F-4

F-4 1 d399085df4.htm F-4 F-4

As filed with the Securities and Exchange Commission on December 22, 2017

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form F-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

RhythmOne plc

(Exact name of registrant as specified in its charter)

Not Applicable

(Translation of registrant name into English)

England and Wales

7311

Not Applicable

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

251 Kearny Street, 2nd Floor

San Francisco, CA 94108

(415) 655-1450

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Ted Hastings

251 Kearny Street, 2nd Floor

San Francisco, CA 94108

(415) 655-1450

(Name, address, including zip code, and telephone number, including area code, of agent of service)

Ted Hastings
RhythmOne plc
251 Kearny Street, 2nd Floor
San Francisco, California 94108
(415) 655-1450

Mile T. Kurta

John Emanoilidis
Torys LLP

1114 Avenue of the Americas
23rd Floor
New York, New York 10036
(212) 880-6000

Paul Porrini

Amy Rothstein

YuMe, Inc.
1204 Middlefield Road
Redwood City, California 94063
(650) 591-9400

James J. Masetti

Christina F. Pearson
Pillsbury Winthrop Shaw

Pittman LLP
2550 Hanover Street

Palo Alto, California 94304
(650) 233- 4500

Approximate date of commencement of proposed sale of the securities to the public:

As soon as practicable after this Registration Statement becomes effective and all other conditions to consummation of the transactions described herein have been satisfied or waived.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933

Emerging Growth Company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

†	The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

CALCULATION OF REGISTRATION FEE



Title of each class of securities to be registered	Amount to be registered⁽¹⁾	Proposed maximum offering price per unit	Proposed maximum aggregate offering price⁽²⁾	Amount of registration fee⁽³⁾
Ordinary shares, no par value	26,338,332	N/A	$69,935,912.97	$8,707.02

Notes:

⁽¹⁾

Represents the maximum number of RhythmOne plc (“RhythmOne”) ordinary shares estimated to be issuable upon consummation of the Transactions (as defined herein). In accordance with Rule 416, this registration statement also covers an indeterminate number of additional RhythmOne securities as may be issuable as a result of stock splits, stock dividends or similar transactions.

⁽²⁾

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 under the Securities Act on the basis of the market value of the shares of YuMe, Inc. (“YuMe”) common stock to be exchanged in the Transactions, computed in accordance with Rule 457(f)(1), Rule 457(f)(3) and Rule 457(c) based on (a) the product of (i) $3,645, the average of the high and low sales prices per share of YuMe common stock on December 20, 2017, as reported by the New York Stock Exchange, and (ii) 35,956,768, the estimated number of shares of YuMe common stock to be exchanged in the Transactions, less (b) $61,126,506.39, the estimated maximum amount of cash payable in the offer and the mergers.

⁽³⁾	Calculated in accordance with Rule 457(f) under the Securities Act as the product of the maximum aggregate offering price and $124.50 per $1,000,000 of securities registered.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus/offer to exchange is not complete and may be changed. RhythmOne may not complete the exchange offer and issue these securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This prospectus/offer to exchange is not an offer to sell or a solicitation to sell these securities in any jurisdiction where such offer, sale or solicitation is not permitted.

PRELIMINARY — SUBJECT TO COMPLETION, DATED DECEMBER 22, 2017

Offer to Exchange

Each

Outstanding Share of Common Stock

YuMe, Inc.

For

$1.70 Cash and 0.7325 Ordinary Shares of RhythmOne plc

Redwood Merger Sub I, Inc.

a wholly-owned subsidiary of

RhythmOne plc

RhythmOne plc, a public limited company incorporated and registered in England and Wales with company number 06223359 (“RhythmOne” or the “Company”), through Redwood Merger Sub I, Inc., a corporation incorporated under the laws of Delaware and a wholly-owned subsidiary of RhythmOne (“Purchaser”), is offering to acquire all of the outstanding common stock (the “YuMe Shares”) of YuMe, Inc., a corporation incorporated under the laws of Delaware (“YuMe”), upon the terms and subject to the conditions set out in this prospectus/offer to exchange and in the related letter of transmittal, which terms and conditions are referred to in this prospectus/offer to exchange together, as each may be amended or supplemented from time to time, as the “Offer”.

Pursuant to the Agreement and Plan of Merger and Reorganization, dated September 4, 2017, by and among RhythmOne, Purchaser, Redwood Merger Sub II, Inc. (“Merger Sub Two”), and YuMe (the “Merger Agreement”), YuMe stockholders are being offered a combination of cash and stock consideration for their YuMe Shares. For each YuMe Share held, YuMe stockholders are being offered (i) $1.70 in cash without interest (the “Cash Consideration”) and (ii) 0.7325 ordinary shares of RhythmOne (“RhythmOne Shares”), which gives effect to the 10-for-1 share consolidation of RhythmOne Shares implemented on September 25, 2017 (the “Share Consideration”, together with the Cash Consideration, the “Transaction Consideration”).

The Offer is the first step in RhythmOne’s plan to acquire control of, and ultimately all of the outstanding equity in, YuMe. As a second step in such plan, if the Offer is completed, pursuant to the terms and subject to the conditions of the Merger Agreement, as soon as practicable following the consummation of the Offer, RhythmOne intends to consummate a merger of Purchaser with and into YuMe, with YuMe surviving the merger as a wholly-owned subsidiary of RhythmOne (the “First Merger”). Immediately following the First Merger, the surviving corporation will merge with and into Merger Sub Two, with the Merger Sub Two surviving the Second Merger as a wholly-owned subsidiary of RhythmOne (the “Second Merger” and together with the First Merger, the “Mergers,” and the Mergers together with the Offer, the “Transactions”).

The purpose of the First Merger is for RhythmOne to acquire all YuMe Shares that it did not acquire in the Offer. In the First Merger, each outstanding YuMe Share that was not acquired by Purchaser in the Offer (other than certain dissenting, converted and cancelled shares as described further in this prospectus/offer to exchange) will be converted into the right to receive the Transaction Consideration. After the First Merger, YuMe, as the surviving corporation, will be a wholly-owned subsidiary of RhythmOne, and the former stockholders of YuMe will no longer have any direct ownership interest in the surviving corporation. The First Merger will be governed by Section 251(h) of the General Corporation Law of the State of Delaware (the “DGCL”). Accordingly, if the Offer is completed (such that Purchaser owns at least a majority of the outstanding YuMe Shares), no stockholder vote will be required to complete the First Merger.

If the Offer is successful and the First Merger is completed, holders of YuMe Shares who have not properly tendered in the Offer, and who otherwise comply with the applicable procedures for demanding appraisal under Section 262 of the DGCL, will be entitled to seek appraisal for the “fair value” of their YuMe Shares as determined by the Delaware Court of Chancery. To exercise appraisal rights, a YuMe stockholder must strictly comply with all of the procedures under the DGCL. These procedures are described more fully in the section of this prospectus/offer to exchange entitled “The Offer —Appraisal Rights.”

YUME’S BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE MERGER AGREEMENT AND THE OFFER ARE ADVISABLE AND FAIR TO AND IN THE BEST INTERESTS OF YUME, HAS APPROVED THE MERGER AGREEMENT AND RECOMMENDS THAT YUME STOCKHOLDERS TENDER THEIR YUME SHARES INTO THE OFFER.

The completion of the Offer is subject to certain conditions, including that at least a majority of the issued and outstanding YuMe Shares are tendered in the Offer, which calculation includes the YuMe Shares resulting from the net exercise of all options that are vested as of immediately prior to the effective time of the First Merger (the “Effective Time”)) and that have an exercise price less than the value of the Transaction Consideration determined in accordance with the Merger Agreement (the “Minimum Tender Condition”). RhythmOne and Purchaser may not, without the prior written consent of YuMe, amend, modify or waive the Minimum Tender Condition. A detailed description of the terms and conditions of the Offer appears under “The Offer” and “The Merger Agreement — Conditions to the Offer” in this prospectus/offer to exchange.

THE OFFER WILL COMMENCE ON ●. THE OFFER, AND YOUR RIGHT TO WITHDRAW YUME SHARES YOU TENDER IN THE OFFER, WILL EXPIRE AT THE TIME THAT IS ONE MINUTE FOLLOWING 11:59 P.M. PACIFIC TIME ON ●, 2018, UNLESS THE EXPIRATION TIME OF THE OFFER IS EXTENDED. SHARES TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION OF THE OFFER.

RhythmOne is an “emerging growth company” and a “foreign private issuer” under applicable U.S. securities laws and is eligible for reduced reporting requirements.

The YuMe Shares are listed on the New York Stock Exchange (the “NYSE”). The RhythmOne Shares are admitted to trading on the London Stock Exchange plc’s AIM market (“AIM”). Prior to the completion of the Offer, RhythmOne will apply to the London Stock Exchange plc for approval for admission to trading on AIM the RhythmOne Shares to be issued as partial consideration to YuMe stockholders. Admission will be subject to RhythmOne satisfying the AIM rules (the “AIM Rules”). Following the completion of the Offer and the Mergers, to the extent permitted under applicable law and stock exchange regulations, RhythmOne intends to delist the YuMe Shares from the NYSE.

FOR A DISCUSSION OF RISK FACTORS THAT YOU SHOULD CAREFULLY CONSIDER IN EVALUATING THE OFFER AND THE OTHER TRANSACTIONS, SEE “RISK FACTORS” BEGINNING ON PAGE 36 OF THIS PROSPECTUS/OFFER TO EXCHANGE.

THIS DOCUMENT IS IMPORTANT AND YOU ARE ENCOURAGED TO READ THIS ENTIRE DOCUMENT AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY, INCLUDING THE ANNEXES AND INFORMATION REFERRED TO OR INCORPORATED BY REFERENCE INTO THIS DOCUMENT.

THIS PROSPECTUS/OFFER TO EXCHANGE IS NOT AN OFFER TO SELL SECURITIES AND IS NOT A SOLICITATION OF AN OFFER TO BUY SECURITIES, NOR SHALL THERE BE ANY SALE OR PURCHASE OF SECURITIES PURSUANT HERETO, IN ANY JURISDICTION IN WHICH SUCH OFFER, SALE OR SOLICITATION IS NOT PERMITTED OR WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE LAWS OF ANY SUCH JURISDICTION. FURTHER, NO OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY YUME SHARES IS BEING MADE IN COLORADO, OHIO, OKLAHOMA, NEW JERSEY, NORTH DAKOTA AND TEXAS UNTIL SUCH TIME AS RHYTHMONE HAS BEEN INFORMED BY THE APPLICABLE STATE SECURITIES LAW REGULATORS THAT SUCH OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY YUME SHARES IS PERMITTED IN SUCH STATE.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED IN CONNECTION WITH THE OFFER OR THE OTHER TRANSACTIONS OR HAS PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROSPECTUS/OFFER TO EXCHANGE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE IN THE UNITED STATES.

The date of this prospectus/offer to exchange is , 2017.

IMPORTANT INFORMATION

This prospectus/offer to exchange is not an offer to sell securities and is not a solicitation of an offer to buy securities, nor shall there be any sale or purchase of securities pursuant hereto, in any jurisdiction in which such offer, solicitation or sale is not permitted or would be unlawful prior to registration or qualification under the laws of any such jurisdiction. If you are in any doubt as to your eligibility to participate in the Offer, you should contact your professional advisor immediately.

ABOUT THIS DOCUMENT

This document, which forms part of a registration statement on Form F-4 filed with the Securities and Exchange Commission (the “SEC”) by RhythmOne, constitutes a prospectus of RhythmOne under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the RhythmOne Shares to be delivered to YuMe stockholders pursuant to the Transactions.

RhythmOne and YuMe have not authorized anyone to give information or make any representations about the Transactions, RhythmOne or YuMe that is different from, or in addition to, that contained in this prospectus/offer to exchange or in any of the materials incorporated by reference in this prospectus/offer to exchange. RhythmOne and YuMe take no responsibility for, and can provide no assurance as to the reliability of, any information that others may give you.

The information contained or incorporated in this prospectus/offer to exchange is accurate only as of the date of this prospectus/offer to exchange or the applicable incorporated document unless the information specifically indicates that another date applies, and neither the mailing of this prospectus/offer to exchange to stockholders nor the issuance of RhythmOne Shares in the Offer should create any implication to the contrary.

This prospectus/offer to exchange is not a prospectus published in accordance with the Prospectus Rules made under Part VI of the Financial Services and Markets Act 2000, as amended (“FSMA”). If you are in any doubt about the contents of this prospectus/offer to exchange or the action you should take, you are recommended to seek your own personal financial advice under FSMA.

WHERE YOU CAN FIND MORE INFORMATION

RhythmOne has filed a registration statement on Form F-4 to register with the SEC the RhythmOne Shares to be issued to YuMe stockholders as the share portion of the Transaction Consideration. This prospectus/offer to exchange is a part of that registration statement and constitutes a prospectus of RhythmOne. The registration statement, including the attached annexes and exhibits, contains additional relevant information about RhythmOne and the RhythmOne Shares. This prospectus/offer to exchange does not contain all of the information set forth in the registration statement because certain parts of the registration statement are omitted in accordance with the rules and regulations of the SEC.

YuMe files annual, quarterly and current reports, proxy statements and other information with the SEC under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). You may read and copy any of this information at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding issuers, including YuMe, who file electronically with the SEC. The address of that website is www.sec.gov. Investors may also consult RhythmOne’s and YuMe’s websites for more information about RhythmOne or YuMe, respectively. RhythmOne’s website is www.rhythmone.com. YuMe’s website is www.yume.com. The web addresses of the SEC, RhythmOne and YuMe have been included as inactive textual references only. These

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websites and the information contained therein or connected thereto are not intended to be incorporated into this prospectus/offer to exchange. Except as specifically incorporated by reference into this prospectus/offer to exchange, information on those websites is not part of this prospectus/offer to exchange.

The SEC allows RhythmOne to “incorporate by reference” certain information of YuMe into this prospectus/offer to exchange that YuMe files with the SEC, which means that important information can be disclosed to you by referring you to those documents and those documents will be considered part of this prospectus/offer to exchange. The information incorporated by reference is an important part of this prospectus/offer to exchange. Certain information that is subsequently filed by YuMe with the SEC will automatically update and supersede information in this prospectus/offer to exchange and in earlier filings with the SEC. This prospectus/offer to exchange also contains summaries of certain provisions contained in some of the RhythmOne or YuMe documents described in this prospectus/offer to exchange, but reference is made to the actual documents for complete information. All of these summaries are qualified in their entirety by reference to the actual documents.

This prospectus/offer to exchange incorporates important business and financial information about YuMe that is not included in or delivered with this prospectus/offer to exchange. The information and documents listed below, which YuMe has filed with the SEC, are incorporated by reference into this prospectus/offer to exchange (excluding any portions of any Form 8-K that are not deemed “filed” pursuant to the General Instructions form 8-K):

•

YuMe’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed on March 10, 2017, as amended by the Form 10-K/A filed on April 28, 2017;

•

The portions of YuMe’s Definitive Proxy Statement on Schedule 14A for the fiscal year ended December 31, 2016, filed on June 16, 2017 that are incorporated by reference into Part II of YuMe’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016;

•

YuMe’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed on May 10, 2017;

•

YuMe’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, filed on August 8, 2017;

•

YuMe’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed on November 8, 2017; and

•

YuMe’s Current Reports on Form 8-K filed on March 6, 2017, April 21, 2017, May 9, 2017, June 22, 2017, July 28, 2017, August 8, 2017, September 5, 2017, September 28, 2017, October 3, 2017 and October 6, 2017.

In addition, all documents filed by YuMe with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus/offer to exchange and prior to completion of the Offer shall be deemed to be incorporated by reference into this prospectus/offer to exchange and made a part of this prospectus/offer to exchange from the respective dates of filing; provided, however, that this prospect/offer to exchange does not incorporate any information furnished under Items 2.02 or 7.01 of any Current Report on Form 8-K unless specifically stated otherwise. These documents include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.

YuMe will provide without charge to each person, including any beneficial owner, to whom this prospectus/offer to exchange is delivered, upon his or her written or oral request, a copy of any or all documents referred to above which have been or may be incorporated by reference into this prospectus, excluding exhibits to those documents unless they are specifically incorporated by reference into those documents. You may obtain copies of those documents by sending your request in writing to YuMe at the following address: YuMe, Inc., 1204 Middlefield Road, Redwood City, CA 94063 or by telephoning YuMe at (650) 591-9400, Attention: Investor Relations.

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In order to receive timely delivery of these documents, YuMe stockholders must make such a request no later than five U.S. business days before the then-scheduled expiration time of the Offer. The expiration time of the Offer is currently at the time that is one minute following 11:59 p.m. Pacific time on ∎, 2018 (the “Expiration Time”), but the actual deadline may change if the Offer is extended.

CURRENCIES AND EXCHANGE RATES

In this prospectus/offer to exchange, unless otherwise specified or the context otherwise requires, references to “$,” “U.S. dollars” or “USD” each refer to the lawful currency of the United States of America and references to “£,” “pounds sterling,” “pence” or “GBP” are to the lawful currency of the United Kingdom.

The following table sets forth the high and low noon buying rates of each month of the last six months, as certified for customs purposes by the Federal Reserve Bank of New York, for the pound sterling expressed in U.S. dollars per pound sterling.


	High		Low
Monthly data
June 2017		1.2995		1.2628
July 2017		1.3196		1.2851
August 2017		1.3236		1.2787
September 2017		1.3578		1.2972
October 2017		1.3304		1.3063
November 2017		1.3506		1.3067
December 2017 (through December 15)		1.3505		1.3316

The following table sets forth for each year the average of the noon buying rates on the last business day of each month of that year, as certified for customs purposes by the Federal Reserve Bank of New York, for the pound sterling expressed in U.S. dollars per pound sterling for each of the five most recent fiscal years.


	Average Rate for the Period
Annual data (Fiscal Year ended March 31)
2013		1.5924
2014		1.5668
2015		1.6461
2016		1.5250
2017		1.3444

On December 15, 2017, the latest practicable date prior to this filing, the noon buying rate was £1 = $1.3316.

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TABLE OF CONTENTS


	Page
IMPORTANT INFORMATION		i

ABOUT THIS DOCUMENT		i

WHERE YOU CAN FIND MORE INFORMATION		i

CURRENCIES AND EXCHANGE RATES		iii

MARKET, INDUSTRY AND OTHER DATA		1

HELPFUL INFORMATION		1

QUESTIONS AND ANSWERS ABOUT THE OFFER		5

SUMMARY		14

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF RHYTHMONE		23

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF YUME		26

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION		30

UNAUDITED COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE INFORMATION		32

RATIO OF EARNINGS TO FIXED CHARGES		34

COMPARATIVE MARKET INFORMATION		35

RISK FACTORS		36

PRESENTATION OF CERTAIN FINANCIAL AND OTHER INFORMATION		64

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		65

RECENT DEVELOPMENTS		67

BACKGROUND TO AND REASONS FOR THE TRANSACTIONS		68

THE OFFER		103

THE MERGER AGREEMENT		113

TENDER AND SUPPORT AGREEMENT		148

INFORMATION ABOUT PURCHASER AND MERGER SUB TWO		152

INFORMATION ABOUT RHYTHMONE		153

MANAGEMENT’S DISCUSSION AND ANALYSIS OF RHYTHMONE		165

MANAGEMENT OF RHYTHMONE		181

REMUNERATION OF RHYTHMONE’S DIRECTORS AND SENIOR MANAGEMENT		189

RELATED PARTY TRANSACTIONS		200

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS OF RHYTHMONE		201

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS OF YUME		204

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION		206

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS		225

MATERIAL U.K. TAX CONSIDERATIONS		234

DESCRIPTION OF RHYTHMONE SHARES AND ARTICLES OF ASSOCIATION		237

TABLE OF CONTENTS

(continued)


	Page
COMPARISON OF SHAREHOLDERS’ RIGHTS		261

INTERESTS OF CERTAIN PERSONS IN THE TRANSACTIONS		286

COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION		295

LEGAL MATTERS		297

EXPERTS		297

ANNEX A		A-1

ANNEX B		B-1

ANNEX C		C-1

INDEX TO FINANCIAL STATEMENTS		F-1

MARKET, INDUSTRY AND OTHER DATA

Some of the market, industry and other data contained in this prospectus/offer to exchange are based on independent industry publications, including those generated by eMarketer, Pixalate, or other publicly available information. This information involves many assumptions and limitations. Although RhythmOne believes that each source is reliable as of its respective date, RhythmOne has not independently verified the accuracy or completeness of this information. The industry in which RhythmOne operates is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors”, which could cause results to differ materially from those expressed in these independent publications.

HELPFUL INFORMATION

Certain Defined Terms

Unless otherwise specified or if the context so requires, in this prospectus/offer to exchange:

“AIM” refers to the London Stock Exchange plc’s AIM market.

“Board Recommendation” refers to the recommendation of the YuMe board of directors to the YuMe stockholders to accept the Offer and tender their YuMe Shares pursuant to the Offer.

“Cash Consideration” refers to the $1.70 in cash without interest being offered for each YuMe Share.

“Closing” refers to the closing of the Mergers that will take place at 8:00 a.m. (East Coast time) on the same date as Purchaser’s acceptance of YuMe Shares tendered in the Offer.

“Closing Date” refers to such date upon which the Closing occurs.

“Code” refers to the U.S. Internal Revenue Code of 1986, as amended.

“Companies Act” refers to the Companies Act (2006) (United Kingdom).

“Converted RhythmOne Option” refers to In-the-Money YuMe Options that were unvested and outstanding as of immediately prior to the Effective Time, to the extent held by a continuing service provider, and have been converted into options to purchase RhythmOne Shares, generally having the same terms and conditions as applied prior to the Mergers, except for an adjusted share count and adjusted per-share exercise price.

“Converted RhythmOne RSU” refers to YuMe RSUs that were unvested and outstanding as of the Effective Time, to the extent held by a continuing service provider, and have been converted into RSUs with respect to RhythmOne Shares, generally having the same terms and conditions as applied prior to the Mergers, except for an adjusted share count.

“DB Group” refers to Deutsche Bank AG and its affiliates.

“Deutsche Bank” refers to Deutsche Bank Securities Inc.

“DGCL” refers to the General Corporation Law of the State of Delaware.

“DTC” refers to the Depository Trust Company.

“Effective Time” refers to the effective time of the First Merger.

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“Equity Award Conversion Ratio” refers to the quotient of (x) the Transaction Consideration Value divided by (y) the volume-weighted average trading price (rounded to the nearest one ten-thousandth) of RhythmOne Shares on AIM over the five (5) consecutive trading days ending on the last trading day prior to the Effective Time, as converted from pounds sterling to U.S. dollars using the exchange ratio quoted by Bloomberg at approximately 10:30am Pacific Time on the last trading day prior to the Effective Time.

“Exchange Act” refers to the U.S. Securities Exchange Act of 1934, as amended.

“Exchange Agent” refers to Computershare Trust Company, N.A. as the depositary and exchange agent retained by RhythmOne to handle the exchange of shares for the Transaction Consideration in both the Offer and the First Merger.

“Expiration Time” refers to the time that is one minute following 11:59 p.m. Pacific time on ●, 2018, which is the time the Offer is scheduled to expire.

“First Merger” refers to the merger of the Purchaser with and into YuMe, with YuMe surviving the merger as a wholly owned subsidiary of RhythmOne.

“First Surviving Corporation” refers to the surviving entity in the First Merger.

“FSMA” refers to the Financial Services and Markets Act 2000, as amended.

“HSR Condition” refers to the condition that all waiting periods (including all extensions thereof) under the HSR Act applicable to the purchase of the YuMe Shares pursuant to the Offer will have expired or been terminated.

“IRS” refers to the Internal Revenue Service.

“JOBS Act” refers to the Jumpstart Our Business Startups Act.

“Mergers” refers to the First Merger together with the Second Merger.

“Merger Agreement” refers to the Agreement and Plan of Merger and Reorganization, dated September 4, 2017, by and among RhythmOne, Purchaser, Redwood Merger Sub II, Inc., and YuMe.

“Merger Sub Two” refers to Redwood Merger Sub II, Inc.

“Minimum Tender Condition” refers to the condition that the completion of the Offer is subject to at least a majority of the issued and outstanding YuMe Shares being tendered in the Offer, which calculation shall include the YuMe Shares resulting from the net exercise of all options that are vested as of immediately prior to the Effective Time and which have an exercise price less than the Transaction Consideration.

“NYSE” refers to the New York Stock Exchange.

“Offer” refers to the offer, whereby Purchaser is offering to acquire all of the outstanding common shares of YuMe, upon the terms and subject to the conditions set out in this prospectus/offer to exchange and in the related letter of transmittal, which terms and conditions are referred to in this prospectus/offer to exchange together, as each may be amended or supplemented from time to time.

“Offer Conditions” refers to certain conditions to the Offer as described in Exhibit B to the Merger Agreement.

“Offer Documents” refer to, collectively, a Schedule TO and the documents included therein pursuant to which the Offer shall be made, including an offer to purchase, a letter of transmittal, and other ancillary Offer documents.

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“Outside Date” refers to March 31, 2018 (which may be extended to April 30, 2018 in certain circumstances in accordance with the Merger Agreement).

“Panel” refers to the U.K. Panel for Takeovers and Mergers.

“Perk” refers to Perk Inc.

“PFIC” refers to a passive foreign investment company.

“Purchaser” refers to Redwood Merger Sub I, Inc., a corporation incorporated under the laws of Delaware and a wholly-owned subsidiary of RhythmOne.

“Radium” refers to RadiumOne, Inc.

“Rhythm” refers to Rhythm NewMedia.

“RhythmOne” refers to RhythmOne plc.

“RhythmOne Representation and Warranty Condition” refers to YuMe’s right to terminate the Merger agreement due to the representations and warranties of RhythmOne contained in the Merger Agreement not being true and correct as of the date of the Merger Agreement and the Expiration Time of the Offer, subject to specified materiality standards.

“RhythmOne Shareholder Approval Condition” refers to the RhythmOne shareholder approval required to authorize the allotment and issue of the Share Consideration.

“RhythmOne Shares” refers to the ordinary shares of RhythmOne.

“Sarbanes-Oxley Act” refers to the U.S. Sarbanes-Oxley Act of 2002, as amended.

“SEC” refers to the Securities and Exchange Commission.

“SEC Condition” refers to the condition to the Offer that the registration statement on Form F-4 relating to the Offer (of which this prospectus/offer to exchange is a part) shall have been declared effective by the SEC under the Securities Act, a stop order suspending the effectiveness of such registration statement shall not have been issued by the SEC, and no proceedings for that purpose shall have been initiated or threatened by the SEC.

“Second Merger” refers to the merger immediately following the First Merger, whereby the surviving corporation will merge with and into Merger Sub, with the Merger Sub surviving the Second Merger as a wholly-owned subsidiary of RhythmOne.

“Securities Act” refers to the U.S. Securities Act of 1933, as amended.

“Share Consideration” refers to the 0.7325 RhythmOne Shares being offered to the YuMe stockholders pursuant to the Offer.

“Supporting Stockholders” refers to certain YuMe stockholders that entered into the Tender and Support Agreement.

“Tender and Support Agreement” refers to the tender and support agreement entered into by each of VIEX Capital Advisors, LLC, AVI Partners, LLC and their respective affiliates, each director and executive officer of YuMe, and RhythmOne concurrently with the execution of the Merger Agreement, pursuant to which, among other things and subject to the terms and conditions therein, each such stockholder, director or executive officer agreed to tender, and not withdraw, all of their respective YuMe Shares into the Offer.

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“Transaction Consideration” refers to the Share Consideration together with the Cash Consideration.

“Transaction Consideration Value” refers to the sum of (x) the Cash Consideration plus (y) the product of the (i) Stock Consideration multiplied by (ii) the volume-weighted average trading price (rounded to the nearest one ten-thousandth) of RhythmOne Shares on the AIM over the five (5) consecutive trading days ending on the last trading day prior to the Effective Time as converted from Sterling Pounds to U.S. Dollars using the exchange ratio quoted by Bloomberg at approximately 10:30am Pacific Time on the last trading day prior to the Effective Time.

“Transactions” refers to the Mergers together with the Offer.

“U.S. GAAP” refers to the accounting principles generally accepted in the United States.

“YuMe” refers to YuMe, Inc.

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QUESTIONS AND ANSWERS ABOUT THE OFFER

The following are some of the questions that you, as a YuMe stockholder, may have regarding the Offer and the Mergers along with answers to those questions. These questions and answers, as well as the following summary, are not meant to be a substitute for the information contained or incorporated by reference in the remainder of this prospectus/offer to exchange or the annexes to this prospectus/offer to exchange, and this information is qualified in its entirety by the more detailed descriptions and explanations contained therein. RhythmOne urges you to carefully read this prospectus/offer to exchange, including any documents incorporated by reference, and its annexes in their entirety prior to making any decision as whether to tender your YuMe Shares in the Offer.

Who is making the Offer?

RhythmOne, through its wholly-owned subsidiary, Purchaser, is making the Offer to purchase all of the outstanding YuMe Shares.

What is RhythmOne proposing?

Pursuant to the terms of and subject to the conditions set forth in the Merger Agreement, RhythmOne is proposing to acquire control of, and ultimately acquire all of the outstanding equity in, YuMe.

The Offer is the first step in RhythmOne’s plan to acquire all of the outstanding YuMe Shares, and the First Merger is the second step in such plan. In the Offer, if a sufficient number of YuMe Shares are validly tendered into the Offer and not properly withdrawn such that, together with any YuMe Shares owned by RhythmOne, Purchaser and RhythmOne’s other subsidiaries, RhythmOne will directly or indirectly own at least a majority of the then-outstanding YuMe Shares, then subject to the satisfaction or waiver of the other conditions to the Offer, Purchaser will accept for exchange, and exchange, the YuMe Shares validly tendered and not properly withdrawn in the Offer for the Transaction Consideration.

As soon as practicable following the completion of the Offer, and as the second step in RhythmOne’s plan to acquire all of the outstanding YuMe Shares, the First Merger will be consummated whereby Purchaser will merge with and into YuMe, with YuMe surviving the First Merger as a wholly-owned subsidiary of RhythmOne. The purpose of the First Merger is for RhythmOne to acquire all remaining YuMe Shares that it did not acquire in the Offer. In the First Merger, each outstanding YuMe Share that was not acquired by Purchaser in the Offer (other than certain dissenting, converted and cancelled shares, as described further in this prospectus/offer to exchange) will be converted into the right to receive the Transaction Consideration.

After the First Merger, YuMe, as the surviving corporation, will be a wholly-owned subsidiary of RhythmOne, and the former stockholders of YuMe will no longer have any direct ownership interest in the surviving corporation. The First Merger will be governed by Section 251(h) of the DGCL, and accordingly, if the Offer is completed, no YuMe stockholder vote will be required to consummate the First Merger.

Immediately following the First Merger, the Second Merger will be consummated whereby YuMe, as the surviving corporation in the First Merger, will merge with and into Merger Sub Two, with Merger Sub Two surviving the Second Merger. The purpose of the Second Merger is to create the possibility (but not the certainty) that YuMe stockholders who tender their YuMe Shares in exchange for RhythmOne Shares pursuant to the Offer could qualify for U.S. tax-free treatment (in part). The Second Merger will be governed by Section 267 of the DGCL. The Offer and the Mergers, taken together, may qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Please read the discussion under “Material U.S. Federal Income Tax Considerations” for more information.

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What consideration is being offered for my YuMe Shares?

YuMe stockholders are being offered a combination of cash and share consideration for their YuMe Shares. For each YuMe Share held, YuMe stockholders are being offered (i) $1.70 in cash and (ii) 0.7325 RhythmOne Shares, which gives effect to the 10-for-1 share consolidation of RhythmOne Shares implemented on September 25, 2017.

This represented an implied value of $5.20 per YuMe Share based upon the pre-share consolidation exchange ratio of 7.325 RhythmOne Shares, the closing price per RhythmOne Share of £0.37 on August 22, 2017, the last trading day prior to RhythmOne’s public confirmation that it was in discussions with YuMe, a U.S. dollar to pound sterling exchange of 1.292x and the $1.70 in cash payable per YuMe Share. Such implied value of $5.20 per YuMe Share represented a premium to the closing price of $5.06 per YuMe Share on August 22, 2017, to the volume weighted average closing price of $4.51 per YuMe Share for the 30 days ended August 22, 2017, and to the closing price of $3.44 per YuMe Share on November 9, 2016, which was the trading day prior to the public announcement by YuMe of its intent to explore and evaluate a range of strategic alternatives.

If you do not tender your YuMe Shares into the Offer, but the First Merger is completed, you will receive the Transaction Consideration in the First Merger in exchange for your YuMe Shares.

What will I receive if I accept the Offer?

YuMe stockholders who validly tender and do not withdraw their YuMe Shares prior to the Expiration Time will receive the Transaction Consideration.

Because the Merger Agreement provides for a fixed number of RhythmOne Shares to be issued in the Offer and the First Merger as part of the Transaction Consideration payable in exchange for each YuMe Share, the value of the Transaction Consideration that YuMe stockholders will receive will depend on the market price of RhythmOne Shares and the exchange rate of pounds sterling to U.S. dollars at the time the Offer and the First Merger are completed. As a result, the value of the Transaction Consideration that YuMe stockholders will receive upon the completion of the Offer and the First Merger could be greater than, less than or the same as the value of the Transaction Consideration on the date of this prospectus/offer to exchange.

How will the Cash Consideration component of the Transaction Consideration be financed?

RhythmOne currently intends to finance the Cash Consideration component of the Transaction Consideration (approximately $60.0 million) and related fees and expenses using existing cash resources as well as a drawing under the facility provided by the Subordinated Loan and Security Agreement, dated as of November 8, 2017, among Silicon Valley Bank, as lender (“SVB”), and certain of RhythmOne’s subsidiaries (including the Purchaser and Merger Sub Two), as borrowers (the “Borrowers”), pursuant to which SVB will make available to one or more of the Borrowers a subordinated loan not to exceed $35.0 million (the “Bridge Facility”). The Bridge Facility matures on the earlier of July 30, 2018 and the date that is 120 days after the funding of the subordinated loan under the Bridge Facility. It is currently expected that the Bridge Facility at maturity will be paid off with cash resources available to the combined RhythmOne and YuMe company. See “Background to and Reasons for the Transaction — Sources and Amount of Funds”.

What are the most significant conditions to the Offer?

The Offer is subject to a number of conditions, including:

that at least a majority of the issued and outstanding YuMe Shares are tendered in the Offer, which calculation shall include the YuMe Shares resulting from the net exercise of all options that have vested prior to the Effective Time and that have an exercise price less than the value of the Transaction Consideration determined in accordance with the Merger Agreement;

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the expiration or termination of the waiting period applicable to the Offer and the Mergers under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Condition”);

the registration statement on Form F-4, of which this prospectus/offer to exchange is a part, shall have been declared effective by the SEC under the Securities Act, a stop order suspending the effectiveness of such registration statement shall not have been issued by the SEC, and no proceedings for that purposes shall have been initiated or threatened by the SEC;

(i) the RhythmOne Shares to be issued in the Offer and the First Merger shall have been approved for admission to trading on AIM; and (ii) the RhythmOne shareholder approval required to authorize the allotment and issue of the Share Consideration shall have been satisfied (the condition in this clause (ii), the “RhythmOne Shareholder Approval Condition”);

no judgment will have been issued by a court of competent jurisdiction or by a governmental authority, or any law or other legal restraint or prohibition, will be in effect that would make the Offer or the Mergers illegal or otherwise prevent the consummation thereof;

there will not have occurred any material adverse effect on YuMe that is continuing, or there shall have occurred any effect that would reasonably be expected to result in a material adverse effect on YuMe;

the representations and warranties of YuMe contained in the Merger Agreement being true and correct as of the date of the Merger Agreement and the Expiration Time of the Offer, subject to specified materiality standards set forth in the Merger Agreement;

YuMe having performed and complied with, in all material respects, all obligations, agreements and covenants of YuMe to be performed or complied with by it under the Merger Agreement;

the Merger Agreement will have not have been terminated in accordance with its terms;

10.

no event will have occurred and remain outstanding or uncured that, with notice or lapse of time or both, would provide (i) RhythmOne the right to terminate the Merger Agreement or (ii) YuMe the right to terminate the Merger Agreement due to the representations and warranties of RhythmOne contained in the Merger Agreement not being true and correct as of the date of the Merger Agreement and the Expiration Time of the Offer, subject to specified materiality standards (the condition in this clause (ii), the “RhythmOne Representation and Warranty Condition”); and

11.

YuMe having at least $32 million in cash and cash equivalents at the consummation of the Offer.

RhythmOne reserves the right to waive, in whole or in part, subject to certain exceptions, any condition to the Offer, except for the Minimum Tender Condition and the RhythmOne Representation and Warranty Condition. The Offer is not subject to any financing condition.

As of the date of this prospectus/offer to exchange, all of the above conditions to the Offer remain outstanding other than the HSR Condition and the RhythmOne Shareholder Approval Condition, both of which have been satisfied.

See “The Merger Agreement — Conditions to the Offer” for additional information.

Is RhythmOne’s financial condition relevant to my decision to tender into the Offer?

Yes. The YuMe Shares validly tendered and accepted for payment in the Offer will be exchanged for cash and RhythmOne Shares. You should consider RhythmOne’s financial condition before you decide to become a holder of RhythmOne Shares by tendering your YuMe Shares in the Offer.

Does RhythmOne’s board of directors support the Offer?

Yes. RhythmOne’s board of directors has unanimously:

•

determined that it is in the best interests of RhythmOne to enter into the Merger Agreement and consummate the Transactions, including the issuance of RhythmOne Shares in the Transactions;

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•

approved the Merger Agreement and authorized and approved the issuance of RhythmOne Shares in the Transactions; and

•

recommended that the shareholders of RhythmOne approve the issuance of RhythmOne Shares in the Transactions.

RhythmOne called a meeting of its shareholders in accordance with U.K. legislation that was held on September 25, 2017, and at that meeting, the requisite resolutions were passed giving the directors of RhythmOne the ability to issue the RhythmOne Shares as the Share Consideration pursuant to the Offer and the First Merger, thereby satisfying the RhythmOne Shareholder Approval Condition.

Does YuMe’s board of directors support the Offer?

Yes. YuMe’s board of directors has unanimously:

•

approved the Merger Agreement and authorized and approved the Offer; and

•

determined that the form, terms and provisions of the Merger Agreement, the performance by YuMe of its obligations thereunder and the consummation by YuMe of the transactions contemplated thereby, including the Mergers, are advisable and fair to and in the best interests of YuMe and its stockholders.

YuMe’s board of directors has also unanimously recommended that the holders of YuMe Shares accept the Offer and tender their YuMe Shares pursuant to the Offer. A description of the reasons for this recommendation is also set forth in the Schedule 14D-9, which will be filed by YuMe with the SEC on ●.

Have any YuMe stockholders or YuMe directors and executive officers agreed to support the Transactions?

