of a nonmonetary exchange that has commercial substance is based on the fair value of the non-cash consideration

If an entity cannot reasonably estimate the fair value of the non-cash consideration received, then it uses the estimated selling price of the promised goods or services.

None of the nonmonetary transactions entered into by the Company met the requirements to recognize revenue or expense.

Therefore, these nonmonetary transactions are not reflected in the Consolidated Financial Statements.

Contract Balances

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These costs are included in cost of revenue and are recognized in the same manner as the corresponding performance obligation.

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Cost of Revenues

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Selling and marketing expenses consist primarily of salaries, commissions, stock-based compensation, benefits and bonuses for personnel associated with sales and marketing activities, as well as costs related to online and offline advertising, product management, seminars, promotional materials, public relations, other sales and marketing programs, and allocated overhead, including rent and other facilities related costs, and depreciation.

Research and Development

Research and development expenses consist primarily of salaries, stock-based compensation, benefits and related costs for personnel associated with research and development activities, as well as allocated overhead, including rent and other facilities related costs, and depreciation.

General and Administrative

General and administrative expenses consist primarily of salaries, stock-based compensation, benefits and related costs for executive management, finance, accounting, human capital, legal, information technology and other administrative functions, as well as professional fees and allocated overhead, including rent and other facilities related costs, depreciation and expenses incurred for other general corporate purposes.

Research and Development

Investigation and Audit Related

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Change in fair value of warrants liability 4,894 ( 2,411 ) —

Change in fair value of interest make-whole derivative ( 871 ) — —

Change in fair value of investment in equity securities — ( 2,324 ) 1,443

Transition services agreement income — 534 9,029

Gain on forgiveness of obligation

Other 244 755 2,290

Total other income (expense), net $ 14,554 $ 1,654 $ ( 1,464 )

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With respect to accounts receivable, credit risk is mitigated by the Company's ongoing credit evaluation of its customers' financial condition.

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Debt Issuance Costs

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The determination of the fair value of the Company's stock option awards is based on a variety of factors, including, but not limited to, the Company's Common Stock price, risk-free rate, expected stock price volatility over the expected life of awards, dividend yield and actual and projected exercise behavior.

Additionally, the

Company has estimated forfeitures for stock-based awards at the dates of grant based on historical experience and adjusted for future expectation.

Additionally, the Company has estimated forfeitures for stock-based awards at the dates of grant based on historical experience and adjusted for future expectation.

The Company performs a review of the forfeiture rate assumption at least annually or as deemed necessary if there are changes that could potentially significantly impact the future rate of forfeiture of its stock-based awards.

The forfeiture estimate is revised as necessary if actual forfeitures differ from these estimates.

The Company issues stock options with a vesting period based solely upon the passage of time (service vesting).

In considering expected exercise behavior the Company applies the simplified method for plain-vanilla options due to the lack of significant historical exercise experience.

For non-employee options that do not qualify as plain-vanilla the Company generally elects to apply the contractual term of the award.

The Company issues RSU awards with restrictions that lapse upon the passage of time (service vesting), achieving performance targets, fulfillment of market conditions or a combination thereof.

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For awards with performance conditions only, or performance and service conditions, the Company starts recognizing compensation cost over the remaining service period when it is probable the performance conditions will be met.

Stock awards that contain performance vesting conditions are excluded from diluted earnings per share computations until the contingency is met as of the end of that reporting period.

For awards with market conditions, the Company recognizes compensation cost over the remaining service period, with the effect of the market condition reflected in the calculation of the award's fair value at grant date.

Stock awards that contain performance vesting conditions are excluded from diluted earnings per share ("EPS") computations until the contingency is met as of the end of that reporting period.

The Company values awards with market conditions using certain valuation techniques, such as a Monte Carlo simulation analysis.

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In addition, the Company considers the time frame over which it would take to utilize the deferred tax assets prior to their expiration.

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For certain tax positions, the Company uses a more-likely-than-not threshold based on the technical merits of the tax position taken.

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The Company's policy is to recognize interest and penalties related to income tax matters in income tax expense.

On December 22, 2017, U.S.

In December 2017, U.S.

tax reform legislation known as the Tax Cuts and Jobs Act (the "TCJA") was signed into law.

As of December 31, 2018, the Company's accounting for the TCJA has been completed.

The Company has determined the effects of certain provisions, including but not limited to:

The Company determined the effects of certain provisions, including but not limited to:

a reduction in the corporate tax rate from 35% to 21%, a limitation of the deductibility of certain officers' compensation, a limitation on the current deductibility of net interest expense in excess of 30% of adjusted taxable income, a limitation of net operating losses generated after 2018 to 80% of taxable income, an incremental tax (base erosion anti-abuse or "BEAT") on excessive amounts paid to foreign related parties, and a minimum tax on certain foreign earnings in excess of 10% of the foreign subsidiaries tangible assets (global intangible low-taxed income or "GILTI").

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and the valuation allowance recorded against its U.S.

net deferred tax assets, these provisions have not had a material impact on the Company's financial statements.

net deferred tax assets, these provisions have not had a material impact on the Company's consolidated financial statements.

Loss Per Share

Basic net loss per common share excludes dilution for potential Common Stock issuances and is computed by dividing net loss by the weighted-average number of shares of Common Stock outstanding for the period.

250,000 shares of Common Stock issuable upon the exercise of warrants ("penny warrants") were included in the number of outstanding shares used for the computation of basic net loss per share prior to the exercise of those warrants on April 3, 2019.

In periods with a reported net loss, the effect of anti-dilutive stock options, stock appreciation rights, restricted stock units, senior secured convertible notes and warrants are excluded and diluted loss per share is equal to basic loss per share.

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Years Ended December 31,

2020 2019 2018

Stock options, stock appreciation rights, restricted stock units, senior secured convertible notes and warrants 16,724,946 12,443,032 8,392,748

Comprehensive Loss

Comprehensive loss consists of net loss, foreign currency translation adjustments and the unrealized gains on investments in marketable securities.

Comprehensive loss consists of net loss and foreign currency translation adjustments.

Accounting Standards Recently Adopted

In July 2017, the Financial Accounting Standards Board ("FASB") issued ASU 2017-11, Earnings Per Share, Distinguishing Liabilities from Equity;

Derivatives and Hedging .

This update was issued to address complexities in accounting for certain equity-linked financial instruments containing down round features.

The amendments in ASU 2017-11 change the classification analysis of these financial instruments (or embedded features) so that equity classification is no longer precluded.

The amendments in ASU 2017-11 are effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annual reporting periods.

Early adoption is permitted.

The adoption of the standard did not have an impact on the Consolidated Financial Statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income .

This update was issued to allow companies to reclassify tax effects stranded in accumulated other comprehensive income as a result of tax reform to retained earnings.

Companies that elect to reclassify these amounts must reclassify stranded tax effects for all items accounted for in accumulated other comprehensive income.

The amendments in ASU 2018-02 are effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annual reporting periods.

Early adoption is permitted.

Upon adoption of the standard, the Company did not elect to reclassify stranded tax effects to retained earnings.

The adoption of the standard did not have an impact on the Consolidated Financial Statements.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718):

Improvements to Non-employee Share-Based Payment Accounting.

This update was issued to allow companies to account for share-based payment transactions with non-employees in the same way as share-based payment transactions with employees, with the main differences being the accounting for attribution and a contractual term election for valuing non-employee equity share options.

The amendments in ASU 2018-07 are effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annual reporting periods.

Per ASU 2018-07, this update should be applied on a modified retrospective basis via a cumulative effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

Early adoption is permitted only if the Company has adopted ASC 606, Revenue from Contracts with Customers .

The adoption of the standard did not have an impact on the Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):

Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract .

This update was issued to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

The amendments in ASU 2018-15 are effective for annual periods beginning after December 15, 2019, including interim reporting periods within those annual periods.

Early adoption is permitted.

The Company early adopted this standard, effective January 1, 2019, on a prospective basis.

The adoption did not have an impact on the Consolidated Financial Statements.

In July 2019, the FASB issued ASU 2019-07, Codification Updates to SEC Sections .

This update was issued to align the codification requirements with the issuance of SEC Final Rule Releases No.

33-10532, Disclosure Update and Simplification , and Nos.

and 33-10442, Investment Company Reporting Modernization , as well as other miscellaneous updates, including updates to XBRL taxonomy.

The adoption did not have an impact on the Consolidated Financial Statements.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) , which simplifies the accounting for income taxes by eliminating certain exemptions as well as a few other changes.

The amendments are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

An entity is permitted to early adopt any removed or modified disclosures upon issuance of the update and to delay adoption of the additional disclosures until their effective date.

The Company is in the process of evaluating the guidance but does not believe that the adoption of this standard will have a material impact on the Consolidated Financial Statements or related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) , which removes and modifies certain disclosure requirements under Topic 820.

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An entity is permitted to early adopt any removed or modified disclosures upon issuance of the update and to delay adoption of the additional disclosures until their effective date.

The Company adopted the new standard effective January 1, 2020, and the standard did not have a material impact on the Consolidated Financial Statements or related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) , which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.

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The Company's financial assets held at amortized cost include certificates of deposit, accounts receivable and contract assets.

The Company will adopt the new standard effective January 1, 2020 and does not expect the adoption of this standard will have a material impact on the Consolidated Financial Statements or related disclosures.

The Company adopted the new standard effective January 1, 2020, and the standard did not have a material impact on the Consolidated Financial Statements or related disclosures based on historical collection trends, the financial condition of payment partners, and external market factors.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) , which simplifies the accounting for income taxes by eliminating certain exemptions as well as a few other changes.

The amendments are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

An entity is permitted to early adopt any removed or modified disclosures upon issuance of the update and to delay adoption of the additional disclosures until their effective date.

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In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40), which simplifies accounting for convertible instruments, enhances disclosure requirements related to the terms and features of convertible instruments, and amends the guidance for the derivatives scope exception for contracts settled in an entity's own equity.

The amendments are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted, but not earlier than periods beginning after December 15, 2020.

Revenue Recognition

The following table presents the Company's revenue disaggregated by solution group, geographical market and timing of transfer of products and services.

The Company attributes revenue to geographical markets based on the location of the customer.

The Company has one reportable segment in accordance with ASC 280, Segment Reporting ;

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Ratings and Planning (1)

$ 253,652 $ 271,623 $ 285,355

Analytics and Optimization (1)

69,080 74,725 92,380

Movies Reporting and Analytics 33,304 42,297 41,747

Total $ 356,036 $ 388,645 $ 419,482

By geographical market:

United States $ 310,717 $ 336,087 $ 359,379

Europe 27,447 30,619 34,623

Latin America 6,275 10,326 13,179

Canada 7,046 7,046 7,882

Other 4,551 4,567 4,419

Total $ 356,036 $ 388,645 $ 419,482

By timing of revenue recognition:

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Products and services transferred over time 278,638 295,609 305,899

Total $ 356,036 $ 388,645 $ 419,482

(1) In the second quarter of 2020, the Company began classifying revenue from certain new and extended custom agreements for services that utilize its syndicated data set, previously classified under Analytics and Optimization, as Ratings and Planning.

The impact was not material to either solution group.

Contract Balances

The following table provides information about receivables, contract assets, contract costs, contract liabilities and customer advances from contracts with customers:

As of December 31,

(In thousands) 2020 2019

December 31, 2019

December 31, 2018

Accounts receivable, net $ 69,379 $ 71,853

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Current and non-current contract costs 430 799

Current contract liability

Current contract liabilities 58,529 58,158

Current customer advances 12,477 9,886

Non-current contract liability

Significant changes in the contract assets and the contract liabilities balances are as follows:

Non-current contract liabilities 4,156 291

Current and non-current contract assets as of December 31, 2020 increased from the prior year due primarily to the Company providing payment deferrals, in exchange for contract extensions, on certain of its movies contracts because of theater closures as a result of the COVID-19 pandemic.

Non-current contract liabilities as of December 31, 2020 increased from the prior year due primarily to a large upfront payment received on a new multi-year contract.

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Significant changes in the current contract liabilities balances are as follows:

Contract Liability (Current)

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(In thousands) 2020 2019

Revenue recognized that was included in the contract liability balance at the beginning of period

Revenue recognized that was included in the opening contract liabilities balance $ ( 53,226 ) $ ( 58,918 )

Cash received or amounts billed in advance and not recognized as revenue 50,836 53,881

3 unchanged sentences

Costs to Obtain or Fulfill a Contract

As of December 31, 2019 and 2018, the Company had $ 0.8 million and $ 1.4 million , respectively, in capitalized contract costs.

