which RAC purchased, or the BAT Purchase, (i) all of the outstanding shares of capital stock of ROIM and (ii) certain intellectual property, or the BAT IP, from BAT in exchange for
2,161,938 shares of RACs Class B common stock and a promissory note of RAC payable to BAT in the original principal amount of $885,194, or the BAT Note.
In connection with the ROIM Agreement, RAC also assumed the following promissory notes: (i) two senior secured promissory notes of BAT
dated October 24, 2012 and March 19, 2013 in the original aggregate principal amount of $2,000,000, or the NCI Notes, payable to Newport Coast Investments, LLC, a California limited liability company beneficially owned by Chad and Ryan
Steelberg, or NCI, (ii) two senior secured promissory notes of BAT dated October 24, 2012 and March 19, 2013 payable to Brand Affinity, LLC, an unaffiliated Illinois limited liability company, or BALLC, in the original principal
amount of $2,000,000, or the BALLC Notes, and (iii) certain senior secured promissory notes of BAT dated as of dates between September 27, 2013 and December 26, 2013 in the original aggregate principal amount of $4,900,000, or the BAT
Bridge Notes. The holders of the BAT Bridge Notes described in subsection (iii) above are collectively referred to as the BAT Noteholders.
On July 15, 2014, prior to the RAC Merger described below, the BAT Noteholders exchanged the BAT Bridge Notes for an aggregate of
1,038,066 shares of Class B common stock of RAC. The NCI Notes, the BALLC Notes and the BAT Bridge Note remained outstanding and were assumed by us in connection with the RAC Merger.
On July 15, 2014, we and the members of NM entered into a Unit Purchase Agreement, pursuant to which we acquired all of the outstanding
membership interests in NM in exchange for the issuance to the members of NM of an aggregate of 900,000 shares of our common stock and 3,000,000 shares of our Series A preferred stock, or the NM Transfer.
On July 15, 2014, we and each of the stockholders of RAC entered into an Agreement and Plan of Merger, pursuant to which RAC was merged
with and into our company, with our company as the surviving company in the merger, or the RAC Merger. In connection with the RAC Merger, all of the outstanding capital stock of RAC was converted into an aggregate of 800,000 shares of our common
stock and 2,666,667 shares of our Series A-1 preferred stock. The NCI Notes, the BALLC Notes and the BAT Bridge Note assumed by us in connection with the RAC Merger were repaid in full in July 2014.
The terms of our Series A preferred stock and Series A-1 preferred stock issued in the NM Transfer and
the RAC Merger were substantially identical except for the adverse treatment of the Series A-1 preferred stock in the event certain indemnification claims were made pursuant to the merger agreement in the RAC
Merger. No indemnification claims were made under such merger agreement, and accordingly, all of the outstanding shares of Series A-1 preferred stock were automatically converted into shares of our Series A
preferred stock on a one-for-one basis in July 2016.
above transactions were considered transactions between entities under common control pursuant to FASB ASC 805-50, as the same group of stockholders (Chad Steelberg and Ryan Steelberg) beneficially owned more
than 50% of the voting ownership interest of BAT and RAC, and of NM and our company, at the time of the respective transactions. Accordingly, upon completion of the NM Transfer and the RAC Merger, the assets and liabilities acquired and assumed by
us through the NM Transfer and the RAC Merger were recorded at their carrying value by the respective predecessor entities without any step up in value or the recognition of any goodwill. In addition, since the expenses related to the development of
the BAT IP had been expensed and not capitalized by BAT, there was no predecessor carrying value for the BAT IP. As a result of us having assumed liabilities in excess of the carrying value of the net assets acquired in the RAC Merger, Additional
Paid In Capital was negative and therefore, the book value of the Series A-1 preferred stock issued in connection with such transaction was recorded as $0. Conversely, in connection with the NM Transfer, for
which the carrying value of the net assets acquired was positive, the corresponding issuances of our common stock and Series A preferred stock were accounted for based upon the allocation of the carrying value of the net assets acquired.