Yes. Concurrently with the execution of the Merger Agreement, each of VIEX Capital Advisors, LLC, AVI Partners, LLC, their respective affiliates, and each director and executive officer of YuMe has entered into the Tender and Support Agreement with RhythmOne, pursuant to which, among other things and subject to the terms and conditions therein, each such YuMe stockholder, director or executive officer has agreed to tender, and not withdraw, all of their respective YuMe Shares into the Offer. Such stockholders and directors and officers beneficially owned, in the aggregate, approximately 29.1% of the YuMe Shares outstanding as of December 14, 2017 (including equity awards to be accelerated in connection with the Transactions, included in both the YuMe Shares beneficially owned by such stockholders and directors and officers and the total outstanding YuMe Shares). See “Tender and Support Agreement”.

How do I accept the Offer?

YuMe stockholders whose YuMe Shares are registered in the share register of YuMe, referred to as registered holders, must return a properly completed and duly executed letter of transmittal. If you hold your YuMe Shares through a financial intermediary, broker, dealer, commercial bank, trust company or other entity, you should instruct your financial intermediary, broker, dealer, commercial bank, trust company or other entity through which you hold your YuMe Shares to tender your YuMe Shares to the Exchange Agent (as defined herein) by means of delivery through the book-entry confirmation facilities of DTC, before the expiration of the Offer.

When does the Offer expire, and under what circumstances will the Offer be extended?

The Offer will expire at the time that is one minute following 11:59 p.m. Pacific time on ●, 2018, unless the Offer is extended in accordance with U.S. tender offer rules and the terms of the Merger Agreement, as set out herein.

If one or more conditions to the Offer set out in the Merger Agreement and described in this prospectus/offer to exchange under “The Merger Agreement — Conditions to the Offer” is not satisfied or, to the extent permitted under the Merger Agreement, waived, Purchaser will extend the period of time for which the Offer is open for successive periods of 10 business days each or such other number of business days as RhythmOne and YuMe may agree in order to permit the satisfaction of the conditions to the Offer, until all the conditions set out

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in “The Merger Agreement — Conditions to the Offer” have been satisfied or waived, provided that neither RhythmOne nor Purchaser will be required to extend the Offer beyond March 31, 2018, which may be extended to April 30, 2018 in certain circumstances (the “Outside Date”) as provided for in the Merger Agreement.

Purchaser will extend the Offer for any period required by any rule, regulation, interpretation or position of the SEC or its staff applicable to the Offer or any period required by law.

In the event that the Offer is extended for any reason, the Offer will remain open for acceptance until the expiration of the relevant extension period. Any extension of the Offer period will be announced by RhythmOne or Purchaser by the issuance of a press release by no later than 9:00 a.m. New York City time on the next U.S. business day following the previously scheduled Expiration Time.

During any extension, any YuMe Shares validly tendered and not properly withdrawn will remain subject to purchase in the Offer, subject to the right of each YuMe stockholder to withdraw the YuMe Shares that such holder has previously tendered. See “How do I withdraw previously tendered YuMe Shares” below.

Will there be a subsequent offering period?

RhythmOne does not anticipate making any “subsequent offering period” (as contemplated by Rule 14d-11 of the Exchange Act) available after the Offer.

How will I know if the Offer is extended?

RhythmOne or Purchaser will announce any extension of the Offer by issuing a press release by no later than 9:00 a.m. New York City time on the next U.S. business day following the previously scheduled Expiration Time.

Subject to the requirements of the U.S. tender offer rules (including U.S. tender offer rules that require that any material changes to an Offer be promptly disseminated to YuMe stockholders in a manner reasonably designed to inform them of such change) and without limiting the manner in which RhythmOne or Purchaser may choose to make any public announcement, it will have no obligation to communicate any public announcement other than as described above.

When will I be notified of the results of the Offer?

Unless the Offer period is extended, RhythmOne or Purchaser will make a public announcement no later than 9:00 a.m. New York City time on the next U.S. business day following the previously scheduled Expiration Time, stating whether (i) the conditions to the Offer have been satisfied or waived or (ii) the Offer is terminated, as a result of any of the conditions to the Offer not having been satisfied or waived.

In accordance with the U.S. tender offer rules, any extension of the Offer period will be announced by no later than 9:00 a.m. New York City time on the next U.S. business day after the previously scheduled Expiration Time. RhythmOne or Purchaser will announce the final results of the Offer, including whether all of the conditions to the Offer have been satisfied or waived and whether RhythmOne will cause Purchaser to accept the tendered YuMe Shares for exchange, as promptly as practicable following the scheduled Expiration Time.

After I tender my YuMe Shares, may I change my mind and withdraw them?

Yes. You may withdraw your YuMe Shares at any time before the Expiration Time and at any time after the Expiration Time until Purchaser accepts the YuMe Shares for exchange. Once Purchaser accepts YuMe Shares for exchange pursuant to the Offer, all withdrawal rights will terminate and you will not be able to withdraw any tendered YuMe Shares.

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How do I withdraw previously tendered YuMe Shares?

If you tendered your YuMe Shares by delivering a letter of transmittal to the Exchange Agent, you may withdraw your YuMe Shares by delivering to the Exchange Agent a properly completed and duly executed notice of withdrawal, guaranteed by an eligible guarantor institution (if the letter of transmittal requires a signature guarantee) before the Expiration Time or before Purchaser accepts the YuMe Shares for exchange.

If you tendered your YuMe Shares by means of the book-entry confirmation facilities of DTC, you may withdraw your YuMe Shares by instructing your financial intermediary, broker, dealer, commercial bank, trust company or other entity through which you hold your YuMe Shares to cause the DTC participant through which your YuMe Shares were tendered to deliver a notice of withdrawal to the Exchange Agent through the book-entry confirmation facilities of DTC before the Expiration Time or before Purchaser accepts the YuMe Shares for exchange.

See “The Offer — Withdrawal Rights” for more information about the procedures for withdrawing your previously tendered YuMe Shares.

Do I need to do anything if I want to retain my YuMe Shares?

No. If you want to retain your YuMe Shares, you do not need to take any action. However, if RhythmOne completes the Offer, it intends to complete the First Merger as soon as practicable thereafter, which will result in the cancellation of all YuMe Shares outstanding as of immediately prior to the Effective Time.

What happens if I do not tender my YuMe Shares?

If RhythmOne completes the Offer, it intends to complete the First Merger as soon as practicable following the completion of the Offer. Upon consummation of the First Merger, each YuMe Share that has not been tendered and accepted for exchange in the Offer, unless appraisal under Delaware law for such shares has been properly demanded, and other than shares held in treasury by YuMe or YuMe Shares held by RhythmOne or any subsidiary of RhythmOne, will be converted in the First Merger into the right to receive the Transaction Consideration.

If the Offer is completed, will YuMe continue as a public company?

No. If the Mergers take place, YuMe will no longer be publicly traded, and YuMe’s business will be held in an indirect wholly-owned subsidiary of RhythmOne. RhythmOne is required, on the terms and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, to consummate the First Merger as soon as practicable following its acceptance for exchange of YuMe Shares in the Offer. The First Merger will be governed by Section 251(h) of the DGCL, and accordingly, if the Offer is completed, no YuMe stockholder vote will be required to consummate the First Merger. As such, RhythmOne anticipates that, if the Offer is completed, the First Merger will be completed on the same day as the Offer.

If my YuMe Shares are acquired in the Offer, how will my rights as a YuMe stockholder change?

The rights of YuMe stockholders are governed by Delaware law and YuMe’s restated certificate of incorporation. If your YuMe Shares are acquired in the Offer, you will become a holder of RhythmOne Shares. Your rights as a holder of RhythmOne Shares will be governed by laws of England and Wales and by RhythmOne’s articles of association. For a discussion of the differences in such rights of holders, see “Comparison of Shareholders’ Rights.”

Do I have appraisal rights under the Offer with respect to the YuMe Shares?

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successful and Purchaser accepts YuMe Shares in the Offer and the First Merger is completed, holders of YuMe Shares will be entitled to exercise appraisal rights in connection with the First Merger and seek appraisal for the “fair value” of their YuMe Shares if they did not properly tender their YuMe Shares into the Offer and if they satisfy the other requirements and comply with the applicable procedures for demanding appraisal rights prescribed by Delaware law.

YuMe stockholders who (i) did not tender their YuMe Shares into the Offer, (ii) demand appraisal of their YuMe Shares in accordance with Section 262 of the DGCL and otherwise comply with the applicable statutory procedures under Section 262 of the DGCL and (iii) do not thereafter withdraw their demand for appraisal of such shares or otherwise lose their appraisal rights, in each case in accordance with the DGCL, will be entitled to receive a judicial determination of the fair value of their YuMe Shares as of the Effective Time, exclusive of any element of value arising from the accomplishment or expectation of the First Merger) and to receive payment of such fair value in cash in lieu of receiving the Transaction Consideration. Any such judicial determination of the fair value of YuMe Shares could be based upon considerations other than, or in addition to, the Transaction Consideration and the market value of YuMe Shares. The value so determined could be higher or lower than, or the same as, the Transaction Consideration per YuMe Share paid by RhythmOne pursuant to the Offer and the First Merger. You should be aware that opinions of investment banking firms as to the fairness from a financial point of view of the consideration payable in a sale transaction, such as the Offer and the First Merger, are not opinions as to fair value for the purposes of appraisal under applicable Delaware law.

Under Section 262 of the DGCL, where a merger or consolidation is approved under Section 251(h), either a constituent corporation before the effective date of the Merger, or the surviving corporation within ten (10) days thereafter, shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the Merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of Section 262 of the DGCL. The Schedule 14D-9, which is expected to be mailed to YuMe stockholders on ●, 2017, constitutes the formal notice of appraisal rights under Section 262 of the DGCL.

The foregoing summary of the rights of dissenting stockholders under Delaware law does not purport to be a complete statement of the procedures to be followed by YuMe stockholders desiring to exercise appraisal rights under Section 262 of the DGCL, and is qualified in its entirety by the full text of Section 262 of the DGCL which is attached as Annex ● to the Schedule 14D-9. See “The Offer — Appraisal Rights.”

What happens if the Offer is not completed?

If the Offer is not completed:

•

and you tendered your YuMe Shares by delivering a letter of transmittal, your YuMe Shares will be returned to you promptly following the announcement that the Offer has not been completed; or

•

you tendered your YuMe Shares by book-entry transfer, your YuMe Shares will be credited to an account maintained at the original book-entry transfer facility to which the YuMe Shares were tendered.

Under no circumstances will RhythmOne or Purchaser pay, or otherwise agree to be responsible for the payment of, interest or other fees, expenses or other costs of holders YuMe Shares if the Offer is not completed.

What percentage of RhythmOne Shares will be owned by the former YuMe stockholders after the Offer is completed?

If all of the issued and outstanding YuMe Shares are validly tendered and exchanged pursuant to the terms of the Offer, the former YuMe stockholders will own approximately 34% of the RhythmOne Shares, and holders of existing RhythmOne Shares will own approximately 66% of the RhythmOne Shares.

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Will I have to pay any transaction fees or brokerage commissions?

You will not have to pay any transaction fees or brokerage commissions if:

•

your YuMe Shares are registered in your name and you tender them to the Exchange Agent; or

•

you instruct your financial intermediary, broker, dealer, commercial bank, trust company or other entity to tender your YuMe Shares, subject to the policies of such financial intermediary, broker, dealer, commercial bank, trust company or other entity.

What are the material United States federal income tax consequences of the Transactions to YuMe stockholders?

The qualification of the Offer and the Mergers as a tax-free “reorganization” within the meaning of Section 368(a) of the Code is uncertain. Thus, no representation is made as to whether the Offer and the Mergers will qualify as a reorganization for U.S. federal income tax purposes, nor will YuMe or RhythmOne seek or obtain either a ruling from the IRS or an opinion of legal counsel regarding the tax consequences of the Transactions. If the Offer and the Mergers do not qualify as a tax-free reorganization, then the exchange of YuMe Shares for RhythmOne Shares and Cash Consideration will be a fully taxable transaction to U.S. Holders for U.S. federal income tax purposes.

If that the Offer and the Mergers, taken together, qualify as a tax-free reorganization within the meaning of Section 368(a) of the Code, and certain requirements under Section 367(a) of the Code are satisfied, then a U.S. Holder who exchanges YuMe Shares for RhythmOne Shares and Cash Consideration in the Transactions generally will recognize gain (but not loss) in an amount equal to the lesser of (i) the amount of gain realized and (ii) the Cash Consideration received in the Transactions. As described more fully in “Material U.S. Federal Income Tax Considerations — U.S. Federal Income Tax Consequences of the Transactions to U.S. Holders of YuMe Shares —Application of Section 368(a),” the qualification of the Offer and the Mergers as a reorganization under Section 368(a) of the Code is uncertain. Moreover, even if the Offer and the Mergers qualify as a reorganization, under Section 367(a)(1) of the Code and the Treasury Regulations thereunder, a U.S. Holder generally will be required to recognize all gain (but not loss) realized upon the exchange of YuMe Shares for RhythmOne Shares and Cash Consideration, unless certain additional requirements are met, including the requirement that the value of RhythmOne equals or exceeds the value of YuMe, as specifically determined for purposes of Section 367 of the Code, as of the closing date of the Transactions. Whether this requirement is met cannot be known with sufficient certainty until the closing date of the Transactions. As a result, in deciding whether to tender YuMe Shares into the Offer, U.S. Holders should consider the possibility that the exchange of YuMe Shares for RhythmOne Shares and Cash Consideration will be a fully taxable transaction to them for U.S. federal income tax purposes. The U.S. federal income tax consequences of the Transactions are complex, and you are urged to consult your tax adviser regarding the tax consequences of the Transactions with regard to your particular circumstances. See “Material U.S. Federal Income Tax Considerations” for a more complete discussion of the U.S. federal income tax consequences summarized above.

What is the market value of the YuMe Shares as of a recent date?

As of December 20, 2017, the latest practicable date before the date of this prospectus/offer to exchange, the closing price of the YuMe Shares reported on the NYSE was $3.57 per YuMe Share. You are encouraged to get a more recent stock price of YuMe Shares before tendering your YuMe Shares into the Offer.

Where can I find more information about RhythmOne and YuMe?

You can find more information about RhythmOne and YuMe by reading this prospectus/offer to exchange and from various sources described in this prospectus/offer to exchange under “Where You Can Find More Information.”

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Who can answer my questions?

If you have any questions about the Offer, or if you need to request additional copies of this prospectus/offer to exchange or other documents, you should contact the Information Agent at the following address and telephone number:

Georgeson LLC

1290 Avenue of the Americas, 9th Floor

New York, NY 10104

Banks, brokers and shareholders please call toll-free: (866) 856-2826

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SUMMARY

The following summary highlights material information contained or incorporated by reference in this prospectus/offer to exchange. It does not contain all of the information that may be important to you. You are urged to read carefully this entire prospectus/offer to exchange (including the annexes) and the other documents that are referred to or incorporated by reference in this prospectus/offer to exchange in order to fully understand the Transactions contemplated by the Merger Agreement. This summary and the balance of this prospectus/offer to exchange contain forward-looking statements about events that are not certain to occur as described, or at all, and you should not place undue reliance on those statements. Please carefully read the section “Cautionary Statement Regarding Forward-Looking Statements.” See “Where You Can Find More Information.” Most items in this summary include a page reference directing you to a more complete description of those items.

The Companies

RhythmOne (see page 153)

RhythmOne is a technology media company that connects digital audiences with brands through premium content across devices. Founded in 2004 as a video search company, RhythmOne works with advertisers, publishers and content providers to offer fully integrated, cross-screen advertising and content distribution solutions that span across desktop, mobile channels and video, rich media, display, social and native formats. RhythmOne’s registered office is located at 65 Gresham Street, 6th Floor, London EC2V 7NQ, United Kingdom and its head office is located at 251 Kearny Street, 2nd Floor, San Francisco, CA 94108, and its telephone number is (415) 655-1450. The RhythmOne Shares are admitted to trading on AIM under the symbol “RTHM”.

Purchaser and Merger Sub Two (see page 152)

Purchaser and Merger Sub Two are wholly-owned subsidiaries of RhythmOne. Purchaser was incorporated on August 29, 2017 for the purpose of making the Offer and consummating the First Merger and Merger Sub Two was incorporated on August 29, 2017 for the purpose of consummating the Second Merger. All outstanding shares of Purchaser and Merger Sub Two are directly owned by RhythmOne. Neither Purchaser nor Merger Sub Two has engaged in any business activities to date and neither has any material assets or liabilities of any kind, other than those incident to their formation and those incurred in connection with the Merger Agreement, the Offer and the Mergers. The address for Purchaser and Merger Sub Two are c/o RhythmOne plc, 251 Kearny Street, 2nd Floor, San Francisco, CA 94108, and their telephone number is (415) 655-1450.

YuMe (see page i)

YuMe was incorporated in Delaware on December 16, 2004. YuMe, including its wholly-owned subsidiaries, is a leading independent provider of digital video brand advertising solutions. YuMe’s proprietary technologies serve the specific needs of brand advertisers and enable them to find and target large, brand-receptive audiences across a wide range of internet-connected devices and digital media properties. YuMe’s software is used by global digital media properties to monetize professionally-produced content and applications. YuMe facilitates digital video advertising by dynamically matching relevant audiences available through its digital media property partners with appropriate advertising campaigns from its advertising customers. YuMe has its principal executive office located at 1204 Middlefield Road, Redwood City, CA 94063. Its telephone number at that address is (650) 591-9400. Additional information about YuMe is contained in its public filings, which are incorporated by reference herein. See “Where You Can Find More Information” on page i. YuMe Shares are traded on the NYSE under the symbol “YUME.”

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Risk Factors (see page 36)

In deciding whether to tender your YuMe Shares in the Offer, you should carefully consider the risks described under “Risk Factors.” The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to complete or realize the anticipated benefits of the Offer and the Mergers, and may have a material adverse effect on the business, cash flows, financial condition or operating results of the combined company following the Offer and the Mergers.

Background to and Reasons for the Transactions (see page 68)

RhythmOne’s Reasons for the Transaction (see page 83)

RhythmOne believes that the acquisition will result in a combined entity with a complete end-to-end platform in one of the fastest growing segments of the digital advertising industry, with the resources, relationships and talent to drive earnings growth both organically and through other potential acquisitions.

YuMe’s Reasons for the Transactions; Recommendation of YuMe’s Board of Directors (see page 86)

Because YuMe’s operational strengths complement RhythmOne’s strengths, YuMe believes that the combined company would offer a broader platform with greater revenue scale on a significantly stronger financial foundation. In addition, the YuMe board of directors evaluated a wide range of alternatives in addition to the Transactions, the potential benefits to the YuMe stockholders of these alternatives and the timing and the likelihood of completing such alternatives as well as the likelihood that such alternatives could result in greater value to YuMe stockholders, and concluded that the Transactions were in the best interest of YuMe stockholders.

The YuMe board of directors has unanimously determined and resolved that the terms of the Offer, the Mergers and the other transactions contemplated by the Merger Agreement were advisable, fair to and in the best interests of, YuMe and its stockholders. The YuMe board of directors has also unanimously resolved to recommend that the holders of YuMe Shares accept the Offer and tender their YuMe Shares into the Offer. A description of the reasons for this recommendation is also set forth in the Schedule 14D-9, which will be filed by YuMe with the SEC. The initial Schedule 14D-9 is expected to be mailed to YuMe stockholders on ●, 2017.

Opinion of YuMe’s Financial Advisor (see page 93)

At the September 4, 2017 meeting of the YuMe board of directors, Deutsche Bank, financial advisor to YuMe, rendered its oral opinion to the YuMe board of directors, confirmed by delivery of a written opinion dated September 4, 2017, to the effect that as of the date of such opinion, and based upon and subject to the assumptions made, procedures followed, matters considered and limitations, qualifications and conditions on the review undertaken in connection therewith, as described in Deutsche Bank’s opinion, the consideration of $1.70 in cash and 7.325 RhythmOne Shares per YuMe Share was fair, from a financial point of view, to the holders of outstanding YuMe Shares (other than RhythmOne and its affiliates).

Following the delivery of Deutsche Bank’s opinion, the RhythmOne shareholders approved a share consolidation pursuant to which every 10 RhythmOne Shares were consolidated into one RhythmOne Share. As a result of this share consolidation and pursuant to the terms of the Merger Agreement, the consideration to be received for each YuMe Share is now $1.70 in cash and 0.7325 RhythmOne Shares. The description of Deutsche Bank’s opinion and financial analyses in this prospectus/offer to exchange refers to the original consideration set forth in the Merger Agreement at the time of delivery of Deutsche Bank’s opinion.

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on the review undertaken in connection with the opinion, is attached to this Form F-4 as Annex C and is incorporated herein by reference. The summary of Deutsche Bank’s opinion set forth in this prospectus/offer to exchange is qualified in its entirety by reference to the full text of the opinion. Deutsche Bank’s opinion was addressed to, and for the use and benefit of, the YuMe board of directors in connection with and for the purpose of its evaluation of the Transactions. Deutsche Bank’s opinion does not constitute a recommendation as to whether or not any YuMe stockholder should tender their YuMe Shares pursuant to the Offer or, if applicable, how any YuMe stockholder should vote with respect to the Transactions or any other matter. Deutsche Bank’s opinion was limited solely to the fairness of the consideration of $1.70 in cash and 7.325 RhythmOne Shares per YuMe Share from a financial point of view, to the holders of outstanding YuMe Shares (other than RhythmOne and its affiliates), and Deutsche Bank did not express any opinion as to the underlying decision by YuMe to engage in the Transactions or the relative merits of the Transactions as compared to any alternative transactions or business strategies.

The Offer and the Mergers (see page 103)

RhythmOne, through Purchaser, is offering, upon the terms and subject to the conditions set forth in this prospectus/offer to exchange and in the accompanying letter of transmittal, to exchange the Transaction Consideration for each outstanding YuMe Share that is validly tendered in the Offer and not properly withdrawn. The Transaction Consideration consists of (i) $1.70 in cash and (ii) 0.7325 RhythmOne Shares, which gives effect to the 10-for-1 share consolidation of RhythmOne Shares implemented on September 25, 2017.

The First Merger will be completed as soon as practicable following Purchaser’s acceptance of YuMe Shares tendered in the Offer if the Offer is completed, assuming the satisfaction or waiver of the other conditions to the Merger at such time. If the Offer is completed, the First Merger will be subject to Section 251(h) of the DGCL, which means that no vote of YuMe stockholders will be required to complete the First Merger. Accordingly, RhythmOne anticipates that, if the Offer is completed, the First Merger will be completed on the same day as the Offer. In the First Merger, Purchaser will merge with and into YuMe, with YuMe surviving the First Merger. At the Effective Time, each outstanding YuMe Share that was not acquired in the Offer (other than certain dissenting, converted or cancelled shares, as described further in this prospectus/offer to exchange) will be converted into the right to receive the Transaction Consideration. After the First Merger, YuMe will be held as a wholly-owned subsidiary of RhythmOne, and the former stockholders of YuMe will no longer have any direct ownership interest in the surviving corporation.

Immediately following the First Merger, the surviving corporation in the First Merger will merge with and into Merger Sub Two, with Merger Sub Two surviving the Second Merger as a wholly-owned subsidiary of RhythmOne. The Second Merger will be governed by Section 267 of the DGCL.

Timing of the Offer (see page 103)

The Offer will commence on ● and will expire at one minute following 11:59 p.m. Pacific time on the date that is twenty (20) Business Days following the commencement of the Offer. If one or more of the conditions to the Offer are not satisfied or, to the extent legally permitted, waived, Purchaser will extend the period of time for which the Offer is open for successive periods of 10 business days (or such other number of business days as RhythmOne and YuMe agree) until all the conditions to the Offer have been satisfied or waived. However, neither RhythmOne nor Purchaser will be required to extend the Offer beyond March 31, 2018, which may be extended to the Outside Date in certain circumstances as provided for in the Merger Agreement.

Withdrawal Rights (see page 106)

YuMe stockholders may withdraw their YuMe Shares at any time before the Expiration Time and at any time after the Expiration Time until Purchaser accepts the YuMe Shares for exchange pursuant to the Offer. Once Purchaser accepts YuMe Shares for exchange pursuant to the Offer, all withdrawal rights will terminate.

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Conditions to the Offer (see page 141)

The Offer is subject to a number of conditions, including:

1.	the Minimum Tender Condition;

2.	the HSR Condition;

the registration statement on Form F-4, of which this prospectus/offer to exchange is a part, shall have been declared effective by the SEC under the Securities Act, a stop order suspending the effectiveness of the registration statement shall not have been issued by the SEC, and no proceedings for that purpose shall have been initiated or threatened by the SEC;

4.	(i) the RhythmOne Shares to be issued in the Offer and the First Merger shall have been approved for admission to trading on AIM; and (ii) the RhythmOne Shareholder Approval Condition shall have been satisfied;

5.	no judgment will have been issued by a court of competent jurisdiction or by a governmental authority, or any law or other legal restraint or prohibition, will be in effect that would make the Offer or the Mergers illegal or otherwise prevent the consummation thereof;

6.	there will not have occurred any material adverse effect on YuMe that is continuing, or there shall have occurred any effect that would reasonably be expected to result in a material adverse effect on YuMe;

7.	the representations and warranties of YuMe contained in the Merger Agreement being true and correct as of the date of the Merger Agreement and the Expiration Time of the Offer, subject to specified materiality standards set forth in the Merger Agreement;

8.	YuMe having performed and complied with, in all material respects, all obligations, agreements and covenants of YuMe to be performed or complied with by it under the Merger Agreement;

9.	the Merger Agreement will have not have terminated in accordance with its terms;

10.	no event will have occurred and remain outstanding or uncured that, with notice or lapse of time or both, (i) would provide RhythmOne the right to terminate the Merger Agreement; or (ii) would cause a failure of the RhythmOne Representation and Warranty Condition; and

11.	YuMe having at least $32 million in cash and cash equivalents at the consummation of the Offer.

Settlement of the Offer (see page 108)

If the conditions to the Offer have been satisfied or, to the extent legally permitted, waived, the consideration payable to tendering YuMe stockholders whose YuMe Shares are accepted for exchange will be calculated by the Exchange Agent. RhythmOne Shares will be issued, and cash will be paid, to tendering YuMe stockholders promptly following the Expiration Time.

With respect to the issuance of RhythmOne Shares to registered YuMe stockholders, the Exchange Agent will requisition from the transfer agent for RhythmOne Shares that such registered YuMe stockholder is entitled to receive in the Offer as specified in the letter of transmittal completed by such YuMe stockholder and

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(i) deliver such RhythmOne Shares to the address or addresses as such YuMe stockholder directed in their letter of transmittal (or if not completed, the address of such registered YuMe stockholder as it appears on the securities register of YuMe), or (ii) facilitate the crediting of a CREST account where such YuMe stockholder has elected to receive RhythmOne Shares in CREST, in each case in accordance with the instructions of the YuMe stockholder in the letter of transmittal.

With respect to the issuance of RhythmOne Shares to beneficial YuMe stockholders who hold their YuMe Shares through a nominee, such YuMe stockholders must contact that nominee for instructions and assistance in exchanging their YuMe Shares for the RhythmOne Shares to which such beneficial YuMe stockholder is entitled pursuant to the Offer.

Delisting and Deregistration (see page 140)

Following the completion of the Offer and the Mergers, RhythmOne intends to delist the YuMe Shares from the NYSE. Following delisting of the YuMe Shares from the NYSE and provided that the criteria for deregistration are met, RhythmOne intends to cause YuMe to make a filing with the SEC requesting that YuMe’s reporting obligations under the Exchange Act be terminated.

Treatment of YuMe Options and Other Stock-Based Awards (see page 120)

The Offer does not extend to YuMe stock options or other stock-based awards. However, pursuant to the Merger Agreement, at the Effective Time, such awards will be subject to the following treatment.

•

Each option to purchase YuMe Shares (“YuMe Option”) that is vested and outstanding as of immediately prior to the Effective Time and that has a per-share exercise price that is less than the value of the Transaction Consideration (as determined pursuant to the Merger Agreement) will be “net exercised” with a portion of the YuMe Shares subject to the option withheld by YuMe to fund payment of the option exercise price and applicable tax withholdings, and each of the issued YuMe Shares resulting from such “net exercise” will be cancelled at the Effective Time in exchange for the Transaction Consideration.

•

Each outstanding YuMe restricted stock unit (“YuMe RSU”) that is subject to an agreement with an individual holder that provides that such RSU shall be settled in connection with a change of control of YuMe (without the required occurrence of termination or any other event), or that otherwise becomes vested on or before the Effective Time will be settled in exchange for the Transaction Consideration with any applicable tax withholdings due upon the settlement of the YuMe RSUs to be withheld from the RhythmOne Shares portion of the Transaction Consideration.

•

Each YuMe Option that is unvested and outstanding as of immediately prior to the Effective Time and that has a per-share exercise price that is less than the value of the Transaction Consideration (as calculated pursuant to the Merger Agreement), to the extent held by a continuing service provider, will be converted into options to purchase RhythmOne Shares. Such converted option will generally have the same terms and conditions as applicable prior to the Effective Time, except for an adjusted share count and adjusted per-share exercise price calculated using an equity award conversion ratio (as determined pursuant to the Merger Agreement) designed to preserve the economic value of the award.

•

Each YuMe RSU that is unvested and outstanding as of the Effective Time will be converted into RSUs with respect to RhythmOne Shares generally having the same terms and conditions as applicable prior to the Effective Time, except for an adjusted share count calculated using an equity award conversion ratio (as determined pursuant to the Merger Agreement) designed to preserve the economic value of the award.

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•

Each YuMe Option that has an exercise price equal to or greater than the value of the Transaction Consideration (as calculated pursuant to the Merger Agreement) and each unvested YuMe Option not held by a continuing service provider will be cancelled at the Effective Time for no consideration in exchange.

With respect to YuMe’s Employee Stock Purchase Plan (“YuMe ESPP”), YuMe will cause the YuMe ESPP to terminate immediately prior to the completion of the Offer, and will commence no new offerings under the YuMe ESPP. If the completion of the Offer precedes the February 2018 purchase scheduled for the current offering period under such plan, then such offering period will be terminated prior to the expiration of the Offer, with the YuMe ESPP participants’ contributions to the plan being refunded and no purchase of shares under the plan taking place. No offering period will be authorized or commenced on or after the date of the Merger Agreement unless the Merger Agreement is terminated.

Regulatory Matters (see page 138)

Completion of the Offer is subject to the expiration or termination of any waiting period (and extensions thereof) applicable to the Offer and the Mergers under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). On September 29, 2017, the U.S. Federal Trade Commission granted early termination of the waiting period under the HSR Act, and as such, the HSR Condition has been satisfied. RhythmOne and YuMe are required to use their respective reasonable best efforts to consummate the Offer and the Mergers and make effective the Mergers as soon as practicable.

Appraisal Rights (see page 109)

Appraisal rights are not available in connection with the Offer, and YuMe stockholders who tender their shares in the Offer will not have appraisal rights in connection with the First Merger. However, if RhythmOne is successful and accepts YuMe Shares in the Offer and the First Merger is completed, holders of YuMe Shares will be entitled to exercise appraisal rights in connection with the First Merger and seek appraisal for the “fair value” of their YuMe Shares if they did not properly tender their YuMe Shares in the Offer and if they satisfy the other requirements and comply with the applicable procedures for demanding appraisal rights prescribed by Delaware law.

YuMe stockholders who (i) did not tender their YuMe Shares in the Offer, (ii) demand appraisal of their YuMe Shares in accordance with Section 262 of the DGCL and otherwise comply with the applicable statutory procedures under Section 262 of the DGCL and (iii) do not thereafter withdraw their demand for appraisal of such YuMe Shares or otherwise lose their appraisal rights, in each case in accordance with the DGCL, will be entitled to receive a judicial determination of the fair value of their YuMe Shares (as of the Effective Time, exclusive of any element of value arising from the accomplishment or expectation of the First Merger) and to receive payment of such fair value in cash in lieu of receiving the Transaction Consideration. Any such judicial determination of the fair value of YuMe Shares could be based upon considerations other than, or in addition to, the price paid in the Offer and the First Merger and the market value of YuMe Shares. The value so determined could be higher or lower than, or the same as, the price per YuMe Share paid by RhythmOne pursuant to the Offer and the First Merger. You should be aware that opinions of investment banking firms as to the fairness from a financial point of view of the consideration payable in a sale transaction, such as the Offer and the First Merger, are not opinions as to fair value for the purposes of appraisal under applicable Delaware law.

Under Section 262 of the DGCL, where a merger or consolidation is approved under Section 251(h), either a constituent corporation before the effective date of the merger, or the surviving corporation within ten (10) days thereafter, shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available

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for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of Section 262 of the DGCL. The Schedule 14D-9, which is expected to be mailed to YuMe stockholders on ●, 2017, constitutes the formal notice of appraisal rights under Section 262 of the DGCL.

The foregoing summary of the rights of dissenting stockholders under Delaware law does not purport to be a complete statement of the procedures to be followed by YuMe stockholders desiring to exercise appraisal rights under Section 262 of the DGCL, and is qualified in its entirety by the full text of Section 262 of the DGCL which is attached as Annex B to the Schedule 14D-9. See “The Offer — Appraisal Rights.”

Accounting Treatment (see page 64)

In accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), RhythmOne will account for the acquisition of YuMe Shares in the Offer and the First Merger under the acquisition method of accounting for business combinations.

Material U.S. Federal Income Tax Considerations (see page 225)

If the Offer and the Mergers, taken together, qualify as a tax-free reorganization within the meaning of Section 368(a) of the Code, and certain requirements under Section 367(a) of the Code are satisfied, then a U.S. Holder who exchanges YuMe Shares for RhythmOne Shares and Cash Consideration in the Transactions generally will recognize gain (but not loss) in an amount equal to the lesser of (i) the amount of gain realized and (ii) the Cash Consideration received in the Transactions. Subject to certain conditions, the parties have agreed not to knowingly take or fail to take any action that could reasonably be expected to cause the Offer and the Mergers, taken together, to fail to qualify as a reorganization within the meaning of Section 368(a) of the Code. However, as described more fully in “Material U.S. Federal Income Tax Considerations — U.S. Federal Income Tax Consequences of the Transactions to U.S. Holders of YuMe Shares — Application of Section 368(a),” the qualification of the Offer and the Mergers as a reorganization is uncertain. Accordingly, there can be no assurance that the IRS will not challenge the treatment of the Offer and the Mergers as a reorganization or that a U.S. court would uphold the treatment of the Offer and the Mergers as a reorganization in the event of an IRS challenge. If the Offer and the Mergers do not qualify as a reorganization under Section 368(a) of the Code, then a U.S. Holder generally will recognize gain or loss measured by the difference between (i) the Cash Consideration and the fair market value as of the closing date of the Transactions of the RhythmOne Shares (including fractional shares) received and (ii) such holder’s tax basis in the YuMe Shares surrendered in the Transactions.

Even if the Offer and the Mergers qualify as a reorganization under Section 368(a) of the Code, under Section 367(a)(1) of the Code and the Treasury Regulations thereunder, a U.S. Holder generally will be required to recognize all gain (but not loss) realized upon the exchange of YuMe Shares for RhythmOne Shares and Cash Consideration, unless certain additional requirements are met. One such requirement is that the value of RhythmOne equal or exceed the value of YuMe, as specifically determined for purposes of Section 367 of the

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Code, as of the closing date of the Transactions. The determination of whether the value of RhythmOne equals or exceeds the value of YuMe for purposes of Section 367 of the Code is based on facts that cannot be known with sufficient certainty until the closing date of the Transactions. In addition, the law in this area, particularly as applied to certain facts relating to YuMe and RhythmOne, is not well-established. Accordingly, no assurance can be given as to whether Section 367(a)(1) of the Code will apply to the transfer by a U.S. Holder of YuMe Shares to RhythmOne in exchange for RhythmOne Shares and Cash Consideration in the Transactions.

Based on the foregoing considerations, in deciding whether to tender YuMe Shares in the Offer, U.S. Holders should consider the possibility that the exchange of YuMe Shares for RhythmOne Shares and Cash Consideration will be a fully taxable transaction to them for U.S. federal income tax purposes. The U.S. federal income tax consequences of the Transactions are complex, and you are urged to consult your tax adviser regarding the tax consequences of the Transactions with regard to your particular circumstances. See “Material U.S. Federal Income Tax Considerations” for a more complete discussion of the U.S. federal income tax consequences summarized above.

Comparison of Shareholders’ Rights (see page 261)

YuMe stockholders receiving RhythmOne Shares will have different rights once they become RhythmOne shareholders than they do as holders of YuMe Shares. The rights of a holder of RhythmOne Shares are governed by the laws of England and Wales and by RhythmOne’s articles of association. For a discussion of the differences in such rights of holders, see “Comparison of Shareholders’ Rights.”

Interests of Certain Persons in the Transactions (see page 286)

Certain members of the YuMe board of directors and executive officers may have interests in the Transactions that may be different from, or in addition to, the interests of YuMe stockholders generally. The YuMe board of directors was aware of the potentially different interests and considered them, among other matters, in evaluating and negotiating the Merger Agreement and in reaching its decision to approve the Merger Agreement and the transactions contemplated therein.

Implications of Being an Emerging Growth Company

As a company with less than $1.07 billion in revenue during its last fiscal year, RhythmOne qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions permit reduced obligations with respect to financial data, including presenting only two years of audited financial statements and only two years of selected financial data, and an exception from compliance with auditor attestation requirements of Section 404 of the U.S. Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”).

RhythmOne may take advantage of these provisions until the end of the fiscal year following the fifth anniversary of the effectiveness of its initial registration statement or such earlier time that it is no longer an emerging growth company. RhythmOne will cease to be an emerging growth company if it has more than $1.07 billion in “total annual gross revenues” during the most recently completed fiscal year, the market value of RhythmOne Shares held by non-affiliates exceeds $700 million or if it issues more than $1.0 billion of non-convertible debt over a three-year period. It may choose to take advantage of some, but not all, of these reduced burdens. For as long as it takes advantage of the reduced reporting obligations, the information that it provides stockholders may be different from information provided by other public companies.

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Additional Information (see page 12)

Georgeson LLC

1290 Avenue of the Americas, 9th Floor

New York, NY 10104

Banks, brokers and shareholders please call toll-free: (866) 856-2826

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF RHYTHMONE

The following table sets forth selected historical consolidated financial information of RhythmOne prepared in accordance with IFRS. The selected financial information as of and for the fiscal years ended March 31, 2017 and 2016 is derived from RhythmOne’s audited consolidated financial statements included elsewhere in this prospectus/offer to exchange. The selected financial information as of September 30, 2017 and for the six months ended September 30, 2017 and 2016 is derived from the unaudited condensed consolidated interim financial statements included elsewhere in this prospectus/offer to exchange. The unaudited selected historical consolidated financial information presented has been prepared on a basis consistent with RhythmOne’s audited consolidated financial statements. In the opinion of RhythmOne management, such unaudited financial information reflects all adjustments necessary for a fair statement of the results for those periods. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year or any future period.