For the years ended December 31, 2019 and 2018, amortized and expensed contract costs were $ 1.9 million and $ 2.3 million , respectively.

Long-term Debt

For the years ended December 31, 2020, 2019 and 2018, amortized and expensed contract costs were $ 1.4 million, $ 1.9 million and $ 2.3 million, respectively.

Issuance and Sale of Initial Notes

6 unchanged sentences

The Notes mature on January 16, 2022.

As described in Footnote 1 , Organization, and Footnote 16 , Subsequent Events, on March 9, 2021, the Company's stockholders approved Transactions for which the proceeds will be used to repay the Notes prior to maturity.

Based upon the determination of the Conversion Price, interest on the Notes accrued at 6.0 % per year through January 30, 2019.

On January 30, 2019, the interest rate reset to 12.0 % through January 30, 2020.

On each of January 30, 2020 and February 1, 2021 , the interest rate on the Notes will reset, and interest will thereafter accrue at a minimum of 4.0 % per year and a maximum of 12.0 % per year, based upon the then-applicable conversion premium in accordance with the terms of the Notes.

The interest rate remains at 12.0 % based on the January 30, 2020 reset calculation.

The interest rate reset feature

of the Initial Notes was determined by management to be a derivative instrument that qualifies for liability treatment.

On January 30, 2020, the interest rate reset and remained at 12.0 % through February 1, 2021.

On February 1, 2021, the interest rate was determined to remain at 12.0 % through maturity based on the reset calculation.

The interest rate reset feature of the Initial Notes was determined by management to be a derivative instrument that qualifies for liability treatment.

The derivative instrument is initially measured at fair value and classified as a liability on the balance sheet, with subsequent changes in fair value being recorded in earnings.

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The stock price was measured using the fair value of the Common Stock on the closing date of the Initial Notes issuance, January 16, 2018, which was $ 24.45 per share.

• Volatility :

Based on the historical volatility of the Company's Common Stock, determined to be 41.3 % as of the valuation date.

3 unchanged sentences

Based upon the modified convertible bond model utilized by management, the fair value of the interest rate reset feature was determined to be $ 6.4 million as of January 16, 2018 and was recognized as an issuance discount for the Initial Notes at inception.

Table of Conte nt s

Interest on the Initial Notes is payable on a quarterly basis in arrears beginning on April 1, 2018, at the option of the Company, in cash, or, subject to certain conditions, through the issuance by the Company of additional shares of Common Stock (the "PIK Interest Shares").

Any PIK Interest Shares so issued will be valued at the arithmetic average of the VWAP of the Common Stock on each trading day during the 10 consecutive trading days ending immediately preceding the applicable interest payment date.

On April 1, 2019, July 1, 2019 and October 1, 2019, the Company paid its quarterly accrued interest liability on the Notes for the first, second and third quarters through the issuance of 243,261 , 856,289 and 2,957,579 PIK Interest Shares, respectively.

The Company paid accrued interest of $ 6.1 million on January 2, 2020 in cash.

The accrued interest was classified within accrued expenses in the Consolidated Financial Statements as of December 31, 2019.

On each of January 2, 2020, April 1, 2020 and July 1, 2020, the Company paid quarterly accrued interest of $ 6.1 million in cash.

On October 1, 2020, the Company paid quarterly accrued interest of $ 6.1 million through the issuance of 1,474,201 PIK Interest Shares and $ 3.1 million in cash.

On January 25, 2021, the Company paid its quarterly accrued interest of $ 6.1 million through the issuance of 2,802,454 PIK Interest Shares.

The interest paid on January 25, 2021 was classified within other non-current liabilities in the Consolidated Financial Statements as of December 31, 2020.

For the remaining interest payment from January 1, 2021 through the closing of the Transactions, the Company intends to pay interest due through the issuance of PIK Interest Shares.

Management evaluated the Notes Option and determined that it met the definition of a derivative as it represented a written option.

4 unchanged sentences

The stock price was measured using the fair value of the Common Stock on the closing date of the Initial Notes issuance, January 16, 2018, which was $ 24.45 per share.

• Volatility :

Based on the historical volatility of the Company's Common Stock, determined to be 38.4 % as of the valuation date.

24 unchanged sentences

The stock price was measured using fair value of the Common Stock on the closing date of the Initial Notes issuance, January 16, 2018, which was $ 24.45 per share.

• Volatility :

The Company determined volatility to be 39.6 % based on the historical volatility of its Common Stock daily volume weighted average price with a look-back period commensurate with the term of the warrants.

4 unchanged sentences

Assumed to be zero based on the historical payout history of the Company.

Table of Conte nt s

Based on the Black-Scholes model, the Company determined that the fair value of the warrants as of January 16, 2018 was $ 6.1 million.

The Company recorded the warrants at allocated proceeds of $ 5.7 million, less allocated issuance costs of $ 0.2 million, as additional paid-in capital.

The cash proceeds and Common Stock received by the Company in exchange for the Initial Notes were net of a $ 20.1 million issuance discount and $ 4.6 million in third party debt issuance costs.

The cash proceeds and Common Stock received by the Company in exchange for the Initial Notes were net of a $ 20.1 million issuance discount and $ 4.6 million in third party deferred financing costs.

On August 8, 2018, the Company and Starboard entered into an amendment to the outstanding Notes to reduce the requirement to maintain certain minimum cash balances.

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The stock price was measured using the fair value of the Common Stock on the closing date of the Option Notes issuance, May 17, 2018, which was $ 21.75 per share.

• Volatility :

Based on the historical volatility of the Company's Common Stock, determined to be 26.3 % as of the valuation date.

12 unchanged sentences

The stock price was measured using the fair value of the Common Stock on the closing date of the Option Notes issuance, May 17, 2018, which was $ 21.75 per share.

• Volatility :

Based on the historical volatility of the Company's Common Stock, determined to be 42.6 % as of the valuation date.

Table of Conte nt s

Based on the time period of the Option Notes maturity, 3.7 years.

15 unchanged sentences

See "Notes Modifications" below.

The cash proceeds and Common Stock received by the Company in exchange for the Option Notes were net of a $ 3.1 million issuance discount and $ 0.2 million in third-party debt issuance costs.

The cash proceeds and Common Stock received by the Company in exchange for the Option Notes were net of a $ 3.1 million issuance discount and $ 0.2 million in third-party deferred financing costs.

On August 8, 2018, the Company and Starboard entered into an amendment to the outstanding Notes to reduce the requirement to maintain certain minimum cash balances.

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On November 6, 2019, the Company and Starboard entered into an additional amendment to the Notes.

The terms of the Notes were amended to provide the Company with an optional redemption right, whereby, in connection with a qualifying change of control pursuant to documentation entered into no later than August 5, 2020, the Company has the right to redeem the Notes in full in cash at a price equal to the sum of (i) the aggregate outstanding principal amount of the Notes, as of the consummation of the qualifying change of control, (ii) accrued interest, (iii) any other amounts owed pursuant to the Notes, and (iv) a 20 % premium

on the aggregate outstanding principal amount of the Notes (the "qualifying change of control redemption").

The terms of the Notes were amended to provide the Company with an optional redemption right, whereby, in connection with a qualifying change of control pursuant to documentation entered into no later than August 5, 2020, the Company had the right to redeem the Notes in full in cash at a price equal to the sum of (i) the aggregate outstanding principal amount of the Notes, as of the consummation of the qualifying change of control, (ii) accrued interest, (iii) any other amounts owed pursuant to the Notes, and (iv) a 20 % premium on the aggregate outstanding principal amount of the Notes (the "qualifying change of control redemption").

The amendment also provided for an adjustment to the minimum cash balance required to be maintained by the Company.

Upon execution of documentation providing for a qualifying change of control, the $ 40.0 million minimum cash balance would be reduced, on a dollar for dollar basis, for each dollar of cash interest paid to the holders of the Notes, subject to a $ 20.0 million minimum, until consummation of the qualifying change in control or, upon termination of the change in control, the shorter of 90 days after such termination or the consummation of a financing that enables the Company to maintain a minimum cash balance of $ 40.0 million .

Upon execution of documentation providing for a qualifying change of control, the $ 40.0 million minimum cash balance would be reduced, on a dollar for dollar basis, for each dollar of cash interest paid to the holders of the Notes, subject to a $ 20.0 million minimum, until consummation of the qualifying change in control or, upon termination of the change in control, the shorter of 90 days after such termination or the consummation of a financing that would enable the Company to maintain a minimum cash balance of $ 40.0 million.

The amendment also modified the provisions of the Registration Rights Agreement between the Company and Starboard by revising the grace periods during which the Company would not be obligated to keep applicable registration statements available for use by Starboard.

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Based on the discounted cash flow model, the Company determined the fair value of the qualifying change of control redemption provision as of November 6, 2019 to be $ 1.2 million.

Table of Conte nt s

In determining the amount to be recognized as an issuance discount of the Notes, the Company compared the fair value of the make-whole change of control redemption option of $ 2.2 million as of November 6, 2019 to the combined value of the make-whole and qualifying change of control redemption options immediately after the modification.

2 unchanged sentences

The Company recorded an additional $ 0.6 million in derivative liabilities due to this modification.

The balance of the Notes as of December 31, 2019 and 2018 was as follows:

The qualifying change of control redemption derivative liability expired on August 5, 2020.

The balance of the Notes as of December 31, 2020 and December 31, 2019 was as follows:

December 31, 2020

(In thousands, except interest rates)

Stated Interest Rate

Effective Interest Rate

Issuance Discount

Deferred Financing Costs

Net Carrying Value

(In thousands, except interest rates) Stated Interest Rate Effective Interest Rate Face Value Issuance Discount Deferred Financing Costs Net Carrying Value

Initial Notes, due January 16, 2022 12.0 % 18.8 % $ 153,500 $ ( 8,200 ) $ ( 1,523 ) $ 143,777

Option Notes, due January 16, 2022 12.0 % 14.9 % 50,500 ( 1,298 ) ( 84 ) 49,118

Total $ 204,000 $ ( 9,498 ) $ ( 1,607 ) $ 192,895

December 31, 2019

(In thousands, except interest rates)

Stated Interest Rate

Effective Interest Rate

Original Issuance Discount

Deferred Financing Costs

Net Carrying Value

(In thousands, except interest rates) Stated Interest Rate Effective Interest Rate Face Value Issuance Discount Deferred Financing Costs Net Carrying Value

Initial Notes, due January 16, 2022 12.0 % 18.8 % $ 153,500 $ ( 14,703 ) $ ( 2,706 ) $ 136,091

Option Notes, due January 16, 2022 12.0 % 14.9 % 50,500 ( 2,365 ) ( 151 ) 47,984

Due to the interest rate reset feature of the Notes, the potential future cash flows associated with the Notes are variable.

Accordingly, the accretion schedule of debt discount and the amortization schedule of debt issuance costs are updated annually to reflect periodic changes in the future cash flows using the effective interest rate on a prospective basis.

The Company amortized $ 1.1 million in debt issuance costs and accreted $ 6.2 million in issuance discounts related to the total outstanding long-term debt during the year ended December 31, 2019.

The Company amortized $ 1.0 million in debt issuance costs and accreted $ 4.8 million in issuance discounts related to the total outstanding long-term debt during the year ended December 31, 2018.

Total $ 204,000 $ ( 17,068 ) $ ( 2,857 ) $ 184,075

Due to the interest rate reset feature of the Notes, the potential future cash flows associated with the Notes were variable prior to the final interest rate reset on February 1, 2021.

Accordingly, the accretion schedule of debt discount and the amortization schedule of deferred financing costs were updated annually to reflect periodic changes in the future cash flows using the effective interest rate on a prospective basis.

The Company amortized $ 1.2 million in deferred financing costs and accreted $ 7.6 million in issuance discount related to the total outstanding long-term debt during the year ended December 31, 2020.

The Company amortized $ 1.1 million in deferred financing costs and accreted $ 6.2 million in issuance discount related to the total outstanding long-term debt during the year ended December 31, 2019.

The estimated fair value of the Notes, using Level 3 inputs based on interest rates available for debt with terms and maturities similar to the Company's outstanding debt, was $ 191.8 million as of December 31, 2020.

6 unchanged sentences

Starboard also agreed to enter into one or more backstop commitment agreements, pursuant to which Starboard would backstop up to $ 100.0 million in aggregate principal amount of Rights Offering Notes through the purchase of additional Notes, with such backstop obligation reduced by the amount of Option Notes purchased ($ 50.0 million).

The Company is not obligated to undertake the Rights Offering, and the Company does not currently intend to do so.

