NOTE 8. SUBSEQUENT EVENTS

The Company evaluated subsequent events through June 26, 2017, the date these condensed consolidated financial statements were issued.

In April 2017, the Company borrowed an additional $2,000 under the Bridge Loan, and in connection with that transaction, the Company issued to the Bridge Loan Lenders (a) an aggregate of 45,000 shares of our common stock, and (b) fully vested warrants to purchase a number of shares of the Company’s common stock equal to the greater of (i) 60,000 shares of common stock, and (ii) 0.375% of the Company’s fully diluted shares outstanding following completion of the IPO. Such warrants have a term of ten years following the date of issuance and have an exercise price per share equal to the lower of $13.6088 or the IPO price per share to the public.

As described in Note 5, the Company completed a reverse split of its common stock in April 2017.

The Company completed its IPO of its common stock on May 17, 2017, pursuant to which it issued 2,500,000 shares at the IPO price per share to the public of $15.00 per share. The Company received proceeds in the IPO of approximately $32,624, net of $4,876 related to underwriting discounts, commissions and offering costs.

Concurrent with the closing of the IPO on May 17, 2017, the following transactions were completed in accordance with the related agreements (see Notes 3 and 4):

Upon the automatic exercise in full of the Primary Warrant in connection with the IPO, the Company issued to Acacia a five-year warrant to purchase up to 809,400 shares of the Company’s common stock at an exercise price of $13.6088 per share (the “10% Warrant”). Fifty percent of the shares under the 10% Warrant vested upon its issuance and the remaining half will vest in May 2018. The fair market value of the 10% Warrant is $5,790, which will be recorded as Other Income (Expense) in the second quarter of 2017.

In the second quarter of 2017, the Company will record a pre-tax charge of approximately $8,600 in Other Expense to reflect the impact of the conversion of the convertible notes payable into common stock and the issuance of warrants, and approximately $2,900 in Accretion of Redeemable Convertible Preferred Stock to reflect the impact of the conversion of the redeemable convertible preferred stock into common stock, as described above.

The stock options issuable under the Employment Agreements with Chad Steelberg and Ryan Steelberg, as described in Note 7, were issued at the time of the pricing of the IPO. The total number of time-vested stock options awarded under these agreements was 2,089,638 and the total number of performance-based options awarded was 1,044,818. In addition, upon the pricing of the IPO, the Company granted a total of 713,785 stock options to employees and directors, which options have an exercise price of $15.00 per share and a four-year vesting period, and granted a total of 35,576 restricted stock units to directors pursuant to the automatic grant provision of the Company’s 2017 Stock Incentive Plan.

In May 2017, the Board of Directors approved the increase in the Company’s authorized common stock to 75,000,000 shares from 38,500,000 shares (par value $0.001 per share) and the decrease in the Company’s authorized preferred stock from 11,500,000 shares to 1,000,000 shares (par value $0.001 per share) upon the closing of the IPO and the effectiveness of the Company’s amended and restated certificate of incorporation.

There were no other material subsequent events that required recognition or additional disclosure in the accompanying condensed consolidated financial statements.