The information set forth below is only a summary and is not necessarily indicative of the results of RhythmOne or the combined company following completion of the Offer and the Mergers, and you should read the following information together with RhythmOne’s consolidated financial statements and accompanying notes included elsewhere in this prospectus/offer to exchange, RhythmOne’s unaudited condensed consolidated interim financial statements and accompanying notes included elsewhere in this prospectus/offer to exchange, and the section entitled “Management’s Discussion and Analysis of RhythmOne” beginning on page 165 of this prospectus/offer to exchange. See “Where You Can Find More Information.”


	Six Months Ended September 30,						Year Ended March 31,
	2017			2016			2017			2016
	(in thousands of U.S. dollars, except number of shares and per share amounts)
Income statement data:
Revenue		114,528			66,771			149,025			116,058

Cost of revenue		(70,939	)		(43,736	)		(98,478	)		(72,690	)
Operating expenses		(54,910	)		(33,546	)		(65,802	)		(120,607	)

Loss before tax and other items		(11,321	)		(10,511	)		(15,255	)		(77,239	)
Finance income		232			299			631			256
Finance expense		(141	)		(84	)		(266	)		(198	)

Other income		2,944			—			—			—
Loss before income tax		(8,286	)		(10,296	)		(14,890	)		(77,181	)
Income tax recovery (charge)		48			(404	)		861			1,654

Loss from continuing operations		(8,238	)		(10,700	)		(14,029	)		(75,527	)
Discontinued operations
Loss from discontinued operations, net of tax		—			(197	)		(4,761	)		(16,726	)

Loss for the period		(8,238	)		(10,897	)		(18,790	)		(92,253	)


Per share data:
Loss per share attributable to RhythmOne plc⁽¹⁾
Basic	$	(0.17	)	$	(0.27	)	$	(0.45	)	$	(2.29	)
Diluted	$	(0.17	)	$	(0.27	)	$	(0.45	)	$	(2.29	)

Loss per share from continuing operations⁽¹⁾
Basic	$	(0.17	)	$	(0.26	)	$	(0.33	)	$	(1.87	)
Diluted	$	(0.17	)	$	(0.26	)	$	(0.33	)	$	(1.87	)

Basic weighted average number of ordinary shares⁽¹⁾		49,542,062			40,488,969			42,260,692			40,319,876
Diluted weighted average number of ordinary shares⁽¹⁾		49,542,062			40,488,969			42,260,692			40,319,876
Dividends declared per common share	$	—		$	—		$	—		$	—

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	Six Months Ended September 30,					Year Ended March 31,
	2017		2016			2017		2016
	(in thousands of U.S. dollars, except number of shares and per share amounts)

Other Financial Data:
Adjusted EBITDA⁽²⁾		3,057		(2,597	)		1,386		(10,458	)

Consolidated Balance Sheet Data:
Cash and cash equivalents		39,325					19,338		18,222
Marketable securities (short- and long-term)		—					55,866		60,264
Goodwill		58,234					48,530		37,207
Intangible assets		44,856					37,971		24,200
Deferred tax asset		19,707					19,271		19,208
Total assets		252,787					235,121		188,534
Share capital		8,674					8,667		7,537
Total shareholders’ equity		183,864					183,235		155,938

⁽¹⁾	Share numbers and per share data have been adjusted for RhythmOne’s share consolidation approved at RhythmOne’s general meeting on September 25, 2017. Refer to Note 31 of the March 31, 2017 RhythmOne audited consolidated financial statements included elsewhere in this prospectus/offer to exchange.

⁽²⁾	Please see “Adjusted EBITDA” below for more information and for the reconciliation of Adjusted EBITDA to loss for the period, the most directly comparable IFRS financial measure.

Adjusted EBITDA

To provide investors with additional information regarding RhythmOne’s financial results, RhythmOne has presented, within this prospectus/offer to exchange, Adjusted EBITDA, a measure that is not defined by IFRS. RhythmOne has provided below a reconciliation of Adjusted EBITDA to loss for the period, the most directly comparable IFRS financial measure.

RhythmOne defines Adjusted EBITDA as loss for the period, adjusted to exclude finance income and expense, taxation, depreciation and amortization, share based payments and exceptional items in continuing operations and in discontinued operations, which include goodwill impairment, change in intangible assets’ lives, acquisition-related costs, restructuring and severance costs, fair value adjustments and unrealized foreign exchange gain and loss. RhythmOne adjusts Adjusted EBITDA for acquisition-related costs because the size, number and type of transactions have varied meaningfully over time. Acquisition-related costs resulting directly from merger and acquisition activities such as legal, due diligence and integration costs are not factored into management’s evaluation of potential acquisitions or its performance after completion of acquisitions, because they are not related to RhythmOne’s core operating performance, and the frequency and amount of such charges vary significantly based on the size and timing of the acquisitions and the maturities of the businesses being acquired. In addition, RhythmOne management believes that the adjustments of items such as acquisition-related costs and amortization of intangible assets more closely correlate with the sustainability of RhythmOne’s operating performance.

RhythmOne management believes that Adjusted EBITDA provides useful information to investors in understanding and evaluating the operating results of RhythmOne in the same manner as RhythmOne management and the RhythmOne board of directors because it excludes the impact of exceptional items in profit from operations, which have less bearing on the routine operating activities of RhythmOne, thereby enhancing users’ understanding of the underlying business performance. RhythmOne management also believes that Adjusted EBITDA provides information that enables investors to better compare RhythmOne’s business performance across periods.

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This non-IFRS measure is not necessarily comparable to similarly titled measures of other companies, and Adjusted EBITDA should not be viewed as a substitute for, or superior to, loss for the period prepared in accordance with IFRS as a measure of RhythmOne’s profitability or liquidity. Some of the limitations of Adjusted EBITDA are:

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

•

Adjusted EBITDA does not reflect changes in, or cash requirements for, RhythmOne’s working capital needs;

•

Adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;

•

Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to RhythmOne; and

•

other companies, including companies in RhythmOne’s industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Users of this financial information should consider the types of events and transactions for which adjustments have been made.

The following is a reconciliation of Adjusted EBITDA to loss for the periods indicated below:


	Six Months Ended September 30,						Year Ended March 31,
	2017			2016			2017			2016
	(in thousands of U.S. dollars)
Loss for the period		(8,238	)		(10,897	)		(18,790	)		(92,253	)

Adjustments:
Finance income		(232	)		(299	)		(631	)		(256	)
Finance expense		141			84			266			198
Taxation		(48	)		404			(861	)		(2,031	)
Depreciation and amortization		7,738			4,487			10,208			14,174
Share based payments		641			1,445			2,015			4,415
Exceptional items
Goodwill impairment		—			—			—			32,363
Change in intangible assets’ lives		—			—			—			12,027
Acquisition-related costs		2,451			256			2,435			1,134
Restructuring and severance cost		4,188			1,459			2,810			1,668
Fair value adjustment		(2,944	)		—			—			—
Unrealized foreign exchange (gain)/loss		(640	)		267			—			—
Exceptional items in discontinued operations		—			197			3,934			18,103

Total adjustments		11,295			8,300			20,176			81,795

Adjusted EBITDA		3,057			(2,597	)		1,386			(10,458	)

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF YUME

The following table sets forth selected historical consolidated financial information of YuMe prepared under accounting principles generally accepted in the United States (“U.S. GAAP”). The selected financial information as of and for the years ended December 31, 2016 and 2015 is derived from the audited consolidated financial statements included in YuMe’s Annual Report on Form 10-K for the year ended December 31, 2016, which is incorporated by reference into this prospectus/offer to exchange.

The selected financial information as of and for the nine months ended September 30, 2017 and 2016 is derived from the unaudited condensed consolidated financial statements included in YuMe’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, which is incorporated by reference into this prospectus/offer to exchange. The unaudited financial data presented have been prepared on a basis consistent with YuMe’s audited consolidated financial statements. In the opinion of YuMe management, such unaudited financial data reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair statement of the results for those periods. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year or any future period.

The information set out below is only a summary and is not necessarily indicative of the results of YuMe or the combined company following completion of the Mergers. You should read the following information together with (i) the audited consolidated financial statements of YuMe and the notes thereto, and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in YuMe’s Annual Report on Form 10-K for the year ended December 31, 2016 and (ii) the unaudited interim consolidated financial statements of YuMe and the notes thereto, and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations on Form 10-Q for the quarter ended September 30, 2017, which is incorporated by reference into this prospectus/offer to exchange. See the section “Where You Can Find More Information”.


	Nine Months Ended September 30,						Year Ended December 31,
	2017			2016			2016			2015
	(expressed in thousands of U.S. dollars, except per share data)
Consolidated Statements of Operations Data:
Revenue		114,309			114,861			160,411			173,254
Cost of revenue⁽¹⁾		57,517			58,642			80,190			95,028

Gross Profit		56,792			56,219			80,221			78,226

Operating expenses:
Sales and marketing⁽¹⁾		31,105			40,144			51,676			59,912
Research and development⁽¹⁾		6,025			8,462			10,968			10,937
General and administrative⁽¹⁾		14,232			17,954			22,513			23,584
Asset impairment		—			—			922			—
Restructuring		—			—			1,577			—

Total operating expenses		51,362			66,560			87,656			94,433

Income (loss) from operations		5,430			(10,341	)		(7,435	)		(16,207	)

Interest and other income (expense), net:
Interest expense		(6	)		(6	)		(7	)		(8	)
Other income (expense), net		782			(146	)		(299	)		(230	)

Total interest and other income (expense), net		776			(152	)		(306	)		(238	)

Income (loss) before income taxes		6,206			(10,493	)		(7,741	)		(16,445	)
Income tax (expense) benefit		(638	)		(55	)		20			(300	)

Net income (loss)		5,568			(10,548	)		(7,721	)		(16,745	)

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	Nine Months Ended September 30,					Year Ended December 31,
	2017		2016			2016			2015
	(expressed in thousands of U.S. dollars, except per share data)
Net income (loss) per share
Basic	$	0.16	$	(0.31	)	$	(0.22	)	$	(0.49	)
Diluted	$	0.16	$	(0.31	)	$	(0.22	)	$	(0.49	)

Weighted-average number of shares used in computing net income (loss) per share:
Basic		33,846		34,524			34,441			33,829
Diluted		34,653		34,524			34,441			33,829

Cash dividends declared per share	$	1.06	$	—		$	—		$	—

Other Financial Data:
Adjusted EBITDA income (loss)⁽²⁾		15,892		2,056			10,880			(1,552	)

⁽¹⁾	Stock-based compensation expense included in YuMe’s consolidated statements of operations data above is as follows:


	Nine Months Ended September 30,				Year Ended December 31
	2017		2016		2016		2015
	(expressed in thousands of U.S. dollars)
Cost of revenue		95		144		178		312
Sales and marketing		1,128		2,152		2,612		3,403
Research and development		535		924		1,200		1,111
General and administrative		1,523		3,418		4,434		4,053

Total employee stock-based compensation		3,281		6,638		8,424		8,879

⁽²⁾	Please see “Adjusted EBITDA” below for more information and for the reconciliation of Adjusted EBITDA to net income (loss), which is the most directly comparable financial measure calculated in accordance with U.S. GAAP.


	As of September 30,		Year Ended December 31,
	2017		2016		2015
	(expressed in thousands of U.S. dollars)
Consolidated Balance Sheet Data:
Cash and cash equivalents		28,589		34,700		17,859
Marketable securities		12,732		30,992		42,324
Property, equipment and software, net		15,821		11,726		12,110
Working capital		49,766		75,721		73,644
Total assets		112,684		137,379		149,074
Capital leases, non-current		703		13		—
Total stockholders’ equity		69,421		97,243		102,603

Adjusted EBITDA

To provide investors with additional information regarding YuMe’s financial results, YuMe has presented Adjusted EBITDA, a non-GAAP financial measure. YuMe has provided below a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure.

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Adjusted EBITDA is a non-GAAP financial measure that YuMe calculates as net income (loss), adjusted to exclude expenses for: interest, income taxes, depreciation and amortization, stock-based compensation, merger-related costs, one-time proxy expenses, asset impairment and restructuring expenses. YuMe management believes that Adjusted EBITDA provides useful information to investors in understanding and evaluating YuMe’s operating results in the same manner as management and the board of directors. This non-GAAP information is not necessarily comparable to non-GAAP information of other companies. Non-GAAP information should not be viewed as a substitute for, or superior to, net income (loss) prepared in accordance with GAAP as a measure of YuMe’s profitability or liquidity. Users of this financial information should consider the types of events and transactions for which adjustments have been made. The following is a reconciliation of Adjusted EBITDA to net income (loss) for the periods indicated below:


	Nine Months Ended September 30,					Year Ended December 31,
	2017		2016			2016			2015
	(expressed in thousands of U.S. dollars)
Net income (loss)		5,568		(10,548	)		(7,721	)		(16,745	)

Adjustments:
Interest expense		6		6			7			8
Income tax expense (benefit)		638		55			(20	)		300
Depreciation and amortization expense		4,599		5,090			6,876			6,006
Stock-based compensation expense		3,281		6,638			8,424			8,879
Merger-related costs⁽¹⁾		1,800		—			—			—
Proxy contest expense		—		815			815			—
Asset impairment		—		—			922			—
Restructuring		—		—			1,577			—

Total adjustments		10,324		12,604			18,601			15,193

Adjusted EBITDA income (loss)		15,892		2,056			10,880			(1,552	)

(1)	Merger-related costs incurred during the nine months ended September 30, 2017 were related to YuMe’s comprehensive review of strategic alternatives leading up to the announcement of the Merger Agreement with RhythmOne.

YuMe has presented Adjusted EBITDA because it is a key measure used by YuMe’s management and board of directors to understand and evaluate YuMe’s core operating performance and trends, to prepare and approve YuMe’s annual budget, and to develop short- and long-term operational plans. In particular, YuMe believe that the exclusion of the expenses eliminated in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of YuMe’s core business. Additionally, Adjusted EBITDA is a key financial measure considered by the compensation committee of YuMe’s board of directors in connection with the determination of compensation for YuMe’s executive officers. Accordingly, YuMe management believes that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating YuMe’s operating results in the same manner as YuMe’s management and board of directors.

Adjusted EBITDA has limitations as a financial measure, and you should not consider it in isolation or as a substitute for analysis of YuMe’s results as reported under GAAP. Some of these limitations are:

•

Adjusted EBITDA does not reflect changes in, or cash requirements for, YuMe’s working capital needs;

•

Adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;

•

Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to YuMe; and

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•

other companies, including companies in YuMe’s industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these and other limitations, you should consider Adjusted EBITDA along with other GAAP-based financial performance measures, including various cash flow metrics, net income or loss, and YuMe’s other GAAP financial results.

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The unaudited pro forma condensed combined income statement for the fiscal year ended March 31, 2017 and for the six months ended September 30, 2017 has been prepared by RhythmOne and gives effect to the following transactions (together, the “Acquisitions”) as if they occurred on April 1, 2016:

•

The acquisition of Perk Inc. (“Perk”) by RhythmOne on January 19, 2017 for consideration of 0.4512 RhythmOne Shares for each Perk share outstanding, as adjusted for the 10-for-1 share consolidation of RhythmOne Shares implemented on September 25, 2017;

•

The acquisition of certain assets and related liabilities from RadiumOne, Inc. (“Radium”) by RhythmOne on June 26, 2017 for consideration of $20.4 million. The consideration included a cash payment of $3.9 million on the acquisition date, a $5.0 million deferred cash payment made on July 19, 2017 and up to a further $11.5 million being deferred and payable in shares at future dates; and

•

The Transactions, assuming 100% of YuMe Shares are exchanged in the Transactions for the Transaction Consideration.

The unaudited pro forma condensed combined balance sheet (the “Pro Forma Balance Sheet”) as at September 30, 2017 combines the historical consolidated balance sheets of RhythmOne, Radium and YuMe, giving effect to the acquisition of Radium and the Transactions as if they occurred on September 30, 2017.

The unaudited pro forma condensed combined financial statements (the “Unaudited Pro Forma Financial Information”) have been adjusted to give effect to pro forma events that are (1) directly attributable to the aforementioned transactions, (2) factually supportable, and (3) with respect to the statement of income, expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial statements should be read in conjunction with the accompanying notes thereto. In addition, the unaudited pro forma condensed combined financial statements were based on and should be read in conjunction with the financial statements and notes of RhythmOne, Perk, Radium and YuMe which are included or incorporated by reference elsewhere in this prospectus/offer to exchange. See “Presentation of Certain Financial and Other Information” and “Unaudited Pro Forma Condensed Combined Financial Information”.

RhythmOne’s fiscal year end is on March 31, whereas the fiscal year ends of Perk and Radium prior to their acquisitions were on December 31 and the fiscal year end of YuMe is December 31. The fiscal year ends of the companies differ by less than 93 days. As such, the Unaudited Pro Forma Financial Information is based upon:

•

Financial information for RhythmOne as of and for the fiscal year ended March 31, 2017, and as of and for the six months ended September 30, 2017,

•

Financial information for Radium as of and for the fiscal year ended December 31, 2016,

•

Financial information for YuMe for the fiscal year ended December 31, 2016, for the three months ended March 31, 2017, and for the nine months ended September 30, 2017, and as of September 30, 2017, and

•

Financial information for Perk for the fiscal year ended December 31, 2016, adjusted to match the fiscal year of RhythmOne, as RhythmOne acquired Perk on January 19, 2017.

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Selected Unaudited Pro Forma Condensed Combined Income Statement Data


(in thousands, except number of shares and per share data)	Six months ended September 30, 2017			Fiscal Year ended March 31, 2017
Revenue		209,350			502,751
Loss before tax and other items		(10,808	)		(60,456	)
Loss before income tax		(7,556	)		(57,773	)
Loss for the year		(8,256	)		(57,833	)
Basic loss per share attributable to RhythmOne		(10.6	)		(81.9	)
Diluted loss per share attributable to RhythmOne		(10.6	)		(81.9	)

Weighted average shares outstanding:
Basic		77,917,936			70,636,566
Diluted		77,917,936			70,636,566

Selected Unaudited Pro Forma Condensed Combined Balance Sheet Data


(in thousands, except per share data)	As of September 30, 2017
Total assets		416,773
Share capital		12,221
Total shareholders’ equity		263,687
Total liabilities and equity		416,773

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UNAUDITED COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE INFORMATION

The following tables include per share information for RhythmOne and YuMe on a historical basis, on an unaudited pro forma combined basis for RhythmOne and on an equivalent unaudited pro forma combined basis for YuMe. The information set out below should be read in conjunction with the consolidated financial statements and related notes of RhythmOne, the unaudited condensed consolidated interim financial information and related notes of RhythmOne, the consolidated financial statements and related notes of YuMe, and the unaudited condensed consolidated interim financial statements and related notes of YuMe which are incorporated by reference into this prospectus/offer to exchange. See “Where You Can Find More Information”.

The historical per share data for RhythmOne shares and YuMe shares below is derived from RhythmOne’s consolidated financial statements, RhythmOne’s unaudited condensed consolidated interim financial statements, YuMe’s consolidated financial statements and YuMe’s unaudited condensed consolidated financial statements. The historical per share data for RhythmOne shares also is adjusted for RhythmOne’s share consolidation approved at RhythmOne’s general meeting on September 25, 2017. Refer to Note 31 of the March 31, 2017 RhythmOne audited consolidated financial statements included elsewhere in this prospectus/offer to exchange.

The following unaudited pro forma per share information has been prepared in accordance with the rules and regulations of the SEC, and is presented for informational purposes only. You should not rely on the unaudited pro forma combined amounts as being necessarily indicative of the results of operations that would have been reported by RhythmOne had the Transactions been effected during 2016 or that may be reported in the future. The unaudited pro forma combined per share information, although helpful in illustrating the financial characteristics of RhythmOne under one set of assumptions, does not reflect the benefits of any cost savings, opportunities to earn additional revenue or other factors that may result as a consequence of the Transactions, or liabilities or related costs of any integration and similar activities. Accordingly, the unaudited pro forma information does not attempt to predict or suggest future results. See “Unaudited Pro Forma Condensed Combined Financial Information” for a more complete discussion.

The unaudited pro forma combined per YuMe equivalent share data set forth below shows the effect of the Transactions from the perspective of a YuMe stockholder that is entitled to receive the Transaction Consideration. The information was calculated by multiplying the unaudited pro forma combined per share data for RhythmOne ordinary shares by the Transaction Consideration exchange ratio of 0.7325 of a RhythmOne Share per YuMe Share, which does not include the $1.70 per YuMe Share Cash Consideration portion of the Transaction Consideration.


	As of and for the Six Months Ended September 30, 2017			As of and for the Fiscal Year Ended March 31, 2017
RhythmOne — Historical per RhythmOne Share Data:
Basic earnings per share from continuing operations (cents)		(16.6	)		(33.2	)
Diluted earnings per share from continuing operations (cents)		(16.6	)		(33.2	)
Basic earnings per share (cents)		(16.6	)		(44.5	)
Diluted earnings per share (cents)		(16.6	)		(44.5	)
Cash dividend declared per share	$	0.00		$	0.00
Net book value per share	$	3.71		$	4.34

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	As at and for the Nine Months Ended September 30, 2017		As at and for the Year Ended December 31, 2016
YuMe —Historical per YuMe Share Data:
Basic earnings per share	$	0.16	$	(0.22	)
Diluted earnings per share	$	0.16	$	(0.22	)
Cash dividend declared per share	$	1.06	$	0.00
Net book value per share	$	2.05	$	2.83


	As of and for the Six Months Ended September 30, 2017			As of and for the Fiscal Year Ended March 31, 2017
Unaudited Pro Forma Combined per RhythmOne Share Data:
Basic earnings per share from continuing operations (cents)		(10.6	)		(75.1	)
Diluted earnings per share from continuing operations (cents)		(10.6	)		(75.1	)
Basic earnings per share (cents)		(10.6	)		(81.9	)
Diluted earnings per share (cents)		(10.6	)		(81.9	)
Cash dividend declared per share	$	0.00		$	0.00
Net book value per share	$	3.38		$	3.88

Unaudited Pro Forma Combined per YuMe Equivalent Share Data:
Basic earnings per share from continuing operations (cents)		(7.8	)		(55.0	)
Diluted earnings per share from continuing operations (cents)		(7.8	)		(55.0	)
Basic earnings per share (cents)		(7.8	)		(60.0	)
Diluted earnings per share (cents)		(7.8	)		(60.0	)
Cash dividend declared per share	$	0.00		$	0.00
Net book value per share	$	2.48		$	2.84

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RATIO OF EARNINGS TO FIXED CHARGES

The following table presents RhythmOne’s historical and pro forma ratio of earnings to fixed charges for the periods indicated.


(unaudited)	Pro Forma For the Six Months Ended September 30, 2017		Pro Forma For the Year Ended March 31, 2017		For the Six Months Ended September 30,						For the Years Ended March 31,
(unaudited)			Pro Forma For the Year Ended March 31, 2017		2017			2016			2017			2016
Ratio of earnings to fixed charges⁽¹⁾		(2.2)		(8.8)		(12.0	)		(14.6	)		(10.8	)		(56.1	)

⁽¹⁾	Based on rounded thousands.

For purposes of calculating this ratio, “earnings” consist of loss before income tax and fixed charges. “Fixed charges” consist of finance expense and the interest portion of operating lease expense.

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COMPARATIVE MARKET INFORMATION

The RhythmOne Shares are admitted to trading on AIM under the symbol “RTHM.” The YuMe Shares are listed on the NYSE under the symbol “YUME”.

The table below sets out the closing price per share of RhythmOne Shares trading on AIM and of YuMe Shares on the NYSE on (a) August 22, 2017, the last full trading day prior to the public announcements of a potential business combination transaction between RhythmOne and YuMe, (b) September 1, 2017, the last full trading day on the NYSE prior to the public announcement of the signing of the Merger Agreement, (c) September 4, 2017, the last full trading day on AIM prior to the public announcement of the signing of the Merger Agreement; and (d) December 20, 2017 the last practicable trading day prior to the date of this prospectus/offer to exchange. The table below also presents the implied equivalent value per share for YuMe Shares in U.S. dollars.

The implied equivalent value of a YuMe Share was calculated as the Transaction Consideration.


	RhythmOne Shares (£)⁽¹⁾		YuMe Shares ($)		Implied equivalent value per share ($)
Date:
August 22, 2017		3.70		5.06		5.20
September 1, 2017		3.50		5.16		5.01
September 4, 2017		3.50		—		5.01
December 20, 2017		2.35		3.57		3.92

⁽¹⁾	Reflects the 10-for-1 share consolidation of RhythmOne Shares implemented on September 25, 2017.

In calculating the implied equivalent value per YuMe Share, amounts in pounds sterling have been translated into U.S. dollars at the spot exchange rate of $1.2923 per pound sterling, as posted on Bloomberg on September 4, 2017 at approximately 10:30 a.m. (Pacific time).

The market prices of RhythmOne Shares and YuMe Shares are likely to fluctuate prior to the Expiration Time and cannot be predicted. RhythmOne urges you to obtain current market information regarding RhythmOne Shares and YuMe Shares.

See “Comparative Per Share Market Price and Dividend Information” for further information about historical market prices of these securities.

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RISK FACTORS

You should carefully consider the following risk factors and all of the information contained in or incorporated by reference into this prospectus/offer to exchange, including but not limited to, the matters addressed in “Cautionary Statement Regarding Forward-Looking Statements” and the matters discussed in YuMe’s Annual Report on Form 10-K for the year ended December 31, 2016 and YuMe’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, as updated from time to time in YuMe’s subsequent filings with the SEC, which are incorporated by reference into this prospectus/offer to exchange. See “Where You Can Find More Information”. Any of the following risks or the factors incorporated by reference into this prospectus/offer to exchange could materially adversely affect RhythmOne’s business, financial condition or results of operations. Additional risks and uncertainties not currently known to RhythmOne or that RhythmOne currently does not consider to be material may also materially and adversely affect RhythmOne’s business, financial condition or results of operations.

Risks related to the Transactions and the Combined Company

The Offer remains subject to conditions that RhythmOne cannot control and if such conditions are not satisfied or waived, the Offer may expire.

The Offer is subject to a number of conditions, including the Minimum Tender Condition, lack of legal prohibitions against consummation of the Offer, approval for listing on AIM of RhythmOne Shares to be issued in the Offer and the First Merger, continued effectiveness of the registration statement on Form F-4, of which this prospectus/offer to exchange is a part, the truth and accuracy of YuMe’s representations and warranties made in the Merger Agreement, subject to specified materiality standards, YuMe’s material compliance with its covenants under the Merger Agreement, the non-termination of the Merger Agreement and YuMe having at least $32 million in cash and cash equivalents at the consummation of the Offer. There are no assurances that all conditions to the Offer will be satisfied or that the conditions will be satisfied in the time frame expected. If the conditions to the Offer are not met, then RhythmOne may, subject to the terms and conditions of the Merger Agreement, allow the Offer to expire, or amend or extend the Offer. See “Merger Agreement — Conditions to the Offer.”

Because the market price of RhythmOne Shares and the exchange rate of pounds sterling to U.S. dollars may fluctuate, YuMe stockholders cannot be sure of the value of the Transaction Consideration they will receive.

Upon completion of the Offer and the First Merger, each YuMe Share will be converted into the right to receive a fixed amount of cash and a fixed number of RhythmOne Shares. The value of the RhythmOne Shares upon completion of the Offer and the First Merger may differ from the value of the RhythmOne Shares at the signing of the Merger Agreement due to changes in the market value of RhythmOne Shares and the comparative value of the pound sterling and the U.S. dollar. If the value of the RhythmOne Shares decreases relative to the value of YuMe Shares or the value of the pound sterling decreases relative to the value of the U.S. dollar between the date of the Merger Agreement and the closing of the First Merger, the implied value and premium paid to YuMe stockholders pursuant to the Offer and in the First Merger will be lower than the implied value and premium paid as of the time the parties executed the Merger Agreement.

After completion of the Offer and the First Merger, former YuMe stockholders will own a smaller percentage of RhythmOne than they currently own of YuMe and as such will have diminished ability to affect the outcome of matters submitted to the RhythmOne shareholders.

After the completion of the Offer and the First Merger, former YuMe stockholders will own a smaller percentage of RhythmOne than they currently own of YuMe. If all of the issued and outstanding YuMe Shares are validly tendered and exchanged pursuant to the terms of the Offer, the former YuMe stockholders will own approximately 34% of the RhythmOne Shares, and holders of existing RhythmOne Shares will own

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approximately 66% of the RhythmOne Shares. As a result, former YuMe stockholders would be a minority of the RhythmOne shareholders with limited ability, if any, to influence the outcome on any matters that are or may be subject to shareholder approval, including the appointment of directors, the issuance of shares or other equity securities, the payment of dividends and the acquisition or disposition of substantial assets.

YuMe stockholders may decide to sell their YuMe Shares or RhythmOne Shares, which could cause a decline in their market prices and the value of the Transaction Consideration.

Some YuMe stockholders may decide they do not want to own shares of a company that has its primary listing outside the United States or decide they do not want to hold RhythmOne Shares for other reasons. This could result in the sale of YuMe Shares prior to the completion of the Offer and the First Merger or the sale of RhythmOne Shares received in the Offer and the First Merger after the completion of the Offer and the First Merger, as the case may be. These sales, or the prospects of such sales in the future, could adversely affect the market price for YuMe Shares, and the ability to sell YuMe Shares in the market before the Offer and the First Merger is completed as well as RhythmOne Shares before and after the Offer and the First Merger is completed. This could, in turn, adversely affect the dollar value of the RhythmOne Shares that YuMe stockholders will receive upon completion of the Offer and the First Merger.

There will be material differences between a stockholder’s current rights as a holder of YuMe Shares and the rights one can expect as a holder of RhythmOne Shares, some which may adversely affect you.

Upon completion of the Transactions, YuMe stockholders will no longer be stockholders of YuMe, a corporation incorporated under the laws of Delaware, but will be shareholders of RhythmOne, a corporation incorporated under the laws of England and Wales. There will be material differences between the current rights of YuMe stockholders and the rights you can expect to have as a holder of RhythmOne Shares, some which may adversely affect you.

Furthermore, for so long as RhythmOne remains a foreign private issuer under the rules and regulations of the SEC, RhythmOne will be exempt from a number of rules under the Exchange Act and will be permitted to file different, and in many instances less comprehensive, information with the SEC, and to file such information less frequently than YuMe is currently required to file. For example, RhythmOne would not be required to furnish Quarterly Reports on Form 10-Q, proxy statements pursuant to Sections 14(a) or 14(c) of the Exchange Act or reports on “insider” trading pursuant to Section 16 of the Exchange Act, nor will the “short swing” profit recovery provisions of Section 16(b) of the Exchange Act be applicable. Accordingly, if you continue to hold RhythmOne Shares after the consummation of the Transactions, for so long as RhythmOne remains a foreign private issuer, you may receive less information about RhythmOne than you currently receive about YuMe and may be afforded less protection under the U.S. federal securities laws than you are currently afforded. In addition, as an AIM listed company, there are differences in the corporate governance practices adopted by RhythmOne compared with those of a NYSE listed company, like YuMe, including the application of different tests for the independence of board members.

For a more detailed discussion of the differences in the rights of YuMe stockholders and RhythmOne shareholders, see “Comparison of Shareholders’ Rights.”

RhythmOne does not currently intend to list the RhythmOne Shares on a U.S. national securities exchange, and therefore a U.S. trading market for RhythmOne Shares may not develop.

RhythmOne currently does not intend to list the RhythmOne Shares on a U.S. national securities exchange. Liquidity in AIM-traded shares tends to be significantly lower than that of NYSE-traded shares. This could make it more difficult for you to sell your RhythmOne Shares following the closing of the Transactions and could adversely affect the price of those shares. Reduced liquidity also could result in increased volatility, and the price for the RhythmOne Shares may vary significantly in the future.

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RhythmOne has the ability to terminate its Exchange Act reporting if permitted by applicable law, which would reduce the disclosures available to you.

Following the consummation of the Transactions, if RhythmOne were to cease to be a reporting company under the Exchange Act, and to the extent not required in connection with any other debt or equity securities of RhythmOne registered or required to be registered under the Exchange Act, the information now available to YuMe stockholders in the annual and other reports required to be filed by YuMe in the United States would not be available to holders of the RhythmOne Shares. As such, the disclosures available to you may be reduced, which may adversely affect your ability to make investment decisions with respect to your RhythmOne Shares.

The effect of comprehensive U.S. tax reform legislation on RhythmOne and its affiliates, whether adverse or favorable, is uncertain.

On December 22, 2017, President Trump signed into law H.R. 1, “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018” (informally titled the “Tax Cuts and Jobs Act”). Among a number of significant changes to the current U.S. federal income tax rules, the Tax Cuts and Jobs Act reduces the marginal U.S. corporate income tax rate from 35% to 21%, limits the deduction for net interest expense, shifts the United States toward a more territorial tax system, and imposes new taxes to combat erosion of the U.S. federal income tax base. The effect of the Tax Cuts and Jobs Act on RhythmOne and its affiliates, whether adverse or favorable, is uncertain, and may not become evident for some period of time. You are urged to consult your tax adviser regarding the implications of the Tax Cuts and Jobs Act for an investment in RhythmOne Shares.

Changes in law could affect RhythmOne’s status as a foreign corporation for U.S. federal income tax purposes, limit the U.S. tax benefits from RhythmOne engaging in certain transactions, or adversely affect holders of RhythmOne Shares.

A corporation generally is considered a tax resident in the jurisdiction of its organization or incorporation for U.S. federal income tax purposes. Because RhythmOne is organized under the laws of England and Wales, RhythmOne believes that it should be classified as a foreign corporation (and, therefore, not a U.S. tax resident) under these rules. Nevertheless, changes to the U.S. tax “inversion” rules under Section 7874 of the Code or the Treasury Regulations promulgated thereunder could adversely affect RhythmOne’s status as a foreign corporation for U.S. federal tax purposes, and any such changes could have prospective or retroactive application. If RhythmOne were to be treated as a U.S. corporation for U.S. federal income tax purposes, it could be subject to a materially different tax regime as a U.S. corporation than currently applies to it as a foreign corporation. Moreover, in such a case, a Non-U.S. Holder (as defined herein) of RhythmOne Shares generally would be subject to U.S. withholding tax on the gross amount of any dividends paid by RhythmOne to such shareholder. If RhythmOne were treated under Section 7874 of the Code as a “surrogate foreign corporation” that is not a U.S. corporation, dividends paid by RhythmOne to certain non-corporate U.S. Holders (including individuals) would not qualify for the lower capital gains rate generally available for “qualified dividend income.” The rules under Section 7874 and other relevant provisions could change on a prospective or retroactive basis in a manner that could adversely affect RhythmOne, its affiliates, and holders of RhythmOne Shares. You are urged to consult your tax advisers regarding the implications of Section 7874 of the Code and related provisions for an investment in RhythmOne Shares.

Future changes in U.S. and foreign tax laws could adversely affect RhythmOne.

The U.S. Congress, the Organization for Economic Co-operation and Development, and government agencies in jurisdictions where RhythmOne and its affiliates do business have focused on issues related to the taxation of multinational corporations. In particular, specific attention has been paid to “base erosion and profit shifting,” where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. As a result, the tax laws in the United States and other countries in which RhythmOne and its affiliates do business could change on a prospective or retroactive basis, and any such change could adversely affect RhythmOne.

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If the Offer and the Mergers, taken together, are not treated as tax-free with respect to U.S. Holders, then U.S. Holders may be required to recognize a greater amount of gain for U.S. federal income tax purposes at the time they exchange YuMe Shares for RhythmOne Shares and Cash Consideration in the Transactions.

The U.S. federal income tax consequences of the Transactions to U.S. Holders of YuMe Shares will be uncertain at the time such holders tender YuMe Shares in the Offer. In general, the tax consequences will depend on whether the Offer and the Mergers, taken together, qualify as a “reorganization” within the meaning of Section 368(a) of the Code and whether Section 367(a) of the Code applies to transfers of YuMe Shares by U.S. Holders pursuant to the Transactions. As described more fully in “Material U.S. Federal Income Tax Considerations — U.S. Federal Income Tax Consequences of the Transactions to U.S. Holders of YuMe Shares — Application of Section 368(a),” the qualification of the Offer and the Mergers as a reorganization is uncertain. Thus, no representation is made as to whether the Offer and the Mergers will qualify as a reorganization for U.S. federal income tax purposes, nor will YuMe or RhythmOne seek or obtain either a ruling from the IRS or an opinion of legal counsel regarding the tax consequences of the Transactions. Accordingly, there can be no assurance that the IRS will not challenge the treatment of the Offer and the Mergers as a reorganization or that a U.S. court would uphold the treatment of the Offer and the Mergers as a reorganization in the event of an IRS challenge.

If the Offer and the Mergers, taken together, do not qualify as a reorganization under Section 368(a) of the Code, then a U.S. Holder generally will recognize gain or loss measured by the difference between (i) the Cash Consideration and the fair market value as of the closing date of the Transactions of the RhythmOne Shares (including fractional shares) received and (ii) such holder’s tax basis in the YuMe Shares surrendered in the Transactions. Even if the Offer and the Mergers qualify as a reorganization under Section 368(a) of the Code, under Section 367(a)(1) of the Code and the Treasury Regulations thereunder, a U.S. Holder generally will be required to recognize all gain (but not loss) realized upon the exchange of RhythmOne Shares for YuMe Shares and Cash Consideration, unless certain additional requirements are met. One such requirement is that the value of RhythmOne equal or exceed the value of YuMe, as specifically determined for purposes of Section 367 of the Code, as of the closing date of the Transactions. The determination of whether the value of RhythmOne equals or exceeds the value of YuMe for purposes of Section 367 of the Code is based on facts that cannot be known with sufficient certainty until the closing date of the Transactions. In addition, the law in this area, particularly as applied to certain facts relating to YuMe and RhythmOne, is not well-established. Accordingly, no assurance can be given as to whether Section 367(a)(1) of the Code will apply to the transfer by a U.S. Holder of YuMe Shares to RhythmOne in exchange for RhythmOne Shares and Cash Consideration in the Transactions.

Based on the foregoing considerations, in deciding whether to tender YuMe Shares into the Offer, U.S. Holders should consider the possibility that the exchange of YuMe Shares for RhythmOne Shares and the Cash Consideration will be a fully taxable transaction to them for U.S. federal income tax purposes. The U.S. federal income tax consequences of the Transactions are complex, and U.S. Holders are urged to consult their tax advisers regarding the tax consequences of the Transactions with regard to their particular circumstances. See “Material U.S. Federal Income Tax Considerations” for a more complete discussion of the U.S. federal income tax consequences summarized above.

Upon completion of the Transactions, YuMe stockholders will become RhythmOne shareholders, and the market price for RhythmOne Shares may be affected by factors different from those that historically have affected YuMe.

Upon completion of the Transactions, YuMe stockholders will become RhythmOne shareholders. RhythmOne’s businesses differ from those of YuMe, and accordingly, the results of operations of RhythmOne will be affected by some factors that are different from those currently affecting the results of operations of YuMe. For a discussion of the business of RhythmOne, see “Information about RhythmOne.”