The Company is not obligated to undertake the Rights Offering, and the Company does not intend to do so.

Guarantee and Security of Notes

The Notes are guaranteed by certain of the Company's direct and indirect wholly-owned domestic subsidiaries (the "Guarantors") and are secured by a security interest in substantially all of the assets of the Company and the Guarantors, pursuant to a Guaranty, dated as of January 16, 2018, entered into by the Guarantors, and a Pledge and Security Agreement, dated as of January 16, 2018, among the Company, the Guarantors and Starboard Value and Opportunity Master Fund Ltd.

Table of Conte nt s

of January 16, 2018, entered into by the Guarantors, and a Pledge and Security Agreement, dated as of January 16, 2018, among the Company, the Guarantors and Starboard Value and Opportunity Master Fund Ltd.

as collateral agent.

7 unchanged sentences

Issuance of Secured Term Note

On December 31, 2019 the Company's wholly owned subsidiary, Rentrak B.V., entered into an agreement with the Noteholder for the Secured Term Note for aggregate gross proceeds of $ 13.0 million , less issuance costs of $ 0.5 million .

On December 31, 2019, the Company's wholly owned subsidiary, Rentrak B.V., entered into an agreement with the Noteholder for the Secured Term Note for aggregate gross proceeds of $ 13.0 million.

The Secured Term Note, which is cash collateralized, matures on December 31, 2021 and has an annual interest rate of 9.75 %.

Interest is payable in arrears on the last business day of each calendar month commencing on January 31, 2020.

As described in Footnote 1 , Organization, and Footnote 16 , Subsequent Events, on March 9, 2021, the Company's stockholders approved the Transactions, and upon closing of the Transactions, the Company expects to repay the Secured Term Note prior to maturity.

The Secured Term Note contains certain affirmative and restrictive covenants with which Rentrak B.V.

2 unchanged sentences

December 31, 2020

(In thousands, except interest rates)

Stated Interest Rate

Effective Interest Rate

Deferred Financing Costs

Net Carrying Value

(In thousands, except interest rates) Stated Interest Rate Effective Interest Rate Face Value Deferred Financing Costs Net Carrying Value

Secured Term Note 9.75 % 12.8 % $ 13,000 $ ( 356 ) $ 12,644

The Company concluded that the carrying amount reported in the Consolidated Balance Sheet ( $ 12.5 million ) approximates the fair value of the Secured Term Note as of December 31, 2019.

Revolving Credit Facility

On June 1, 2018 , the Company entered into a Security Agreement with Wells Fargo Bank, N.A.

December 31, 2019

(In thousands, except interest rates) Stated Interest Rate Effective Interest Rate Face Value Deferred Financing Costs Net Carrying Value

Secured Term Note 9.75 % 12.2 % $ 13,000 $ ( 537 ) $ 12,463

The Company amortized $ 0.3 million in deferred financing costs related to the Secured Term Note during the year ended December 31, 2020.

The estimated fair value of the Secured Term Note, using Level 2 inputs based on interest rates available for debt with terms and maturities similar to the Company's outstanding debt, was $ 13.4 million as of December 31, 2020.

The Secured Term Note contains a redemption provision whereby, upon the occurrence of certain fundamental transactions, a holder would have the right to require the Company to redeem the Secured Term Note for cash at a price equal to (i) the entire outstanding principal amount, (ii) any accrued and unpaid interest, and (iii) a premium equal to the remaining contractual interest cash flows (the "interest make-whole redemption").

Management evaluated this interest make-whole redemption feature and determined it represented an embedded derivative that must be bifurcated and accounted for separately from the Secured Term Note.

The interest make-whole derivative is treated as a liability, initially measured at fair value with subsequent changes in fair value recorded in earnings.

The estimated fair value of the interest make-whole derivative was determined to be negligible as of December 31, 2019.

The estimated fair value of the interest make-whole derivative as of December 31, 2020 was $ 0.9 million.

Refer to Footnote 6 , Fair Value Measurements , for further information.

Standby Letters of Credit

In 2018, the Company entered into a Security Agreement with Wells Fargo Bank, N.A.

to issue standby letters of credit.

As of December 31, 2020, $ 3.3 million in letters of credit are outstanding and are cash collateralized under the Security Agreement.

Table of Conte nt s

Failed Sale-Leaseback Transaction

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The assets continue to be depreciated over their useful lives, and payments are allocated between interest expense and repayment of the financing liability.

The financing obligation is included within other current and other non-current liabilities on the Consolidated Balance Sheets, with $ 1.8 million classified as short-term and $ 1.7 million classified as long-term as of December 31, 2019.

Future minimum payments related to the financing obligations under the failed sale-leaseback transaction as of December 31, 2019 are summarized below:

(In thousands)

The remaining financing obligation of $ 1.7 million is included within current liabilities on the Consolidated Balance Sheet.

Remaining future minimum cash payments related to the financing obligations under the failed sale-leaseback transaction total $ 1.4 million as of December 31, 2020 and will be paid during the first half of 2021.

Stockholders' Equity

4 unchanged sentences

The Series B-1 Warrants provided the holders the right to purchase an aggregate of up to 2,347,418 shares of Common Stock at an exercise price equal to $ 8.52 and could have been exercised for cash only.

The Series B-1 Warrants expired in January 2020.

The Series B-2 Warrants are exercisable by the holders at any time prior to the 12-month anniversary of the Closing Date, as adjusted pursuant to the terms of the Series B-2 Warrants.

The Series B-2 Warrants provide the holders the right to purchase an aggregate of up to 1,121,076 shares of Common Stock at an exercise price equal to $ 8.92 and may be exercised for cash only.

If all of the Series B-2 Warrants have not been exercised prior to their expiration date, the Company will have the right, subject to prior notice to the holders and certain equity, volume and other conditions, to force the exercise of any unexercised portion of the Series B-2 Warrants by such holders.

Key conditions that may impact the ability of the Company to force the exercise of these warrants include a $ 3.96 minimum for the VWAP of the Common Stock leading up to the forced exercise date, a minimum threshold for trading volume, and the maintained effectiveness of a registration statement with the SEC.

The forced exercise price for the Series B-2 Warrants, if applicable, will be 85.0 % of the VWAP of the Common Stock on the date immediately preceding the expiration date of the Series B-2 Warrants.

The Series A Warrants are exercisable for a period of five years from the Closing Date and are currently exercisable into 5,457,026 shares of Common Stock, which is equal to the Initial Shares plus the number of shares issued pursuant to the exercise of the Series C Warrants (described below).

The exercise price for the Series A Warrants is $ 12.00 .

The Series A Warrants may be exercised for cash or through a net settlement feature.

The Series C Warrants are partially prepaid warrants (with a nominal remaining exercise price) that were not exercisable before September 21, 2019 and expire 90 days after the first anniversary of the Closing Date.

The Series B-1 Warrants expired on January 29, 2020.

The Series B-2 Warrants were exercisable by the holders at any time prior to the 12-month anniversary of the Closing Date, as adjusted pursuant to the terms of the Series B-2 Warrants.

The Series B-2 Warrants provided the holders the right to purchase an aggregate of up to 1,121,076 shares of Common Stock at an exercise price equal to $ 8.92 and could have been exercised for cash only.

The Series B-2 Warrants expired on August 3, 2020.

The Series C Warrants were partially prepaid warrants (with a nominal remaining exercise price) that were not exercisable before September 21, 2019 and expire 90 days after the first anniversary of the Closing Date.

CVI exercised the Series C Warrants on October 10, 2019.

Because the VWAP of the Common Stock as of the date of exercise, discounted by 7.5 % , was less than CVI's purchase price for the Initial Shares, the Company was required to issue to CVI a number of shares of Common Stock equal to (i) (x) CVI's purchase price for the Initial Shares divided by (y) 92.5 % of the VWAP of the Common Stock leading up to September

21, 2019, subject to a floor of 50.0 % of the price per Initial Share, less (ii) the number of Initial Shares issued to CVI on the Closing Date.

Because the VWAP of the Common Stock as of the date of exercise, discounted by 7.5 %, was less than CVI's purchase price for the Initial Shares, the Company was required to issue to CVI a number of shares of Common Stock equal to (i) (x) CVI's purchase price for the Initial Shares divided by (y) 92.5 % of the VWAP of the Common Stock leading up to September 21, 2019, subject to a floor of 50.0 % of the price per Initial Share, less (ii) the number of Initial Shares issued to CVI on the Closing Date.

As a result of this exercise, the Company issued 2,728,513 shares of Common Stock to CVI on October 14, 2019.

In addition, the number of shares issuable under the Company's Series A Warrants was increased by 2,728,513 .

The exercise prices for the Series A and Series B-2 Warrants are subject to anti-dilution adjustment in certain circumstances.

The exercise price for the Series A Warrants is $ 12.00 .

The Series A Warrants may be exercised for cash or through a net settlement feature under certain circumstances.

The exercise price for the Series A Warrants is subject to anti-dilution adjustment in certain circumstances.

Refer to Footnote 16 , Subsequent Events , for further information.

In addition, if and to the extent the exercise of any warrants would, together with the issuances of the Initial Shares and the shares issued pursuant to the exercise of any other warrants, result in the issuance of 20.0 % or more of the outstanding Common Stock of the Company on the Closing Date (the "Exchange Cap"), the Company intends to, in lieu of issuing such shares, settle the obligation to issue such shares in cash.

1 unchanged sentence

CVI has the right, in its discretion, to raise this threshold up to 9.99 % with 60 days' notice to the Company.

If any forced exercise of the Series B-2 Warrants would result in CVI beneficially owning more than 4.99 % of the outstanding Common Stock, CVI will pay the applicable forced exercise price and no shares of Common Stock will be issued, but instead the aggregate number of shares of Common Stock issuable upon any exercise of the Series C Warrants will increase by an equal amount.

Pursuant to the transactions described above, the Company agreed to a 105 -day lock-up period related to any future offering of equity or equity-linked securities and also agreed to provide CVI with registration rights relating to the Initial Shares and any shares issuable upon the exercise of the warrants.

Pursuant to the transactions described above, the Company agreed to provide CVI with registration rights relating to the Initial Shares and any shares issuable upon the exercise of the warrants.

On June 26, 2019, the Company filed a prospectus supplement to its effective registration statement on Form S-3 to permit the resale of such shares.

2 unchanged sentences

To determine the fair value of each warrant, management utilized a Monte Carlo simulation analysis within an option pricing model using the following key assumptions as of the Closing Date:

Table of Conte nt s

• Stock price :

The stock price was measured using the fair value of the Common Stock on the Closing Date, which was $ 5.57 per share.

Measured using the fair value of the Common Stock on the Closing Date, which was $ 5.57 per share.

• Volatility :

The Company determined volatility to be 50.0 % based on (i) the historical volatility of the Common Stock daily volume weighted average price with a look-back period commensurate with the term of the warrants and (ii) options-based implied volatility.

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Based on the option pricing valuation model, the Company determined the fair value of the warrants as of the Closing Date to be the following:

(in thousands)

Warrants Liability

(in thousands) Warrants Liability

Series A Warrants $ 3,862

2 unchanged sentences

Series C Warrants (3)

1) Series B-1 warrants expired in January 2020.

2) Series C warrants were exercised in October 2019.

Total $ 10,798

1) Series B-1 Warrants expired on January 29, 2020.

2) Series B-2 Warrants expired on August 3, 2020.

3) Series C Warrants were exercised on October 10, 2019.

The Company recorded $ 1.8 million in accrued transaction costs in 2019, of which approximately $ 0.8 million was allocated to the warrants liability and recorded in general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss.

2 unchanged sentences

Refer to Footnote 6 , Fair Value Measurements , for further information.

2007 Equity Incentive Plan

Pursuant to a merger agreement with Rentrak Corporation, upon the closing of the transaction in 2016, the Company assumed outstanding stock options under the Rentrak Corporation Amended and Restated 2005 Stock Incentive Plan and assumed outstanding stock options, RSUs and a stock appreciation right ("SAR") under the Rentrak Corporation 2011 Incentive Plan, and such stock options, RSUs and SAR were automatically converted into stock options, RSUs and SAR, respectively, with respect to shares of Common Stock, subject to appropriate adjustments to the number of shares and the exercise price (if applicable) of each such award.

In 2017, the Company's 2007 Equity Incentive Plan (the "2007 Plan") reached the end of its ten -year term and expired.

2018 Equity and Incentive Compensation Plan

The Company's stockholders approved the 2018 Equity and Incentive Compensation Plan (the "2018 Plan") at the Company's 2018 Annual Meeting.