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The market value of RhythmOne Shares may be adversely affected by fluctuations in the exchange rate between the U.S. dollar and the pound sterling.

Fluctuations in the exchange rate between the U.S. dollar and the pound sterling will affect the market value of RhythmOne Shares when expressed in U.S. dollars. If the relative value of the pound sterling to the U.S. dollar declines, the U.S. dollar equivalent of the pound sterling price of RhythmOne Shares traded on AIM will also decline.

The Merger Agreement limits YuMe’s ability to pursue alternative transactions, and in certain instances requires payment of a termination fee, which could deter a third-party from proposing an alternative transaction.

The Merger Agreement contains provisions that, subject to certain exceptions, limit YuMe’s ability to solicit, initiate or knowingly encourage or knowingly facilitate any inquiries regarding or the making of any proposal or offer that constitutes or could reasonably be expected to lead to an alternative takeover proposal. See “Merger Agreement — No Solicitation of Acquisition Proposals.” In addition, under specified circumstances where the Merger Agreement is terminated, YuMe is required to pay a termination fee of $5,536,790. See “Merger Agreement — Effect of Termination; Termination Fee”. It is possible that these or other provisions might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of YuMe from considering or proposing an acquisition or might result in a potential competing acquirer proposing to pay a lower per share price to acquire YuMe than it might otherwise have proposed to pay.

The opinion of YuMe’s financial advisor will not reflect changes in circumstances between the signing of the Merger Agreement and the completion of the Transactions.

YuMe has not obtained an updated opinion from its financial advisor as of the date of this prospectus/offer to exchange and does not expect to receive an updated, revised or reaffirmed opinion prior to the completion of the Transactions. Changes in the operations and prospects of YuMe or RhythmOne, general market and economic conditions and other factors that may be beyond the control of YuMe or RhythmOne, and on which YuMe’s financial advisor’s opinion was based, may significantly alter the value of YuMe or RhythmOne, or the prices of YuMe Shares or RhythmOne Shares by the time the Transactions are completed. The opinion does not speak as of the time the Transactions will be completed or as of any other date other than the date of such opinion. Because YuMe’s financial advisor will not be updating its opinion, the opinion will not address the fairness of the Transaction Consideration from a financial point of view at the time the Transactions are completed.

Some of YuMe’s directors and executive officers may have financial interests in the Transactions that are different from or are in addition to those of YuMe stockholders generally.

Some of YuMe’s directors and executive officers may have financial interests in the Transactions that are different from, or are in addition to, those of YuMe’s stockholders generally. These interests could have affected their decision to support or approve the Offer. Such interests have been included in “Interests of Certain Persons in the Transactions — Interests of YuMe’s Directors and Executive Officers in the Transactions.

RhythmOne may fail to realize some or all of the anticipated cost savings, synergies, growth opportunities and other benefits of the Transactions, which could adversely affect the value of the RhythmOne Shares.

RhythmOne and YuMe currently operate as separate public companies. The success of the Transactions will depend, in part, on RhythmOne’s ability to realize the anticipated cost savings, synergies, growth opportunities and other benefits from combining with YuMe. The achievement of the anticipated benefits of the Transactions is subject to a number of uncertainties, including whether RhythmOne is able to integrate YuMe in an efficient and effective manner, and general competitive factors in the marketplace. Failure to achieve these anticipated benefits could result in increased costs, decreases in the revenues and diversion of management’s time and

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energy and could materially impact RhythmOne’s business, cash flows, financial condition or operating results. If RhythmOne is not able to successfully achieve these objectives, the anticipated cost savings, synergies, growth opportunities and other benefits may not be realized fully or at all, or may take longer to realize than expected.

It is possible that the integration process could take longer or be more costly than anticipated or could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the ability of RhythmOne and YuMe to maintain their relationships with clients, customers and employees, to achieve the anticipated benefits of the Transactions or to maintain quality standards. Integration efforts between RhythmOne and YuMe may also divert their respective management’s time and energy. An inability to realize the full extent of, or any of, the anticipated benefits of the Transactions, as well as any delays encountered in the integration process, could have an adverse effect on the combined company’s business, cash flows, financial condition or operating results, which may affect the value of the RhythmOne Shares following the consummation of the Transactions.

In addition, the integration of RhythmOne’s and YuMe’s businesses may result in additional and unforeseen expenses and capital investments, and the anticipated benefits of the integration plan may not be realized. Actual cost and sales synergies, if achieved at all, may be lower than RhythmOne and YuMe expect and may take longer to achieve than anticipated. If RhythmOne and YuMe are not able to adequately address these challenges, the combined company may be unable to successfully integrate RhythmOne’s and YuMe’s businesses, or to realize the anticipated benefits of the integration of the businesses of the two companies.

There will be substantial transaction costs incurred in connection with the Transactions, and such costs may be paid even if the Transactions are not completed, and such costs could adversely affect the combined company’s ability to execute on its business plan.

RhythmOne and YuMe have incurred and expect to incur significant transaction fees and other costs associated with completing the Transactions. These fees and costs are substantial and include financial advisory, legal and accounting fees and expenses. The significant amount of these fees could adversely affect the combined company’s ability to execute on its business plans. Such fees and costs may be required to be paid even if the Transactions are not completed.

RhythmOne and YuMe may be targets of securities class action and derivative lawsuits which could result in substantial costs and may delay or prevent the Transactions from being completed.

Securities class action lawsuits and derivative lawsuits are often brought against companies that have entered into merger agreements. Even if the lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on RhythmOne’s liquidity and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting consummation of the Transactions, then that injunction may delay or prevent the Transactions from being completed. Currently, neither RhythmOne nor YuMe is aware of any securities class action lawsuits or derivative lawsuits being filed in connection with the Transactions.

The unaudited pro forma condensed combined financial information may not be an indication of RhythmOne’s financial condition or results of operations following the Transactions.

The unaudited pro forma condensed combined financial information contained in this prospectus/offer to exchange has been prepared using the consolidated historical financial statements of RhythmOne, YuMe and Radium, and is presented for illustrative purposes only and should not be considered to be an indication of the results of operations including, without limitation, future revenue, or financial condition of RhythmOne following the Transactions. Certain adjustments and assumptions have been made regarding RhythmOne after giving effect to the Transactions. The information upon which these adjustments and assumptions have been

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made is preliminary, and these kinds of adjustments and assumptions are difficult to make with accuracy. These assumptions may not prove to be accurate, and other factors may affect RhythmOne’s results of operations or financial condition following the Transactions. For these and other reasons, the historical and pro forma condensed combined financial information included in this prospectus/offer to exchange does not necessarily reflect RhythmOne’s results of operations and financial condition and the actual financial condition and results of operations of RhythmOne following the Transactions may not be consistent with, or evident from, this pro forma financial information.

The projections and forecasts presented in this prospectus/offer to exchange may not be an indication of the actual results of the Transactions or RhythmOne’s future results.

This prospectus/offer to exchange contains projections and forecasts prepared by YuMe’s management. RhythmOne does not endorse any of the forecasts, projections or estimates prepared by YuMe of the business and financial performance of YuMe that may be included in this prospectus/offer to exchange.

None of the projections and forecasts included in this prospectus/offer to exchange have been prepared with a view toward public disclosure other than to certain parties involved in the Transactions or toward complying with SEC guidelines or generally accepted accounting principles. The projections and forecasts were based on numerous variables and assumptions which are inherently uncertain and may be beyond the control of YuMe and RhythmOne, and exclude, among other things, transaction-related expenses. Important factors that may affect actual results and results of YuMe’s operations, or could lead to such projections and forecasts not being achieved include, but are not limited to: customer demand for YuMe’s products, successful and timely development of products, an evolving competitive landscape, rapid technological change, margin shifts in the industry, RhythmOne’s dependence on a limited number of customers in a highly competitive industry, successful management and retention of key personnel, unexpected expenses and general economic conditions. As such, these projections and forecasts may be inaccurate and should not be relied upon as an indicator of actual past or future results.

RhythmOne’s acquisition of YuMe could trigger certain change-of-control or similar provisions contained in YuMe’s agreements with third parties that could permit such parties to terminate or re-negotiate those agreements.

YuMe is a party to agreements that permit a counterparty to terminate an agreement or receive payments because the Transactions would cause a default or violate an anti-assignment, change-of-control or similar clause in such agreement. If this happens, RhythmOne may have to seek to replace that agreement with a new agreement or make additional payments under such agreement in order to retain the commercial relationship with the counterparty. However, RhythmOne may be unable to replace a terminated agreement on comparable terms or at all. Depending on the importance of such agreement to YuMe’s business, the failure to replace a terminated agreement on similar terms or at all, and requirements to pay additional amounts, may increase the costs to RhythmOne of operating YuMe’s business or decrease the expected benefits of the Transactions to RhythmOne.

Failure to effectively retain, attract and motivate key employees could diminish the anticipated benefits of the Transactions.

The success of the acquisition of YuMe will depend in part on the attraction, retention and motivation of personnel critical to the business and operations of RhythmOne. Employees may experience uncertainty about their future roles with RhythmOne and YuMe during the pendency of the Transactions or after their completion. RhythmOne and YuMe do not have identical corporate cultures, and some YuMe employees may not want to work for RhythmOne after consummation of the Transactions. In addition, competitors may recruit employees during RhythmOne’s integration of YuMe. If RhythmOne and YuMe are unable to attract, retain and motivate personnel that are critical to the successful integration of YuMe into RhythmOne and the future operation of the combined business, RhythmOne could face disruptions in its operations, strategic relationships, key information, expertise or know-how and unanticipated additional recruiting and training costs. In addition, the loss of key personnel could diminish the anticipated benefits of the acquisition of YuMe to RhythmOne.

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RhythmOne is an “emerging growth company” and it cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make the RhythmOne Shares less attractive to investors.

RhythmOne is an “emerging growth company,” as defined in the JOBS Act. As an emerging growth company, RhythmOne is only required to provide two years of audited financial statements and only two years of related selected financial data and management’s discussion and analysis of financial condition and results of operations disclosure. In addition, RhythmOne is not required to obtain auditor attestation of its reporting on internal control over financial reporting, has reduced disclosure obligations, and is not required to hold non-binding advisory votes on executive compensation. RhythmOne cannot predict whether investors will find RhythmOne Shares to be less attractive as a result of its reliance on these exemptions. If some investors find RhythmOne Shares to be less attractive as a result, there may be a less active trading market for RhythmOne Shares and the price of RhythmOne Shares may be more volatile.

RhythmOne will remain an emerging growth company until the earliest of: the end of the fiscal year in which RhythmOne has total annual gross revenue of $1.07 billion; the last day of RhythmOne’s fiscal year containing the fifth anniversary of the date on which the RhythmOne Shares were offered in connection with the Offer; the date on which RhythmOne issues more than $1.0 billion in non-convertible debt during the preceding three-year period; or the end of the fiscal year in which the market value of the RhythmOne Shares held by non-affiliates exceeds $700 million as of the last business day of its most recently completed second fiscal quarter.

RhythmOne may need additional capital in the future to meet its financial obligations and to pursue its business objectives. Additional capital may not be available on favorable terms, or at all, which could compromise RhythmOne’s ability to meet its financial obligations and grow its business.

While RhythmOne’s management anticipates that existing cash, cash equivalents, marketable securities and cash generated from operations will be sufficient to fund RhythmOne’s operations for at least the next 12 months, RhythmOne may need to raise additional capital to fund operations in the future or to finance acquisitions.

If RhythmOne seeks to raise additional capital in order to meet various objectives, including developing existing or future technologies and solutions, increasing working capital, acquiring businesses, expanding geographically and responding to competitive pressures, capital may not be available on favorable terms or may not be available at all. Lack of sufficient capital resources could significantly limit RhythmOne’s ability to take advantage of business and strategic opportunities. Any additional capital raised through the sale of equity or debt securities with an equity component would dilute stock ownership. If adequate additional funds are not available, RhythmOne may be required to delay, reduce the scope of, or eliminate material parts of its business strategy, including potential additional acquisitions or the continued development of new or existing technologies or solutions and geographic expansion.

The combined company will incur significant costs and devote substantial management time as a result of becoming subject to reporting requirements in the United States, which may adversely affect the operating results of RhythmOne in the future.

As a company subject to reporting requirements in the United States, the combined company will incur significant legal, accounting and other expenses that RhythmOne did not incur as a public company in the United Kingdom. For example, RhythmOne will be subject to the reporting requirements of the Exchange Act and is required to comply with the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the SEC, including the establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Compliance with these requirements will increase RhythmOne’s legal and financial compliance costs and will make some activities more time consuming and costly, while also diverting management attention. In particular, RhythmOne expects to continue to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, which will increase when it is no longer an emerging growth company as defined by the JOBS Act.

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Risks related to the Business of RhythmOne

RhythmOne is an AIM traded company and has not historically been subject to reporting requirements of the Sarbanes-Oxley Act. In connection with the Offer, RhythmOne has begun an assessment of its internal controls in preparation for reporting under requirements of the Sarbanes-Oxley Act. As a result of work performed as part of this assessment, RhythmOne management identified material weaknesses in RhythmOne’s internal control over financial reporting, which could affect its ability to produce accurate financial statements on a timely basis.

RhythmOne is a U.K. publicly traded AIM company, and as such, has not historically been subject to the reporting requirements of Section 404 of the Sarbanes-Oxley Act (“Section 404”) or an audit performed in accordance with auditing standards issued by the Public Company Accounting Oversight Board (“PCAOB”). In connection with the Offer and in preparation of RhythmOne becoming subject to Section 404 reporting requirements, RhythmOne is engaged in a process to document and evaluate its internal controls over financial reporting. Furthermore, RhythmOne’s internal controls over financial reporting were for the first time subject to review under PCAOB auditing standards in connection with the audit of RhythmOne’s annual consolidated financial statements for the two years ended March 31, 2017. As a result of the work undertaken, certain weaknesses in RhythmOne’s internal control over financial reporting have been identified, which under PCAOB standards are considered to be material weaknesses. See “Management’s Discussion and Analysis of RhythmOne — Internal Control over Financial Reporting”.

Under the PCAOB standards, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of RhythmOne’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

The material weaknesses identified relate to (i) the insufficient nature of RhythmOne’s formally designed, documented and implemented control processes and review procedures, (ii) the lack of adequate controls over key reports and spreadsheets, and (iii) the lack of key accounting personnel with the requisite knowledge and experience of IFRS for complex transactions and SEC rules.

Following the completion of the Offer, RhythmOne will be subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act. The Sarbanes-Oxley Act requires, among other things, that RhythmOne maintain effective disclosure controls and procedures and internal control over financial reporting. Commencing with RhythmOne’s fiscal year ending March 31, 2019, RhythmOne must perform system and process evaluation and testing of its internal control over financial reporting to allow management to report on the effectiveness of its internal control over financial reporting in its Form 20-F filing for that year, as required by Section 404. RhythmOne’s management may conclude that its internal control over financial reporting is not effective. As long as RhythmOne is an “emerging growth company” under the JOBS Act, its independent registered public accounting firm will not be required to attest to the effectiveness of RhythmOne’s internal controls over financial reporting pursuant to Section 404. However, if required to report under Section 404 at a future date, and even if RhythmOne’s management concludes that RhythmOne’s internal control over financial reporting is effective, RhythmOne’s independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with RhythmOne’s internal controls or the level at which its controls are documented, designed, operated or reviewed, or if RhythmOne’s independent registered public accounting firm interprets the relevant requirements differently from RhythmOne. This will require that RhythmOne incur substantial additional professional fees and internal costs to expand its accounting and finance functions and that it expend significant management efforts. Prior to the Offer, RhythmOne was never required to test its internal controls within a specified period, and, as a result, it may experience difficulty in meeting these reporting requirements in a timely manner.

In addition, RhythmOne’s internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute,

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assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

The RhythmOne board of directors has acknowledged its responsibility for ensuring that an adequate system of internal control and risk management is maintained following completion of the Transactions. While the board of directors is satisfied that RhythmOne has been and will continue to be in compliance with the internal controls and related financial reporting requirements of AIM listed companies, it acknowledges that the material weaknesses identified may not be able to be remediated by March 2019, and there is a risk that other deficiencies for purposes of Section 404 reporting may be identified. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of RhythmOne’s financial statements and could have a material adverse effect on RhythmOne’s business, financial condition, results of operation and prospects. If RhythmOne is not able to comply with the requirements of Section 404 in a timely manner, or if it is unable to maintain proper and effective internal controls, it may not be able to produce timely and accurate financial statements.

RhythmOne may not be able to integrate, maintain and enhance its advertising solutions to keep pace with technological and market developments, which may adversely affect the operating results of RhythmOne in the future.

The market for digital advertising solutions is characterized by rapid technological change, evolving industry standards and frequent introductions of new products and services. To keep pace with technological developments, satisfy increasing advertiser and digital media property requirements, maintain the attractiveness and competitiveness of RhythmOne’s advertising solutions and ensure compatibility with evolving industry standards and protocols, RhythmOne will need to anticipate and respond to varying product lifecycles, regularly enhance RhythmOne’s current advertising solutions and develop and introduce new solutions and functionality on a timely basis. This requires significant investment of financial and other resources. For example, RhythmOne is required to invest significant resources into integrating its solutions with multiple forms of internet-connected devices in order to maintain a comprehensive advertising platform. RhythmOne has periodically experienced difficulty integrating RhythmOne’s solutions with some digital media properties, advertising agencies and third parties. RhythmOne may continue to experience similar difficulties and these difficulties will consume financial, engineering and managerial resources and RhythmOne may not have the financial resources to make investments across all new forms of internet-connected devices in the future. Ad exchanges and other technological developments may displace RhythmOne or introduce an additional intermediate layer between RhythmOne and its advertising customers and digital media properties that could impair RhythmOne’s relationships with those customers. RhythmOne’s inability, for technological, business or other reasons, to enhance, develop, introduce and deliver compelling advertising solutions in response to changing market conditions and technologies or evolving expectations of advertisers, digital media properties or consumers of digital advertising could hurt RhythmOne’s ability to deliver successful digital campaigns which could result in RhythmOne’s advertising solutions becoming obsolete and a failure to grow or retain its current advertiser base.

RhythmOne’s growth forecasts may suffer if RhythmOne fails to gather sufficient data in a particular international market and effectively coordinate the demand for and supply of advertising inventory.

The performance in a particular geographic market depends on having sufficient advertiser clients and publishers in that market utilizing RhythmOne’s solutions and its ability to coordinate the demand for and supply of advertising inventory in that market. In most instances, digital media properties can change the terms and supply of ad inventory they make available to RhythmOne at any time, and if digital media properties increase the cost or reduce the supply of inventory available to RhythmOne in international markets, RhythmOne may not be coordinated for optimization. As such, as RhythmOne targets new geographic markets, a failure to effectively manage demand for and the supply of advertising inventory could impair its growth forecasts in these markets and could result in lost revenue.

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RhythmOne’s rapidly evolving industry makes it difficult to evaluate RhythmOne’s business and prospects.

The digital advertising industry is rapidly evolving. As a result, RhythmOne will encounter risks and difficulties frequently encountered in rapidly evolving industries, particularly in light of its size and relatively short operating history compared to some of RhythmOne’s larger and more established competitors, including the need to:

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Maintain RhythmOne’s reputation and build trust with advertisers and digital media property owners;

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Offer competitive pricing to advertisers (including periodic discounting) and digital media properties;

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Compete with larger, better capitalized competitors in addressing industry trends such as programmatic buying and real-time bidding;

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Maintain quality and expand quantity of RhythmOne’s advertising inventory;

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Deliver advertising results that are superior to those that advertisers or digital media property owners could achieve through the use of competing providers or technologies;

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Continue to develop, launch and upgrade the technologies that enable RhythmOne to provide its solutions;

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Respond to evolving government regulations relating to the internet, telecommunications, mobile, privacy, marketing and advertising aspects of RhythmOne’s business;

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Identify, attract, retain and motivate qualified personnel; and

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Cost-effectively manage RhythmOne’s operations, including its international operations.

If RhythmOne does not successfully address these risks, its revenue could decline, its costs could increase, and its ability to pursue its growth strategy and attain profitability could be compromised.

RhythmOne depends on the proliferation of cross-device, cross-format digital advertisements and anything that prevents this proliferation, including the possibility to opt out of services and functionality, will negatively impact RhythmOne’s business model.

The success of RhythmOne’s business model depends on its ability to deliver digital advertising to consumers on a wide variety of internet-connected devices. RhythmOne believes that digital advertising is most successful when targeted primarily through analysis of data. This data might include a device’s location or data collected when device users view an ad or video or when they click on or otherwise engage with an ad, or it could include demographic or other data about users’ interests or activities that is licensed or acquired from third parties. Users may elect not to allow data sharing for targeted advertising for many reasons, such as privacy concerns, or to avoid usage charges based on the amount or type of data consumed on the device. Users may opt out of interest-based advertising by RhythmOne through the opt-out feature on RhythmOne’s website or other opt-out features that may be developed. In addition, internet-connected devices and operating systems controlled by third parties increasingly contain features that allow device users to disable functionality that allows for the delivery of ads on their devices. Device and browser manufacturers may include or expand these features as part of their standard device specifications. For example, when Apple announced that its Unique Device Identifier (“UDID”), a standard device identifier used in some applications, was being superseded and would no longer be supported application developers were required to update their apps to utilize alternative device identifiers such as universally unique identifier, or, more recently, identifier-for-Advertising, which simplify the process for Apple users to opt out of behavioral targeting. In addition, many advertising companies may participate in self-regulatory programs, such as the Network Advertising Initiative or Digital Advertising Alliance, through which they agree to offer users the ability to opt out of behavioral advertising. If users elect to utilize the opt-out mechanisms in greater numbers, RhythmOne’s ability to deliver effective advertising campaigns on behalf of its advertisers would suffer, which could hurt its ability to generate revenue and become profitable.

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If the use of “third-party cookies” is rejected by internet users, restricted or otherwise subject to unfavorable regulation, RhythmOne’s performance could decline and RhythmOne could lose advertisers and revenue.

Cookies (small text files) are used to gather data to help support RhythmOne’s products. These cookies are placed through an internet browser on an internet user’s computer and correspond to certain data sets on RhythmOne’s servers. Cookies collect anonymous information, such as when an internet user views an ad, clicks on an ad, or visits one of RhythmOne’s advertisers’ websites.

Cookies may easily be deleted or blocked by internet users. All of the most commonly used internet browsers allow internet users to modify their browser settings to prevent first party or third-party cookies from being accepted by their browsers. Internet users can also delete cookies or download “ad blocking” software that prevents cookies from being stored on a user’s computer. If more internet users adopt these settings or delete their cookies more frequently than they currently do, RhythmOne’s business could be harmed. In addition, the Safari browser blocks third-party cookies by default, and other browsers may do so in the future. Unless such default settings in browsers are altered by internet users, RhythmOne will be able to set fewer of its cookies in browsers, which could adversely affect its business. There have also been announcements that prominent advertising platforms plan to replace cookies with alternative web tracking technologies. These alternative mechanisms have not been described in technical detail, and have not been announced with any specific stated timeline. It is possible that these companies may rely on proprietary algorithms or statistical methods to track web users without the deployment of cookies, or may utilize log-in credentials entered by users into other web properties owned by these companies, such as their digital email services, to track web usage without deploying third-party cookies. Alternatively, such companies may build alternative and potentially proprietary user tracking methods into their widely-used web browsers.

If and to the extent that cookies are blocked or replaced by proprietary alternatives, RhythmOne’s continued use of cookies may face negative consumer sentiment, reduce its market share, or otherwise place RhythmOne at a competitive disadvantage. If cookies are replaced, in whole or in part, by proprietary alternatives, RhythmOne may be obliged to license proprietary tracking mechanisms and data from companies that have developed them, which also compete with RhythmOne as advertising platforms, and RhythmOne may not be able to obtain such licenses on economically favorable terms. If such proprietary web-tracking standards are owned by companies that compete with RhythmOne, they may be unwilling to make that technology available to RhythmOne.

In addition, in the EU, Directive 2002/58/EC (as amended by Directive 2009/136/EC), commonly referred to as the “Cookie Directive,” directs EU member states to ensure that storing or accessing information on an internet user’s device, such as through a cookie, is allowed only if the internet user has given his or her consent. Because RhythmOne’s direct relationship with internet users is limited, in many cases RhythmOne relies on its digital media property owners, both practically and contractually, to obtain such consent. Some member states have adopted and implemented, and may continue to adopt and implement, legislation that negatively impacts the use of cookies for digital advertising. Some of these member states also require prior express user consent, as opposed to merely implied consent, to permit the placement and use of cookies. Where member states require prior express consent, RhythmOne’s ability to deliver advertisements on certain websites or to certain users may be impaired. Furthermore, there are proposals to replace the current Cookie Directive with a new ePrivacy Regulation, slated to take effect in May 2018. If adopted, the Regulation will standardize the currently disparate cookie consent laws across Europe. However, if adopted in its current draft form, it could create significant challenges for digital advertising models as it introduces enhanced cookie consent and transparency requirements, in particular proposing that browser (and similar internet access software) manufacturers should offer users the ability to accept or refuse cookies upon installation of their software.

RhythmOne operates in a highly competitive industry, and it may not be able to compete successfully.

The digital advertising market is highly competitive, with many companies providing competing solutions. RhythmOne competes with Google (YouTube and DoubleClick), Facebook and OATH (AOL, Yahoo, Verizon),

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as well as many ad exchanges, demand-side platforms for advertisers and ad networks. RhythmOne also faces competition from direct response (search-based) advertisers who seek to target brands. Many of RhythmOne’s competitors are significantly larger than RhythmOne is and have more capital to invest in their businesses. RhythmOne’s competitors may establish or strengthen cooperative relationships with digital media property partners and brand advertisers, or other parties, which limit RhythmOne’s ability to promote its solutions and generate revenue. Competitors could also seek to gain market share by reducing the prices they charge to advertisers, introducing products and solutions that are similar to ours or introducing new technology tools for advertisers and digital media properties. Moreover, increased competition for advertising inventory from digital media properties could result in an increase in the portion of advertiser revenue that RhythmOne must pay to digital media property owners to acquire that advertising inventory.

Some large advertising agencies that represent RhythmOne’s current advertising customers have their own relationships with digital media properties and can directly connect advertisers with digital media properties. RhythmOne’s business will suffer to the extent that RhythmOne’s advertisers and digital media properties purchase and sell advertising inventory directly from one another or through other companies that act as intermediaries between advertisers and digital media properties. Other companies that offer analytics, mediation, ad exchange or other third-party solutions have or may become intermediaries between advertisers and digital media properties and thereby compete with RhythmOne. Any of these developments would make it more difficult for RhythmOne to sell its solutions and could result in increased pricing pressure, reduced profit margins, increased sales and marketing expenses or the loss of market share.

There is a concentration of growth within a small number of dominant providers, and if RhythmOne fails to compete effectively with these providers, RhythmOne’s operating results may be negatively impacted in the future.

In recent years, growth within the advertising technology sector has concentrated within a small number of dominant providers such as Google and Facebook. While RhythmOne believes there is significant opportunity for growth outside of these providers, and to take market share from these providers, there is no guarantee that RhythmOne will be able to do so. These providers often have greater resources at their disposal, so if they did ever view RhythmOne as a threat to their business, this could result in increased pricing pressure, reduced profit margins, increased sales and marketing expenses or the loss of market share.

The impact of worldwide economic conditions, including effects on advertising spending by brand advertisers, may adversely affect RhythmOne’s business, operating results and financial condition.

RhythmOne’s financial performance is subject to worldwide economic conditions and their impact on advertising spending by brand advertisers, which may be disproportionately affected by economic downturns. Expenditures by advertisers generally tend to reflect overall economic conditions, and to the extent that worldwide economic conditions materially deteriorate or change, RhythmOne’s existing and potential advertisers may reduce current or projected advertising budgets and the use of RhythmOne’s advertising solutions. In particular, digital advertising may be viewed by some of RhythmOne’s existing and potential advertisers as a lower priority and could cause advertisers to reduce the amounts they spend on advertising, terminate their use of RhythmOne’s digital advertising solutions or default on their payment obligations to RhythmOne, which could have a material adverse effect on RhythmOne’s business, financial condition and results of operations. For example, concerns over the sovereign debt situation in certain countries in the EU, the impact of Brexit, as well as continued geopolitical turmoil in many parts of the world have, and may continue to, put pressure on global economic conditions, which could lead to reduced spending on advertising.

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RhythmOne depends on digital media properties for advertising inventory for its customers’ advertising campaigns, and any decline in the supply of advertising inventory from these digital media properties could hurt its business.

Since only a small portion of RhythmOne’s advertising inventory is generated from owned and operated properties, RhythmOne depends largely on third-party digital media publishers to provide it with inventory within its websites and mobile applications on which RhythmOne deliver ads. Generally, the digital media publishers that supply their advertising inventory to RhythmOne are not required to provide any minimum amounts of advertising inventory to RhythmOne, nor are they contractually bound to provide RhythmOne with a consistent supply of advertising inventory. The tools that RhythmOne provides to digital media properties allows them to make decisions as to how to allocate advertising inventory among RhythmOne and other advertising technology providers, some of which may be RhythmOne’s competitors. Other ad exchanges or third parties acting as an intermediaries on behalf of digital media properties could increase the competition for third-party supply and pressure RhythmOne to increase the prices RhythmOne pays to digital media property owners for that inventory, which may reduce RhythmOne’s operating margins, or otherwise block RhythmOne’s access to that inventory, without which it would be unable to deliver ads on behalf of its advertising customers.

In addition, digital media publishers sometimes place significant restrictions on RhythmOne’s use of their advertising inventory. These restrictions may prohibit ads from specific advertisers or specific industries, or they could restrict the use of specified creative content or format.

RhythmOne also may be impacted by new protocols designed to influence buying and selling of third-party media, such as the Ads.txt initiative. Ads.txt stands for “Authorized Digital Sellers” and lets publishers and distributors publicly declare the companies they authorize to sell their digital inventory. As publishers increasingly adopt ads.txt, buyers will be able to more easily identify the Authorized Digital Sellers for a participating publisher, allowing brands to buy inventory on this basis.

If digital media properties decide not to make advertising inventory available to RhythmOne for any of these reasons, or decide to increase the price of inventory, or place significant restrictions on RhythmOne’s use of their advertising inventory, or not authorize RhythmOne to represent their inventory via Ads.txt, RhythmOne may not be able to replace this with inventory from other digital media properties that satisfy its requirements in a timely and cost-effective manner. If any of this happens, RhythmOne’s revenue could decline, its liquidity could be negatively impacted and its cost of acquiring inventory could increase, lowering RhythmOne’s operating margins.

If RhythmOne fails to detect advertising fraud or other actions that impact its advertising campaign performance, RhythmOne could harm its reputation with advertisers or agencies, which would cause its revenue and business to suffer.

RhythmOne’s business relies on its ability to deliver successful and effective digital advertising campaigns. Some of those campaigns may experience fraudulent and other invalid impressions, clicks or conversions that advertisers may perceive as undesirable, such as non-human traffic generated by machines that are designed to simulate human users and artificially inflate user traffic on websites. These activities could overstate the performance of any given advertising campaign and could harm RhythmOne’s reputation. It may be difficult for RhythmOne to detect fraudulent or malicious activity because RhythmOne does not own the majority of content and relies in part on its digital media properties to control such activity. These risks become more pronounced as the digital advertising industry shifts to programmatic buying. Industry self-regulatory bodies, the U.S. Federal Trade Commission (the “FTC”), certain influential members of the United States Congress and the European Commission have increased their scrutiny and awareness of, and have taken recent actions to address, advertising fraud and other malicious activity. While RhythmOne constantly assesses the quality of supply entering its ecosystem, using both human methods and proprietary filtering technologies, such review may not detect or prevent all fraudulent or malicious activity. If RhythmOne fails to detect or prevent fraudulent or other malicious

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activity, the affected advertisers may experience or perceive a reduced return on their investment and RhythmOne’s reputation may be harmed. High levels of fraudulent or malicious activity could lead to dissatisfaction with RhythmOne’s solutions, refusals to pay, refund or future credit demands or withdrawal of future business. In addition, advertisers increasingly rely on third-party vendors to measure campaigns against audience guarantee, viewability and other requirements and to detect fraud. If RhythmOne is unable to successfully integrate its technology with such vendors, or its measurement and fraud detection differs from their findings, RhythmOne’s customers could lose confidence in RhythmOne’s solutions, RhythmOne may not get paid for certain campaigns, traffic acquisition costs could increase and its revenues could decline. Further, if RhythmOne is unable to detect fraudulent or other malicious activities and advertisers demand fraud-free inventory, its supply could fall drastically, making it impossible to sustain its current business model. If RhythmOne fails to detect fraudulent or other malicious activities that impact the performance of RhythmOne’s brand advertising campaigns, RhythmOne could harm its reputation with its advertisers or agencies and its revenue and business would suffer.

Any inability to deliver successful digital advertising campaigns due to technological challenges or an inability to persuasively demonstrate success will prevent RhythmOne from growing or retaining its current advertiser base.

It is critical that RhythmOne deliver successful digital advertising campaigns on behalf of its advertisers. Factors that may adversely affect RhythmOne’s ability to deliver successful digital advertising campaigns include:

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Inability to accurately process data and extract meaningful insights and trends, such as the failure to accurately process data to place ads effectively at digital media properties;

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Faulty or out-of-date algorithms that fail to properly process data or result in inability to capture brand-receptive audiences at scale;

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Technical or infrastructure problems causing digital ads not to function, display properly or be placed next to inappropriate context;

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Inability to control ad engagement and performance, maintain user attention or prevent end users from skipping or ignoring advertisements;

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Inability to detect and prevent advertising fraud and other malicious activity;

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Inability to fulfill audience guarantee, brand safety or viewability requirements of RhythmOne’s advertiser customers;

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Inability to integrate with third parties that measure RhythmOne’s campaigns against audience guarantee, brand safety or viewability requirements;

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Unavailability of standard digital video audience ratings and brand receptivity measurements for brand advertisers to effectively measure the success of their campaigns; and

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Access to quality inventory at sufficient volumes to meet the needs of RhythmOne’s advertisers’ campaigns.

RhythmOne’s ability to deliver successful advertising campaigns also depends on the continuing and uninterrupted performance of RhythmOne’s own internal and third-party managed systems, which RhythmOne utilizes to place ads, monitor the performance of advertising campaigns and manage RhythmOne’s advertising inventory. RhythmOne’s revenue depends on the technological ability of its solutions to deliver ads and measure them. Sustained or repeated system failures that interrupt RhythmOne’s ability to provide solutions to customers, including security breaches and other technological failures affecting its ability to deliver ads quickly and accurately and to collect and process data in connection with these ads, could significantly reduce the attractiveness of its solutions to advertisers, negatively impact operations and reduce its revenue. RhythmOne’s

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systems are vulnerable to damage from a variety of sources, including telecommunications failures, power outages, malicious human acts and natural disasters. In addition, any steps RhythmOne takes to increase the reliability and redundancy of its systems may be expensive and may not be successful in preventing system failures. Also, advertisers may perceive any technical disruption or failure in ad performance on digital media properties’ platforms to be attributable to RhythmOne, and its reputation could similarly suffer, or advertisers may seek to avoid payment or demand future credits for disruptions or failures, any of which could harm its business and results of operations. If RhythmOne is unable to deliver successful advertising campaigns, its ability to attract potential advertisers and retain and expand business with existing advertisers could be harmed and RhythmOne’s business, financial condition and operating results could be adversely affected.

A significant portion of RhythmOne’s historical growth has occurred through mergers, acquisitions or investments which may be unsuccessful and may divert RhythmOne’s management’s attention and consume significant resources.

RhythmOne is presently evaluating, and it expects to continue to evaluate on an ongoing basis, possible acquisition transactions. RhythmOne is presently engaged, and at any time in the future it may be engaged, in discussions or negotiations with respect to possible acquisitions, including larger transactions that would be significant to RhythmOne, but are not currently probable. RhythmOne regularly makes, and it expects to continue to make, non-binding acquisition proposals, and RhythmOne may enter into letters of intent, in each case allowing it to conduct due diligence on a confidential basis. RhythmOne cannot predict the timing of any contemplated transactions, and any pending transaction may be entered into as soon as shortly after the consummation of the Transactions. There can be no assurance that RhythmOne will enter into definitive agreements with respect to any contemplated transactions or that they will be completed. Acquisitions involve risks that the businesses acquired will not perform as expected and that business judgments concerning the value, strengths and weaknesses of businesses acquired will prove incorrect. Any merger, acquisition or investment may require RhythmOne to use significant amounts of cash, issue potentially dilutive equity securities or incur debt. In addition, mergers and acquisitions involve many risks, any of which could harm its business, including:

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Difficulties in integrating the operations, technologies, solutions and personnel, especially if those businesses operate outside of RhythmOne’s core competency of delivering digital advertising;

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Cultural challenges associated with integrating employees;

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Ineffectiveness or incompatibility of acquired technologies or solutions;

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Potential loss of key employees;

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Inability to maintain the key business relationships and the reputations of the involved businesses;

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Diversion of management’s attention from other business concerns;

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Litigation for activities of the involved companies, including claims from terminated employees, customers, former stockholders or other third parties;

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In the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries;

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Costs necessary to establish and maintain effective internal controls for the involved businesses;

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Failure to successfully further develop the acquired technologies in order to achieve appropriate returns on investment; and

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Increased fixed costs.

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RhythmOne generally does not have long-term agreements with its customers, and it may be unable to retain key customers, attract new customers, or replace departing customers with customers that can provide comparable revenue to it.

RhythmOne’s success requires it to maintain and expand its current customer relationships and to develop new relationships. RhythmOne’s contracts and relationships with advertising agencies on behalf of advertisers generally do not include long-term obligations requiring them to purchase RhythmOne’s solutions and are cancelable upon short or no notice and without penalty. As a result, RhythmOne may have limited visibility into its future advertising revenue streams. RhythmOne cannot assure that its customers will continue to use its solutions, or that RhythmOne will be able to replace, in a timely or effective manner, departing customers with new customers that generate comparable revenue. If a major customer representing a significant portion of RhythmOne’s business decides to materially reduce its use of RhythmOne’s solutions or to cease using its solutions altogether, RhythmOne’s revenue could be significantly reduced. Any non-renewal, renegotiation, cancellation or deferral of large advertising contracts, or a number of contracts that in the aggregate account for a significant amount of revenue, could cause an immediate and significant decline in RhythmOne’s revenue and harm its business.

RhythmOne business depends on certain key demand and supply partners and any disruption in these relationships could have an adverse effect on RhythmOne’s operations.

The RhythmOne business depends on its relationship with certain key advertising inventory partners both on the demand and supply side of its business and any disruption in its relationship or commercial arrangement with such partners, including, among other things, by way of non-renewal or termination of the agreement governing the arrangement, a material change to the commercial terms, including the economics, of the arrangement or non-performance by a key partner of its contractual obligations, could have an adverse effect on RhythmOne’s prospects, business, financial condition and results of operations if RhythmOne is unable to find a suitable substitute in a timely manner.

An active trading market for RhythmOne Shares may not be sustained and investors may not be able to resell their RhythmOne Shares at or above the price at which they purchased them.

An active trading market for RhythmOne Shares may not be sustained. In the absence of an active trading market for RhythmOne Shares, investors may not be able to sell their RhythmOne Shares at or above the price they paid at the time that they would like to sell. In addition, an inactive market may impair RhythmOne’s ability to raise capital by selling shares and may impair its ability to acquire other companies or technologies by using RhythmOne Shares as consideration, which, in turn, could harm RhythmOne’s business.

The trading price of RhythmOne Shares is likely to remain volatile, and holders of RhythmOne Shares could incur substantial losses.

The price of RhythmOne Shares has been and is likely to remain volatile. Since RhythmOne Shares were sold in its IPO at a price of £0.45 per share, the stock price of RhythmOne Shares has ranged from £0.10 to £3.30 from May 31, 2007 through to October 25, 2017. The foregoing share prices are unadjusted and reflect the prices of RhythmOne Shares as then traded, both before and after the 10-for-1 share consolidation on September 25, 2017. The stock market in general and the market for technology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may not be able to sell their RhythmOne Shares at or above the price paid for the RhythmOne Shares. The market price for the RhythmOne Shares may be influenced by many factors, including:

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Actual or anticipated variations in operating results;

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Changes in financial estimates by RhythmOne or by any securities analysts who might cover RhythmOne Shares;

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•

Conditions or trends in RhythmOne’s industry;

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Stock market price and volume fluctuations of other publicly traded companies and, in particular, those that operate in the advertising, internet or media industries;

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Announcements by RhythmOne or its competitors of new product or service offerings, significant acquisitions, strategic partnerships or divestitures;

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Announcements of investigations or regulatory scrutiny of RhythmOne’s operations or lawsuits filed against RhythmOne;

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Capital commitments;

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Business disruption and costs related to stockholder activism;

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Additions or departures of key personnel;

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Stock repurchase programs;

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Sales of RhythmOne Shares, including sales by RhythmOne’s directors and officers or specific shareholders; and

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Expectations of future cash dividend declarations and payments.

In addition, in the past, shareholders have initiated class action lawsuits against technology companies following periods of volatility in the market prices of these companies’ stock. If litigation is instituted against RhythmOne, RhythmOne could incur substantial costs and divert management’s attention and resources. RhythmOne has failed in the past, and may fail in the future, to meet its publicly announced guidance or other expectations about RhythmOne’s business and future operating results. Such past failures have caused, and future failures would likely cause, the price of RhythmOne’s Shares to decline.

Seasonal fluctuations in digital advertising activity could adversely affect RhythmOne’s cash flows.

RhythmOne’s cash flows from operations vary from quarter to quarter due to the seasonal nature of advertiser spending. For example, many advertisers devote a disproportionate amount of their advertising budgets to the fourth quarter of the calendar year to coincide with increased holiday purchasing. In addition, RhythmOne acquires advertising inventory on a guaranteed basis, or at a fixed price, in order to meet the anticipated increased demand in the fourth quarter. These seasonal effects have been partially masked by RhythmOne’s historical revenue growth and other factors, such as episodic political campaign advertising spending. However, if and to the extent that seasonal fluctuations become more pronounced, or are not offset by other factors, RhythmOne’s operating cash flows could fluctuate materially from period to period as a result.

The digital advertising market may deteriorate or develop more slowly than RhythmOne expects, which could harm its business.

Digital advertising is an emerging market. Advertisers have historically spent a smaller portion of their advertising budgets on digital advertising than on traditional advertising methods, such as television, newspapers, radio and billboards. In addition, spending on digital advertising has historically been primarily for direct response advertising, or relatively simple display advertising such as banner ads on websites. Advertiser spending in the emerging cross-device, cross-format digital advertising market is uncertain. Many advertisers still have limited experience with cross-device, cross-format advertising and may continue to devote larger portions of their limited advertising budgets to more traditional offline or online performance-based advertising, instead of shifting resources to digital advertising. In addition, RhythmOne’s current and potential future customers may ultimately find digital advertising to be less effective than traditional advertising media or marketing methods or other technologies for promoting their products and solutions, and they may reduce their spending on digital advertising as a result. If the market for digital advertising deteriorates, or develops more slowly than RhythmOne expects, or brand advertisers prefer traditional advertising over its solutions, RhythmOne may not be able to increase its revenue and its business would suffer.

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The vote by the United Kingdom to leave the European Union could adversely affect RhythmOne.

In June 2016, the United Kingdom (the “U.K.”) held a referendum in which voters approved the United Kingdom’s withdrawal from membership of the European Union (the “E.U.”) (“Brexit”). Brexit has resulted in significant volatility in global stock markets and currency exchange rate fluctuations that resulted in the strengthening of the U.S. dollar against foreign currencies in which RhythmOne conducts business. As described elsewhere in this report, RhythmOne translates revenue denominated in foreign currency into U.S. dollars for RhythmOne’s financial statements. During periods of a strengthening dollar, RhythmOne’s reported international revenue is reduced because foreign currencies translate into fewer U.S. dollars. The announcement of Brexit may also create global economic uncertainty, which may cause RhythmOne’s customers to closely monitor their costs and reduce their spending budget on RhythmOne’s products and services.

The United Kingdom commenced negotiations to determine the future terms of the United Kingdom’s relationship with the E.U., including the terms of trade between the United Kingdom and the E.U. The effects of Brexit will depend on any agreements the United Kingdom makes to retain access to E.U. markets either during a transitional period or more permanently. The measures could potentially disrupt the markets RhythmOne serves and may cause it to lose customers and employees. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the United Kingdom determines which E.U. laws to replace or replicate.

RhythmOne’s international operations subject RhythmOne to new challenges and risks.

Despite RhythmOne’s international operations, RhythmOne has a limited sales operations history as a company outside the United States, and RhythmOne’s ability to manage its business and conduct its operations internationally requires considerable management attention and resources and is subject to the challenges of multiple cultures, customs, legal systems, alternative dispute systems, regulatory systems and commercial infrastructures. International expansion will require RhythmOne to invest significant funds and other resources. Expanding internationally subjects RhythmOne to new risks that RhythmOne has not faced before or increases risks that it currently faces, including risks associated with:

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Establishing and maintaining effective controls at foreign locations and the associated increased costs;

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Challenges inherent to efficiently managing a number of employees over large geographic distances;

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Providing digital advertising solutions among different cultures, including potentially modifying RhythmOne’s solutions and features to ensure that RhythmOne delivers ads that are culturally relevant in different countries;

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Variations in traffic access costs and margins, region by region;

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Increased competition from local providers of digital advertising solutions;

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Longer sales or collection cycles in some countries;

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Credit risk and higher levels of payment fraud;

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Compliance with anti-bribery laws, such as the Foreign Corrupt Practices Act and the U.K. Anti-Bribery Act;

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Compliance with foreign data privacy frameworks, such as the EU Data Privacy Directive (and from May 25, 2018, the successor to the Directive, the General Data Protection Regulation);

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Currency exchange rate fluctuations;

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Foreign exchange controls that might prevent RhythmOne from repatriating cash earned outside the United States;

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Economic and political instability in some countries;

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•

Compliance with the laws of numerous taxing jurisdictions where RhythmOne conducts business, potential double taxation of its international earnings and potentially adverse tax consequences due to changes in applicable U.S. and foreign tax laws;

•

The complexity and potential adverse consequences of U.S. tax laws as they relate to RhythmOne’s international operations; and

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Overall higher costs of doing business internationally.

Further expansion or contraction of RhythmOne’s international operations may require significant management attention and financial resources and may place burdens on RhythmOne’s management, administrative, operational and financial infrastructure. Additionally, in most instances digital media properties can change the terms and supply of ad inventory they make available to RhythmOne at any time, and if digital media properties increase the cost or reduce the supply of inventory available to RhythmOne in international markets, RhythmOne’s growth forecasts in these markets may suffer. Further, if RhythmOne’s revenue from its international operations, and particularly from its operations in the countries and regions on which RhythmOne has focused its investment, does not exceed the expense of establishing and maintaining these operations, RhythmOne’s business and operating results will suffer. RhythmOne’s limited experience in operating its business internationally increases the risk that any potential future expansion efforts that it may undertake will not be successful. If RhythmOne invests substantial time and resources to expand its international operations and is unable to do so successfully and in a timely manner, its business and results of operations will suffer.

RhythmOne has experienced foreign currency gains and losses and expects to continue to experience those gains and losses. Fluctuations in currency exchange rates can adversely affect its profitability.

RhythmOne incurs foreign currency transaction gains and losses, primarily related to foreign currency exposures that arise from British pound, Canadian dollar, Australian dollar, Singapore dollar and euro denominated transactions that it expects to cash settle in the near term, which are charged against earnings in the period incurred. RhythmOne expects that it will continue to realize gains or losses with respect to its foreign currency exposures. RhythmOne does not enter into or trade financial instruments, including derivative financial instruments, for any purpose. RhythmOne maintains the majority of its cash in U.S. dollars as a natural hedge, in line with its revenue and costs which are predominantly U.S.-based.

RhythmOne’s business depends on its ability to collect and use data to deliver ads, and to disclose data relating to the performance of its ads; any limitation on these practices could significantly diminish the value of its solutions and cause it to lose customers and revenue.

When RhythmOne delivers an ad to an internet-connected device, it is able to collect information about the placement of the ad and the interaction of the device user with the ad, such as whether the user visited a landing page or watched a video. RhythmOne is also able to collect information about the user’s IP address, device, mobile location and some demographic characteristics. It may also contract with one or more third parties to obtain additional pseudonymous information about the device user who is viewing a particular ad, including information about the user’s interests. As RhythmOne collects and aggregates this data provided by billions of ad impressions, it analyzes it to optimize the placement and timing of ads served across the advertising inventory provided to it by digital media properties.

Although the data RhythmOne collects does not enable it to determine the actual identity of any individual, its customers — or end users — might decide not to allow RhythmOne to collect some or all of the data or might limit its use of it. For example, a digital media property might not agree to provide RhythmOne with data generated by interactions with the content on its apps, or device users might not consent to share their information about device usage. Any limitation on RhythmOne’s ability to collect data about user behavior and interaction with content could make it more difficult for it to deliver effective digital advertising programs that meet the demands of its customers. This in turn could harm its revenue and impair its business.

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Although RhythmOne’s contracts with advertisers generally permit it to aggregate data from advertising campaigns, sometimes an advertiser declines to permit the use of this data, which limits the usefulness of the data that RhythmOne collects. Furthermore, advertisers may request that RhythmOne discontinue using data obtained from their campaigns that have already been aggregated with other advertisers’ campaign data. It would be difficult, if not impossible, to comply with these requests, and complying with these kinds of requests could cause RhythmOne to spend significant amounts of resources. Interruptions, failures or defects in RhythmOne’s data collection, mining, analysis and storage systems, as well as privacy concerns and regulatory restrictions regarding the collection, use and processing of data, could also limit its ability to aggregate and analyze the data from its customers’ advertising campaigns. If that happens, RhythmOne may not be able to optimize the placement of advertising for the benefit of RhythmOne’s advertising customers, which could make its solutions less valuable, and, as a result, RhythmOne may lose customers and its revenue may decline.

RhythmOne’s business practices with respect to data could give rise to liabilities, restrictions on its business or reputational harm as a result of evolving governmental regulation, legal requirements or industry standards relating to consumer privacy and data protection.

In the course of providing RhythmOne’s solutions, RhythmOne collects, transmits and stores information related to and seeking to correlate internet-connected devices, user activity and the ads RhythmOne places. Federal, state and international laws and regulations govern the collection, use, processing, retention, sharing and security of data that RhythmOne collects across its advertising solutions. RhythmOne strives to comply with all applicable laws, regulations, policies and legal obligations relating to privacy and data collection, processing use and disclosure. However, the applicability of specific laws may be unclear in some cases and domestic and foreign government regulation and enforcement of data practices and data tracking technologies is expansive, not clearly defined and rapidly evolving. In addition, it is possible that these requirements may be interpreted and applied in a manner that is new or inconsistent from one jurisdiction to another and may conflict with other rules or RhythmOne’s practices. Any actual or perceived failure by RhythmOne to comply with U.S. federal, state or international laws, including laws and regulations regulating privacy, data, security or consumer protection, or disclosure or unauthorized access by third parties to this information, could result in proceedings or actions against RhythmOne by governmental entities, competitors, private parties or others. Any proceedings or actions against RhythmOne alleging violations of consumer or data protection laws or asserting privacy-related theories could hurt RhythmOne’s reputation, force RhythmOne to spend significant amounts in defense of these proceedings, distract RhythmOne’s management, increase RhythmOne’s costs of doing business, adversely affect the demand for RhythmOne’s solutions and ultimately result in the imposition of monetary liability. RhythmOne may also be contractually liable to indemnify and hold harmless its customers from the costs or consequences of litigation resulting from using its solutions or from the disclosure of confidential information, which could damage RhythmOne’s reputation among its current and potential customers, require significant expenditures of capital and other resources and cause RhythmOne to lose business and revenue.

The regulatory framework for privacy issues is evolving worldwide, and various government and consumer agencies and public advocacy groups have called for new regulation and changes in industry practices, including some directed at the digital advertising industry in particular. It is possible that new laws and regulations will be adopted in the United States and internationally, or existing laws and regulations may be interpreted in new ways, that would affect RhythmOne’s business, particularly with regard to collection or use of data to target ads and communication with consumers and the international transfer of data from Europe to the United States. The U.S. government, including the Federal Trade Commission and the Department of Commerce, has announced that it is reviewing the need for greater regulation of the collection of consumer information, including regulation aimed at restricting some targeted advertising practices. In Europe, in October 2015 the Court of Justice of the European Union invalidated the “US-EU Safe Harbor framework,” which created a safe harbor under the European Data Protection Directive for certain European data transfers to the United States. RhythmOne had not self-certified under this regime, and therefore was not directly affected by this decision. In July 2016, the European Commission approved the Privacy Shield, which is a set of principles and related rules that are intended to replace the US-EU Safe harbor framework. RhythmOne is in the process of determining whether to

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join the Privacy Shield program. Stricter regulation of European data transfers to U.S. in future may impact RhythmOne’s ability to serve European customers effectively, or require RhythmOne to open and operate datacenters in the European Union which would result in a higher cost of doing business in these jurisdictions.

In particular, Europe’s new General Data Protection Regulation (“GDPR”) (which comes into force in May 2018) extends the jurisdictional scope of European data protection law. As a result, RhythmOne will be subject to the GDPR when it provides its targeting services in Europe. The GDPR imposes stricter data protection requirements that may necessitate changes to RhythmOne’s services and business practices. Potential penalties for non-compliance with the GDPR include administrative fines of up to 4% of annual worldwide turnover. Complying with any new regulatory requirements could force RhythmOne to incur substantial costs or require RhythmOne to change its business practices in a manner that could reduce its revenue or compromise its ability to effectively pursue its growth strategy.

The FTC has also adopted revisions to the Children’s Online Privacy Protection Act (“COPPA”) that expand liability for the collection of information by operators of websites and other electronic solutions that are directed to children. Questions exist as to how regulators and courts may interpret the scope and circumstances for potential liability under COPPA, and the FTC continues to provide guidance and clarification as to its 2013 revisions of COPPA. FTC guidance or enforcement precedent may make it difficult or impractical for RhythmOne to provide advertising on certain websites, services or applications. In addition, the FTC recently fined an ad network for certain methods of collecting and using data from mobile applications, including certain applications directed at children, and failing to disclose the data collection to mobile application developers in their network.

While RhythmOne has not collected data that is traditionally considered personal data, such as name, email address, physical address, phone numbers or social security numbers, RhythmOne typically collects and stores IP addresses, geo-location information, and device or other persistent identifiers that are or may be considered personal data in some jurisdictions or otherwise may be the subject of legislation or regulation. For example, some jurisdictions in the EU regard IP addresses as personal data, and certain regulators, such as the California Attorney General’s Office, have advocated for including IP addresses, GPS-level geolocation data, and unique device identifiers as personal data under California law. Furthermore, when it enters into effect in May 2018, Europe’s GDPR indicates that online identifiers (such as IP addresses and other device identifiers) will be treated as “personal data” going forward and therefore subject to stricter data protection rules.

Evolving definitions of personal data within the EU, the United States and elsewhere, especially relating to the classification of IP addresses, machine or device identifiers, geo-location data and other such information, may cause RhythmOne to change RhythmOne’s business practices, diminish the quality of RhythmOne’s data and the value of RhythmOne’s solution, and hamper RhythmOne’s ability to expand its offerings into the EU or other jurisdictions outside of the United States. RhythmOne’s failure to comply with evolving interpretations of applicable laws and regulations, or to adequately protect personal data, could result in enforcement action against RhythmOne or reputational harm, which could have a material adverse impact on RhythmOne’s business, financial condition and results of operations.

In addition to compliance with government regulations, RhythmOne voluntarily participates in trade associations and industry self-regulatory groups that promulgate best practices or codes of conduct addressing the provision of internet advertising. RhythmOne could be adversely affected by changes to these guidelines and codes in ways that are inconsistent with its practices or in conflict with the laws and regulations of U.S. or international regulatory authorities. For instance, new guidelines, codes, or interpretations, by self-regulatory organizations or government agencies, may require additional disclosures, or additional consumer consents, such as “opt-in” permissions to share, link or use data, such as health data from third parties, in certain ways. If RhythmOne fails to abide by, or is perceived as not operating in accordance with, industry best practices or any industry guidelines or codes with regard to privacy, its reputation may suffer and RhythmOne could lose relationships with advertisers and digital media properties.

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RhythmOne’s business model is dependent on the continued growth in usage of the internet, computers, smartphones, tablets, internet-connected TVs and other devices, as well as continued digital audience fragmentation as a result of this continued growth.

RhythmOne’s business model depends on the continued proliferation of the internet, computers and internet-connected devices, such as smartphones, tablets and internet-connected TVs, as well as the increased consumption of digital video content on the internet through those devices resulting in increased audience fragmentation. However, consumer usage of these internet-connected devices and resulting audience fragmentation may be inhibited for a number of reasons, such as:

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Inadequate network infrastructure to support advanced features;

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Users’ concerns about the security of these devices and the privacy of their information;

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Inconsistent quality of cellular or wireless connections;

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Unavailability of cost-effective, high-speed internet service;

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Changes in network carrier pricing plans that charge device users based on the amount of data consumed; and

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Government regulation of the internet, telecommunications industry, mobile platforms and related infrastructure.

For any of these reasons, users of the internet and internet-connected devices may limit the amount of time they spend and the type of activities they conduct on these devices. In addition, technological advances may standardize or homogenize the way users access digital video content, making brand-receptive audiences easier for advertisers to reach without use of RhythmOne’s solutions. RhythmOne’s total addressable market size may be significantly limited if user adoption of the internet and internet-connected devices and consumer consumption of content on those devices and resulting audience fragmentation do not continue to grow. These conditions could compromise RhythmOne’s ability to increase its revenue and to become profitable.

RhythmOne may be unable to deliver advertising in a context that is appropriate for a brand’s specifications, which could harm RhythmOne’s reputation and cause its business to suffer.

It is very important to advertisers that their brand advertisements not be placed in or near content that is unlawful or would be deemed offensive or inappropriate by their customers. Unlike advertising on television, where the context in which an advertiser’s ad will appear is highly predictable and controlled, digital media content — especially when delivered programmatically — is more unpredictable, and RhythmOne cannot guarantee that digital advertisements will appear in a context that is appropriate for the brand. RhythmOne relies on continued access to premium ad inventory in high-quality and brand-safe environments, viewable to consumers across multiple screens. If RhythmOne is not successful in delivering context appropriate digital advertising campaigns for advertisers, its reputation will suffer and its ability to attract potential advertisers and retain and expand business with existing advertisers could be harmed, or RhythmOne’s customers may seek to avoid payment or demand future credits for inappropriately placed advertisements, any of which could harm RhythmOne’s business, financial condition and operating results.

RhythmOne’s sales efforts with advertisers and digital media properties require significant time and expense.

Attracting new advertisers and digital media properties requires substantial time and expense, and RhythmOne may not be successful in establishing new relationships or in maintaining or advancing its current relationships. For example, it may be difficult to identify, engage and market to potential advertisers who do not currently spend on digital advertising or are unfamiliar with RhythmOne’s current solutions. Furthermore, many of RhythmOne’s customers’ purchasing and design decisions typically require input from multiple internal constituencies, including those units historically responsible for a larger TV brand campaign. As a result, RhythmOne must identify those persons involved in the purchasing decision and devote a sufficient amount of time to presenting its solutions to each of those persons.

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The novelty of RhythmOne’s solutions and its business model often requires RhythmOne to spend substantial time and effort educating its own sales force and potential advertisers, advertising agencies and digital media properties about its offerings, including providing demonstrations and comparisons against other available solutions. This process is costly and time-consuming. If RhythmOne is not successful in targeting, supporting and streamlining its sales processes, its ability to grow its business may be adversely affected.

If RhythmOne’s pricing model is not accepted by its advertisers, RhythmOne could lose customers and its revenue could decline.

RhythmOne offers its solutions to advertisers based on a variety of different pricing models, including cost per thousand impressions (“CPM”) basis or on a Pay per Click (“PPC”) basis, as well as dynamic pricing models based on open auction or private marketplace deal structures. If advertisers do not understand or accept the benefits of RhythmOne’s pricing model, or if competitors are able to offer alternative pricing models (or pricing) that is deemed more attractive than that of RhythmOne, then the market for RhythmOne’s solutions may decline or develop more slowly than RhythmOne expects, limiting its ability to grow its revenue and profits.

RhythmOne’s business is subject to the risks of earthquakes, fires, floods and other natural catastrophic events and to interruption by man-made problems such as computer viruses or terrorism.

RhythmOne’s systems and operations are vulnerable to damage or interruption from earthquakes, fires, floods, power losses, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins and similar events. For example, a significant natural disaster, such as a tornado, earthquake, fire or flood, could have a material adverse effect on RhythmOne’s business, results of operations and financial condition, and RhythmOne’s insurance coverage may be insufficient to compensate RhythmOne for losses that may occur. RhythmOne has offices located in California, a region known for earthquakes. In addition, acts of terrorism, which may be targeted at metropolitan areas that have higher population density than rural areas, could cause disruptions in RhythmOne’s or RhythmOne’s advertisers’ businesses or the economy as a whole. RhythmOne’s servers may also be vulnerable to computer viruses, break-ins, denial-of-service attacks and similar disruptions from unauthorized tampering with RhythmOne’s computer systems, which could lead to interruptions, delays, loss of critical data. RhythmOne may not have sufficient protection or recovery plans in the event a natural disaster should occur. As RhythmOne relies heavily on its data centers, computer and communications systems and the internet to conduct its business and provide high-quality customer service, such disruptions could negatively impact RhythmOne’s ability to run its business and either directly or indirectly disrupt its advertisers’ businesses, which could have a material adverse effect on RhythmOne’s business, results of operations and financial condition.

If RhythmOne does not retain its senior management team and key employees, or attract and retain additional sales and technology talent, RhythmOne may not be able to grow or achieve its business objectives.

RhythmOne has experienced and in the future it may periodically experience attrition in key executive management positions. The loss of members of RhythmOne’s senior management team and other key employees, whether voluntarily or involuntarily, could significantly limit RhythmOne’s ability to achieve its strategic objectives. RhythmOne does not maintain key-person insurance on any of these employees. RhythmOne’s future success also depends on RhythmOne’s ability to continue to attract, retain and motivate highly skilled employees, particularly employees with technical skills that enable RhythmOne to deliver effective advertising solutions and sales and customer support representatives with experience in digital advertising and strong relationships with brand advertisers, agencies and digital media properties. Competition for these employees in RhythmOne’s industry is intense and RhythmOne has experienced difficulty in recruiting and retaining them. Many of the companies with which RhythmOne competes for experienced personnel also have greater resources than it has. Competition for qualified personnel is particularly intense in the San Francisco Bay Area, where RhythmOne’s headquarters are located. As a result, RhythmOne may be unable to attract or retain these management, technical, sales, marketing and customer support personnel that are critical to its success, resulting

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in harm to its key customer relationships, loss of key information, expertise or know-how and unanticipated recruitment and training costs. Additionally, RhythmOne’s ability to achieve revenue growth in the future will depend, in part, on RhythmOne’s success in recruiting, retaining and training sufficient numbers of sales personnel. These new employees require training in order to achieve full productivity. The timing of these activities may continue to negatively impact sales productivity. Additionally, the loss of the services of RhythmOne’s senior management or other key employees could make it more difficult to successfully operate its business and pursue RhythmOne’s business goals.

If RhythmOne cannot foster or maintain an effective corporate culture as it continues to build its business and evolve, its future success could be negatively impacted.

RhythmOne believes that fostering and maintaining an effective corporate culture that promotes innovation, creativity and teamwork has been and will be in the future a critical contributor to RhythmOne’s success. Fostering and maintaining an effective corporate culture will become increasingly difficult as RhythmOne builds its business and implements the more complex business plans and organizational management structures necessary to support its development and to comply with the requirements imposed on public companies. Failure to foster, maintain and further develop its culture could negatively impact RhythmOne’s future success.

RhythmOne’s software could be susceptible to errors, defects, or unintended performance problems that could result in loss of reputation, lost inventory or liability.

RhythmOne develops and offers complex software platforms and other software that is used or embedded by RhythmOne’s customers and digital media properties in devices, video technologies, software and operating systems. Complex software often contains defects, particularly when first introduced or when new versions are released. Determining whether RhythmOne’s software has defects may occur after versions are released into the market. Defects, errors or unintended performance problems with RhythmOne’s software could unintentionally jeopardize the performance of advertising campaigns and digital media properties’ products. This could result in injury to RhythmOne’s reputation, loss of revenue, diversion of development and technical resources, increased insurance costs and increased warranty costs. If RhythmOne’s software contains any undetected defects, errors or unintended performance problems, its advertising customers may refuse to use it, digital media properties may refuse to embed it into their products and RhythmOne may be unable to collect data or acquire advertising inventory from digital media properties. These defects, errors and unintended performance problems could also result in product liability claims. Although RhythmOne attempts to reduce the risk of losses resulting from these claims through warranty disclaimers and limitation of liability clauses in its agreements, these contractual provisions may not be enforceable in every instance. Furthermore, although RhythmOne maintains errors and omissions insurance, this insurance may not adequately cover these claims. If a court refused to enforce the liability-limiting provisions of RhythmOne’s contracts for any reason, or if liabilities arose that were not contractually limited or adequately covered by insurance, its business could be materially harmed.

RhythmOne’s inability to use software licensed from third parties, or its use of open source software under license terms that interfere with RhythmOne’s proprietary rights, could disrupt RhythmOne’s business.

RhythmOne’s technologies incorporate software licensed from third parties, including some software, known as open source software, which RhythmOne uses without charge. Although RhythmOne monitors its use of open source software, the terms of many open source licenses to which RhythmOne are subject have not been interpreted by U.S. or foreign courts, and there is a risk that these licenses could be construed in a manner that imposes unanticipated conditions or restrictions on RhythmOne’s ability to provide its solutions to its customers. In the future, RhythmOne could be required to seek licenses from third parties in order to continue offering its solutions, which licenses may not be available on terms that are acceptable to it, or at all. Alternatively, RhythmOne may need to re-engineer its solutions or discontinue use of portions of the functionality provided by its solutions. In addition, the terms of open source software licenses may require RhythmOne to provide software that RhythmOne develops using this software to others on unfavorable license terms. Further, if a digital media

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property owner who embeds RhythmOne’s software in their devices, video technologies, software and operating systems incorporates open source software into its software and RhythmOne’s software is integrated with such open source software in the final product, RhythmOne could, under some circumstances, be required to disclose the source code to RhythmOne’s software. While RhythmOne carefully monitors the use of all open source software and tries to ensure that no open source software is used in such a way as to require RhythmOne to disclose the source code to its software, such use could inadvertently occur. RhythmOne’s inability to use third-party software or the requirement to disclose the source code to its software could result in disruptions to its business, or delays in the development of future offerings or enhancements of existing offerings, which could impair its business.

Software and components that RhythmOne incorporates into its advertising solutions may contain errors or defects, which could harm its reputation and hurt its business.

RhythmOne uses a combination of custom and third-party software, including open source software, in building its advertising solutions. Although RhythmOne tests software before incorporating it into its solutions, RhythmOne cannot guarantee that all the third-party technologies it incorporates will not contain errors, bugs or other defects. RhythmOne continues to launch enhancements to its advertising solutions, and RhythmOne cannot guarantee any of these enhancements will be free from these kinds of defects. If errors or other defects occur in technologies that RhythmOne utilizes in its advertising solutions, it could result in damage to its reputation and losses in revenue, and RhythmOne could be required to spend significant amounts of additional research and development resources to fix any problems.

RhythmOne’s failure to protect its intellectual property rights could diminish the value of its solutions, weaken its competitive position and reduce its revenue.

RhythmOne regards the protection of its intellectual property, which includes patents and patent applications, trade secrets, copyrights, trademarks and domain names, as critical to its success. RhythmOne strives to protect its intellectual property rights by relying on federal, state and common law rights, as well as contractual restrictions. RhythmOne enters into confidentiality and invention assignment agreements with its employees and contractors, and confidentiality agreements with parties with whom it conducts business in order to limit access to, and disclosure and use of, its proprietary information. However, these contractual arrangements and the other steps RhythmOne has taken to protect its intellectual property may not prevent the misappropriation of its proprietary information or deter independent development of similar technologies by others.

In addition to issued patents and trademarks, RhythmOne has applications pending. There can be no assurance that its applications will be approved, and if approved, there’s no assurance they will adequately protect its intellectual property, or will not be challenged by third parties or found to be invalid or unenforceable. Effective trade secret, copyright, trademark and patent protection is expensive to develop and maintain, both in terms of initial and ongoing registration requirements and the costs of defending RhythmOne’s rights. RhythmOne may be required to protect its intellectual property in an increasing number of jurisdictions, a process that is expensive and may not be successful or which RhythmOne may not pursue in every location. RhythmOne may, over time, increase its investment in protecting its intellectual property through additional patent filings that could be expensive and time-consuming.

Monitoring unauthorized use of RhythmOne’s intellectual property is difficult and costly. RhythmOne’s efforts to protect its proprietary rights may not be adequate to prevent misappropriation of RhythmOne’s intellectual property. RhythmOne may not be able to detect unauthorized use of, or take appropriate steps to enforce, its intellectual property rights. Further, RhythmOne’s competitors may independently develop technologies that are similar to ours but which avoids the scope of RhythmOne’s intellectual property rights. In addition, the laws of many countries, such as China and India, do not protect RhythmOne’s proprietary rights to as great an extent as do the laws of European countries and the United States. Further, the laws in the United

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States and elsewhere change rapidly, and any future changes could adversely affect RhythmOne and its intellectual property. RhythmOne’s failure to meaningfully protect its intellectual property could result in competitors offering solutions that incorporate RhythmOne’s most technologically advanced features, which could seriously reduce demand for its advertising solutions. In addition, RhythmOne may in the future need to initiate infringement claims or litigation. Litigation, whether RhythmOne is a plaintiff or a defendant, can be expensive, time-consuming and may divert the attention of RhythmOne’s technical staff and managerial personnel, which could harm its business, whether or not the litigation results in a determination that is unfavorable to RhythmOne. In addition, litigation is inherently uncertain, and thus RhythmOne may not be able to stop its competitors from infringing its intellectual property rights.

RhythmOne’s agreements with partners, employees and others may not adequately prevent disclosure of trade secrets and other proprietary information.

RhythmOne relies in part on confidentiality agreements and other restrictions with its customers, partners, employees, consultants and others to protect RhythmOne’s proprietary technology and other proprietary information. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. Despite RhythmOne’s efforts to protect its proprietary technology, processes and methods, unauthorized parties may attempt to misappropriate, reverse engineer or otherwise obtain and use them. Moreover, policing unauthorized use of RhythmOne’s technologies, products and intellectual property is difficult, expensive and time-consuming, particularly in foreign countries where applicable laws may be less protective of intellectual property rights than those in the United States, and where enforcement mechanisms for intellectual property rights may be weak. Costly and time-consuming litigation could be necessary to enforce and determine the scope of RhythmOne’s proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect RhythmOne’s competitive business position.

RhythmOne could incur substantial costs and disruption to its business as a result of any claim of infringement of another party’s intellectual property rights, which could harm its business and operating results.

In recent years, there has been significant litigation in the United States over patents and other intellectual property rights. From time to time, RhythmOne faces allegations that it or customers who use its products have infringed the trademarks, copyrights, patents and other intellectual property rights of third parties, including allegations made by its competitors or by non-practicing entities. RhythmOne cannot predict whether assertions of third-party intellectual property rights or claims arising from these assertions will substantially harm its business and operating results. If RhythmOne is forced to defend any infringement claims, whether they are with or without merit or are ultimately determined in RhythmOne’s favor, RhythmOne may face costly litigation and diversion of technical and management personnel. Some of RhythmOne’s competitors have substantially greater resources than RhythmOne does and is able to sustain the cost of complex intellectual property litigation to a greater extent and for longer periods of time than RhythmOne could. Furthermore, an adverse outcome of a dispute may require RhythmOne: to pay damages, potentially including treble damages and attorneys’ fees, if RhythmOne is found to have willfully infringed a party’s patent or other intellectual property rights; to cease making, licensing or using products that are alleged to incorporate or make use of the intellectual property of others; to expend additional development resources to redesign RhythmOne’s products; and to enter into potentially unfavorable royalty or license agreements in order to obtain the rights to use necessary technologies. Royalty or licensing agreements, if required, may be unavailable on terms acceptable to RhythmOne, or at all. In any event, RhythmOne may need to license intellectual property which would require it to pay royalties or make one-time payments. Even if these matters do not result in litigation or are resolved in RhythmOne’s favor or without significant cash settlements, the time and resources necessary to resolve them could harm RhythmOne’s business, operating results, financial condition and reputation.

In addition, if RhythmOne’s advertising customers do not own the copyright for advertising content included in their advertisements or if digital media property owners do not own the copyright for content to the

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digital media next to which the advertisements appear, advertisers and digital media properties could receive complaints from copyright owners, which could harm RhythmOne’s reputation and its business.

Risks Related to YuMe’s Business

You should read and consider the risk factors specific to YuMe’s business that will also affect the combined company after the Transactions. These risks are described in YuMe’s Annual Report on Form 10-K for the year ended December 31, 2016 in YuMe’s Quarterly Report on Form 10-Q for the quarter ending September 30, 2017, and in other documents that are incorporated by reference into this prospectus/offer to exchange. See “Where You Can Find More Information” for the location of information incorporated by reference in this prospectus/offer to exchange.

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PRESENTATION OF CERTAIN FINANCIAL AND OTHER INFORMATION

YuMe Financial Information

YuMe’s unaudited consolidated financial information for the nine months ended September 30, 2017 has been derived from its Quarterly Report on Form 10-Q filed on November 8, 2017, incorporated by reference in this prospectus/offer to exchange. YuMe’s consolidated financial information for the years ended December 31, 2016, 2015 and 2014 has been derived from its Annual Report filed on Form 10-K dated March 10, 2017, also incorporated by reference in this prospectus/offer to exchange. All disclosures of dollar amounts, except share data and per share amounts, are presented in millions of U.S. dollars. YuMe’s consolidated financial statements, incorporated by reference herein, are prepared in accordance with U.S. GAAP.

As a subsidiary of RhythmOne, the accounting policies that will be applied by YuMe will be consistent with those applied by RhythmOne. In addition, for the purposes of the consolidated financial information prepared for RhythmOne, YuMe will be consolidated as a subsidiary of RhythmOne in accordance with RhythmOne’s accounting policies under IFRS. Therefore, YuMe’s historical financial information may not be a reliable indicator of future results.

Accounting Principles

The consolidated financial statements of RhythmOne have been prepared in accordance with IFRS 3, Business Combinations.

The preparation of financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies. The areas that require a high level of judgment or areas of judgment and estimation that are significant to RhythmOne are disclosed in the notes accompanying its annual consolidated financial statements.

Under IFRS, the acquisition of YuMe will be accounted for as a business combination using the acquisition method in accordance with IFRS 3, Business Combinations, which requires that one of the two companies in the Transactions be designated as the acquirer for accounting purposes based on the evidence available. RhythmOne is the accounting and legal acquirer. In RhythmOne’s consolidated financial statements, the assets, liabilities and contingent liabilities of YuMe will initially be recognized at fair value, with limited exceptions; the excess of the cost of the Transactions over the net fair value of the assets, liabilities and contingent liabilities recognized will be recorded as goodwill.

Reconciliation of YuMe Historic Financial Information from U.S. GAAP to IFRS

This prospectus/offer to exchange contains unaudited pro forma condensed combined financial information that has been adjusted to reflect the effect of the Transactions on the consolidated balance sheet of RhythmOne as at September 30, 2017 as if the Transactions had occurred on that date and to reflect the effect of the Transactions on the consolidated income statements of RhythmOne for the year ended March 31, 2017 and the six months ended September 30, 2017 as if the Transactions had occurred on April 1, 2016.

The unaudited pro forma condensed combined financial information is presented for information purposes only and reflects estimates and assumptions made by RhythmOne’s management that it considers reasonable. It does not purport to represent what RhythmOne’s actual results of operations or financial condition would have been had the Transactions occurred on the date indicated, nor is it necessarily indicative of future results of operations or financial condition. In addition, the unaudited pro forma condensed combined financial information does not reflect the effect of any cost or revenue synergies associated with combining RhythmOne and YuMe. For more information see “Unaudited Pro Forma Condensed Combined Financial Information.”

For purposes of the unaudited pro forma condensed combined financial information, the historical consolidated financial information of YuMe as at September 30, 2017 and for the six months ended September 30, 2017 and for the year ended December 31, 2016 has been reconciled to RhythmOne’s IFRS accounting policies.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Statements included in this prospectus/offer to exchange and in documents incorporated by reference into this prospectus/offer to exchange regarding the Transactions, the expected timetable for the Transactions, the benefits and synergies associated with the Transactions, future opportunities for the combined company and any other statements regarding RhythmOne’s, YuMe’s or the combined company’s future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “positioned,” “potential,” “predict,” “project,” “should,” “strategy,” “will,” “would” and similar expressions. All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual future financial condition, performance and results to differ materially from the plans, goals, expectations and results expressed in the forward-looking statements and other financial and statistical data within this prospectus/offer to exchange. Among the key factors that could cause the failure of the Transactions to be completed or, if completed, that could have an adverse effect on the results of operations, cash flows and financial position of the combined company and any anticipated benefits of the Transactions, and that could cause actual results to differ materially from those projected in the forward-looking statements, are:

•

the growth and prospects of the digital advertising industry;

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forecasts regarding internet usage and advertising spend;

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projected levels of growth in RhythmOne’s markets;

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RhythmOne’s expectations about the factors that drive business;

•

RhythmOne’s investments in international and emerging market and sectors;

•

anticipated trends and challenges in RhythmOne’s industry, including but not limited to the increasing quantity, variety and fragmentation of digital video content, platforms, distribution channels and technologies;

•

the expansion of the digital media advertising market in general and the digital video advertising market in particular;

•

RhythmOne’s operating results, including revenue, cost of revenue, expenses and liquidity;

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RhythmOne’s strategy and competition;

•

market trends, including overall opportunities for digital media advertising and shifting advertising budgets;

•

the ongoing improvement and refinement of RhythmOne’s data-science capabilities;

•

developments in the regulatory framework applicable to RhythmOne’s business; and

•

RhythmOne’s intellectual property and proprietary technologies.