Under the 2018 Plan, the Company may grant option rights, appreciation rights, restricted stock awards, restricted stock units, performance shares and performance units up to 10,650,000 shares of Common Stock.

The Company's stockholders approved the 2018 Equity and Incentive Compensation Plan (the "2018 Plan") at the Company's 2018 Annual Meeting and approved an amendment and restatement of the 2018 Plan at the Company's 2020 Annual Meeting.

Under the 2018 Plan, as amended and restated, the Company may grant option rights, appreciation rights, restricted stock awards, restricted stock units, performance shares and performance units up to 20,250,000 shares of Common Stock.

The aggregate number of shares of Common Stock available will be reduced by:

1 unchanged sentence

If any award granted under the 2018 Plan (in whole or in part) is canceled or forfeited, expires, is settled in cash, or is unearned, the shares of Common Stock subject to such award will, to the extent of such cancellation, forfeiture, expiration, cash settlement, or unearned amount, again be available at a rate of one share of Common Stock for every one share of Common Stock subject to awards of option rights or appreciation rights and two shares of Common Stock for every one share of Common Stock subject to awards other than of option rights or appreciation rights.

Additionally, if, after December 31, 2017, any shares of Common Stock subject to an award granted under the 2007 Plan are forfeited, or an award granted under the 2007 Plan (in whole or in part) is canceled or forfeited, expires, is settled in cash, or is unearned, the shares of Common Stock subject to such award will, to the extent of such cancellation, forfeiture, expiration, cash settlement, or unearned amount, be available for awards under the 2018 Plan at a rate of one share for every one share subject to such award.

The Company registered the securities under the 2018 Plan with the SEC effective June 1, 2018.

The maximum number of shares available for issuance under the 2018 Plan as of December 31, 2019 is 1,871,778 .

The maximum number of shares available for future issuance under the 2018 Plan as of December 31, 2020 (excluding outstanding awards) is 10,746,533 .

Stock Options

During the year ended December 31, 2019, the Company's Compensation Committee approved and awarded 925,000 stock options under the 2018 Plan to employees and consultants of the Company.

The fair value of options at date of grant was estimated using the Black-Scholes method utilizing the following assumptions:

The Company's Compensation Committee approved and awarded 50,000 and 925,000 options for the years ended December 31, 2020 and 2019, respectively, under the 2018 Plan to employees and consultants.

No options were approved and awarded for the year ended December 31, 2018.

The fair value of options at date of grant was estimated using the Black-Scholes option pricing model utilizing the following assumptions:

Table of Conte nt s

Years Ended December 31,

Dividend yield 0.0 % 0.0 %

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Expected life of the options — This is the period of time that the options granted are expected to remain outstanding.

A summary of the options granted, exercised and expired during the years ended December 31, 2017, 2018 and 2019 is presented below:

Weighted-Average

Options under the Company's plans generally have a contractual term of 10 years and generally must be exercised within 90 days following employee termination.

A summary of the options granted, exercised, forfeited and expired during the years ended December 31, 2020, 2019 and 2018 is presented below:

Shares Weighted-Average

Exercise Price

Options outstanding as of December 31, 2017 3,444,252 $ 30.65

Options exercised (1)

( 347,752 ) 15.45

Options expired ( 2,050,587 ) 39.74

Options outstanding as of December 31, 2018 1,045,913 $ 17.89

Options granted 925,000 5.64

Options exercised ( 68,259 ) 17.44

Options expired

Options forfeited ( 363,687 ) 15.15

Options outstanding as of December 31, 2019 1,538,967 $ 11.27

2 unchanged sentences

Options forfeited ( 60,000 ) 5.38

Options expired ( 456,775 ) 15.92

Options outstanding as of December 31, 2020 997,192 $ 9.82

1 unchanged sentence

(1) Includes 125,523 options withheld to pay the exercise price for certain exercises during the year ended December 31, 2018.

The following table summarizes information about options outstanding as of December 31, 2019 :

Options Outstanding

Options Exercisable

Range of Exercise Prices

Options Outstanding

The following table summarizes information about options outstanding, and exercisable, as of December 31, 2020:

Options Outstanding Options Exercisable

Range of Exercise Prices Options Outstanding Weighted

Price Weighted

Life (Years) Options

Exercisable Weighted

Price Weighted

$ 3.21 - $ 5.38

450,000 $ 3.74 8.92 133,333 $ 6.00 8.88

$ 10.35 - $ 19.31

494,360 13.79 3.25 381,860 18.46 1.73

$ 20.11 - $ 23.22

46,775 22.33 0.94 46,775 22.33 0.94

6,057 40.80 3.62 6,057 40.80 3.62

997,192 $ 9.82 5.71 568,025 $ 16.10 3.37

The intrinsic value of exercised stock options is calculated based on the difference between the exercise price and the quoted market price of the Company's Common Stock as of the close of the exercise date.

There were 68,259 and 347,752 options exercised during the years ended December 31, 2019 and 2018 , respectively.

There were no options exercised during 2017.

The aggregate intrinsic value for all options exercisable was $ 0.2 million , $ 1.5 million , and $ 17.2 million under the Company's stock plans as of December 31, 2019, 2018, and 2017 respectively.

The aggregate intrinsic value for all options outstanding was $ 0.9 million , $ 0.7 million , and $ 17.2 million under the Company's stock plans as of December 31, 2019, 2018, and 2017, respectively.

As of December 31, 2019, the total unrecognized compensation expense related to outstanding options is $ 1.9 million .

There was no unrecognized compensation expense related to outstanding options as of December 31, 2018 and 2017.

Stock Appreciation Rights ("SAR")

The Company assumed an as-converted SAR with respect to 86,250 shares of Common Stock originally granted pursuant to the terms of Rentrak Corporation 2005 Stock Incentive Plan at an as-converted base price of $ 12.61 per share.

The SAR expired unexercised on June 15, 2019 .

The Company's outstanding stock awards are comprised of RSUs, including both time-based and performance-based RSUs.

The aggregate intrinsic value for options exercised was $ 0.1 million, $ 0.3 million and $ 1.5 million for the years ended December 31, 2020, 2019 and 2018, respectively.

There was no intrinsic value for options exercisable or outstanding as of December 31, 2020.

The aggregate intrinsic value for all options exercisable was $ 0.2 million and $ 0.7 million under the Company's stock plans as of December 31, 2019 and 2018, respectively.

The aggregate intrinsic value for all options outstanding was $ 0.9 million and $ 0.7 million under the Company's stock plans as of December 31, 2019 and 2018, respectively.

Table of Conte nt s

As of December 31, 2020, the total unrecognized compensation expense related to outstanding, but not yet exercisable, options is $ 0.9 million, which the Company expects to recognize over a weighted-average vesting period of approximately 2.1 years.

The Company's outstanding stock awards are comprised of RSUs, including time-based, performance-based and market-based RSUs.

During 2020, the Company's Compensation Committee approved and awarded 634,570 time-based RSUs (of which 610,590 RSUs related to the settlement of an accrued 2019 annual incentive plan liability and vested immediately).

During 2019, the Company's Compensation Committee approved and awarded 1,603,866 time-based RSUs (of which 206,108 RSUs related to the settlement of an accrued 2018 annual incentive plan liability) and 975,000 market-based RSUs, which were valued using a Monte Carlo simulation analysis, to employees, directors and consultants of the Company.

Of the time-based RSUs, 581,491 vested immediately upon grant.

The remaining time-based RSUs generally vest after one to three years contingent on continued service.

Market-based awards generally vest over up to ten years based on the achievement of certain stock price hurdles.

During 2018, the Company's Compensation Committee approved and awarded 2,612,457 time-based RSUs, 191,800 performance-based RSUs and 68,151 market-based RSUs under the 2018 Plan to employees, directors and consultants of the Company.

Of the time-based RSUs, 1,493,288 vested immediately upon grant, including 165,086 shares related to the compensation of the Company's former CEO as part of his retirement and transition services agreement.

The remaining time-based RSUs generally vest after three to four years contingent on continued service, and performance-based RSUs generally vest after three years based on achievement of pre-established revenue and adjusted earnings before interest income, interest expense, income taxes, depreciation and amortization (Adjusted EBITDA) goals.

Market-based awards generally vest after three years based on the attainment of certain stock price hurdles.

The estimated forfeiture rate as of December 31, 2020, 2019 and 2018 was 10.0 % for non-executive awards.

Awards granted to senior executives have an estimated forfeiture rate of zero .

Changes in the estimates and assumptions relating to forfeitures and subsequent grants may result in material changes to stock-based compensation expense in the future.

A summary of the stock awards granted, vested and forfeited during the years ended December 31, 2020, 2019 and 2018 is presented as follows.

RSU awards with undelivered shares are classified as unvested until the date of delivery of the shares.

Unvested Stock Awards

Unvested Stock Awards Restricted

Stock Units Weighted

Grant-Date Fair Value

Unvested as of December 31, 2017 779,912 $ 37.22

Granted 2,872,408 22.53

Vested ( 2,077,253 ) 27.55

Forfeited ( 108,932 ) 29.50

Unvested as of December 31, 2018 1,466,135 $ 22.62

Granted 2,578,866 7.56

Vested ( 854,998 ) 23.96

Forfeited ( 529,767 ) 18.47

Unvested as of December 31, 2019 2,660,236 $ 8.42

Granted 634,570 3.66

Vested ( 1,363,152 ) 7.22

Forfeited ( 106,417 ) 20.02

Unvested as of December 31, 2020 1,825,237 $ 6.99

The aggregate intrinsic value for all unvested RSUs outstanding was $ 4.5 million, $ 12.1 million, and $ 21.3 million as of December 31, 2020, 2019, and 2018, respectively.

During the year ended December 31, 2019, the Company's Compensation Committee approved and awarded 1,603,866 time-based RSUs (of which 206,108 RSUs related to the settlement of an accrued 2018 annual incentive plan liability) and 975,000 market-based RSUs, which were valued using a Monte Carlo simulation analysis, to employees, directors and consultants of the Company.

The Monte Carlo simulation analysis uses key assumptions including the performance period, grant date stock price, performance-based vesting hurdles and achievement requirements.

Of the time-based RSUs, 581,491 shares vested immediately upon grant.

The remaining time-based RSUs generally vest after one to three years contingent on continued service.

The market-based RSUs vest over up to ten years based on the achievement of certain stock price hurdles.

As of December 31, 2020, total unrecognized compensation expense related to unvested RSUs was $ 5.5 million, which the Company expects to recognize over a weighted-average vesting period of approximately 4.4 years.

The estimated forfeiture rate as of December 31, 2017, 2018, and 2019 was 10.0 % .

Changes in the estimates and assumptions relating to forfeitures and subsequent grants may result in material changes in stock-based compensation expense in the future.

During 2018, the Company's Compensation Committee approved and awarded 2,612,457 time-based RSUs, 191,800 performance-based RSUs, and 68,151 market-based RSUs under the 2018 Plan to employees, directors and consultants of the Company.

Market-based awards generally vest after three years based on the attainment of certain stock price hurdles.

Preferred Stock

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no shares have been issued or were outstanding as of December 31, 2020 and 2019.

Refer to Footnote 16 , Subsequent Events .

Table of Conte nt s

Fair Value Measurements

The Company's financial instruments measured at fair value in the accompanying Consolidated Balance Sheets on a recurring basis consist of the following:

December 31, 2019

December 31, 2018

(In thousands)

December 31, 2020 December 31, 2019

(In thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Money market funds (1)

$ 11,928 $ — $ — $ 11,928 $ 24,327 $ — $ — $ 24,327

Certificates of deposit (2)

Investment in equity securities

— — — — — 1,009 — 1,009

Total $ 11,928 $ — $ — $ 11,928 $ 24,327 $ 1,009 $ — $ 25,336

Financing derivatives:

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Warrants issued:

Series A — — 2,831 2,831 — — 7,508 7,508

Series B-2 — — — — — — 217 217

Secured term note:

Interest make-whole derivative — — 871 871 — — — —

Total $ — $ — $ 15,002 $ 15,002 $ — $ — $ 29,312 $ 29,312

(1) Level 1 cash equivalents are invested in money market funds that are intended to maintain a stable net asset value of $ 1.00 per share by investing in liquid, high quality U.S.

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(3) The fair values of the financing derivatives are derived from techniques which utilize inputs, certain of which are significant and unobservable, that result in classification as Level 3 fair value measurements.

The fair value of the make-whole change of control derivative was estimated as negligible as of December 31, 2020.

The qualifying change of control derivative expired on August 5, 2020.

(4) The fair values of the warrant liabilities are derived from techniques which utilize inputs, certain of which are significant and unobservable, that result in classification as Level 3 fair value measurements.

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The Series B-1 warrants expired without exercise on January 29, 2020.

The Series B-2 Warrants expired without exercise on August 3, 2020.

(5) The fair values of embedded derivatives within the secured term note are derived from techniques which utilize inputs, certain of which are significant and unobservable, that result in classification as Level 3 fair value measurements.

The interest make-whole derivative is classified within other current liabilities in the Consolidated Financial Statements as of December 31, 2020.

The Company did not have any transfers between fair value measurement levels during the periods presented.

There were no changes to the Company's valuation methodologies during the years ended December 31, 2018 or 2019.

The following tables present the changes in the Company's recurring Level 3 fair value measurements for the financing derivatives for the years ended December 31, 2019 and 2018:

(In thousands)

Financing Derivative Liabilities

There were no changes to the Company's valuation methodologies during the years ended December 31, 2020 or 2019, respectively.

The following tables present the changes in the Company's recurring Level 3 fair value measurements for the financing derivatives, warrants liability and interest make-whole derivative for the years ended December 31, 2020 and 2019:

(In thousands) Financing Derivative Liabilities Warrants Liability Interest Make-whole Derivative Liability

Balance as of December 31, 2018 $ 26,100 $ — $ —

Total losses included in other income (expense), net (1)

Issuances 587 10,798 —

Settlement — ( 5,484 ) —

Balance as of December 31, 2018

Total gain included in other income (expense), net (3)

Balance as of December 31, 2019

(1) Represents change in fair value of interest rate reset derivative liability $ 13.6 million loss, Notes Option derivative liability $ 3.3 million loss, and change of control derivative liability of $ 2.7 million gain.

All changes in fair value were recorded in other income (expense), net in the Consolidated Statements of Operations and Comprehensive Loss.

(2) Represents settlement of the Notes Option derivative liability through the issuance of the Option Notes on May 17, 2018.

The derivative was net settled with the Option Notes and recorded as an issuance premium.

Refer to Footnote 4 , Long-term Debt, for further information.

(3) Represents $ 4.5 million gain due to change in fair value of interest rate reset derivative liability and $ 0.6 million gain due to change in fair value of the make-whole redemption derivative liability.

All gains were recorded in other income (expense), net in the Consolidated Statements of Operations and Comprehensive Loss.

The following tables present the changes in the Company's recurring Level 3 fair value measurements for the warrants liability for the year ended December 31, 2019 :

(In thousands)

Warrants Liability

Total (gain) loss included in other income (expense), net (1)

( 5,100 ) 2,411 —

Balance as of December 31, 2019 21,587 7,725 —

Issuance of warrants liability

Total losses included in other income (expense), net (1)

Total (gain) loss included in other income (expense), net (2)

( 10,287 ) ( 4,894 ) 871

Balance as of December 31, 2020 $ 11,300 $ 2,831 $ 871

(1) Represents $ 3.6 million loss due to change in fair value of the Series A Warrants, $ 0.3 million gain due to change in fair value of the Series B-1 Warrants, $ 0.2 million gain due to change in fair value of the Series B-2 Warrants, and $ 0.7 million gain due to change in fair value of Series C Warrants.

(1) Represents $ 4.5 million gain due to change in fair value of interest rate reset derivative liability and $ 0.6 million gain due to change in fair value of the make-whole change of control redemption derivative liability.

Represents $ 3.6 million loss due to change in fair value of the Series A Warrants, and gains of $ 0.3 million, $ 0.2 million and $ 0.7 million due to change in fair value of the Series B-1 Warrants, Series B-2 Warrants and Series C Warrants, respectively.

All gains and losses were recorded in other income (expense), net in the Consolidated Statements of Operations and Comprehensive Loss.

(2) Represents $ 7.5 million gain due to change in fair value of interest rate reset derivative liability, $ 1.6 million gain due to change in fair value of the make-whole change of control redemption derivative liability, and $ 1.2 million gain due to change in fair value of the qualifying change of control redemption derivative liability.

Represents $ 4.7 million gain due to change in fair value of the Series A Warrants and $ 0.2 million gain due to change in fair value of the Series B-2 Warrants.

All gains were recorded in other income (expense), net in the Consolidated Statements of Operations and Comprehensive Loss.

Table of Conte nt s

The following table displays valuation techniques and the significant inputs, certain of which are unobservable, for the Company's Level 3 liabilities measured at fair value as of December 31, 2020 and 2019:

Fair value measurements

Significant valuation technique

Significant valuation inputs

December 31, 2019

December 31, 2018

Interest rate reset derivative liability

Discounted cash flow

Discount rate

Significant Valuation Technique Significant Valuation Inputs December 31, 2020 December 31, 2019

Interest rate reset derivative liability Discounted cash flow Discount rate 20.0 % 25.0 %

Stock price $ 2.49 $ 4.94

Volatility 96.9 % 74.1 %

Term 1.04 years

Risk-free rate 0.1 % 1.6 %

Make-whole change of control redemption derivative liability (1)

Option pricing model

Change of control probability

Option pricing model Change of control probability — % 5.0 % - 10.0 %

Term — 2.04 years

Risk-free rate — % 1.6 %

Qualifying change of control redemption derivative liability (2)

Discounted cash flow

Change of control probability

Discounted cash flow Change of control probability — % 5.0 %

Term — 0.60 years

Discount rate — % 25.0 %

Warrants liability (3)

Option pricing model

Option pricing model Stock price $ 2.49 $ 4.94

Volatility 80.0 % 65.0 %

Term 3.49 years

0.59 - 4.49 years

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Risk-free rate 0.2 % 1.6 % - 1.7 %

(1) Warrants liability includes Series A and Series B-2.

Cost of debt — % 14.7 % - 16.0 %

Interest make-whole derivative liability Discounted cash flow Recapitalization probability 90.0 % — %

Term 0.25 years

Risk-free rate 0.10 % — %

(1) The probability of a make-whole change of control, and the resulting fair value determination, was estimated to be negligible as of December 31, 2020.

(2) The qualifying change of control redemption derivative liability expired on August 5, 2020.

(3) Warrants liability includes only Series A as of December 31, 2020.

Warrants liability includes Series A and Series B-2 as of December 31, 2019.

The fair values of the Company's financing derivatives are estimated using forward projections and are discounted back at rates commensurate with the remaining term of the related derivative.

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The primary sensitivity in the valuation of each warrant liability is driven by the Common Stock price at the measurement date and the observable volatility of the Common Stock.

The primary sensitivity in the interest make-whole derivative liability is driven by the probability, and closing date, of a fundamental transaction which includes, but is not limited to, a recapitalization of the Company.

Table of Conte nt s

Property and Equipment

As of December 31,

(In thousands) 2020 2019

Computer equipment (including capital leases of $7,859 in 2018)

Computer equipment $ 96,657 $ 103,604

Capitalized internal-use software 36,489 21,534

Leasehold improvements 15,643 18,453

Computer software (including software license arrangements of $936 in 2019, and capital leases of $684 in 2018) (2)

Computer software (including software license arrangements of $ 1,611 in 2020 and $ 936 in 2019)

Finance leases 5,541 5,442

Office equipment, furniture, and other (including capital leases of $925 in 2018)

Office equipment, furniture, and other 4,130 5,619

Total property and equipment 167,766 163,608

accumulated depreciation and amortization (including software license arrangements of $400 in 2019, and capital leases of $5,685 in 2018)

accumulated depreciation and amortization (including software license arrangements of $ 1,428 in 2020 and $ 400 in 2019)

( 136,793 ) ( 131,915 )

Total property and equipment, net $ 30,973 $ 31,693

(1) As discussed in Footnote 2 , Summary of Significant Accounting Policies, property and equipment for the year ended December 31, 2018 may not be comparable to the year ended December 31, 2019 due to the adoption of ASC 842, Leases, as of January 1, 2019.

(2) In 2019, the Company reclassified any software licenses categorized as a capital lease in 2018 to software license arrangements.

During 2020, the Company recorded an impairment charge related to certain facility leases and associated leasehold improvements.

$ 1.9 million of this charge was recorded against the property and equipment, net line item in the Consolidated Balance Sheet.

For the years ended December 31, 2020, 2019, and 2018, depreciation expense was $ 14.1 million, $ 12.8 million and $ 17.3 million respectively.

In addition, amortization expense from finance leases was $ 2.4 million for the year ended December 31, 2019.

In addition, amortization expense from finance leases was $ 1.7 million and $ 2.4 million for the years ended December 31, 2020 and 2019, respectively.

The composition of the Company's property and equipment, net between those in the United States and those in other locations as of the end of each year is as follows:

As of December 31,

(In thousands) 2020 2019

United States $ 30,041 $ 30,556

Latin America 341 251

Europe 333 841

Total $ 30,973 $ 31,693

The Company has operating leases for real estate and finance leases for computer equipment and automobiles.

These leases have remaining lease terms of one year to eight years , some of which include options to extend the leases for up to five years , and some of which include options to terminate the leases within one year .

These leases have remaining lease terms of one year to seven years , some of which include options to extend the leases for up to five years , and some of which include options to terminate the leases within one year .

As of December 31, 2020, the weighted average remaining lease term for the Company's finance leases and operating leases was 1.70 years and 5.76 years, respectively.

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The components of lease cost were as follows:

Years Ended December 31,

(In thousands) 2020 2019

December 31, 2019

Finance lease cost

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Total operating lease cost $ 12,228 $ 13,515

(1) The lease costs, net of sublease income, are reflected in the Consolidated Statements of Operations and Comprehensive Loss as follows:

Year Ended December 31, 2019

Table of Conte nt s

Lease costs, net of sublease income, are reflected in the Consolidated Statements of Operations and Comprehensive Loss as follows:

Years Ended December 31,

(In thousands) 2020 2019

Amortization of right-of-use assets

Cost of revenues $ 1,212 $ 1,771

Selling and marketing 176 258

Research and development 175 253

General and administrative 89 131

Total amortization of right-of-use assets $ 1,652 $ 2,413

Operating lease cost

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General and administrative 2,078 2,843

Other information related to leases was as follows:

Total operating lease cost $ 12,228 $ 13,515

During 2020, the Company recorded an impairment charge related to certain facility leases and associated leasehold improvements.

$ 2.8 million of this charge was recorded against the operating right-of-use assets line item in the Consolidated Balance Sheet.

Supplemental cash flow information related to leases was as follows:

Years Ended December 31,

(In thousands) 2020 2019

December 31, 2019

Supplemental Cash Flows Information

Cash paid for amounts included in the measurement of lease liabilities:

1 unchanged sentence

Operating cash flows from operating leases 11,170 15,546

Financing cash flows from finance leases

Right-of-use assets obtained in exchange for lease obligations:

2 unchanged sentences

Maturities of operating and finance lease liabilities as of December 31, 2020 were as follows:

(In thousands)

Operating Leases

Finance Leases

(In thousands) Operating Leases Finance Leases

2021 $ 12,175 $ 2,201

2022 9,406 1,108

2023 9,796 167

Thereafter 14,283 —

Total lease payments 62,900 3,476

3 unchanged sentences

Total non-current lease liabilities $ 36,127 $ 1,211

As of December 31, 2019, the Company subleases six real estate properties.

As of December 31, 2020, the Company subleases seven real estate properties.

One sublease has a noncancelable term of less than one year.

One sublease is for a noncancelable term of 36 months commencing in the first quarter of 2020.

The Company expects to receive fixed lease payments in the amount of $ 1.5 million over the 36 -month term.

The remaining four subleases are noncancelable and have remaining lease terms of one year to seven years .

None of the four subleases contain any options to renew or terminate the sublease agreement.

Future expected cash receipts from these four subleases with a term greater than one year that have commenced as of December 31, 2019 were as follows:

(In thousands)

Sublease Receipts

The remaining six subleases are noncancelable and have remaining lease terms of two years to seven years .

None of these subleases contain any options to renew or terminate the sublease agreement.