All forward-looking statements attributable to RhythmOne and YuMe, or persons acting on their behalf, are expressly qualified in their entirety by the cautionary statements set out in this paragraph. Undue reliance should not be placed on such statements, which speak only as of the date they are made. Such factors include, but are not limited to: the failure to complete the Transactions or to complete them on the currently proposed terms; adverse fluctuations in foreign currency exchange rates; RhythmOne’s ability to implement and achieve its business strategies successfully; and other factors that are set out in “Risk Factors” and in the documents incorporated by reference in this prospectus/offer to exchange, including those in the section “Risk Factors” in YuMe’s Annual Report on Form 10-K for the year ended December 31, 2016 and YuMe’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017. Additional factors could cause actual results to differ materially from those in the forward-looking statements. Subject to compliance with applicable laws and regulations of the relevant stock

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exchanges, RhythmOne disclaims any intention or obligation to update or revise any forward-looking statements and undertakes no obligation to release publicly the results of any future revisions to the forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

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RECENT DEVELOPMENTS

Radium Acquisition

On June 26, 2017, RhythmOne acquired a leading data-driven marketing platform from Radium, together with certain other related assets and associated liabilities for consideration of $20.4 million and the assumption of approximately $4 million in net liabilities. The consideration included a cash payment of $3.9 million on the acquisition date and up to a further $16.5 million being deferred and payable by way of issuance of up to 30,956,849 RhythmOne Shares following closing (“Deferred Consideration”). The Deferred Consideration could, in certain circumstances, be payable in cash at RhythmOne’s discretion.

On July 19, 2017, RhythmOne made a Deferred Consideration payment of $5.0 million in cash, reducing the maximum number of new RhythmOne Shares that could be issued as Deferred Consideration to 21,575,985 based on a $0.53 share price, representing RhythmOne’s average closing share price for the 10 trading days ending on June 23, 2017 (the “Deemed Price”).

On August 31, 2017 RhythmOne provided written notice to Radium for the indemnification of certain out of pocket legal expenses incurred in connection with the transaction and the maximum number of new RhythmOne Shares that could be issued as Deferred Consideration was, based on the Deemed Price, further reduced by 17,190 shares, reducing the maximum number of new RhythmOne Shares that could be issued as Deferred Consideration to 21,558,795.

A Deferred Consideration payment of 1,660,569 RhythmOne Shares was made on December 21, 2017, and subject to certain conditions being met, it is expected that a final Deferred Consideration payment of up to 495,309 RhythmOne Shares will be made on or about June 26, 2018, in each case as adjusted for the 10-to-1 share consolidation of RhythmOne Shares implemented on September 25, 2017.

Any RhythmOne Shares issued prior to June 26, 2018 will be subject to a lock-up from the date of issuance through to June 26, 2018, subject to limited exceptions.

Each reference to RhythmOne Shares reflected above in this section reflects the number of RhythmOne Shares as at the relevant time, both before and after the 10-for-1 share consolidation of RhythmOne Shares implemented on September 25, 2017.

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BACKGROUND TO AND REASONS FOR THE TRANSACTIONS

Background to the Transactions

YuMe operates in the digital advertising industry, which is highly competitive and characterized by rapid technological change. The board of directors of and management of YuMe have recognized that many of YuMe’s competitors, such as Hulu, Google (YouTube and DoubleClick) and Facebook, are larger or more diversified companies with substantially greater financial resources and capacity to invest in the development and marketing of their product offerings. The large scale of these competitors enables them to establish or strengthen cooperative relationships with digital media property partners and brand advertisers, or other parties, which limits YuMe’s ability, as a smaller scale company, to promote its solutions and generate revenue. In light of these market and business dynamics, the YuMe board of directors, together with YuMe management, periodically reviews and assesses YuMe’s business plan and potential strategic opportunities available to YuMe with the goal of maximizing stockholder value. As part of this ongoing process, the YuMe board of directors and YuMe management have periodically evaluated whether the continued execution of YuMe’s strategy as a standalone company or the sale of YuMe to, or a combination of YuMe with, a third party offers the best avenue to maximize stockholder value.

In connection with such review, YuMe management, with assistance from financial advisors and the oversight of the YuMe board of directors, has met, from time to time, with various third parties who expressed an interest in engaging in a strategic transaction with YuMe. In addition, the YuMe board of directors has from time to time evaluated the possibility of acquiring synergistic companies or product lines, but in the past several years did not find businesses or assets to acquire on terms that it deemed attractive. The YuMe board of directors has also evaluated the divestiture of certain businesses and assets and executed on certain restructuring activities as a way to maximize stockholder value.

In connection with YuMe’s periodic review of strategic alternatives, in October 2014, YuMe engaged GCA Savvian Advisors, LLC (“Savvian”) to provide financial advisory services and to provide YuMe with market, industry trend and financial information to aid in YuMe’s evaluation of its prospects for maximizing stockholder value as a standalone company. Additionally, in November 2014, the YuMe board of directors established a strategic transactions committee (the “Strategic Transactions Committee”) consisting of independent directors Adriel Lares, Daniel Springer and David Weiden. Around this time, at the direction of the Strategic Transactions Committee, Savvian contacted a number of third parties as part of YuMe’s review of its strategic alternatives, and in December 2014, YuMe entered into a non-disclosure agreement with, and received a non-binding indication of interest from, Company A, a strategic party. The Strategic Transactions Committee considered the terms of the indication of interest, and YuMe management met with Company A to discuss a potential strategic transaction. In January 2015, YuMe engaged Needham & Company LLC (“Needham”) to serve as a second financial advisor, and in February 2015, YuMe received a revised non-binding indication of interest from Company A for a potential combination with YuMe with such third party. Ultimately, the YuMe board of directors determined that the proposed transaction would not be in the best interests of YuMe stockholders and ceased discussions with Company A.

From February 2015 through February 2016, Savvian and Needham continued to contact additional parties as part of YuMe’s review of strategic alternatives, but no further indications of interest were received. In February 2016, YuMe terminated the engagement letters previously entered into with each of Savvian and Needham.

In early October 2015, Jayant Kadambi, the CEO of YuMe at that time, met with Brian Mukherjee, the CEO of RhythmOne at that time, as part of YuMe and RhythmOne’s commercial relationship. All references to “RhythmOne” in this section with respect to periods prior to June 17, 2016, refer to blinkx plc, which changed its name to RhythmOne plc on June 17, 2016. YuMe had entered into a commercial agreement with RhythmOne in 2014, as the two companies had complementary products addressing different aspects of the digital advertising

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market. YuMe and RhythmOne executed standard YuMe publisher agreements for the purchase of media inventory. For the six months ended September 30, 2017 and for the fiscal years ended March 31, 2017, 2016 and 2015, YuMe generated approximately 1.1%, 0.6%, nil and 1.4%, respectively, of RhythmOne’s consolidated revenues for such periods through such commercial arrangements. For these same periods, these commercial arrangements resulted in no revenue for YuMe directly from RhythmOne, except for less than $0.1 million of ad serving fee revenue in the six months ended September 30, 2017. The companies originally executed a mutual non-disclosure agreement with respect to commercial discussions in July 2014 that terminated in July 2015. On March 23, 2016, the companies executed a new mutual non-disclosure agreement with respect to commercial discussions and amended it effective March 14, 2017 to extend the term to March 23, 2018. As a result of this commercial relationship, Mr. Kadambi and Mr. Mukherjee had occasion to periodically meet and discuss the ongoing commercial relationship, various aspects of each company’s business and market strategy, and additional ways in which the companies could collaborate. At a meeting in October 2015, Mr. Mukherjee suggested that a strategic transaction might be in the best interests of both companies and their respective customers and stockholders. Mr. Kadambi agreed that the idea was worth exploring and the two set up a follow-up meeting with the heads of corporate development for each company on October 30, 2015.

On October 7, 2015, Vertex Capital Advisors, LLC, an entity affiliated with Eric Singer which was later renamed Viex Capital Advisors, LLC (“Viex”), filed a Schedule 13D, disclosing Viex’s belief that YuMe Shares were materially undervalued and that the YuMe board of directors should focus on strategic alternatives to maximize stockholder value and be accountable to YuMe stockholders on capital allocation. The Schedule 13D reported that Viex owned 5.3% of the outstanding YuMe Shares.

On October 30, 2015, Mr. Kadambi, Mr. Mukherjee and the heads of corporate development of each of YuMe and RhythmOne met, along with a small group of managers from both parties, and presented company overviews and found the two businesses to be potentially complementary. Following an additional management meeting on November 9, 2015 and a meeting between Mr. Kadambi and Mr. Mukherjee on December 12, 2015, however, the parties mutually agreed not to pursue a strategic transaction at that time. The parties agreed to stay in touch and, when appropriate, explore the possibility of a strategic transaction again.

On March 4, 2016, Viex delivered a letter to the YuMe board of directors nominating Mr. Singer and Elias Nader for election to the YuMe board of directors at YuMe’s 2016 annual meeting of stockholders to be held later in the year. Prior to and following this nomination, Viex had engaged, and continued to engage, in discussions with the YuMe board of directors regarding matters related to the composition of the YuMe board of directors.

In March 2016, a meeting occurred between Mr. Kadambi and a shareholder of RhythmOne at which many industry issues were discussed, including growth through a potential strategic transaction. Frank Barbieri, YuMe’s head of corporate development, also met with Ujjal Kohli, a director of RhythmOne, regarding a potential strategic transaction. Mr. Barbieri and Mr. Kohli reported back to Mr. Kadambi and Mr. Mukherjee, respectively, and the parties agreed to restart discussions and enter into a new mutual non-disclosure agreement.

Over the next several months, a series of meetings followed in which management teams of both YuMe and RhythmOne discussed product lines, teams, business lines, financial performance, market opportunities and the potential for a strategic transaction between the companies.

On April 26, 2016, Mr. Kadambi received a letter from a RhythmOne shareholder requesting that the YuMe board of directors consider a potential strategic transaction with RhythmOne, and YuMe management informed the YuMe board of directors of the letter, but no further developments occurred with the RhythmOne shareholder in regards to such letter.

In parallel, strategic discussions between YuMe and RhythmOne management continued through June 2016. In June 2016, Mr. Barbieri communicated to Frank Pao, RhythmOne’s head of corporate development, that YuMe would consider a proposal from RhythmOne for a strategic transaction, but that YuMe would not provide such a proposal for an acquisition of RhythmOne. Ultimately RhythmOne declined to submit a proposal at that time.

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On May 27, 2016, the two Viex director nominees, Mr. Singer and Mr. Nader, were elected to the YuMe board of directors at the YuMe annual meeting of stockholders.

On August 2, 2016, the YuMe board of directors met, with representatives of Needham and Fenwick & West LLP (“Fenwick”), YuMe’s legal counsel at the time. During the meeting, representatives from Needham discussed various strategic alternatives, including remaining independent, a potential sale of YuMe, potential acquisitions or merger and other alternatives. A representative from Fenwick discussed the Board’s fiduciary duties.

In August 2016, YuMe received a non-binding indication of interest from its second largest stockholder at that time, AVI Partners, LLC (“AVI”) to acquire all of the outstanding YuMe Shares for a purchase price in the range of $4.52 to $5.22 per share subject to certain conditions including YuMe having at least $63 million in cash and cash equivalents and the elimination of at least $10 million in operating costs (the “AVI Proposal”). AVI publicly disclosed the AVI Proposal in an amended Schedule 13D filed on September 14, 2016, and also disclosed AVI’s then current holdings of 10.4% of the outstanding YuMe Shares. The closing price per YuMe Share as reported by the NYSE on September 14, 2016 was $4.12 per share.

In connection with the review and consideration of the AVI Proposal and to allow YuMe management to receive the input and consideration from the YuMe board of directors more efficiently, on August 31, 2016, the YuMe board of directors re-constituted its Strategic Transactions Committee. The committee was renamed the special committee (the “Special Committee”) and was comprised of independent directors Mr. Singer (chairman), Mitchell Habib and Chris Paisley. The Special Committee was formed to review, consider and, if deemed advisable, to make recommendations to the YuMe board of directors with respect to strategic alternatives intended to enhance stockholder value. The YuMe board of directors authorized the Special Committee to meet with YuMe management and take such actions as deemed necessary by the Special Committee, and to provide the YuMe board of directors with updates at the regular quarterly board meetings. YuMe management and the Special Committee determined that YuMe should consider engaging an investment bank as a financial advisor in connection with the review of strategic alternatives, and, at the direction of the Special Committee, YuMe management contacted four investment banks to present to the Special Committee as part of the selection process.

On September 20, 2016 the Special Committee held a meeting at which representatives of Deutsche Bank and three other investment banks made presentations. Following the presentations, the Special Committee reviewed and evaluated the presentations made by Deutsche Bank and the other banking firms, discussing the pros and cons of each in assisting YuMe in connection with the proposed review of strategic alternatives. As part of this discussion, the Special Committee considered various criteria and factors, including Deutsche Bank’s experience in the digital advertising industry, its understanding of YuMe’s business, that Deutsche Bank had previously served as an underwriter of the initial public offering of YuMe Shares, that Deutsche Bank had informed YuMe that it was not advising any of the potential business combination partners then under discussion in connection with a potential strategic transaction involving YuMe, and Deutsche Bank’s overall capabilities and strengths. After discussion, the Special Committee determined that Deutsche Bank would be best qualified and able to serve as financial advisor to YuMe and approved the engagement of Deutsche Bank. On October 6, 2016, YuMe engaged Deutsche Bank as its financial advisor.

Following the meeting of the Special Committee held on September 20, 2016, members of the Special Committee and YuMe management identified an initial group of parties to contact as part of YuMe’s exploration of potential strategic alternatives. YuMe management began to contact these parties and to discuss the forms of confidentiality agreements. Except as noted below, the confidentiality agreements entered into by YuMe in connection with these discussions included a “standstill” provision, which prevented the other party from purchasing YuMe securities or announcing publicly a proposal to acquire YuMe without YuMe’s consent. These standstill provisions automatically terminated at such time that YuMe announced a definitive agreement for the sale or merger of YuMe.

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On September 21, 2016 and September 29, 2016, YuMe management met with Company B, a strategic party, to discuss a potential strategic transaction.

On September 29, 2016, YuMe executed a confidentiality agreement with Company B.

On October 5, 2016, YuMe executed a confidentiality agreement with Company C, a financial sponsor, and on October 10, 2016, representatives of YuMe management made a presentation to Company C about YuMe’s business and discussed a potential transaction between the parties.

On October 7, 2016, the Special Committee held a meeting with YuMe management present. Paul Porrini, who was then serving as YuMe’s General Counsel, advised the Special Committee on its fiduciary duties as directors in the context of exploring strategic alternatives, including the potential sale of the company. YuMe management updated the Special Committee on the status of the negotiations of confidentiality agreements with certain entities and on upcoming management diligence meetings. YuMe management also presented for the Special Committee’s review, the list of companies that YuMe and Deutsche Bank recommended be contacted as part of the review of strategic alternatives. The Special Committee agreed to review the list and discuss it at the next meeting of the Special Committee.

The Special Committee held meetings on October 13, 2016 and October 20, 2016, at which members of YuMe management and representatives of Deutsche Bank provided updates relating to the initial outreach and communications with parties previously contacted as to their potential interest in a strategic transaction. The Special Committee discussed next steps for a structured market check process, noting that additional actions would be put on hold until further direction was received from the YuMe board of directors.

On October 27, 2016, YuMe management met with Company B for a follow-up discussion regarding a potential strategic transaction between the parties.

On October 28, 2016, YuMe and AVI executed a confidentiality agreement, which did not contain a standstill provision.

On November 4, 2016, YuMe granted AVI access to its electronic data room containing materials enabling substantive due diligence on YuMe and its operations. Also on this date, YuMe management met telephonically with representatives of AVI to confirm access to the data room had been granted and to offer support to AVI’s diligence efforts.

On November 8, 2016, the YuMe board of directors met and discussed various strategic alternatives available to YuMe and potential alternatives to maximize stockholder value, including how to maximize stockholder value while continuing to operate YuMe on a standalone basis. As part of the YuMe board of directors’ consideration of how to maximize stockholder value as a standalone company, the YuMe board of directors reviewed and approved a restructuring plan to reduce its operating expenses to realign YuMe’s cost structure with revenue.

On November 9, 2016, YuMe announced that Mr. Singer would replace Mr. Kadambi as the Chairman of the YuMe board of directors, and Mr. Porrini would replace Mr. Kadambi as CEO, effective November 9, 2016. YuMe also announced its restructuring plan, that the YuMe board of directors’ Special Committee of independent directors was exploring and evaluating a range of strategic alternatives to enhance stockholder value, and the engagement of Deutsche Bank to advise the Special Committee in this process.

On November 10, 2016, at a meeting of the Special Committee, YuMe management, together with representatives of Deutsche Bank presented, and the committee reviewed and discussed, a proposed market check strategy and a list of potential parties to be contacted. Representatives of Deutsche Bank also discussed an anticipated timeline and milestones. The Special Committee authorized Deutsche Bank and YuMe management to proceed with the plan.

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On November 10, 2016, YuMe management met telephonically with representatives of AVI to discuss YuMe’s performance in the third quarter of 2016 and to offer any additional assistance to AVI’s diligence efforts.

Beginning on November 14, 2016 and at the direction of the Special Committee, YuMe management and representatives of Deutsche Bank contacted additional parties regarding their interest in a potential strategic transaction with YuMe. YuMe management contacted a total of seven parties and representatives of Deutsche Bank contacted an additional 38 parties, including those parties that were initially contacted in October 2016. Of these parties, 34 were strategic parties and 11 were financial sponsors.

On November 15, 2016 Mr. Barbieri reached out to Mr. Pao of RhythmOne to describe the management changes at YuMe and the strategic alternatives process being run with assistance from Deutsche Bank. Mr. Pao expressed interest in continuing the companies’ previous discussions.

On November 16, 2016, Company C informed representatives of Deutsche Bank that it could not move forward with a transaction with YuMe at this time due to matters related to Company C, but indicated it would consider a potential transaction with YuMe in the future. Representatives of Deutsche Bank subsequently informed YuMe of this communication.

On November 17, 2016, the Special Committee held a meeting with YuMe management and representatives of Deutsche Bank present. Representatives of Deutsche Bank provided an update on YuMe’s outreach activities, noting that the most engaged potential strategic counterparties were likely to structure a potential transaction as a “merger of equals,” meaning these were parties of similar size and/or value compared to YuMe.

On November 18, 2016, YuMe executed a confidentiality agreement with Company D, a strategic party.

On December 1, 2016, the Special Committee held a meeting to discuss the status of strategic discussions.

On December 1, 2016, YuMe executed a confidentiality agreement with Company E, a financial sponsor.

On December 3, 2016, YuMe management met with Company B to discuss a potential strategic transaction.

On December 6, 2016, YuMe executed a confidentiality agreement with Company F, a strategic party.

On December 6, 2016, YuMe management made presentations about YuMe’s business to Company D and Company G, a strategic party, with representatives of Deutsche Bank in attendance.

On December 7, 2016, YuMe management and representatives of Deutsche Bank met with RhythmOne and made a presentation about YuMe’s business. Several days after the meeting with RhythmOne, Mr. Pao and Mr. Mukherjee, who had both attended the meeting, indicated to Mr. Barbieri that they were interested in a possible strategic transaction but that the timing was not right for RhythmOne as they had very recently announced the acquisition of Perk. They indicated that RhythmOne’s acquisition of Perk was expected to close in late January 2017 at which time RhythmOne management would be able to re-engage on a potential transaction with YuMe.

Also, on December 7, 2016, YuMe executed a confidentiality agreement with Company H, a strategic party.

Between December 8, 2016 and December 22, 2016, YuMe management made presentations about YuMe’s business to Company H, Company E, Company F, Company I (a strategic party), Company J (a strategic party) and Company B, and the Special Committee met on December 9, 2016 and December 15, 2016 to receive updates from YuMe management and representatives of Deutsche Bank with respect to meetings held, actions taken and next steps with respect to a potential strategic transaction.

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On December 12, 2016, YuMe executed a confidentiality agreement with Company G.

On December 13, 2016, YuMe executed a confidentiality agreement with Company I.

On December 14, 2016, YuMe executed a confidentiality agreement with Company J.

On January 2, 2017, YuMe received an indication of interest from Company I to acquire YuMe for $60 million in cash and an amount of Company I stock which would result in the stockholders of YuMe holding approximately 50% of Company I stock following the transaction. In light of Company I’s relatively small market capitalization at that time, the potential value of the proposal was highly dependent on an increase in value of the combined company based on potential synergies from combining the two companies. On December 30, 2016, the last trading day prior to receipt of the indication of interest, the closing price per YuMe Share as reported by the NYSE was $3.58 per share (which is not adjusted to reflect the special dividend of $1.00 per share and quarterly dividends of $0.03 per share paid by YuMe on July 7, 2017, and on October 9, 2017). As of December 31, 2016, YuMe held $66 million in cash, cash equivalents and marketable securities. On January 4, 2017, the YuMe board of directors met, with representatives of Deutsche Bank present, to review the indication of interest from Company I. After discussion of the offer and YuMe’s strategic alternatives, the YuMe board of directors rejected Company I’s proposal as insufficient, but directed YuMe management to continue discussions with Company I to determine if a more favorable transaction was possible.

On January 4, 2017, YuMe management met with Company B to hold a follow-up discussion regarding a potential strategic transaction between the parties.

On January 9, 2017, YuMe executed a confidentiality agreement with Company K, a strategic party.

On January 11, 2017, YuMe management made a presentation about YuMe’s business to Company K with representatives of Deutsche Bank in attendance.

On January 12, 2017, Company I was granted access to YuMe’s data room, along with Company E and RhythmOne. YuMe also provided Company I with a reverse diligence request list.

On January 13, 2017, YuMe granted data room access to Company K.

On January 19, 2017, YuMe management again met with RhythmOne to discuss a potential strategic transaction.

On January 23, 2017, YuMe management met with Company B for a follow-up discussion regarding a potential strategic transaction between the parties.

During this period, YuMe management kept the members of the Special Committee informed of developments in the strategic process, including the fact that discussions with Company F had ceased due to lack of interest. At the direction of the Special Committee members, YuMe management directed Deutsche Bank to deliver process letters to Company D, Company G, Company H, Company E, Company I, Company K and RhythmOne requesting initial non-binding indications of interest by January 30, 2017. Deutsche Bank sent such letters on January 23, 2017. YuMe determined not to send process letters to Company J or Company B because, based on previous discussions with these parties, YuMe believed that both parties were unlikely to submit a proposal with terms competitive to the other currently engaged parties and were unlikely to be able to consummate a transaction in a reasonable timeframe.

On January 26, 2017, YuMe had additional diligence sessions with Company I and granted data room access to Company G, and, at the direction of YuMe, Deutsche Bank circulated a draft transaction framework to Company G’s financial advisor.

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On January 27, 2017, YuMe granted data room access to Company J.

On January 30, 2017, a representative of Deutsche Bank called Mr. Pao of RhythmOne to follow up on the timing and RhythmOne’s interest in a transaction with YuMe. Mr. Pao provided a high-level overview of proposed terms and structure from RhythmOne. Deutsche Bank reported this conversation to YuMe. Based on the terms described by Mr. Pao, YuMe determined that a transaction with RhythmOne at this time would not likely be competitive with other potential offers or in the best interest of YuMe stockholders. However, representatives of the Special Committee directed YuMe management, with assistance from Deutsche Bank, to continue to negotiate with RhythmOne to determine whether its offer terms could be improved. Over the next week, representatives of YuMe and RhythmOne negotiated terms of a potential transaction that would be more acceptable to YuMe stockholders.

On February 2, 2017, the Special Committee held a meeting during which representatives of Deutsche Bank provided an update on the process in general and recent activity with respect to RhythmOne, Company G and Company I, specifically. The Special Committee discussed the likelihood that RhythmOne and Company I would submit non-binding letters of intent in the next few days. Mr. Porrini also provided an update on recent interest from Company J and Company B, and noted AVI’s lack of engagement with YuMe with respect to a potential transaction, including the fact that it had not entered the data room despite having access to the YuMe data room since November 4, 2016. The Special Committee discussed at length the strategic rationale of a potential transaction with the currently interested parties, including RhythmOne, and the potential economic terms of any such transaction.

On February 7, 2017, YuMe management received a non-binding indication of interest from Company I reaffirming its prior offer of an aggregate of $60 million in cash and an amount of Company I stock which would result in the stockholders of YuMe holding approximately 50% of Company I stock following the transaction. In light of Company I’s relatively small market capitalization at that time, the potential value of the proposal was highly dependent on an increase in value of the combined company based on potential synergies from combining the two companies. On February 7, 2017, RhythmOne also submitted a non-binding letter of intent to acquire YuMe in an “at-market” transaction, representing an implied 0.0% premium to YuMe’s enterprise value (defined as YuMe’s fully-diluted market capitalization based on the closing price of $3.65 per YuMe Share on February 7, 2017, less net cash, cash equivalents and marketable securities of $66 million). The aggregate consideration to be paid to YuMe stockholders would consist of $50 million in cash and $81 million through the issuance of approximately 168 million RhythmOne Shares (based on the closing price per RhythmOne Share of $0.48 on February 7, 2017, converted from pound sterling to U.S. dollar at the daily closing spot exchange rate and before giving effect to the RhythmOne share consolidation implemented on September 25, 2017), which would result in YuMe stockholders holding approximately 25% of the combined company. On February 7, 2017, the closing price per YuMe Share as reported by the NYSE was $3.65 per share (which is not adjusted to reflect the special dividend of $1.00 per share and quarterly dividends of $0.03 per share paid by YuMe on July 7, 2017, and on October 9, 2017). RhythmOne’s offer, at this time, was predicated on YuMe holding $66 million in cash, cash equivalents and marketable securities.

Additionally, on February 7, 2017, Company G’s financial advisor contacted Deutsche Bank indicating Company G’s preliminary support of a potential transaction with YuMe, but noting that Company G would require as part of any such transaction that YuMe would pay $30 to $35 million in cash to Company G, and that Company G shareholders would need to own 60% of the combined entity.

On February 9, 2017, Company B submitted a non-binding indication of interest to acquire YuMe for an aggregate of between $150 and $160 million to be paid entirely in cash, representing an offer price of between $4.18 and $4.46 per YuMe Share. Company B’s offer was contingent on its ability to secure the financing necessary for the transaction, which at the time was uncertain. On February 9, 2017, the closing price per YuMe Share as reported by the NYSE was $3.52 per share (which is not adjusted to reflect the special dividend of $1.00 per share and quarterly dividends of $0.03 per share paid by YuMe on July 7, 2017, and on October 9, 2017).

Company D, Company H, Company E, Company J and Company K did not submit proposals.

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On February 10, 2017, YuMe management and representatives of Deutsche Bank met with representatives of Company B to discuss a potential strategic transaction.

On February 21, 2017, YuMe management met telephonically with representatives of AVI to discuss YuMe’s fourth quarter 2016 and full year 2016 results.

On February 22, 2017, Company I provided a verbal revised indication of interest for an acquisition of YuMe for an aggregate of $60 million in cash and an additional $20 million in Company I stock, resulting in the stockholders of YuMe holding approximately 55% of Company I stock. In light of Company I’s relatively small market capitalization, the potential value of the proposal was highly dependent on an increase in value of the combined company based on potential synergies from combining the two companies.

Also on February 22, 2017, RhythmOne provided a revised non-binding letter of intent to acquire YuMe for aggregate consideration of approximately $131 million, which reflected a 2.5% premium to YuMe’s enterprise value (defined as YuMe’s fully-diluted market capitalization based on the closing price of $3.60 per YuMe Share on February 13, 2017, less net cash, cash equivalents and marketable securities of $66 million). The aggregate consideration to be paid to YuMe stockholders would consist of $85 million in cash and $46 million through the issuance of approximately 95 million RhythmOne Shares (based on the closing price per RhythmOne Share of $0.48 on February 13, 2017, converted from pound sterling to U.S. dollar at the daily closing spot exchange rate and before giving effect to the RhythmOne share consolidation implemented on September 25, 2017) which would result in YuMe stockholders holding approximately 16% of the combined company. RhythmOne’s offer represented an estimated value of approximately $3.65 per YuMe Share. On February 22, 2017, the closing price per YuMe Share as reported by the NYSE was $3.82 per share (which is not adjusted to reflect the special dividend of $1.00 per share and quarterly dividends of $0.03 per share paid by YuMe on July 7, 2017 and on October 9, 2017). RhythmOne’s offer, at this time, was predicated on YuMe holding $66 million in cash, cash equivalents and marketable securities

On February 23, 2017, the Special Committee met, with representatives of YuMe management, Deutsche Bank and Fenwick, and discussed the proposals received from RhythmOne, Company I and Company B. The representative from Fenwick advised the members of the Special Committee regarding their fiduciary duties. With respect to Company B, YuMe management noted that Company B had not yet engaged counsel, had not yet been granted access to the data room, had previously indicated that it would take at least two months to conduct their due diligence once access was granted and did not yet have committed financing for the transaction. YuMe management also noted that Company J had not provided any proposal to date. The Special Committee discussed the letter of intent and negotiations with RhythmOne to date, including that the cash portion of the proposed consideration had increased to $85 million with the balance to be paid in equity and other terms, including the right of YuMe to designate two members of the board of the combined company. The Special Committee also discussed recent discussions with Company I and the terms of its indication of interest. The Special Committee then discussed the pros and cons of a transaction with each of RhythmOne, Company I and Company B, and representatives of Deutsche Bank discussed with the Special Committee certain financial aspects of each of the proposals. The Special Committee also considered YuMe’s alternatives to a strategic transaction including remaining as a standalone company, and the prospects and risks associated with such alternatives. Following a discussion of potential alternatives and a discussion of which transaction would be most likely to maximize stockholder value, the Special Committee directed YuMe management to continue pursuing all alternatives reasonably available, including continued negotiations with RhythmOne, but noted that, to the extent YuMe and RhythmOne converge on terms, a YuMe board of directors meeting should be called to consider entry into a letter of intent containing binding exclusivity provisions.

Also on February 23, 2017, YuMe granted data room access to Company B.

On February 24, 2017, RhythmOne provided a revised non-binding letter of intent to acquire YuMe for aggregate consideration of approximately $132 million, which reflected a 5.0% premium to YuMe’s enterprise

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value (defined as YuMe’s fully-diluted market capitalization based on the closing price of $3.60 per YuMe Share on February 13, 2017, less net cash, cash equivalents and marketable securities of $66 million). The aggregate consideration to be paid to YuMe stockholders would consist of $90 million in cash and $42 million through the issuance of approximately 88 million RhythmOne Shares (based on the closing price per RhythmOne Share of $0.48 on February 13, 2017, converted from pound sterling to U.S. dollar at the daily closing spot exchange rate and before giving effect to the RhythmOne share consolidation implemented on September 25, 2017) which would result in YuMe stockholders holding approximately 15% of the combined company. RhythmOne’s offer represented an estimated value of approximately $3.69 per YuMe Share. On February 24, 2017, the closing price per YuMe Share as reported by the NYSE was $3.60 per share (which is not adjusted to reflect the special dividend of $1.00 per share and quarterly dividends of $0.03 per share paid by YuMe on July 7, 2017, and on October 9, 2017). RhythmOne’s offer, at this time, was predicated on YuMe holding $66 million in cash, cash equivalents and marketable securities

On February 28, 2017, the YuMe board of directors met with representatives of YuMe management, Deutsche Bank and Fenwick, to discuss the current status of the strategic process and each of Company D, Company G, Company H, Company E, Company I, Company J, Company K, Company B and RhythmOne, each of whom had participated in the strategic process. YuMe management noted that no indication of interest had been received from Company D, Company H, Company E, Company J or Company K and that none were expected, but that Company G, Company I, Company B and RhythmOne each had submitted indications of interest. In response to follow-up discussions, only Company I and RhythmOne had provided revised indications of interest. The representative of Fenwick advised the YuMe board of directors regarding its fiduciary duties. YuMe management reviewed the revised written letter of intent provided by RhythmOne and the verbal revised indication of interest from Company I. The YuMe board of directors discussed all of the proposals received to date, including the previous proposal provided by AVI, but noted AVI’s lack of engagement with YuMe with respect to a potential transaction. The YuMe board of directors determined not to pursue further discussions with AVI due to AVI’s apparent lack of interest. The YuMe board of directors determined not to proceed with further discussions with Company G due to the unfavorable economic terms of their proposal, namely the requirement of the cash payment by YuMe, the preliminary nature of Company G’s interest indicated by the fact that no formal indication of interest was ever provided, the limited strategic rationale for such a transaction, and the limited recent engagement by Company G. The YuMe board of directors then discussed the offers provided by each of Company I and Company B relative to the offer provided by RhythmOne, and determined that the RhythmOne transaction presented the best terms reasonably available to YuMe. The YuMe board of directors directed YuMe management to finalize the letter of intent with RhythmOne.

On March 1, 2017, RhythmOne provided a revised non-binding letter of intent to acquire YuMe reaffirming the economic terms contained in the February 24, 2017 non-binding letter of intent. The revised non-binding letter of intent contained certain changes to other deal terms that had been negotiated between the parties and included a binding commitment of YuMe to work with RhythmOne on an exclusive basis for 21 days to try to finalize a definitive agreement as well as a binding and mutual standstill provision. RhythmOne’s offer reaffirmed an estimated offer price of approximately $3.69 per YuMe Share (which is not adjusted to reflect the special dividend of $1.00 per share and quarterly dividends of $0.03 per share paid by YuMe on July 7, 2017, and on October 9, 2017). On March 1, 2017, the closing price per YuMe Share as reported by the NYSE was $3.56 per share, which does not take into account both the $1.00 per share special dividend and the $0.03 per share quarterly dividends paid by YuMe on July 7, 2017, and on October 9, 2017. RhythmOne’s offer, at this time, was predicated on YuMe holding $66 million in cash, cash equivalents and marketable securities. On March 1, 2017, YuMe agreed to the 21-day exclusivity period and began working with RhythmOne on due diligence and the negotiation of a definitive agreement.

In March 2017, the management teams from both YuMe and RhythmOne met more than 15 times and addressed several due diligence topics including product roadmap, sales strategy, organization, financial performance, cost synergies, deal structure, demand and supply, engineering competencies and processes, international expansion, strategic agency deals, working capital needs and receivables and other relevant topics.

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During this time, while initially getting closer on terms, YuMe began to believe that RhythmOne was reconsidering the mix of the cash and stock components of the proposed consideration. On March 20, 2017, the parties agreed to extend the exclusivity period by 24 hours to March 22, 2017.

On March 22, 2017, RhythmOne circulated the first draft of the merger agreement.

On March 23, 2017, the Special Committee held a meeting where YuMe management provided an update on management diligence meetings held with RhythmOne over the past several weeks. Representatives of Deutsche Bank also provided an overview of certain terms of the draft merger agreement received from RhythmOne’s counsel, including the exchange offer transaction structure. The Special Committee discussed the proposed transaction and its various terms and conditions.

Messrs. Porrini and Mukherjee had phone calls on March 24, 2017 and March 30, 2017 in which Mr. Mukherjee expressed reticence to proceed with the proposed transaction due to uncertainty in RhythmOne’s ability to finance the transaction within the proposed transaction timeline.

In parallel, on several occasions throughout March 2017, Mr. Singer spoke with Ted Hastings, a current member of the board of directors of RhythmOne and the former CEO of recently acquired Perk, about the potential synergies between the two companies, the strategic rationale for a potential transaction, as well as the proposed deal terms, and Mr. Hastings expressed support for the deal.

On April 6, 2017, the Special Committee held a meeting with YuMe management and representatives of Deutsche Bank. Mr. Porrini provided an update regarding the interactions with RhythmOne since the prior meeting and his discussions with Mr. Mukherjee who had indicated that he would allow the exclusivity period to expire with YuMe but that RhythmOne remained open to additional discussions. Mr. Porrini provided Mr. Mukherjee’s reasons for RhythmOne’s slow-down in diligence and other transaction-related activities, which included YuMe’s recent stock price increase and RhythmOne’s ability to finance the transaction within the proposed transaction timeline. The Special Committee discussed, with input from representatives of Deutsche Bank, next steps in light of the termination of exclusivity with RhythmOne, and YuMe management noted they had additional meetings planned with other parties who had expressed interest, including Company B.

On April 10, 2017, YuMe management met with Company B to discuss a potential strategic transaction and re-granted Company B access to the data room.

On April 11, 2017, Company B contacted YuMe management, reaffirming its non-binding indication of interest for an acquisition of YuMe for between $150 and $160 million in all-cash, or between approximately $4.11 and $4.38 per YuMe Share. Company B’s offer was contingent on its ability to secure the financing necessary for the transaction, which at the time was uncertain. On April 11, 2017, the closing price per YuMe Share as reported by the NYSE was $3.92 per share (which is not adjusted to reflect the special dividend of $1.00 per share and quarterly dividends of $0.03 per share paid by YuMe on July 7, 2017, and on October 9, 2017). As of March 31, 2017, YuMe held $68 million in cash, cash equivalents and marketable securities.

On April 16, 2017, YuMe sent an initial draft of a merger agreement to Company B.

On April 18, 2017, Mr. Mukherjee called Mr. Porrini to say that RhythmOne would not be moving forward at this time with the proposed transaction. Also on April 18, 2017, YuMe management met with Company B to continue to discuss a potential strategic transaction.

On April 20, 2017, the Special Committee met, with representatives of Deutsche Bank and YuMe management, to review the proposal from Company B. A representative from Company B was also in attendance for part of the meeting, and presented Company B’s reasons for a potential transaction with YuMe, its proposed cash consideration, matters relating to its foreign status and cash received from foreign entities, and a proposed

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transaction timeline. The Special Committee discussed these points with the representative from Company B, including placing the cash consideration in escrow, potential approval processes and other deal certainty matters, after which time the representative of Company B left and the Special Committee further discussed the terms of the proposed transaction.

On April 25, 2017, YuMe received a revised merger agreement from Company B, and on April 27, 2017, YuMe responded with a list of open issues in the merger agreement.

On May 1, 2017, May 8, 2017 and May 22, 2017, Mr. Porrini and other members of YuMe management had discussions with Company B regarding the open issues in the merger agreement and a potential strategic transaction.

On multiple occasions during May 2017, Mr. Hastings and Mr. Singer continued to discuss a proposed transaction between RhythmOne and YuMe.