Future expected cash receipts from these subleases as of December 31, 2020 were as follows:

(In thousands) Sublease Receipts

Thereafter 1,312

Total expected sublease receipts $ 9,568

Disclosures Related to Periods Prior to Adoption of ASC 842

Capital Leases

Future minimum payments under capital leases with initial terms of one year or more as of December 31, 2018 were as follows:

(In thousands)

December 31, 2018

Total minimum lease payments

Less amount representing interest

Present value of net minimum lease payments

Less current portion

Capital lease obligations, long-term

Operating Leases

Future minimum lease commitments and sublease receipts under non-cancelable lease agreements with initial terms of one year or more in effect as of December 31, 2018 were as follows:

(In thousands)

Operating Lease Commitment

Sublease Receipts

Total minimum lease payments

Table of Conte nt s

Goodwill and Intangible Assets

9 unchanged sentences

Translation adjustments ( 501 )

Impairment charge ( 224,272 )

Balance as of December 31, 2019 $ 416,418

Translation adjustments 1,909

Impairment charge

Balance as of December 31, 2020 $ 418,327

Goodwill 642,599

Accumulated impairment ( 224,272 )

In addition, the Company recorded a $ 17.3 million impairment charge related to its strategic alliance intangible asset during 2019.

Total $ 418,327

The Company also recorded a $ 17.3 million impairment charge related to its strategic alliance intangible asset during 2019.

Changes in the Company's projected revenue in certain non-U.S.

geographic markets due to the changing international competitive landscape as well as significant reductions in international staffing during the second quarter, resulted in a change in the Company's long-term view of the viability of the intangible asset.

geographic markets due to the changing international competitive landscape as well as significant reductions in international staffing, resulted in a change in the Company's long-term view of the viability of the intangible asset.

As such, the Company's assessment yielded that the benefit of the strategic alliance would not be realized.

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The carrying values of the Company's amortizable acquired intangible assets are as follows:

December 31, 2019

December 31, 2018

(In thousands)

Accumulated Impairment

Acquired methodologies/technology

December 31, 2020 December 31, 2019

(In thousands) Gross

Amount Accumulated

Amortization Net

Amount Accumulated

Amortization Accumulated Impairment Net

Acquired methodologies and technology $ 148,403 $ ( 106,771 ) $ 41,632 148,386 $ ( 86,771 ) $ — $ 61,615

Customer relationships 40,168 ( 31,170 ) 8,998 40,143 ( 25,864 ) — 14,279

1 unchanged sentence

Acquired software 9,287 ( 9,286 ) 1 9,287 ( 7,928 ) — 1,359

Panel 3,139 ( 3,139 ) — 3,123 ( 3,123 ) — —

Trade names 773 ( 757 ) 16 768 ( 691 ) — 77

Strategic alliance — — — 30,100 ( 12,792 ) ( 17,308 ) —

Other 600 ( 499 ) 101 600 ( 397 ) — 203

Total intangible assets $ 216,749 $ ( 164,409 ) $ 52,340 $ 246,779 $ ( 149,912 ) $ ( 17,308 ) $ 79,559

Amortization expense related to intangible assets was $ 27.2 million, $ 30.1 million, and $ 32.9 million for the years ended December 31, 2020, 2019, and 2018, respectively.

There were no impairment charges recognized during the years ended December 31, 2018 and 2017.

Of the Company's long-lived intangible assets, net, $ 52.3 million and $ 79.5 million were generated by or located in the United States as of December 31, 2020 and 2019, respectively.

The weighted-average remaining amortization period by major asset class as of December 31, 2020 is as follows:

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Customer relationships 1.5

Acquired methodologies/technology

Acquired methodologies and technology 1.4

Trade names 0.2

Acquired software 0.1

Table of Conte nt s

The estimated future amortization of intangible assets is as follows:

(In thousands)

2021 $ 25,038

Total $ 52,340

Accrued Expenses

As of December 31,

(In thousands) 2020 2019

3 unchanged sentences

Professional fees 4,848 4,118

Restructuring accrual

Other 9,504 10,264

Total accrued expenses $ 48,380 $ 55,507

8 unchanged sentences

Privacy Class Action Litigation

On September 11, 2017, the Company and a wholly-owned subsidiary, Full Circle Studies, Inc., ("Full Circle"), received demand letters on behalf of named plaintiffs and all others similarly situated alleging that the Company and Full Circle collected personal information from users under the age of 13 without verifiable parental consent in violation of Massachusetts law and the federal Children's Online Privacy Protection Act.

The letters alleged that the Company and Full Circle collected such personal information by embedding advertising software development kits ("SDKs") in applications created or developed by The Walt Disney Company.

On September 11, 2017, the Company and a wholly-owned subsidiary, Full Circle Studies, Inc.

("Full Circle"), received demand letters on behalf of named plaintiffs and all others similarly situated alleging that the Company and Full Circle collected personal information from users under the age of 13 without verifiable parental consent in violation of Massachusetts law and the federal Children's Online Privacy Protection Act.

The letters alleged that the Company and Full Circle collected such personal information by embedding advertising software development kits in applications created or developed by The Walt Disney Company.

The letters sought monetary damages, attorneys' fees and damages under Massachusetts law.

5 unchanged sentences

On February 26, 2020, the Company and Full Circle reached an agreement with the plaintiffs to settle the complaints in full, with no admission of liability, in return for injunctive relief and payment of the plaintiffs' attorneys fees, to be covered by the Company's insurance.

The settlement received preliminary court approval on September 24, 2020;

it remains subject to final court approval.

Securities Class Action Litigation

3 unchanged sentences

03210, was filed in the U.S.

District Court for the Southern District of New York and also names the Company's Chief Financial Officer, Gregory Fink, and the Company's former Chief Executive Officer, Bryan Wiener, as defendants.

The complaint, which was amended on September 30, 2019, purports to bring claims on behalf of all persons and entities that acquired securities of the Company between February 28, 2019 and August 7, 2019 and alleges that the Company, Mr.

District Court for the Southern District of New York and also named the Company's Chief Financial Officer, Gregory Fink, and the Company's former Chief Executive Officer, Bryan Wiener, as defendants.

The complaint, which was amended on September 30, 2019, purported to bring claims on behalf of all persons and entities that acquired securities of the Company between February 28, 2019 and August 7, 2019 and alleged that the Company, Mr.

Wiener, and Mr.

Fink violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, by allegedly failing to disclose in public statements in February and March 2019 material information concerning a disagreement relating to the Company's business strategy.

The complaint also alleges that Mr.

The complaint also alleged that Mr.

Wiener and Mr.

Fink, acting as control persons of the Company, violated Section 20(a) of the Exchange Act in connection with the Company's alleged failure to disclose material information.

The complaint seeks a determination of the propriety of the class, compensatory damages and the award of reasonable costs and expenses incurred in the action.

The defendants deny any wrongdoing or liability and intend to vigorously defend against these claims.

Although the ultimate outcome of this matter is unknown, the Company believes that a material loss was not probable or estimable as of December 31, 2019.

SEC Settlement

On September 24, 2019, the Company announced a settlement with the SEC, resolving a previously disclosed investigation into financial accounting and disclosure practices between February 2014 and February 2016.

The findings reached by the SEC related to revenue recognition and disclosure practices in 2014-2016, including contravention of civil antifraud and books and records provisions.

The conduct occurred under prior management, including the Company's former Chief Executive Officer, Serge Matta.

In agreeing to the terms of the settlement, which included a civil monetary penalty of $ 5.0 million and a cease-and-desist order (dated September 24, 2019) under Section 8A of the Securities Act of 1933 and Section 21C of the Exchange Act, the Company neither admitted nor denied the SEC's allegations.

A separate proceeding against Mr.

Matta was announced by the SEC, pursuant to which Mr.

Matta agreed to pay a clawback to the Company of $ 2.1 million .

The SEC considered the Company's cooperation during the investigation and its significant remedial efforts, including replacing the former Chief Executive Officer and other senior executives, constituting a new management team, implementing new and extensive internal control procedures and policies, and implementing a new, comprehensive compliance management system.

In its order, the SEC also noted that all senior management and directors who were with the Company at the time of the conduct described in the order are no longer with the Company.

Matta's $ 2.1 million clawback was paid to the Company in September 2019.

The Company's first payment to the SEC (of the same amount, $ 2.1 million ) was made in October 2019, to be followed by three equal payments of the remaining penalty amount plus post-judgment interest due 120, 240, and 360 days after the entry of the SEC's order.

Export Controls Review

In March 2018, the Company became aware of possible violations of U.S.

export controls and economic sanctions laws and regulations involving the Company.

The circumstances giving rise to these possible violations pertained to the Company's collection of survey data from panelists within U.S.

embargoed countries, as a part of the Company's larger global survey efforts not intentionally targeted at such countries.

The Company filed a joint initial notice of voluntary disclosure with the U.S.

Department of the Treasury's Office of Foreign Assets Control ("OFAC") and the U.S.

Commerce Department’s Bureau of Industry and Security ("BIS") and commenced an internal review to identify the causes and scope of transactions that could constitute violations of the OFAC and BIS regulations.

On May 31, 2018, the Company filed a final voluntary disclosure with OFAC and BIS.

On September 10, 2018, the Company was notified that BIS did not find a violation of export regulations and closed the matter.

On September 13, 2019, OFAC issued a letter stating that although potential violations may have occurred, OFAC had decided not to pursue a civil monetary penalty or take other enforcement action.

The letter represented a final enforcement response from OFAC.

In its letter, OFAC noted that the Company had taken a number of remedial compliance measures and detailed the compliance measures taken.

The complaint sought a determination of the propriety of the class, compensatory damages and the award of

Table of Conte nt s

reasonable costs and expenses incurred in the action.

On June 24, 2020, the Court granted the defendants' motion to dismiss the complaint for failure to state a claim.

On July 24, 2020, the complaint was dismissed with prejudice.

Other Matters

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The Company has entered into indemnification agreements with each of the Company's directors and certain officers, and the Company's amended and restated certificate of incorporation requires it to indemnify each of its officers and directors, to the fullest extent permitted by Delaware law, who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that he or she is or was a director or officer of the Company.

The Company has paid and continues to pay legal counsel fees incurred by the present and former directors and officers who are involved in legal proceedings that require indemnification.

The Company has paid and may in the future pay legal counsel fees incurred by current and former directors and officers who are involved in legal proceedings that require indemnification.

Similarly, certain of the Company's commercial contracts require it to indemnify contract counterparties under specified circumstances, and the Company may incur legal counsel fees and other costs in connection with these obligations.

The components of loss before income tax benefit (provision) are as follows:

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The components of loss before income tax (provision) benefit are as follows:

Years Ended December 31,

(In thousands) 2020 2019 2018

Income tax (benefit) provision is as follows:

Domestic $ ( 44,010 ) $ ( 316,479 ) $ ( 140,298 )

Foreign ( 3,006 ) ( 23,524 ) ( 15,264 )

Total $ ( 47,016 ) $ ( 340,003 ) $ ( 155,562 )

Income tax provision (benefit) is as follows:

Years Ended December 31,

(In thousands) 2020 2019 2018

Income tax (benefit) provision

Federal $ — $ — $ —

State 45 ( 42 ) ( 119 )

Foreign 847 2,762 1,806

Total $ 892 $ 2,720 $ 1,687

Federal $ 101 $ ( 1,189 ) $ 898

State 238 ( 3,992 ) 1,060

Foreign ( 329 ) 1,454 61

Total $ 10 $ ( 3,727 ) $ 2,019

Income tax provision (benefit) $ 902 $ ( 1,007 ) $ 3,706

A reconciliation of the statutory U.S.

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Years Ended December 31,

2020 2019 2018

Statutory federal tax rate 21.0 % 21.0 % 21.0 %

Nondeductible items

State taxes ( 0.5 ) % 1.1 % ( 2.8 ) %

Other nondeductible items — % ( 0.7 ) % ( 0.5 ) %

Nondeductible interest and derivatives ( 9.7 ) % ( 1.5 ) % ( 4.0 ) %

Foreign rate differences ( 1.8 ) % ( 1.8 ) % ( 2.2 ) %

Change in statutory tax rates

Change in valuation allowance 5.9 % ( 5.3 ) % ( 5.4 ) %

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Subscription receivable — % — % ( 1.2 ) %

US tax impact of restructuring ( 14.4 ) % — % — %

Other adjustments 1.1 % ( 0.5 ) % ( 1.0 ) %

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Effective tax rate ( 1.9 ) % 0.3 % ( 2.4 ) %

Income Tax Benefit (Provision)

Income Tax (Provision) Benefit

The Company recognized income tax expense of $ 0.9 million during the year ended December 31, 2020, which is primarily comprised of current tax expense of $ 0.8 million related to foreign taxes.

Included in total tax expense are income tax adjustments of $ 8.9 million for permanent differences in the book and tax treatment of certain stock-based compensation, limitations on the deductibility of certain executive compensation, and nondeductible interest expense on debt instruments and associated derivatives.

Also included is an adjustment of $ 11.2 million for a permanent difference related to foreign earnings taxable in the U.S.

as a result of a tax restructuring that occurred during the year.

These tax adjustments, along with state and local taxes and book losses in foreign jurisdictions where the income tax rate is substantially lower than the U.S.

federal statutory rate, are the primary drivers of the annual effective income tax rate.

The Company recognized an income tax benefit of $ 1.0 million during the year ended December 31, 2019, which is comprised of current tax expense of $ 2.7 million primarily related to foreign taxes and a deferred tax benefit of $ 3.7 million related to temporary differences between the tax treatment and GAAP accounting treatment for certain items.

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and certain foreign jurisdictions.

Also included in the total tax benefit are income tax adjustments of $ 58.6 million related to the impairment of goodwill and $ 15.2 million for permanent differences in the book and tax treatment of certain stock-based compensation, limitations on the deductibility of certain executive compensation, nondeductible interest expense on debt instruments and associated derivatives, and other nondeductible expenses.

Also included in the total tax benefit are income tax adjustments of $ 58.6 million related to the impairment of goodwill and $ 15.2 million for permanent differences in the book

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and tax treatment of certain stock-based compensation, limitations on the deductibility of certain executive compensation, nondeductible interest expense on debt instruments and associated derivatives, and other nondeductible expenses.

These tax adjustments, along with state and local taxes and book losses in foreign jurisdictions where the income tax rate is substantially lower than the U.S.

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federal statutory rate, are the primary drivers of the annual effective income tax rate.

The Company recognized an income tax benefit of $ 2.7 million during the year ended December 31, 2017, which is comprised of current tax expense of $ 0.5 million primarily related to foreign taxes and a deferred tax benefit of $ 3.2 million related to temporary differences between the tax treatment and GAAP accounting treatment for certain items.

Included within the total tax benefit is an income tax benefit of $ 8.3 million related to the impact of the TCJA provisions on the Company's U.S.

deferred taxes, including the reduction in the corporate tax rate from 35% to 21% and a change in the Company's valuation allowance assessment.

Also included is income tax expense of $ 126.1 million related to the increase in valuation allowance recorded against the Company's deferred tax assets to offset the tax benefit of the Company's operating losses in the U.S.

and certain foreign jurisdictions.

An income tax adjustment of $ 2.5 million has also been included for permanent differences in the book and tax treatment of certain stock-based compensation, meals and entertainment and other nondeductible expenses.

These tax adjustments, along with having book losses in foreign jurisdictions where the income tax rate is substantially lower than the U.S.

federal statutory rate, are the primary drivers of the annual effective income tax rate.

The COVID-19 pandemic has a global reach, and many countries have introduced measures that provide relief to taxpayers in a variety of ways.

The Company has evaluated these measures, including the CARES Act in the United States, and has concluded that these did not have a significant impact on its income tax (provision) benefit for the year ended December 31, 2020.

Deferred Income Taxes

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The components of net deferred income taxes are as follows:

As of December 31,

(In thousands)

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Net operating loss carryforwards $ 197,017 $ 212,253

Deferred compensation

Deferred rent

Lease liability 14,517 16,772

Deferred revenues 14,483 5,095

Property and equipment

Tax contingencies

Deferred compensation 6,138 8,146

Accrued salaries and benefits 3,499 2,406

Capital leases

Tax credits 2,187 2,945

Tax contingencies 1,132 1,127

Allowance for doubtful accounts 776 453

Capital loss carryforwards 263 266

Goodwill — 2,462

Litigation settlement — 225

Other 2,550 2,409

Gross deferred tax assets 242,562 254,559

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Deferred tax liabilities:

Intangible assets

Lease asset $ ( 8,829 ) $ ( 11,219 )

Property and equipment ( 5,716 ) ( 5,134 )

Intangible assets ( 3,495 ) ( 15,202 )

Subpart F income recapture ( 1,224 ) ( 1,224 )

Outside basis difference

Goodwill ( 958 ) —

Other ( 111 ) ( 86 )

Total deferred tax liabilities ( 20,333 ) ( 32,865 )

Net deferred tax asset (liability)

Net deferred tax asset $ 2,114 $ 2,087

Tax Valuation Allowance

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entities, including federal and state tax attributes and timing differences, as well as the deferred tax assets of certain foreign subsidiaries.

The increase in the valuation allowance during 2019 is primarily related to operating losses incurred during the year.

To the extent the Company determines that, based on the weight of available evidence, all or a portion of its valuation allowance is no longer necessary, the Company will recognize an income tax benefit in the period such determination is made for the reversal of the valuation allowance.

The increase in the valuation allowance during 2020 is primarily related to the pre-tax losses generated in the U.S.

To the extent the Company determines that, based on the weight of available evidence, all or a portion of its valuation allowance is no longer necessary, the

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Company will recognize an income tax benefit in the period such determination is made for the reversal of the valuation allowance.

If management determines that, based on the weight of available evidence, it is more-likely-than-not that all or a portion of the net deferred tax assets will not be realized, the Company may recognize income tax expense in the period such determination is made to increase the valuation allowance.

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A summary of the deferred tax asset valuation allowance is as follows:

As of December 31,

(In thousands) 2020 2019

Beginning Balance

$ 219,607 $ 200,366

Additions 737 19,832

Reductions ( 229 ) ( 591 )

Ending Balance $ 220,115 $ 219,607

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As of December 31, 2020, the Company had federal and state net operating loss carryforwards for tax purposes of $ 578.5 million and $ 1,360.7 million, respectively.

These net operating loss carryforwards begin to expire in 2022 for federal income tax purposes and are expiring annually for state income tax purposes.

The federal and certain state net operating losses generated after December 31, 2017 will have an indefinite carryforward period as a result of the TCJA.

These net operating loss carryforwards will begin to expire in 2023 for federal income tax purposes and 2021 for state income tax purposes.

The federal and certain state net operating losses generated after December 31, 2017 have an indefinite carryforward period.

As of December 31, 2020, the Company had an aggregate net operating loss carryforward for tax purposes related to its foreign subsidiaries of $ 5.1 million, which will begin to expire in 2024.

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net operating loss carryforwards that can be utilized annually to offset future taxable income and taxes payable.

A significant portion of the Company's net operating loss carryforwards are subject to an annual limitation under Section 382 of the Internal Revenue Code.

A significant portion of the Company's net operating loss carryforwards are subject to an annual limitation under Section 382 of the Internal Revenue Code, and the Company anticipates that the Transactions will trigger further limitations.

Additionally, despite the net operating loss carryforwards, the Company may have a future tax liability due to foreign tax or state tax requirements.

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The Company has unrecognized tax benefits, which are tax benefits related to uncertain tax positions which have been or will be reflected in income tax filings that have not been recognized in the financial statements due to potential adjustments by taxing authorities in the applicable jurisdictions.

The Company's liabilities for unrecognized tax benefits, which include interest and penalties, were $ 1.6 million as of both December 31, 2019 and 2018 .

The Company's liabilities for unrecognized tax benefits, which include interest and penalties, were $ 0.7 million and $ 1.6 million as of December 31, 2020 and 2019, respectively.

The remaining unrecognized tax benefits have reduced deferred tax balances.

The amount of unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate are $ 2.0 million, $ 2.3 million and $ 2.5 million as of December 31, 2020, 2019 and 2018, respectively, and include the federal tax benefit of state deductions.

The Company anticipates that $ 0.4 million of unrecognized tax benefits will reverse during the next year due to the expiration of statutes of limitation.

The Company anticipates a negligible amount of unrecognized tax benefits will reverse during the next year due to the expiration of statutes of limitation.

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Changes in the Company's unrecognized income tax benefits are as follows:

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(In thousands)

2020 2019 2018

Beginning balance $ 2,400 $ 2,560 $ 2,508

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The Company recognizes interest and penalties related to income tax matters in income tax expense.

As of both December 31, 2019 and 2018 , accrued interest and penalties on unrecognized tax benefits were $ 0.7 million .

As of December 31, 2020 and 2019, accrued interest and penalties on unrecognized tax benefits were $ 0.1 million and $ 0.7 million, respectively.

The Company or one of its subsidiaries files income tax returns in the U.S.

federal jurisdiction, and various state and foreign jurisdictions.

For income tax returns filed by the Company, the Company is no longer subject to U.S.

For income tax returns filed by the Company, the Company is generally no longer subject to U.S.

federal examinations by tax authorities for years prior to 2017 or state and local tax examinations by tax authorities for years prior to 2016.

Tax attribute carryforwards may still be adjusted upon examination by tax authorities.

Employee Benefit Plans

The Company has a 401(k) plan for the benefit of all U.S.

employees who meet certain eligibility requirements.

This plan covers substantially all of the Company's full-time U.S.

The Company contributed $ 1.1 million , $ 1.2 million and $ 1.3 million to the 401(k) plan for the years ended December 31, 2019 , 2018 and 2017 , respectively.

Geographic Information

The Company attributes revenues to customers based on the location of the customer.

The composition of the Company's sales to customers between those in the United States and those in other locations is as follows:

Years Ended December 31,

(In thousands)

United States

Latin America

Total revenues

(1) As discussed in Footnote 2 , Summary of Significant Accounting Policies, of the 2018 10-K, revenue for 2017 is not comparable to 2019 and 2018 due to the adoption of ASC 606 on January 1, 2018.

The composition of the Company's property and equipment, net between those in the United States and those in other locations as of the end of each year are as follows:

As of December 31,

(In thousands)

United States

Latin America

Of the Company's long-lived intangible assets, net, $ 79.5 million and $ 107.9 million were generated by or located in the United States for the years ended December 31, 2019 and 2018, respectively.

The Company also had $ 0.1 million and $ 19.0 million of long-lived intangible assets, net generated by or located in Europe for the years ended December 31, 2019 and 2018, respectively.

The Company is no longer subject to examination by tax authorities in the Netherlands for years prior to 2014.

However, tax attribute carryforwards may still be adjusted upon examination by tax authorities.

Related Party Transactions

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On July 19, 2018, the Company filed a registration statement on Form S-1 with the SEC for the purpose of registering the shares of Common Stock owned by WPP in order to fulfill the Company's contractual obligations under a stockholders' rights agreement entered into by the Company and WPP in 2015.

Refer to Footnote 4 , Long-term Debt for more information.

Refer to Footnote 4 , Debt for more information.

The Company provides WPP, in the normal course of business, services amongst its different products and receives various services from WPP supporting the Company's data collection efforts.

In early 2015, there were a series of business and asset acquisitions and sales and issuances of Common Stock between the Company and WPP (giving rise to the stockholders' rights agreement described above) as well as a Subscription Receivable agreement that the Company entered into with GroupM, a WPP subsidiary.

In 2015, the Company and GroupM entered into an agreement in which GroupM agreed to a minimum commitment to purchase $ 20.9 million of the Company's products over five years , which was recorded as Subscription Receivable as contra equity within additional paid-in capital on the Consolidated Statements of Stockholders' Equity.

In December 2017, the Company signed an amendment with GroupM in which GroupM agreed to purchase additional subscription services for $ 17.8 million over three years , which was offset by the $ 3.7 million Subscription Receivable that remained as of December 31, 2017.

Upon fully utilizing the Subscription Receivable in September 2018, the Company began recognizing revenue under the amendment as the Company delivered products and services under the agreement.

Total revenue recognized was $ 6.0 million and $ 2.0 million for the years ended December 31, 2019 and 2018, respectively.

In January 2016, as part of the Company's merger with Rentrak Corporation ("Rentrak"), the Company acquired two contracts with net present value of $ 14.5 million with WPP wholly-owned subsidiaries which were reflected as Subscription Receivable.

The Company recorded the Subscription Receivable as contra equity within additional paid-in capital on the Consolidated Statements of Stockholders' Equity.

In 2015, there were a series of business and asset acquisitions and sales and issuances of Common Stock between the Company and WPP (giving rise to the stockholders' rights agreement described above) as well as a Subscription Receivable agreement that the Company entered into with GroupM, a WPP subsidiary.

In 2016, as part of the Company's merger with Rentrak Corporation, the Company acquired contracts with WPP wholly-owned subsidiaries which were also included as a Subscription Receivable.

The Subscription Receivable was recorded as contra equity within additional paid-in capital on the Consolidated Statements of Stockholders' Equity.

As cash was received on the Subscription Receivable, additional paid-in capital was increased by the amount of cash received and the Company recognized imputed interest income.

Effective August 31, 2018, the Company terminated one legacy Rentrak agreement which was originally reflected in Subscription Receivable and concurrently signed a new arrangement for $ 7.4 million for various subscription services over a three -year period.

As of December 31, 2019 , the balance of the Subscription Receivable is zero .