On May 4, 2017, YuMe sent Company B a revised merger agreement, and the parties continued to negotiate terms of the merger agreement.

On May 5, 2017, the YuMe board of directors met and discussed various alternatives for maximizing stockholder value, including a potential strategic transaction and continuing as a standalone company. YuMe management provided an update on the strategic process, noting that discussions with Company B were ongoing. The YuMe board of directors discussed a potential transaction with Company B, however expressed concern regarding the likelihood of such a transaction due to the uncertainty of Company B’s financing relating to such a transaction and other necessary regulatory approvals. The YuMe board of directors discussed the status of discussions with RhythmOne and the fact that any potential transaction with RhythmOne was on hold due to RhythmOne’s ability to finance the proposed transaction within the proposed transaction timeline. In evaluating ways to maximize value for YuMe’s stockholders in the event it was determined that YuMe should continue as a standalone company, the YuMe board of directors considered declaring a special dividend and a quarterly dividend to its stockholders. The YuMe board of directors discussed the impact these dividends would have on the company, its operations and its prospects for engaging in a strategic transaction. The YuMe board of directors determined that, in light of the absence of any firm offer with acceptable terms from a third party with respect to a strategic transaction and no near-term prospects for executing a strategic transaction, that it would be in the YuMe stockholders’ best interests to declare a special dividend of $1.00 per share and initiate a quarterly dividend of $0.03 per share, each payable on June 26, 2017, but conditioned upon YuMe not having entered into a definitive agreement to be acquired by June 1, 2017.

On May 18, 2017, YuMe management met again with Company C to discuss YuMe’s business and a potential transaction with Company C. Shortly following the meeting, Company C declined to move forward in discussions with YuMe.

On May 23, 2017, YuMe management, together with representatives of Deutsche Bank, met with Company B to provide information about YuMe and to discuss a proposed transaction.

Additionally on May 23, 2017, YuMe received a non-binding indication of interest from Company I to acquire YuMe for $4.75 per share in cash. On May 23, 2017, the closing price per YuMe Share as reported by the NYSE was $4.39 per share (which is not adjusted to reflect the special dividend of $1.00 per share and quarterly dividends of $0.03 per share paid by YuMe on July 7, 2017, and on October 9, 2017).

On May 26, 2017, Company B sent YuMe a revised merger agreement, and the parties continued to negotiate terms of the merger agreement.

On or around May 31, 2017, the YuMe board of directors approved, through a unanimous written consent, delaying the record date for the special and quarterly dividends to June 7, 2017 and the payment date to July 7, 2017 due to ongoing strategic negotiations.

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On June 2, 2017, Company B provided a revised non-binding indication of interest to acquire YuMe for an aggregate of $180 million in cash, representing an approximate offer of $4.88 per YuMe share, and YuMe sent Company B a revised merger agreement. On June 2, 2017, the closing price per YuMe Share as reported by the NYSE was $4.80 per share (which is not adjusted to reflect the special dividend of $1.00 per share and quarterly dividends of $0.03 per share paid by YuMe on July 7, 2017, and on October 9, 2017). As of March 31, 2017, YuMe held $68 million in cash, cash equivalents and marketable securities. YuMe and Company B continued to be unable to come to an agreement on terms, including key terms related to the structure of the transaction and the placement into an escrow account by Company B of a minimum amount of the purchase price consideration. At this time, Company B’s financing for the transaction continued to be uncertain.

On June 6, 2017, the YuMe board of directors approved a delay in the record date for the special and quarterly dividends to June 30, 2017 and a payment date of July 7, 2017, the payment of which would be contingent upon YuMe not having entered into a definitive agreement by June 30, 2017.

On June 15, 2017, RhythmOne provided a non-binding letter of intent to acquire YuMe for an aggregate of $120 million in cash and $70 million in RhythmOne Shares. RhythmOne’s offer represented an estimated offer price of approximately $5.15 per YuMe Share. On June 15, 2017, the closing price per YuMe Share as reported by the NYSE was $4.68 per share (which is not adjusted to reflect the special dividend of $1.00 per share and quarterly dividends of $0.03 per share paid by YuMe on July 7, 2017, and on October 9, 2017). As of March 31, 2017, YuMe held $68 million in cash, cash equivalents and marketable securities.

On June 21, 2017, the YuMe board of directors met and, based on certain FINRA and NYSE notice requirements, determined to delay the record date of the special and quarterly dividend to July 3, 2017. At this time, the YuMe board of directors believed none of the ongoing strategic discussions were likely to lead to a definitive agreement in the near term based on the status of discussions with RhythmOne and Company B.

On June 22, 2017, YuMe announced the declaration of the special cash dividend of $1.00 per YuMe Share and a quarterly cash dividend of $0.03 per YuMe Share.

On June 26, 2017, Mr. Porrini met with Company B to discuss a potential strategic transaction.

On June 27, 2017, RhythmOne announced that Mr. Hastings would be replacing Mr. Mukherjee as CEO of RhythmOne, effective July 29, 2017. Around this time, Mr. Pao also ceased to be part of the RhythmOne management team. Additionally, during this time, RhythmOne signed and closed an asset purchase agreement to buy certain assets and liabilities of Radium on June 27, 2017. Although RhythmOne remained interested in a potential transaction with YuMe, it indicated it was not in a position to execute a transaction in the near-term as a result of this restructuring and recent asset acquisition. However, Messrs. Hastings and Singer continued to have several discussions in July 2017 regarding potential deal terms.

On July 7, 2017, YuMe management met with Company B, and Company B indicated it would not continue discussions regarding a potential transactions due to, among other things, the political climate in the United States and certain U.S. foreign relations issues.

On July 7, 2017, YuMe paid its special cash dividend of $1.00 per YuMe Share and quarterly cash dividend of $0.03 per YuMe Share, resulting in a total cash dividend to its stockholders of $35.6 million.

On July 20, 2017, representatives of YuMe and RhythmOne met to discuss a potential transaction and outlined a process to continue to explore a potential transaction between the parties.

On July 21, 2017, YuMe and RhythmOne executed a third non-binding letter of intent with a 15-day exclusivity period. The letter of intent reflected an offer to acquire YuMe for a total purchase price of $185 million, consisting of $2.40 in cash per YuMe Share and approximately $2.85 per YuMe Share in

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RhythmOne Shares for a total purchase price of approximately $5.25 per YuMe Share, subject to adjustment based on an average trading price of RhythmOne Shares applying a formula set out in the letter of intent. On July 21, 2017, the closing price per YuMe Share as reported by the NYSE was $4.37 per share. After accounting for the payment of the special and quarterly dividends, YuMe held $38 million in cash, cash equivalents and marketable securities as of June 30, 2017.

On July 26, 2017, Torys LLP (counsel for RhythmOne) circulated a draft of the merger agreement. Between July 27, 2017 and September 2, 2017, YuMe, with assistance from its outside counsel Pillsbury Winthrop Shaw Pittman LLP (“Pillsbury”) and Deutsche Bank, and RhythmOne, with assistance from its outside counsel, Torys LLP, and Bird & Bird LLP (RhythmOne’s U.K. outside counsel) continued to conduct business and legal due diligence with respect to RhythmOne and YuMe, respectively, and negotiated the terms of the definitive merger agreement, as well as the form of tender and support agreement that RhythmOne required to be entered into by certain stockholders of YuMe.

On July 27, 2017, the YuMe board of directors met to discuss YuMe’s ongoing operations as a standalone business. During this meeting, the YuMe board of directors confirmed board committee appointments following the 2017 annual meeting of stockholders, including the appointment of the following independent directors to serve on the Special Committee: Mr. Singer, as chairman, Mr. Paisley, Stephen Domenik and John Mutch.

On August 2, 2017, the YuMe board of directors met with YuMe management and representatives of Pillsbury, to review the status of the proposed transaction with RhythmOne, including current deal terms, the rationale for the proposed transaction and timing of the proposed transaction. The YuMe board of directors directed YuMe management to continue to negotiate terms with RhythmOne and work toward the execution of a definitive agreement.

Between August 2, 2017 and August 10, 2017, representatives of YuMe management negotiated the terms of the potential acquisition of YuMe by RhythmOne. Each party also continued to conduct due diligence on the other party.

On August 10, 2017, the parties executed a revised non-binding letter of intent for RhythmOne to acquire YuMe for $1.70 in cash per YuMe Share and approximately $3.55 per YuMe Share in RhythmOne Shares for a total purchase price of approximately $5.25 per YuMe Share, subject to adjustment based on an average trading price of RhythmOne Shares applying the formula set out in the letter of intent and subject to a 0.39 pence-0.42 pence collar on the RhythmOne Shares (before giving effect to the RhythmOne share consolidation implemented on September 25, 2017).

From August 10, 2017 until September 2, 2017, each company conducted due diligence on the other company. These due diligence activities included the finance teams of both organizations, together with their respective outside accounting consultants, conducting a mutual forensic accounting diligence and a quality of earnings audit.

On August 23, 2017, RhythmOne issued a press release confirming that it was in discussions regarding the potential acquisition of YuMe, following which, YuMe issued a press release confirming the same. The closing price per YuMe Share as reported by the NYSE on August 22, 2017 was $5.06 and on August 23, 2017 was $5.15.

On August 24, 2017, the YuMe board of directors met with representatives from YuMe management, Deutsche Bank and Pillsbury present. YuMe management provided an update on the recent speculative public statements in the press regarding a potential transaction between YuMe and RhythmOne, noting that because certain rules and regulations in the UK required RhythmOne to issue a press release to address the speculation, YuMe released a similar statement that discussions were ongoing. Representatives of Deutsche Bank provided a process overview and discussed the current status of negotiations with respect to the potential transaction with

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RhythmOne, including certain preliminary financial information taking into account then-current transaction terms. YuMe management also provided an update with respect to the due diligence process, including forensic accounting due diligence, business due diligence and legal diligence, noting that they had identified no major concerns thus far, and described the current status of the definitive agreement. A representative from Pillsbury discussed with the YuMe board of directors certain tax matters, including whether the receipt of the stock portion of the consideration would be taxable. The YuMe board of directors considered other potential deal structures in light of uncertainty of the tax treatment of the transaction. The Board determined to take the position to preserve the possibility that the transaction should be treated as a tax-free reorganization and to provide certain cautionary disclosures to stockholders as the tax treatment of the transaction was uncertain.

On August 31, 2017, the YuMe board of directors held a meeting at which representatives of YuMe management, Deutsche Bank and Pillsbury were present. YuMe management provided the YuMe board of directors with an update on the proposed transaction with RhythmOne including the current deal structure, due diligence and material deal points, including closing conditions, lock-up requirements and board representation. The YuMe board of directors, together with YuMe management, discussed negotiation strategies, and the YuMe board of directors provided direction to YuMe management on outstanding deal points. YuMe management also presented an update on tax considerations with respect to the proposed transaction, and the YuMe board of directors again reiterated its preference that YuMe preserve the possibility of a tax-free reorganization and to provide YuMe stockholders disclosure as to the uncertainty of the tax treatment. Representatives of Deutsche Bank discussed with the YuMe board of directors other strategic alternatives available to YuMe, including continuing to operate on a standalone basis, and reviewed the various steps taken in the strategic alternatives process including the parties contacted, the letters of intent received, and the history of negotiations with RhythmOne. The YuMe board of directors reviewed, together with YuMe management, the potential synergies of the proposed transaction with RhythmOne and the impact those could have on stockholder value. A representative from Pillsbury advised the YuMe board of directors on its fiduciary duties.

On September 2, 2017, the YuMe board of directors held a meeting with representatives of YuMe management, Deutsche Bank and Pillsbury. The YuMe board of directors once again discussed the current tax analysis, noting no changes since the last discussion, and then representatives of Deutsche Bank discussed the strategic process to date and the history of negotiations with RhythmOne.

On September 3, 2017, the YuMe board of directors held a meeting at which representatives of YuMe management, Deutsche Bank, Pillsbury and its outside accounting consultant were present. Representatives from the accounting consultant presented the findings of the forensic accounting due diligence review, discussing RhythmOne revenue recognition standards under IFRS, financial statement due diligence of both RhythmOne and its recently acquired companies, and other accounting due diligence matters. The YuMe board of directors discussed forecasts provided by RhythmOne and the anticipated synergies as a result of the potential combination of RhythmOne and YuMe. The YuMe board of directors directed YuMe management to request additional support on RhythmOne’s forecasts and the projected synergistic cost savings. YuMe management, together with representatives of Pillsbury, reviewed the overall process and timing of the transaction, including the negotiation of the definitive agreement and supporting documents, the material terms of the definitive agreement, the deal structure, support and lock-up agreements with officers, directors and major stockholders, closing conditions, offer conditions, no-shop terms, fiduciary out provisions, and termination provisions and related fees.

On September 3, 2017, representatives of each of RhythmOne, Torys, Pillsbury and YuMe continued to negotiate the definitive merger agreement, the tender and support agreements and the related disclosure schedules, including a series of discussions regarding the proposed purchase price between Mr. Singer and Mr. Hastings. As a result of these discussions, the mechanism for calculating the stock consideration component that had been set forth in the August 10, 2017 letter of intent from RhythmOne was revised to lower the low-end of the collar from 0.39 pence to 0.375 pence (before giving effect to the RhythmOne share consolidation implemented on September 25, 2017), resulting in an increase of $0.13 per YuMe Share in total consideration to be paid to YuMe stockholders from what would have been paid under the terms of the letter of intent.

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On September 4, 2017, the YuMe board of directors held two meetings to review the proposed transaction. During the first meeting, YuMe management presented additional information related to the due diligence performed by YuMe on RhythmOne, with the assistance of its advisors, including follow-up reports on the forensic accounting review, the anticipated synergies from the transaction and RhythmOne’s business. The YuMe board of directors also discussed the closing conditions set forth in the Merger Agreement.

During the second meeting of the YuMe board of directors held later in the day on September 4, 2017, Pillsbury began the meeting by advising the directors of their fiduciary duties in the context of considering a sale of the company. YuMe management then reviewed the rationale for the transaction, the robust sales process, the prospects, risks and benefits of the proposed transaction with RhythmOne as well as the prospects, risks and benefits of YuMe remaining as a standalone entity, the consideration offered by RhythmOne, the return of capital to stockholders in light of the cash portion of the consideration, deal certainty matters, tax treatment and stockholder value, following which YuMe management made a recommendation in support of the proposed transaction with RhythmOne. Representatives of Deutsche Bank then joined the meeting and discussed the process undertaken by the YuMe board of directors to evaluate strategic alternatives which included outreach to 45 parties which ultimately resulted in three companies presenting non-binding offers. Representatives of Deutsche Bank reviewed and discussed with the YuMe board of directors certain financial analyses with respect to the consideration of $1.70 in cash and 7.325 RhythmOne Shares per YuMe Share (not giving effect to the share consolidation pursuant to which every 10 RhythmOne ordinary shares were consolidated into one RhythmOne ordinary share) and rendered an oral opinion to the YuMe board of directors, confirmed by delivery of a written opinion dated September 4, 2017, to the effect that as of the date of such opinion, and based upon and subject to the assumptions made, procedures followed, matters considered and limitations, qualifications and conditions on the review undertaken in connection therewith, as described in Deutsche Bank’s opinion, the consideration of $1.70 in cash and 7.325 RhythmOne Shares per YuMe Share (not giving effect to the share consolidation pursuant to which every 10 RhythmOne ordinary shares were consolidated into one RhythmOne ordinary share) was fair, from a financial point of view, to the holders of YuMe Shares (other than RhythmOne and its affiliates). The opinion of Deutsche Bank is more fully described below under the heading “Opinion of Deutsche Bank, as Financial Advisor to YuMe.” The YuMe board of directors then discussed, with input from YuMe management, the standalone prospects of YuMe and the risks and benefits of remaining a standalone company. The Board held a further discussion of the proposed transaction with RhythmOne, the diligence conducted on RhythmOne, the cash to be received by YuMe stockholders and the value of RhythmOne Shares to be received in the transaction, the anticipated value of such stock as a result of the announcement of this transaction and other factors, the reasons in support of the proposed transaction and the negative factors about the proposed transaction.

Following discussion, the YuMe board of directors unanimously agreed and determined, for the reasons more fully described in “— YuMe’s Reasons for the Transactions”, that the Offer and the Mergers were advisable and in the best interests of YuMe and its stockholders, and the YuMe board of directors voted unanimously to approve the Merger Agreement and the transactions contemplated thereunder.

The definitive merger agreement and the tender support agreements were executed following the YuMe board of directors meeting on September 4, 2017 and the transaction was announced prior to the opening of AIM and the NYSE.

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RhythmOne’s Reasons for the Transactions

The RhythmOne board of directors approved the Merger Agreement and the transactions contemplated by the Merger Agreement. In reaching its decision to approve the Merger Agreement, the RhythmOne board of directors consulted with senior members of RhythmOne’s management and legal teams regarding the results of the due diligence efforts undertaken by management. In reaching its decision to approve the Merger Agreement, the RhythmOne board of directors considered a variety of factors, including the following:

Strategic factors considered by the RhythmOne board of directors

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Broader platform. The acquisition accelerates RhythmOne’s strategy to build a unified programmatic platform with distinctive audiences of differentiated quality at scale. With the acquisition of YuMe, RhythmOne gains access to a leading data driven marketing platform, premium inventory, distinctive consumer insights, cross-screen targeting technology and established demand relationships. The RhythmOne board of directors believes that, as a result of the acquisition, RhythmOne will be a more attractive alternative to the largest networks and exchanges, represented by companies such as Google and Facebook.

•

Greater volume. The acquisition will increase RhythmOne’s access to mobile, desktop and connected TV video inventory, augmenting the relative attractiveness of its platform to brand advertisers. Through its video supply footprint, YuMe currently attracts over 150 million unique U.S. viewers and over 250 million unique viewers globally. The majority of ad impressions are served via YuMe’s audience-aware software development kit.

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Controlled inventory and premium demand. YuMe provides, among other things, premium demand on connected TV as a supply channel, which will be a new supply category for RhythmOne. YuMe has been a connected TV leader with almost six years of experience in connected TV that includes over 2,000 campaigns run to date through this medium.

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Premium demand. Both video and connected TV inventory are expected to improve scale and reach benefiting the overall economic effects realized through RhythmOne’s platform. Global brands have shown a particular appetite for advertising campaigns such as connected TV, which can supplement the flagging effectiveness of broadcast television. In addition, the acquisition will add premium video brand advertising demand, generated through established, long-term relationships with agencies and brands, which the RhythmOne board of directors believes may have a positive effect on fill rate achieved by RhythmOne’s platform.

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Proven team and R&D capability. YuMe has an experienced executive team, and is expected to add material sales, engineering, product and operational expertise to the combined enterprise. Moreover, YuMe has an India-based technology development and ad operations center, which adds a significant competitive advantage in terms of product innovation and a streamlined operational expenditure structure.

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Critical and financial scale. RhythmOne’s strategy is to build a unified programmatic platform with distinctive audiences of differentiated quality at scale. The acquisition directly advances this objective through the addition of premium mobile, video and connected TV inventory onto the platform, and further builds on the increased scale of supply that resulted from the acquisitions of Perk Inc. in January 2017 and RadiumOne, Inc. in June 2017. The RhythmOne board of directors believes that the industry will consolidate and the acquisition allows RhythmOne to stay ahead of the industry trend and to build critical and financial scale.

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Synergies. RhythmOne believes that the acquisition represents an attractive opportunity to achieve savings of approximately $10 million to $12 million per annum (before tax) across the combined businesses from, among other things, functional redundancies as a combined entity, duplicative vendor relationships and YuMe public company costs, with associated one-off costs of no greater than approximately $1 million. There also may be potential for revenue synergies. However, there can be no

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assurance that any particular amount of such savings or synergies will be achieved following completion of the Transactions or that they will be achieved in the expected time frame. See “Risk Factors — RhythmOne may fail to realize some or all of the anticipated cost savings, synergies, growth opportunities and other benefits of the Transactions, which could adversely affect the value of the RhythmOne Shares.”

Other factors considered by the RhythmOne board of directors

•

Exchange ratio. The fact that the exchange ratio of 0.7325 RhythmOne Shares (which gives effect to the 10-for-1 share consolidation of RhythmOne Shares implemented on September 25, 2017) for each YuMe Share (which exchange ratio implied a Transaction Consideration value of approximately $5.01 per YuMe Share based upon the £0.35 closing price per RhythmOne Share and an exchange rate of $1.2923 per pound sterling, in each case as of September 4, 2017) is fixed;

•

Pro forma ownership of the combined company. The fact that, based on the RhythmOne Shares and YuMe Shares outstanding on September 4, 2017 and after giving effect to the RhythmOne share consolidation to be completed prior to the consummation of the Offer and the Mergers, RhythmOne shareholders would own approximately 66% of RhythmOne’s Shares upon completion of the Transactions, and would continue to participate in potential further appreciation of the combined company thereafter;

•

Terms of Merger Agreement. The terms of the Merger Agreement, including the following:

•

conditions to the completion of the Transactions;

•

the circumstances under which the Merger Agreement could be terminated and the impact of such a termination;

•

the potential payment by YuMe to RhythmOne of a termination fee of $5,536,790 under certain circumstances;

•

the potential payment by YuMe to RhythmOne of up to $500,000 as a reimbursement for certain RhythmOne expenses under certain circumstances;

•

Tender and Support Agreement. Affiliates of each of VIEX Capital Advisors, LLC and AVI Partners, LLC, and each director and executive officer of YuMe, entered into a Tender and Support Agreement with RhythmOne, pursuant to which, among other things and subject to the terms and conditions therein, each such stockholder, director or executive officer agreed to tender and not withdraw all of their respective YuMe Shares into the Offer. As of December 14, 2017, such stockholders and directors and officers beneficially own, in the aggregate, approximately 29.1% of the outstanding YuMe Shares (including equity awards to be accelerated in connection with the Transactions, included in both the YuMe Shares beneficially owned by such stockholders and directors and officers and the total outstanding YuMe Shares);

•

Likelihood of Completion. The likelihood that the Transactions would be completed, in light of, among other things, the conditions to the Offer, the efforts required to obtain regulatory approvals, and the provisions of the Merger Agreement in the event of various breaches by YuMe; and

The RhythmOne board of directors considered a number of potentially negative factors, as well as related mitigating factors, in its deliberations concerning the Merger Agreement, including:

•

The risk that the anticipated strategic and other benefits to RhythmOne following completion of the Transactions, including the estimated synergies described above, will not be realized or will take longer to realize than expected;

•

The potential challenges and difficulties relating to integrating the operations of RhythmOne and YuMe, including the cost to achieve the estimated synergies;

•

The potential that the exchange ratio could result in RhythmOne delivering greater value to YuMe stockholders than had been anticipated should the value of the RhythmOne Shares increase from the date of execution of the Merger Agreement;

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•

The possibility that the Transactions might not be completed, including as a result of the failure to achieve the Minimum Tender Condition;

•

The possible disruption to RhythmOne’s business that may result from the Transactions, the resulting distraction of the attention of RhythmOne’s management and potential attrition of RhythmOne employees;

•

The costs and expenses that RhythmOne has incurred and will incur in connection with the proposed Transactions, regardless of whether the Transactions are completed;

•

The potential payment by RhythmOne to YuMe of up to $500,000 as a reimbursement for certain YuMe expenses under certain circumstances; and

•

The risks described under “Risk Factors — Risks Related to the Transactions and the Combined Company” beginning on page 36 of this prospectus/offer to exchange.

After consideration of these factors, the RhythmOne board of directors determined that these risks could be mitigated or managed by YuMe or by RhythmOne following the Transactions, were reasonably acceptable under the circumstances or, in light of the anticipated benefits, the risks were unlikely to have a materially adverse impact on the Transactions or on RhythmOne following the Transactions, and that, overall, these risks were significantly outweighed by the potential benefits of the Transactions.

The RhythmOne board of directors considered all of the foregoing factors as a whole and determined to approve the Merger Agreement and the Transactions.

The foregoing description of the information and factors considered by the RhythmOne board of directors is not exhaustive, but RhythmOne believes it includes all the material factors considered by the RhythmOne board of directors in its consideration of the Transactions, including factors that may support the Transactions, as well as factors that may weigh against the Transactions. In view of the wide variety of factors considered by the RhythmOne board of directors in connection with its evaluation of the Transactions and the complexity of these matters, the RhythmOne board of directors did not consider it practical, and did not attempt, to quantify, rank or otherwise assign relative weights to and did not make specific assessments of the specific factors it considered in reaching its decision. Rather, the RhythmOne board of directors made its decision based on the totality of information presented to it and the investigation it conducted. In considering the factors described above, individual RhythmOne directors may have given different weights to different factors. The RhythmOne board of directors did not reach any specific conclusion with respect to any of the factors or reasons considered.

Recommendation of YuMe’s Board of Directors

After careful consideration, including a thorough review of the Transactions with its legal and financial advisers, YuMe’s board of directors unanimously: (i) approved the Merger Agreement and authorized and approved the Offer; (ii) determined that the form, terms and provisions of the Merger Agreement, the performance by YuMe of its obligations thereunder and the consummation by YuMe of the transactions contemplated thereby, including the Mergers, are advisable and fair to and in the best interests of YuMe; and (iii) resolved to recommend that the stockholders of YuMe accept the Offer and tender their YuMe Shares into the Offer.

The YuMe board of directors’ full statement regarding the Offer is set out in YuMe’s solicitation/recommendation statement on Schedule 14D-9 to be filed with the SEC on ●, 2017.

For the reasons described below, and in light of other factors that they believed were appropriate, YuMe’s board of directors unanimously determined and resolved that the terms of the Offer, the Mergers and the other transactions contemplated by the Merger Agreement are advisable, and fair to and in the best interests of, YuMe and its stockholders, and unanimously resolved to recommend that the stockholders of YuMe accept the Offer and tender their YuMe Shares to Purchaser pursuant to the Offer.

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YuMe’s Reasons for the Transactions

In evaluating the Offer, the Mergers and the Merger Agreement and reaching its decision to make the recommendation to the YuMe stockholders that they tender their YuMe Shares in the Offer, the YuMe board of directors consulted with YuMe management and its legal and financial advisors, and also considered numerous substantive factors that it viewed as supporting its recommendation, including, but not limited to:

Value and Form of Transaction Consideration

•

that the Transaction Consideration of $1.70 in cash and 0.7325 RhythmOne Shares per YuMe Share to be received by the YuMe stockholders in the Offer and the First Merger (after giving effect to the share consolidation pursuant to which every 10 RhythmOne Shares were consolidated into one RhythmOne Share) resulted in an implied value of $5.20 per YuMe Share based upon the pre-share consolidation exchange ratio of 7.325 RhythmOne Shares, the closing price per RhythmOne Share of £0.37 on August 22, 2017, the last trading day prior to RhythmOne’s public confirmation that it was in discussions with YuMe, a U.S. dollar to pound sterling exchange of 1.292x and the $1.70 in cash payable per YuMe Share;

•

that such implied value of $5.20 per YuMe Share represented a premium to the closing price of $5.06 per YuMe Share on August 22, 2017, to the volume weighted average closing price of $4.51 per YuMe Share for the 30 days ended August 22, 2017, and to the closing price of $3.44 per YuMe Share on November 9, 2016, which was the trading day prior to the public announcement by YuMe of its intent to explore and evaluate a range of strategic alternatives; and

•

that a portion of the Transaction Consideration will be paid in cash providing some immediate value and liquidity to YuMe’s stockholders, and a portion will be paid in RhythmOne Shares, providing the opportunity for the YuMe stockholders to participate in the future growth and profitability of the combined entity.

Strategic Rationale for Mergers

•

A demand leader paired with a supply leader. YuMe offers demand-side software and services used by brands, agencies and trading platforms, a data management and targeting platform, first party data collection system and global programmatic capabilities. RhythmOne primarily focuses on the supply-side, and has sizeable owned and operated, controlled and extended reach properties, as well as established programmatic platform capabilities represented by its multi-channel, multi-format ad exchange, whereby advertisers and agencies can reach targeted, engaged audiences at scale. YuMe’s strong sales organization and relationships with agencies and brands and its demand side platform complement RhythmOne’s unified programmatic platform;

•

The benefits of scale. Advertisers want the value and scale from digital advertising that they previously experienced with television. The Transactions could potentially result in a combined company with one of the largest independent cross-device supply footprints in the industry which would allow advertisers to go to a single source to meet their advertising objectives rather than to a patchwork of boutique providers. The YuMe board of directors also expects that the combined company’s larger commercial profile will provide access to a more diverse investor base and additional sources of capital;

•

Comprehensive data insights. YuMe’s first-party data management and targeting platform provides insights for brand advertising campaigns. RhythmOne’s analytics, data management platform and brand safety technology provide transparency and drive results for performance-based campaigns. The unified, proprietary data set, augmented by machine-learning algorithms, could enable the combined company to successfully deliver against a broad range of advertising key performance indicators. The data could also offer significant insight for publishers looking to derive additional value from their audiences; and

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•

Talent. RhythmOne and YuMe each have experienced, tenured teams that are aligned as to the vision for the combined company. These teams could directly benefit from operating a broader platform with greater revenue scale on a significantly stronger financial foundation.

Risks of Continuing to Operate as a Standalone Entity. YuMe’s prospects for substantially increasing stockholder value as a standalone company above the Transaction Consideration, including consideration of the following factors:

•

YuMe’s ability to build trust with and offer competitive pricing to advertisers and digital media property owners in an industry with larger, better capitalized competitors, as well as the need to develop and upgrade the technologies involved with YuMe’s solutions and respond to evolving customer demands, and the investment associated with such efforts;

•

the likelihood of YuMe achieving its growth plans in light of the current and future market conditions, including the risks and uncertainties in the U.S. and global economy generally and YuMe’s industry specifically;

•

the potential negative reaction of investors, employees, customers, distributors and suppliers if YuMe did not consummate a transaction as a result of its publicly announced strategic alternative review and the resulting impact on YuMe’s business and stock price;

•

a standalone company would not have the ability to achieve value through revenue and cost synergies that may be recognized by the combined company;

•

the fact that YuMe’s legacy direct business, particularly in its European operations, has not experienced revenue growth in the past three years;

•

despite early success, the sustainability of customer adoption of YuMe’s programmatic offering remains uncertain;

•

challenges associated with attracting and retaining talented employees;

•

lack of a comprehensive set of product features when compared with larger competitors with greater financial resources and scale;

•

the challenge of operating profitably, which can reduce the ability to scale organically;

•

the significant cost of being a public company in the United States, while operating a subscale business;

•

the general risks associated with YuMe’s ability to execute on a business plan that would create stockholder value in excess of the Transaction Consideration; and

•

the risk and uncertainty associated with YuMe’s business, including the risk factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2017.

Opinion of Deutsche Bank. The financial analyses presented to the YuMe board of directors by Deutsche Bank with respect to the Transaction Consideration and the oral opinion of Deutsche Bank delivered to the YuMe board of directors, subsequently confirmed by delivery of a written opinion dated September 4, 2017, to the effect that, as of the date of such opinion, and based upon and subject to the assumptions made, procedures followed, matters considered and limitations, qualifications and conditions on the review undertaken in connection therewith, as described in Deutsche Bank’s opinion, the consideration of $1.70 in cash and 7.325 RhythmOne Shares per one YuMe Share was fair, from a financial point of view, to the holders of the YuMe Shares (other than RhythmOne and its affiliates). Following the delivery of Deutsche Bank’s opinion, the RhythmOne shareholders approved a share consolidation pursuant to which every 10 RhythmOne Shares were consolidated into one RhythmOne Share. As a result of this share consolidation and pursuant to the terms of the Merger Agreement, the consideration to be received for each YuMe Share will now be $1.70 in cash and 0.7325

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RhythmOne Shares. The description of Deutsche Bank’s opinion and financial analyses in this document refers to the original consideration set forth in the Merger Agreement at the time of delivery of Deutsche Bank’s opinion.

Available Alternatives; Results of Discussions with Additional Third Parties. The possible alternatives to the Transactions (including the possibility of being acquired in whole or in part by another buyer, or continuing to operate as an independent entity, and the desirability and perceived risks of those alternatives), the potential benefits to the YuMe stockholders of these alternatives and the timing and the likelihood of completing such alternatives, as well as the likelihood that such alternatives could result in greater value for the YuMe stockholders, taking into account risks of execution as well as business, competitive, industry and market risks. The YuMe board of directors also considered the results of the process conducted by the YuMe board of directors prior to approval of the Merger Agreement, with the assistance of YuMe management and Deutsche Bank, to evaluate strategic alternatives, including the results of discussions with third parties regarding their interest in a potential business combination with YuMe and, the possibility that other bidders would make a superior proposal to acquire YuMe at a price higher than the Transaction Consideration.

Absence of Financing Condition and Other Limited Conditions. That the Offer is likely to be completed and the Mergers are likely to be consummated, based on, among other things, the absence of a financing condition and the limited number of other conditions to the Offer and the Mergers.

Timing of Completion. The anticipated timing of the consummation of the Transactions and the fact that the Transactions is structured as a tender offer and subsequent mergers, which can often be completed more promptly than other structures, meaning that all YuMe stockholders are likely to receive the Transaction Consideration more promptly.

The terms and conditions of the Merger Agreement, including:

•

under certain circumstances, RhythmOne would be required to extend the Offer beyond the initial expiration of the Offer if certain conditions to the consummation of the Offer are not satisfied as of the initial expiration of the Offer or, if applicable, certain subsequent expirations, which would increase the likelihood that the Offer could be consummated;

•

the ability of the YuMe board of directors to withdraw or modify its recommendation that the YuMe stockholders vote to approve the Mergers in the event that there is an unsolicited bona fide acquisition proposal that the YuMe board of directors concludes in good faith (after consultation with its outside legal counsel and financial advisor) constitutes a superior proposal, and YuMe’s right to terminate the Merger Agreement in order to accept a superior proposal and enter into a definitive agreement, in both cases after giving RhythmOne four (4) business days’ notice and providing a “last look” to amend its offer prior to the YuMe board of directors’ withdrawing or modifying its recommendation and subject to payment of a termination fee;

•

the ability of the YuMe board of directors to withdraw or modify its recommendation in response to a material development or change in circumstances (not in connection with a competing acquisition proposal) that was not known to the YuMe board of directors as of the date of the Merger Agreement, if, in each case, (a) it determines in good faith, after consultation with its financial and legal advisors, that failure to take such action is reasonably likely to be inconsistent with its fiduciary duties under applicable law; (b) allows for a five business day period to discuss such withdrawal or modification with RhythmOne in good faith; and (c) after such discussion, the YuMe board of directors determines in good faith, after consultation with its outside legal counsel and financial advisor, that the failure to take such action would reasonably be expected to be inconsistent with its fiduciary duty under applicable law;

•

the customary nature of the conditions to RhythmOne’s obligations to consummate the Mergers and the risk of non-satisfaction of such conditions; and

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•

the conclusion of the YuMe board of directors that the termination fee of $5,536,790.00 which is payable by YuMe if the Merger Agreement is terminated in connection with a superior proposal or certain other events is customary and reasonable and will not unduly inhibit the YuMe board of directors from approving a superior proposal if such were available.

Arm’s Length Negotiations. The belief of the YuMe board of directors that as a result of arm’s-length negotiations with RhythmOne, YuMe, with the assistance of its representatives had negotiated the highest price per share that RhythmOne was willing to pay for YuMe and that the terms of the Merger Agreement include the most favorable terms to YuMe in the aggregate to which RhythmOne was willing to agree;

Ability to Participate in Future Growth. The fact that the YuMe stockholders will have the opportunity to participate in any future earnings or growth of the resulting combined entity following the Mergers, and will benefit from any future appreciation in the value of RhythmOne, including appreciation resulting from potential synergies;

Tax Treatment. The Transaction may qualify for tax-deferred treatment as a “reorganization” for U.S. federal income tax purposes, in which case YuMe’s U.S. stockholders would not be able to recognize any loss, but would be required to recognize gain only up to the amount of cash received; and

Availability of Appraisal Rights. The availability of statutory appraisal rights under the DGCL in connection with the Mergers for YuMe stockholders who comply with the statutory requirements of the DGCL and who believe that exercising their appraisal rights would yield a greater per share amount than the Mergers would.

The YuMe board of directors also considered a variety of risks and other potentially negative factors of the Merger Agreement and the Transaction, including the following:

Effect of Public Announcement. Possible effects of the announcement and pendency of the Transaction on YuMe’s operations, employee retention, and relationships with distributors, customers, and suppliers;

Restrictions on Conduct of Business. The restrictions in the Merger Agreement on the conduct of YuMe’s business prior to the consummation of the Transactions, which may delay or prevent YuMe from undertaking business or other opportunities that may arise prior to the consummation of the Transactions, and the potentially adverse impact on YuMe’s business and financial condition if the Transactions are not consummated;

Potential decrease in the implied value and premium to YuMe stockholders if RhythmOne stock price declines before the First Merger is consummated. The risk that the value of RhythmOne Shares may decline relative to the YuMe Shares during the period of time between the execution of the Merger Agreement and the closing of the First Merger, which would result in a lower value and premium paid to YuMe stockholders. There is no adjustment mechanism or other protections in the Merger Agreement to address significant fluctuations in stock price of RhythmOne Shares relative to YuMe Shares or to address fluctuations in the comparative value of the pound sterling and the U.S. dollar. As a result, the value and premium paid to YuMe stockholders pursuant to the Offer and at the closing of the First Merger may be lower or greater than the implied value and premium paid to YuMe stockholders as of the time the parties executed the Merger Agreement.

Inability to Obtain Approvals or the Failure of Other Conditions. The risk that the Transactions may not receive required government approvals, that a governmental authority may prohibit the Transactions, or that other conditions to the parties’ obligations to complete the Transactions will not be satisfied, and as a result, the possibility that the Transactions may not be completed even if a majority of outstanding shares are tendered in the Offer;

Significant Monetary and Opportunity Costs. The significant financial costs involved with completing the Transactions, the substantial time and effort of management required to complete the Transactions, and the related disruptions to YuMe’s operations;

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No Solicitation of Alternative Acquisition Proposals. The restrictions in the Merger Agreement that prohibit YuMe from soliciting or initiating discussions with third parties regarding a competing offer for YuMe, and place certain constraints on YuMe’s ability to respond to such proposals, subject to the fulfillment of certain fiduciary duties of the YuMe board of directors;

Termination Fee. The termination fee payable to RhythmOne upon the occurrence of certain events may deter other potential acquirors from publicly making a competing offer for YuMe that might be more advantageous to the YuMe stockholders, and the impact of the termination fee on YuMe’s ability to engage in certain other transactions following the termination of the Merger Agreement;

Reimbursement of RhythmOne’s expenses. The requirement for YuMe to pay RhythmOne’s actual and reasonable out-of-pocket expenses up to $500,000 incurred in connection with the Merger Agreement, if less than a majority of outstanding YuMe Shares are tendered in the Offer and the Merger Agreement is terminated after the March 31, 2018 (or April 30, 2018 under certain circumstances);

Potential decrease in liquidity. The liquidity in AIM-traded shares tends to be significantly lower than that of NYSE-traded shares. This could make it more difficult for YuMe stockholders to sell their RhythmOne Shares following the closing of the Transactions and could adversely affect the price of those shares.