The Company recorded $ 2.3 million and $ 0.8 million in revenues in the Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2019 and 2018, respectively.

The Company has a cancelable five -year agreement with Lightspeed, a WPP subsidiary, to conduct a proof of concept and follow-on program (the "Program") to demonstrate the capability of designing and deploying a program to collect browsing and demographic data for individual participating households.

The agreement provides that the Company makes payments to Lightspeed of approximately $ 5.0 million per year through 2020.

The Program is designed to be a comprehensive data collection effort across multiple in-home devices (e.g., television, streaming devices, computers, mobile phones, tablets, gaming devices and wearables) monitored via the installation of household internet routers ("Meters") in panelist households.

The Meters collect and send the data back to the Company for use in its Total Home Panel product.

Under the terms of the Program, Lightspeed is paid to manage the operational aspects of panel recruitment, compliance, inventory management, support and collection of panel demographic data.

Upon fully utilizing the Subscription Receivable in September 2018, the Company began recognizing revenue as products and services were delivered under the respective agreements.

Total revenue recognized under these agreements was $ 6.6 million, $ 8.3 million and $ 2.8 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The Company has a cancelable five-year agreement with Lightspeed, a WPP subsidiary, to collect browsing and demographic data for individual participating households.

The agreement provides that the Company makes payments to Lightspeed of approximately $ 5.4 million per year through December 2025.

The agreement is designed to be a comprehensive data collection effort across multiple in-home devices (e.g., television, streaming devices, computers, mobile phones, tablets, gaming devices and wearables) for which data is collected and sent to the Company for use in its products.

Lightspeed is paid to manage the operational aspects of panel recruitment, compliance, inventory management, support and collection of panel demographic data.

The Company's results from transactions with WPP and its affiliates, as reflected in the Consolidated Statements of Operations and Comprehensive Loss, are detailed below:

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(In thousands) 2020 2019 2018

Revenues $ 13,315 $ 15,858 $ 11,610

Cost of revenues 10,094 10,455 11,077

Selling and marketing

Research and development

General and administrative 316 539 99

Interest income — — 343

(1) The Company entered into certain agreements with WPP and its affiliates that were not characterized as revenue arrangements under GAAP.

Accordingly, despite cash being received by the Company under these agreements, no revenue was recognized during the year ended December 31, 2018 other than imputed interest income on the net present value of anticipated future cash payments from WPP.

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The Company has the following balances related to transactions with WPP and its affiliates, as reflected in the Consolidated Balance Sheets:

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Accrued expenses 835 716

Contract liability

Other non-current liabilities

Contract liabilities 3,538 1,361

Transactions with Starboard

On January 16, 2018, the Company entered into certain agreements with Starboard, then a beneficial owner of more than five percent of the Company's outstanding Common Stock.

Refer to Footnote 4 , Long-term Debt , for further information regarding these agreements and the Company's issuance of senior secured convertible notes to Starboard in 2018.

Refer to Footnote 4 , Debt , for further information regarding these agreements and the Company's issuance of senior secured convertible notes to Starboard in 2018.

As a result of these agreements and the transactions contemplated thereby, Starboard ceased to be a beneficial owner of more than five percent of the Company's outstanding Common Stock on January 16, 2018.

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As of December 31, 2018, Starboard had no remaining right to designate any directors to the Board.

Included in the Consolidated Statements of Operations and Comprehensive Loss, the Company recorded interest expense related to Starboard of $ 30.8 million and $ 16.4 million during the years ended December 31, 2019 and 2018 , respectively.

Included in the Consolidated Statements of Operations and Comprehensive Loss, the Company recorded interest expense, inclusive of non-cash accretion of issuance discount and deferred financing costs, related to the senior secured convertible notes of $ 33.3 million, $ 30.8 million, and $ 16.4 million during the years ended December 31, 2020, 2019 and 2018, respectively.

The Company has the following balances related to transactions with Starboard, as reflected in the Consolidated Balance Sheets:

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Accrued expenses $ — $ 6,120

Financing derivatives

Senior secured convertible notes 192,895 184,075

Financing derivatives 11,300 21,587

Other non-current liabilities 6,120 —

Organizational Restructuring

In December 2017, the Company implemented a reduction in force plan ("2017 Restructuring Plan") that resulted in the termination of approximately 10 % of its workforce.

The reduction in force was implemented following management's determination to reduce its staffing levels and exit certain geographic regions, in order to enable the Company to decrease its global costs and more effectively align resources to business priorities.

Total restructuring expense recognized for the 2017 Restructuring Plan was $ 11.8 million and this plan was complete as of December 31, 2018.

In June and December 2018, the Company's Board of Directors authorized management to implement additional reductions in its workforce (less than 10 % ) and rationalize its portfolio of leased properties due to the reductions in headcount ("2018 Restructuring Plans").

This additional restructuring effort resulted in the termination of one operating lease, the extension of the lease related to the Company's headquarters, and the sublease of three offices.

In June and December 2018, the Company's Board of Directors authorized management to implement reductions in its workforce (less than 10 %) and rationalize its portfolio of leased properties due to the reductions in headcount ("2018 Restructuring Plans").

This restructuring effort resulted in the termination of one operating lease, the extension of the lease related to the Company's headquarters, and the sublease of three offices.

In connection with the 2018 Restructuring Plans, the Company incurred total exit-related costs of $ 8.1 million.

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In connection with the August 2019 Restructuring Plan, the Company incurred total exit-related costs of $ 2.5 million.

As of December 31, 2019 , the total remaining accrual for restructuring is $ 1.0 million , all of which is current.

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The tables below summarize the balance of accrued restructuring expenses and the changes in the accrued amounts for each period presented.

2017 Restructuring Plan

(In thousands)

Severance pay and benefits

Other direct costs

Restructuring expense

Foreign exchange

Accrued Balance as of December 31, 2017

Restructuring expense

Foreign exchange

Accrued Balance as of December 31, 2018

Accrued Balance as of December 31, 2019

2018 Restructuring Plans

(In thousands)

Severance pay and benefits

Short-term lease exit and other direct costs

Long-term lease exit and other direct costs

(In thousands) Severance pay and benefits Short-term lease exit and other direct costs Long-term lease exit and other direct costs Total

Restructuring expense (1)

$ 7,145 $ 1,271 $ 1,847 $ 10,263

Payments ( 2,652 ) ( 561 ) ( 37 ) ( 3,250 )

Foreign exchange — ( 2 ) — ( 2 )

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Adoption of ASC 842 (2)

— ( 708 ) ( 1,810 ) ( 2,518 )

Restructuring expense (3)

( 2,195 ) — — ( 2,195 )

Payments ( 2,298 ) — — ( 2,298 )

Accrued Balance as of December 31, 2019 $ — $ — $ — $ —

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2019 Restructuring Plans

(In thousands)

May 2019 Restructuring Plan

August 2019 Restructuring Plan

(In thousands) May 2019 Restructuring Plan August 2019 Restructuring Plan

Severance pay and benefits related restructuring expense $ 3,141 $ 2,454

Payments ( 2,847 ) ( 1,756 )

Accrued Balance as of December 31, 2019 294 698

Payments ( 294 ) ( 698 )

Accrued Balance as of December 31, 2020 $ — $ —

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Quarterly Financial Information (Unaudited)

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(In thousands, except share and per share data)

First Second Third Fourth

Revenues $ 89,528 $ 88,566 $ 87,952 $ 89,990

Cost of revenues (1)

45,798 44,949 46,466 43,499

Gross profit 43,730 43,617 41,486 46,491

Selling and marketing (1)

19,213 16,007 17,131 17,869

Research and development (1)

10,136 9,765 9,501 9,304

General and administrative (1)

Investigation and audit related

15,543 13,741 12,136 14,363

Amortization of intangible assets 6,918 6,846 6,750 6,705

Impairment of goodwill

Impairment of intangible asset

Settlement of litigation, net

Restructuring

Total operating expenses

Impairment of right-of-use and long-lived assets 4,671 — — —

Total expenses from operations 56,481 46,359 45,518 48,241

Loss from operations ( 12,751 ) ( 2,742 ) ( 4,032 ) ( 1,750 )

Interest expense, net ( 8,846 ) ( 8,856 ) ( 9,027 ) ( 9,076 )

Other income (expense), net

Other income, net 7,194 1,477 4,191 1,692

Gain (loss) from foreign currency transactions 804 ( 944 ) ( 2,012 ) ( 2,338 )

Loss before income taxes ( 13,599 ) ( 11,065 ) ( 10,880 ) ( 11,472 )

Income tax (provision) benefit

Income tax benefit (provision) 415 664 ( 241 ) ( 1,740 )

Net loss $ ( 13,184 ) $ ( 10,401 ) $ ( 11,121 ) ( 13,212 )

Net loss per common share:

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(1) Amortization of stock-based compensation expense is included in the line items above as follows:

First Second Third Fourth

Cost of revenues $ 209 $ 487 $ 503 $ 89

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General and administrative 1,784 764 1,010 2,115

Restructuring

Total stock-based compensation expense $ 2,658 $ 2,346 $ 2,524 $ 2,545

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First Second Third Fourth

Revenues $ 102,294 $ 96,888 $ 94,300 $ 95,163

Cost of revenues (1)

53,407 51,994 47,390 46,831

Gross profit 48,887 44,894 46,910 48,332

Selling and marketing (1)

24,840 23,329 20,421 20,555

Research and development (1)

18,216 16,883 14,064 12,639

General and administrative (1)

Investigation and audit related

19,545 16,932 14,064 15,878

Amortization of intangible assets 8,105 8,076 6,970 6,925

Investigation and audit related 842 2,354 980 129

Impairment of goodwill — 224,272 — —

Impairment of intangible assets — 17,308 — —

Settlement of litigation, net — 5,000 ( 2,100 ) —

Restructuring ( 70 ) 2,949 2,270 ( 1,886 )

Total operating expenses

Total expenses from operations 71,478 317,103 56,669 54,240

Loss from operations ( 22,591 ) ( 272,209 ) ( 9,759 ) ( 5,908 )

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Other income (expense), net 2,969 ( 3,081 ) 6,733 ( 4,967 )

(Loss) gain from foreign currency transactions

Gain (loss) from foreign currency transactions 38 ( 464 ) 1,194 ( 432 )

Loss before income taxes ( 26,343 ) ( 283,996 ) ( 10,007 ) ( 19,657 )

Income tax (provision) benefit ( 1,171 ) 4,463 ( 552 ) ( 1,733 )

Net loss $ ( 27,514 ) $ ( 279,533 ) $ ( 10,559 ) $ ( 21,390 )

Net loss per common share:

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(1) Stock-based compensation expense is included in the line items above as follows:

First Second Third Fourth

Cost of revenues $ 848 $ 636 $ 396 $ ( 28 )

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Total stock-based compensation expense $ 6,953 $ 4,038 $ 3,142 $ 2,425

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Subsequent Events

On January 7, 2021, the Company entered into separate Securities Purchase Agreements with each of Charter, Qurate and Pine, pursuant to which, at the closing of the Transactions contemplated thereby, the Company will issue and sell (a) to Charter, 27,509,203 shares of Series B Convertible Preferred Stock in exchange for $ 68.0 million, (b) to Qurate, 27,509,203 shares of Series B Convertible Preferred Stock in exchange for $ 68.0 million and (c) to Pine, 27,509,203 shares of Series B Convertible Preferred Stock in exchange for $ 68.0 million.

The proceeds of the Transactions will be used to repay the Notes.

Additionally, in connection with the closing, the Company expects to repay the Secured Term Note and certain transaction-related expenses with cash from its balance sheet.

Refer to Footnote 4 , Debt for additional information on the Notes and the Secured Term Note.

The Transactions and related matters were approved by the Company's stockholders on March 9, 2021 and are expected to be completed on or around March 10, 2021.

The exercise price of the Company's Series A Warrants described in Footnote 5 , Stockholders' Equity , is subject to anti-dilution adjustment in certain circumstances, including upon certain issuances of capital stock.

As a result of the Transactions described above, the Company expects to adjust the exercise price of the Series A Warrants to the closing price of the Transactions.

Upon closing of the Transactions, the Company expects to record a non-cash charge that will include extinguishment of debt and associated derivatives, issuance of 3.15 million conversion shares to affiliates of Starboard Value LP, and the anti-dilution adjustment to the Series A Warrants described above.

The non-cash charge at closing is estimated to range between $ 15 million and $ 25 million based on recent trading prices of the Company's Common Stock, but could vary depending on the market price of the Common Stock on the closing date and other variables.

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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data