Tax Treatment. The possibility that the Transactions may not qualify for tax-deferred treatment as a “reorganization” for U.S. federal income tax purposes, in which case YuMe stockholders would recognize gain or loss in full, taking into account the amount of cash and the fair market value of RhythmOne Shares received; and even if the Transactions qualify as a “reorganization” for U.S. federal income tax purposes, YuMe stockholders would not be able to recognize any loss, and would be required to recognize any gain up to the amount of cash received (a smaller portion of the total consideration than the stock consideration); and

Potential Conflicts of Interest of Officers and Directors. The arrangements and possible conflicts of interest of YuMe’s officers and directors.

The YuMe board of directors based its ultimate decision on its business judgment that the benefits of the Offer and the Mergers to the YuMe stockholders outweigh the negative considerations. The YuMe board of directors determined that the Offer and the Mergers represent the best reasonably available alternative to maximize YuMe stockholder value with the least risk of non-completion.

This discussion of the information and factors considered by the YuMe board of directors includes the material positive and negative factors considered by the YuMe board of directors, but is not intended to be exhaustive and may not include all of the factors considered by the YuMe board of directors. The YuMe board of directors did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination, and did not quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination that the Offer, the Mergers, the Merger Agreement and the other transactions contemplated by the Merger Agreement are fair and advisable to and in the interests of the YuMe stockholders. Rather, the YuMe board of directors conducted an overall analysis of the factors described above, including thorough discussions with, and questioning of, YuMe management and YuMe’s outside advisors, and considered the factors overall to be favorable to, and to support, its determination. In addition, individual members of the YuMe board of directors may have given different weight to different factors. This explanation of the reasoning of the YuMe board of directors and certain information presented in this section is forward-looking in nature and, therefore, that information should be read in light of the factors discussed in “Cautionary Statement Regarding Forward-Looking Statements”.

For the reasons described above, the YuMe board of directors unanimously recommends that the YuMe stockholders accept the Offer and tender their YuMe Shares in the Offer.

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Certain YuMe Prospective Financial Information

YuMe’s management does not as a matter of course make detailed or long-term public forecasts or projections as to its future financial performance beyond the then current quarter due to the unpredictability of the underlying assumptions and estimates and uncertainty inherent in YuMe’s business. However, in connection with strategic planning and decision-making purposes, YuMe’s management has prepared internal forecasts and projections for the YuMe board of directors. In addition, in connection with the strategic process that resulted in the proposed Offer and Mergers, including, without limitation, the due diligence process and evaluation of the Offer, the Merger Agreement and the Transactions contemplated by the Merger Agreement, including the Mergers, as described in this prospectus/offer to exchange, YuMe’s management prepared financial projections for fiscal years 2017 through 2021 (the “Forecasts”). The Forecasts were provided to the YuMe board of directors, Deutsche Bank and RhythmOne in preparation for their analysis and evaluation of YuMe and its businesses. The Forecasts are provided below to give YuMe stockholders access to certain nonpublic information that was available to RhythmOne and the RhythmOne board of directors at the time of the evaluation of the Offer, the Merger Agreement and the Transactions contemplated by the Merger Agreement, including the Mergers.

These Forecasts were developed from historical financial statements and a series of assumptions and estimates of YuMe management related to future trends and did not give effect to any changes or expenses as a result of the Offer, the Merger Agreement or the Mergers or any other effects of such terms. The Forecasts were prepared by YuMe’s management for internal use and were not prepared with a view to public disclosure, except to the parties identified below, nor were they prepared with a view toward compliance with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information or generally accepted accounting principles. No independent registered public accounting firm has audited, reviewed, examined, compiled, nor applied any agreed-upon procedures with respect to the accompanying prospective financial information nor have they expressed any opinion or any other form of assurance on such information or its achievability. The PricewaterhouseCoopers LLP report incorporated by reference in this prospectus/offer to exchange relates to YuMe’s historical financial information. It does not extend to the prospective financial information and should not be read to do so. The Forecasts were prepared by employees of YuMe without the assistance of RhythmOne, Purchaser or any of their affiliates.

Before entering into the Merger Agreement, representatives of RhythmOne and Purchaser conducted a due diligence review of YuMe, and in connection with their review, RhythmOne and Purchaser received certain non-public information concerning YuMe, including the Forecasts. This information was also furnished to Deutsche Bank. YuMe management and the YuMe board of directors instructed Deutsche Bank to rely on these Forecasts as the basis for its analysis in rendering its fairness opinions described in more detail above. YuMe’s management also advised RhythmOne and Purchaser that the financial projections provided to them on August 28, 2017 and set forth below for fiscal years 2017 through 2021 represented YuMe management’s best estimate as to YuMe’s future performance on a stand-alone basis.

These Forecasts were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of YuMe and exclude, among other things, transaction-related expenses. The Forecasts show gross revenue, Adjusted EBITDA and unlevered free cash flow. Important factors that may affect actual results and results of YuMe’s operations, or could lead to the Forecasts not being achieved include, but are not limited to: customer demand for YuMe’s products, successful and timely development of products, an evolving competitive landscape, rapid technological change, margin shifts in the industry, RhythmOne’s dependence on a limited number of customers in a highly competitive industry, successful management and retention of key personnel, unexpected expenses and general economic conditions, and other factors that are more fully described in the “Risk Factors” section of YuMe’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017, Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017 and Quarterly Report on Form 10-Q for the fiscal quarter

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ended September 30, 2017, as filed with the SEC. The assumptions upon which the Forecasts were based necessarily involve judgments with respect to, among other things, future economic, competitive and regulatory conditions, financial market conditions and conditions in the industries in which YuMe operates, all of which are difficult or impossible to predict accurately and many of which are beyond the control of YuMe and its management. The Forecasts also reflect assumptions as to certain business decisions that are subject to change.

Accordingly, there can be no assurance that the Forecasts will be realized, and actual results may vary materially from those shown. The inclusion of the Forecasts in this prospectus/offer to exchange should not be regarded as an indication that any member of YuMe or any of their respective affiliates, advisors, officers, directors, partners, members or representatives considered or consider the Forecasts to be predictive of actual future events, and the internal financial forecasts should not be relied upon as such. Neither YuMe nor any of their respective affiliates, advisors, officers, directors, partners, members or representatives can give you any assurance that actual results will not differ from the Forecasts, and none of them undertakes any obligation to update or otherwise revise or reconcile the Forecasts to reflect circumstances existing after the date such Forecasts were generated or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the Forecasts are shown to be in error. The Forecasts have not been updated since they were prepared, and do not take into account any circumstances or events occurring after the date they were prepared, including the September 5, 2017 announcement of the parties’ entry into the Merger Agreement or subsequent integration planning activities. In addition, the Forecasts do not take into account the effect of any failure of the Mergers to occur and should not be viewed as accurate or continuing in that context. Neither YuMe nor any of their respective affiliates intends to make publicly available an update or other revisions to the Forecasts. Neither YuMe nor any of their respective affiliates, advisors, officers, directors, partners, members or representatives has made or makes any representation to any YuMe stockholder or other person regarding the ultimate performance of YuMe compared to the information contained in the Forecasts or that the Forecasts will be achieved. YuMe has made no representation to RhythmOne or Purchaser or any of their respective affiliates concerning the Forecasts.

The summary of the Forecasts is not being included in this Form F-4 to influence any YuMe stockholder’s decision whether to tender YuMe Shares in the Offer, but because this information was made available by YuMe to RhythmOne, Purchaser and Deutsche Bank. The information from the Forecasts should be evaluated, if at all, in conjunction with the historical financial statements and other information regarding YuMe contained in YuMe’s public filings with the SEC.

All Forecasts are forward-looking statements. These and other forward-looking statements are expressly qualified in their entirety by the risks and uncertainties identified above and the cautionary statements contained in YuMe’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017, and Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017. Any provisions of the Private Securities Litigation Reform Act of 1995 that may be referenced in these or YuMe’s other periodic reports are not applicable to any forward looking statements made in connection with the Offer.

Stockholders are cautioned not to place undue reliance on the Forecasts included in this prospectus/offer to exchange.

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A summary of the information that was included in the Forecasts is set forth below, including reconciliation between the Non-GAAP prospective financial information and the comparable GAAP measures for fiscal years 2017 through 2021.


(in millions)	2017E			2018E			2019E			2020E			2021E
Revenue	$	162		$	170		$	183		$	197		$	213

Net income/(loss)		10			11			11			11			16
Add: Income taxes		1			—			1			6			8
Add: Depreciation and amortization		7			6			8			8			9
Add: Stock-based compensation		5			5			5			5			5
Adjusted EBITDA⁽¹⁾	$	23		$	22		$	25		$	30		$	38

Adjusted EBITDA⁽¹⁾	$	23		$	22		$	25		$	30		$	38
Less: Stock-based compensation		(5	)		(5	)		(5	)		(5	)		(5	)
Less: Cash paid for taxes		—			—			(3	)		(6	)		(8	)⁽²⁾
Less: Capital expenditures		(9	)		(9	)		(10	)		(11	)		(11	)
Less: Change in net working capital		4			(1	)		(1	)		(1	)		(3	)
Unlevered Free Cash Flow⁽³⁾	$	12		$	7		$	6		$	8		$	11

⁽¹⁾	EBITDA is earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA excludes the impact of stock-based compensation expense.

⁽²⁾	Includes U.S. federal income tax savings expected from the utilization of $27 million of net operating loss carryforwards in fiscal years 2017, 2018 and 2019, Forecasts assume a 35% tax rate.

⁽³⁾	Unlevered Free Cash Flow as used in the Forecasts represents Non-GAAP Adjusted EBITDA less stock-based compensation, cash paid for taxes (based on EBIT adjusted for stock-based compensation), capital expenditures and change in net working capital.

Opinion of YuMe’s Financial Advisor

At the September 4, 2017 meeting of the YuMe board of directors, Deutsche Bank, financial advisor to YuMe, rendered its oral opinion to the YuMe board of directors, subsequently confirmed by delivery of a written opinion dated September 4, 2017, to the effect that, as of the date of such opinion, and based upon and subject to the assumptions made, procedures followed, matters considered and limitations, qualifications and conditions on the review undertaken in connection therewith, as described in Deutsche Bank’s opinion, the consideration of $1.70 in cash and 7.325 RhythmOne Shares per YuMe Share was fair, from a financial point of view, to the holders of the outstanding YuMe Shares (other than RhythmOne and its affiliates).

Following the delivery of Deutsche Bank’s opinion, the holders of RhythmOne Shares approved a share consolidation pursuant to which every 10 RhythmOne Shares were consolidated into one RhythmOne Share. As a result of this share consolidation and pursuant to the terms of the Merger Agreement, the consideration to be received for each YuMe Share will now be $1.70 in cash and 0.7325 RhythmOne Shares. The description of Deutsche Bank’s opinion and financial analyses in this prospectus/offer to exchange refers to the original consideration set forth in the Merger Agreement at the time of delivery of Deutsche Bank’s opinion.

The full text of Deutsche Bank’s written opinion, dated September 4, 2017, which sets forth the assumptions made, procedures followed, matters considered and limitations, qualifications and conditions on the review undertaken by Deutsche Bank in connection with the opinion, is attached to this prospectus/offer to exchange as Annex C and is incorporated herein by reference (the “opinion”). The summary of Deutsche Bank’s opinion set forth in this prospectus/offer to exchange is qualified in its entirety by reference to the full text of the opinion. Deutsche Bank’s opinion was approved and authorized for issuance by a Deutsche Bank fairness opinion review committee and was addressed to, and was for the use and benefit of, the YuMe board of directors in connection with and for the purpose of its evaluation of the

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Transactions. Deutsche Bank’s opinion was limited to the fairness of the consideration of $1.70 in cash and 7.325 RhythmOne Shares per YuMe Share, from a financial point of view, to the holders of the outstanding YuMe Shares (other than RhythmOne and its affiliates) as of the date of the opinion. Deutsche Bank’s opinion did not address any other terms of the Transactions, the Mergers, the Merger Agreement or any other agreement entered into or to be entered into in connection with the Transactions. The YuMe board of directors did not ask Deutsche Bank to, and Deutsche Bank’s opinion did not, address the fairness of the Transactions, or any consideration received in connection therewith, to the holders of any other class of securities, creditors or other constituencies of YuMe, nor did it address the fairness of the contemplated benefits of the Transactions. Deutsche Bank expressed no opinion as to the merits of the underlying decision by YuMe to engage in the Transactions or the relative merits of the Transactions as compared to any alternative transactions or business strategies. Nor did Deutsche Bank express an opinion, and Deutsche Bank’s opinion does not constitute a recommendation, as to whether or not any holder of YuMe Shares should tender YuMe Shares pursuant to the Offer or, if applicable, how any holder of YuMe Shares should vote with respect to the Transactions or any other matter. In addition, Deutsche Bank did not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation payable to, or to be received by, any of the officers, directors, or employees of any party to the Transactions, or any class of such persons, in connection with the Transactions, whether relative to the consideration of $1.70 in cash and 7.325 RhythmOne Shares per YuMe Share or otherwise. Deutsche Bank’s opinion did not in any manner address what the value of the RhythmOne Shares will actually be when issued pursuant to the Transactions or the prices at which YuMe Shares, the RhythmOne Shares or any other securities will trade following the announcement or consummation of the Transactions.

In connection with Deutsche Bank’s role as financial advisor to YuMe, and in arriving at its opinion, Deutsche Bank reviewed certain publicly available financial and other information concerning YuMe and certain internal analyses, financial forecasts and other information relating to YuMe prepared by management of YuMe. In addition, Deutsche Bank reviewed certain forecasts of the amount and timing of certain cost savings and operating efficiencies projected by the management of YuMe to result from the Transactions, as approved for Deutsche Bank’s use by YuMe (the “Synergies”). Deutsche Bank also reviewed certain publicly available financial and other information concerning RhythmOne and certain internal analyses, financial forecasts and other information related to RhythmOne prepared by management of RhythmOne and approved by YuMe for Deutsche Bank’s use. Deutsche Bank also held discussions with certain senior officers of YuMe regarding the businesses and prospects of YuMe, RhythmOne and the combined company and with certain senior officers of RhythmOne regarding the business and prospects of RhythmOne and the combined company. In addition, Deutsche Bank:

•

reviewed the reported prices and trading activity for the YuMe Shares and the RhythmOne Shares;

•

compared certain financial and stock market information for YuMe and RhythmOne with, to the extent publicly available, similar information for certain other companies Deutsche Bank considered relevant whose securities are publicly traded;

•

reviewed, to the extent publicly available, the financial terms of certain recent business combinations which Deutsche Bank deemed relevant;

•

reviewed the Merger Agreement; and

•

performed such other studies and analyses and considered such other factors as Deutsche Bank deemed appropriate.

Deutsche Bank did not assume responsibility for independent verification of, and did not independently verify, any information, whether publicly available or furnished to it, concerning YuMe, RhythmOne or the combined company, including, without limitation, any financial information considered in connection with the rendering of Deutsche Bank’s opinion. Accordingly, for purposes of Deutsche Bank’s opinion, Deutsche Bank,

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with the knowledge and permission of the YuMe board of directors, assumed and relied upon the accuracy and completeness of all such information. Deutsche Bank did not conduct a physical inspection of any of the properties or assets, and did not prepare, obtain or review any independent evaluation or appraisal of any of the assets or liabilities (including any contingent, derivative or off-balance-sheet assets or liabilities), of YuMe, RhythmOne, or any of their respective subsidiaries, nor did Deutsche Bank evaluate the solvency or fair value of YuMe, RhythmOne any of their respective subsidiaries or the combined company (or the impact of the Transactions thereon) under any law relating to bankruptcy, insolvency or similar matters. With respect to the YuMe forecasts, Synergies and RhythmOne forecasts made available to Deutsche Bank and used in its analyses, Deutsche Bank assumed with the knowledge and permission of YuMe board of directors, that such forecasts had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of YuMe (in the case of the YuMe forecasts and the Synergies) and RhythmOne (in the case of the RhythmOne forecasts), as to the matters covered thereby. In rendering its opinion, Deutsche Bank expressed no view as to the reasonableness of such forecasts and projections or the assumptions on which they were based. Deutsche Bank’s opinion was necessarily based upon economic, market and other conditions as in effect on, and the information made available to Deutsche Bank as of the date of the opinion. Deutsche Bank expressly disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting Deutsche Bank’s opinion of which Deutsche Bank becomes aware after the date of its opinion.

For purposes of rendering its opinion, Deutsche Bank assumed with the knowledge and permission of the YuMe board of directors that, in all respects material to Deutsche Bank’s analysis, the Transactions would be consummated in accordance with the terms of the Merger Agreement, without any waiver, modification or amendment of any term, condition or agreement that would be material to Deutsche Bank’s analysis. Deutsche Bank also assumed with knowledge and permission of the YuMe board of directors that all material governmental, regulatory or other approvals and consents required in connection with the consummation of the Transactions would be obtained and that in connection with obtaining any necessary governmental, regulatory or other approvals and consents, no restrictions, terms or conditions would be imposed that would be material to Deutsche Bank’s analysis. Deutsche Bank is not a legal, regulatory, tax or accounting expert and relied on the assessments made by YuMe and its other advisors with respect to such issues.

YuMe selected Deutsche Bank as its financial advisor in connection with the Transactions based on Deutsche Bank’s qualifications, expertise, reputation and experience in mergers and acquisitions. Pursuant to an engagement letter between YuMe and Deutsche Bank, dated October 6, 2016, YuMe agreed to pay Deutsche Bank a fee estimated to be approximately $3,510,000 for its services as financial advisor to YuMe in connection with the Transactions, of which $400,000 became payable upon delivery of its opinion (or would have become payable if Deutsche Bank had advised the YuMe board of directors that it was unable to render an opinion) and the remainder of which is contingent upon consummation of the Offer. YuMe has also agreed to reimburse Deutsche Bank for its expenses, and to indemnify Deutsche Bank against certain liabilities, in connection with its engagement.

Deutsche Bank is an affiliate of Deutsche Bank AG (together with its affiliates, the “DB Group”). The DB Group has not received fees from YuMe or RhythmOne with respect to any investment banking, transaction banking or corporate banking services unrelated to the Transactions since January 1, 2015. One or more member of the DB Group may provide investment and commercial banking services to RhythmOne, YuMe or their respective affiliates in the future, for which Deutsche Bank would expect the DB Group to receive compensation. In the ordinary course of business, members of the DB Group may actively trade in the securities and other instruments and obligations of RhythmOne, YuMe and their respective affiliates for their own accounts and for the accounts of their customers. Accordingly, the DB Group may at any time hold a long or short position in such securities, instruments, and obligations.

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Summary of Material Financial Analyses

The following is a summary of the material financial analyses presented by Deutsche Bank to the YuMe board of directors on September 4, 2017, and that were used in connection with rendering its opinion described above.

The following summary, however, does not purport to be a complete description of the financial analyses performed by Deutsche Bank, nor does the order in which the analyses are described below represent the relative importance or weight given to the analyses by Deutsche Bank. Some of the summaries of the financial analyses below include information presented in tabular format. In order to fully understand the analyses, the tables must be read together with the full text of each summary. The tables alone do not constitute a complete description of Deutsche Bank’s analyses. Considering the data described below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Deutsche Bank’s analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before September 1, 2017, and is not necessarily indicative of current market conditions.

In preparing its analysis, Deutsche Bank utilized calculations of, among other things, (i) enterprise value, calculated as equity value plus net debt (“EV”), (ii) earnings before interest, taxes, depreciation and amortization (“EBITDA”) and (iii) earnings before interest, taxes, depreciation and amortization adjusted to exclude the impact of certain non-cash and non-recurring items (for purposes of this “Opinion of YuMe’s Financial Advisor” section only, “Adjusted EBITDA”). For purposes of its analysis, Deutsche Bank calculated the implied value of the consideration to be paid in the Transactions as $5.20 per YuMe Share based upon the exchange ratio of 7.325 RhythmOne Shares, the closing price per RhythmOne Share of £0.37 on August 22, 2017, the last trading day prior to RhythmOne’s public confirmation that it was in discussions with YuMe, a U.S. dollar to British pound exchange of 1.292x and the $1.70 in cash payable per YuMe Share.

Selected Public Companies Analysis

Deutsche Bank reviewed and compared certain financial information and commonly used valuation measurements for YuMe and RhythmOne with corresponding financial information and valuation measurements for the following publicly-traded advertising technology and software companies:

•

Criteo S.A.

•

Marchex, Inc.

•

Matomy Media Group Ltd.

•

Perion Network Ltd.

•

Taptica International Ltd

•

Tremor Video, Inc.

•

The Rubicon Project, Inc.

•

The Trade Desk, Inc.

Although none of RhythmOne or the other selected companies is directly comparable to YuMe, and none of YuMe or the other selected companies is directly comparable to RhythmOne, for the purpose of selecting the companies for this analysis, Deutsche bank utilized its professional judgment and experience as investment bankers, taking into account several factors, including, among other things, YuMe’s and RhythmOne’s operational capabilities and financial profile compared with those of the selected companies, the competitive landscape in which YuMe, RhythmOne and the selected companies operate and YuMe’s and RhythmOne’s product offerings and those of the selected companies. Accordingly, the analysis of selected publicly traded

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companies was not simply mathematical. Rather, it involved complex considerations and qualitative judgments, reflected in the opinion of Deutsche Bank, concerning differences in financial and operating characteristics of the selected companies and other factors that could affect the public trading value of such companies.

Based on the closing prices of each of the common stock or common equity of each of the selected companies (other than RhythmOne) on September 1, 2017, information contained in the most recent public filings of such selected companies, and analyst consensus estimates of Adjusted EBITDA for calendar year 2017 for each such selected company (other than RhythmOne), Deutsche Bank calculated EV as a multiple of the estimated calendar year 2017 Adjusted EBITDA with respect to such selected companies.

Deutsche Bank calculated the same multiple for RhythmOne based upon RhythmOne management’s estimate of calendar year 2017 Adjusted EBITDA. Deutsche Bank also calculated the same multiple for YuMe based upon YuMe management’s estimate of calendar year 2017 Adjusted EBITDA of YuMe and implied EV of YuMe based upon the implied value of the consideration of $5.20 per share. The results of this analysis are summarized as follows:


	EV/CY2017E Adjusted EBITDA
Selected Companies
Criteo S.A.		10.7x
Marchex, Inc.		Not Meaningful (“NM”)*
Matomy Media Group Ltd.		6.1x
Perion Network Ltd.		4.4x
Taptica International Ltd		7.7x
Tremor Video, Inc.		NM
The Rubicon Project, Inc.		5.0x
The Trade Desk, Inc.		NM

RhythmOne		NM
Median		6.1x

YuMe (at 5.20 per share)		6.7x

*	Multiples that were negative or above 15.0x were considered not meaningful and excluded.

For purposes of its analyses, the foregoing multiples for Taptica International Ltd and Tremor Video, Inc. were calculated to adjust for Taptica International Ltd’s acquisition of Tremor Video Inc.’s demand-side platform business.

Based in part upon the multiples of the selected companies described above and taking into account its professional judgment and experience, Deutsche Bank calculated a range of estimated implied values per YuMe Share on a fully-diluted basis of approximately $4.14 to $5.65 per YuMe Share by applying multiples of EV to calendar 2017 Adjusted EBITDA of 5.0x to 7.5x to YuMe’s management estimates of calendar year 2017 Adjusted EBITDA.

Selected Transactions Analysis

Deutsche Bank reviewed publicly available information relating to the nine selected advertising technology transactions announced since May 2015 described in the table below, which are referred to in this section as the “selected transactions”.

Although none of the selected transactions is directly comparable to the Transactions, the companies that participated in the selected transactions were selected by Deutsche Bank based upon its professional judgment and experience as investment bankers and its knowledge of transactions of a similar nature and are such that, for purposes of analysis, the selected transactions may be considered similar to the Transactions.

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With respect to each selected transaction and based on publicly available information, Deutsche Bank calculated the multiples of the target’s EV to last twelve months (“LTM”) Adjusted EBITDA. The following table presents the results of this analysis:


Date Announced	Target	Acquirer	EV/LTM Adjusted EBITDA
August 28, 2017	MaxPoint Interactive, Inc.	Valassis Communications, Inc.	NM*
August 7, 2017	Tremor Video, Inc. demand-side platform	Taptica International Ltd	3.1x
July 18, 2017	Rocket Fuel Inc.	Sizmek Inc.	9.5x
December 14, 2016	NeuStar, Inc.	Golden Gate Private Equity, Inc.	5.9x
November 10, 2016	TubeMogul, Inc.	Adobe Systems Incorporated	NM
August 3, 2016	Sizmek Inc.	Vector Capital	6.2x
July 25, 2016	Yahoo! Inc. core assets	Verizon Communications Inc.	7.9x
December 1, 2015	Undertone	Perion Network Ltd.	9.2x
May 12, 2015	AOL Inc.	Verizon Communications Inc.	8.3x

Median			7.9x

*	Multiples that were negative or above 15.0x were considered not meaningful and excluded.

Based in part upon the multiples of the selected transactions described above, and taking into account its professional judgment and experience, Deutsche Bank calculated a range of estimated implied value per YuMe Share of approximately $4.31 to $5.89 per YuMe Share on a fully-diluted basis by applying multiples of EV to calendar 2017 Adjusted EBITDA of 6.0x to 9.0x to YuMe’s management estimates of calendar year 2017 Adjusted EBITDA.

Discounted Cash Flow Analysis

Deutsche Bank also performed a discounted cash flow analysis to determine a range of implied net present values per share of the YuMe Shares. Deutsche Bank applied discount rates ranging from 12.0% to 15.8% to estimates of the future unlevered free cash flows of YuMe for the calendar years 2017 through 2021, and to a range of estimated terminal values for YuMe at the end of such period based upon the YuMe forecasts to determine a range of implied enterprise values for YuMe as of September 1, 2017. For purposes of its financial analyses, Deutsche Bank calculated unlevered free cash flow as (a) Adjusted EBITDA less, (b) stock based compensation expense less, (c) cash taxes, less (d) capital expenditures, less (e) change in net working capital. Deutsche Bank derived the foregoing range of discount rates utilizing a weighted average cost of capital analysis based on certain financial metrics for YuMe, RhythmOne, Criteo S.A., Marchex, Inc., Perion Network Ltd., Tremor Video, Inc., The Rubicon Project, Inc. and The Trade Desk, Inc. The terminal values were calculated using a range of perpetuity growth rates of 3.0% to 5.0%. Deutsche Bank then added cash (net of debt) and divided the result by the number of fully diluted YuMe Shares outstanding using the treasury method. This analysis resulted in a range of implied net present values of YuMe Shares as of September 1, 2017 of approximately $3.08 to $4.60 per share.

Other Information

Deutsche Bank also noted for the YuMe board of directors certain additional factors that were not considered part of its financial analysis with respect to its opinion but were referenced for informational purposes.

Specifically, Deutsche Bank reviewed the historical trading prices for the YuMe Shares and RhythmOne Shares for each trading day during the 52-week period ended September 1, 2017, and noted that during such 52-week period (a) the price per YuMe Share ranged from a low of $2.22 per share on November 11, 2016

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(adjusted for a $1.00 special dividend prior to the June 29, 2017 ex-dividend date) to a high of $5.90 per share on August 30, 2017, (b) the price per RhythmOne Share ranged from a low of $0.41 per share on August 11, 2017 to a high of $0.63 per share on May 12, 2017, converted from GBP at the daily closing spot exchange rate, and (c) the daily exchange ratio for one YuMe Share calculated by dividing the closing price per YuMe Share (adjusted for a $1.00 special dividend prior to the June 29, 2017 ex-dividend date and the cash consideration of $1.70 per share) by the closing price per RhythmOne Share on each relevant date ranged from a low of 1.148 RhythmOne Shares to a high of 8.845 RhythmOne Shares per YuMe Share, which, when adjusted for the cash consideration of $1.70 per YuMe Share and the special dividend, implied a value range of $2.22 to $5.70 for each YuMe Share.

In addition, Deutsche Bank performed a discounted cash flow analysis to determine a range of implied net present values per RhythmOne Share. Deutsche Bank applied discount rates ranging from 12.0% to 15.8% to estimates of the future unlevered free cash flows of RhythmOne for the calendar years 2017 through 2021, and to a range of estimated terminal values for RhythmOne at the end of such period based upon the RhythmOne forecasts to determine a range of implied enterprise values for RhythmOne as of September 1, 2017. For purposes of its financial analyses, Deutsche Bank calculated unlevered free cash flow as (a) Adjusted EBITDA less, (b) stock based compensation expense less, (c) cash taxes, less (d) capital expenditures, less (e) change in net working capital. Deutsche Bank derived the foregoing range of discount rates utilizing a weighted average cost of capital analysis based on certain financial metrics for RhythmOne, YuMe, Criteo S.A., Marchex, Inc., Perion Network Ltd., Tremor Video, Inc., The Rubicon Project, Inc. and The TradeDesk, Inc. The terminal values were calculated using a range of perpetuity growth rates of 3.0% to 5.0%. Deutsche Bank then added cash (net of debt) and divided the result by the number of fully diluted RhythmOne Shares outstanding using the treasury method. This analysis resulted in a range of implied net present value per RhythmOne Share as of September 1, 2017 of approximately $0.60 to $1.00 per share.

Deutsche Bank also reviewed the stock price targets for the RhythmOne Shares in four publicly available research analysts’ reports published since June 26, 2017, which indicated a price target range from a low of £0.61 per share to a high of £0.93 per share with a median of £0.75 (or $0.97 based upon a U.S. dollar to pound sterling exchange rate of 1.292x).

Miscellaneous

This summary is not a complete description of Deutsche Bank’s opinion or the underlying analyses and factors considered in connection with Deutsche Bank’s opinion. The preparation of a fairness opinion is a complex process involving the application of subjective business and financial judgment in determining the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, is not readily susceptible to partial analysis or summary description. Deutsche Bank believes that its analyses described above must be considered as a whole and that considering any portion of such analyses and of the factors considered without considering all analyses and factors could create a misleading view of the process underlying its opinion. Selecting portions of the analyses or summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying the Deutsche Bank opinion. In arriving at its fairness determination, Deutsche Bank considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis. Rather, it made its fairness determination on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction in the analyses described above is identical to YuMe, RhythmOne, the combined company or the Transactions.

In conducting its analyses and arriving at its opinion, Deutsche Bank utilized a variety of generally accepted valuation methods. The analyses were prepared solely for the purpose of enabling Deutsche Bank to provide its opinion to the YuMe board of directors as to the fairness of the consideration of $1.70 in cash and 7.325 RhythmOne Shares per YuMe Share (unadjusted for RhythmOne’s share consolidation completed on September 25, 2017), from a financial point of view, to the holders of YuMe Shares (other than RhythmOne and

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its affiliates) as of the date of the opinion and do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be sold, which are inherently subject to uncertainty. As described above, in connection with its analyses, Deutsche Bank made, and was provided by the management of YuMe with, numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Deutsche Bank or YuMe. Analyses based on estimates or forecasts of future results are not necessarily indicative of actual, past or future values or results, which may be significantly more or less favorable than suggested by such analyses. Because such analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of YuMe or RhythmOne or their respective advisors, Deutsche Bank does not assume responsibility if future results or actual values are materially different from these forecasts or assumptions.

The terms of the Transactions, including the consideration, were determined through arm’s-length negotiations between YuMe and RhythmOne and were approved by the YuMe board of directors. Although Deutsche Bank provided advice to the YuMe board of directors during the course of these negotiations, the decision to enter into the Merger Agreement was solely that of the YuMe board of directors.

Deutsche Bank did not recommend any specific consideration to YuMe or the YuMe board of directors, or that any specific amount or type of consideration constituted the only appropriate consideration for the Transactions. As described above, the opinion of Deutsche Bank and its presentation to the Board of Directors were among a number of factors taken into consideration by the YuMe board of directors in making its determination to approve the Merger Agreement and the Transactions.

Intent to Tender

Affiliates of each of VIEX Capital Advisors, LLC and AVI Partners, LLC, and each director and executive officer of YuMe, entered into a Tender and Support Agreement with RhythmOne, pursuant to which, among other things and subject to the terms and conditions therein, each such stockholder, director or executive officer agreed to tender and not withdraw all of their respective YuMe Shares into the Offer. Such stockholders and directors and officers beneficially own, in the aggregate, approximately 29.1% of the outstanding YuMe Shares as of December 14, 2017 (including equity awards to be accelerated in connection with the Transactions, included in both the YuMe Shares beneficially owned by such stockholders and directors and officers and the total outstanding YuMe Shares).

Plans and Proposals for YuMe

RhythmOne’s immediate priority after the Transactions will be to ensure that RhythmOne continues to provide a high quality service to its customers. RhythmOne has reviewed and will continue to review various possible business strategies, and following the Closing of the Transactions, may make changes to its business that affect YuMe. These changes could include, among other things, changes in YuMe’s business, operations, personnel, employee benefit plans, corporate structure, capitalization and management. For further detail, see “Background to and Reasons for the Offer — RhythmOne’s Reasons for the Transactions.”

The Mergers

The Offer is the first step in RhythmOne’s plan to acquire control of, and ultimately acquire all of the outstanding equity in, YuMe. As a second step in such plan, if the Offer is completed, pursuant to the terms and subject to the conditions of the Merger Agreement, as soon as practicable following the consummation of the Offer, RhythmOne intends to consummate the First Merger which will be governed by Section 251(h) of the DGCL. Accordingly, if the Offer is completed (such that Purchaser owns at least a majority of the YuMe Shares), no YuMe stockholder vote will be required to complete the First Merger. The purpose of the First Merger is for RhythmOne to acquire all remaining YuMe Shares that it did not acquire in the Offer. In the First Merger, each outstanding YuMe Share that was not acquired by Purchaser in the Offer (other than certain dissenting, converted and cancelled shares, as described further in this prospectus/offer to exchange) will be converted into the right to receive the Transaction Consideration.

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After the First Merger, YuMe, as the surviving corporation, will be a wholly-owned subsidiary of RhythmOne, and the former stockholders of YuMe will no longer have any direct ownership interest in the surviving corporation. Immediately following the First Merger, the Second Merger will be consummated whereby the surviving corporation in the First Merger will merge with and into Merger Sub Two, with Merger Sub Two surviving the Second Merger as a wholly-owned subsidiary of RhythmOne. The purpose of the Second Merger is to create the possibility (but not the certainty) that YuMe stockholders who tender their YuMe Shares in exchange for RhythmOne Shares pursuant to the Offer could qualify for U.S. tax-free treatment (in part). The Second Merger will be governed by Section 267 of the DGCL.

Effect of the Offer on the Market for YuMe Shares

The purchase of YuMe Shares by Purchaser pursuant to the Offer will reduce the number of holders of YuMe Shares, and the number of YuMe Shares that might otherwise trade publicly and could adversely affect the liquidity and market value of the remaining shares held by the public. The extent of the public market for YuMe Shares after consummation of the Offer and the availability of quotations for such shares will depend upon a number of factors, including the number of YuMe stockholders, the aggregate market value of the YuMe Shares held by the public at such time, the interest in maintaining a market in the YuMe Shares, analyst coverage of YuMe on the part of any securities firms and other factors. It is anticipated that, because the First Merger may be effected pursuant to Section 251(h) of the DGCL if the Offer is consummated, the First Merger will be consummated on the same day that the Offer is consummated. As a result of the First Merger, YuMe Shares will no longer qualify for inclusion on the NYSE and will be withdrawn from listing.

NYSE Listing

The YuMe Shares are currently listed on the NYSE. However, the rules of the NYSE establish certain criteria that, if not met, could lead to the discontinuance of listing of the YuMe Shares from the NYSE. Among such criteria are the number of stockholders, the number of shares publicly held and the aggregate market value of the shares publicly held. If, as a result of the purchase of YuMe Shares pursuant to the Offer or otherwise, YuMe Shares no longer meet the requirements of the NYSE for continued listing and the listing of YuMe Shares is discontinued, the market for such shares would be adversely affected.

Following the consummation of the Offer, if the First Merger is for some reason not consummated, it is possible that YuMe Shares would be traded on other securities exchanges (with trades published by such exchanges), the OTC Bulletin Board or in a local or regional over-the-counter market. The extent of the public market for such shares would, however, depend upon the number of YuMe stockholders and the aggregate market value of YuMe Shares remaining at such time, the interest in maintaining a market in such shares on the part of securities firms, the possible termination of registration of YuMe Shares under the Exchange Act and other factors. As a result of the First Merger, YuMe Shares will no longer qualify for inclusion on the NYSE and will be withdrawn from listing.

Registration Under the Exchange Act

The YuMe Shares are currently registered under the Exchange Act. Such registration may be terminated upon application by YuMe to the SEC if YuMe Shares are neither listed on a national securities exchange nor held by 300 or more holders of record. Termination of registration of YuMe Shares under the Exchange Act would substantially reduce the information required to be furnished by YuMe to its stockholders and to the SEC and would make certain provisions of the Exchange Act no longer applicable to YuMe, such as the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the requirement of furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in connection with meetings of stockholders and the related requirement of furnishing an annual report to stockholders and the requirements of Rule 13e-3 under the Exchange Act with respect to “going private” transactions. Furthermore, the ability of “affiliates” of YuMe and persons holding “restricted securities” of YuMe to dispose of such securities pursuant to Rule 144 promulgated

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under the Securities Act may be impaired. If registration of YuMe Shares under the Exchange Act were terminated, such shares would no longer be “margin securities” or be eligible for quotation on the NYSE. After consummation of the Offer and the First Merger, RhythmOne and YuMe have agreed to cooperate to cause YuMe to terminate the registration of YuMe Shares under the Exchange Act as soon as the requirements for termination of registration are met.

Sources and Amount of Funds

RhythmOne currently intends to finance the Cash Consideration portion of the Transaction Consideration (approximately $60.0 million) and related fees and expenses using existing cash resources as well as a drawing under the Bridge Facility. Pursuant to the Bridge Facility, SVB, the lender thereunder, will make available to one or more subsidiaries of RhythmOne a subordinated loan not to exceed $35.0 million. The Bridge Facility matures on the earlier of July 30, 2018 and the date that is 120 days after the funding of the subordinated loan under the Bridge Facility. The principal amount outstanding under the Bridge Facility will accrue interest at a per annum rate equal to the greater of (i) the prime rate from time to time in effect less 1.5%, and (ii) 2.75%. Upon the occurrence of an event of default under the Bridge Facility, the interest rate will increase by 2.0% above the applicable interest rate. The obligations of each borrower under the Bridge Facility will be guaranteed on a full and unconditional basis by certain of RhythmOne’s subsidiaries and the obligations of the borrowers and the guarantors will be secured by substantially all of the assets of the borrowers and the guarantors (limited, in the case of the stock of certain non-U.S. subsidiaries, to 65% of the capital stock of such subsidiaries). The loans under the Bridge Facility will be subordinated in right of payment to the payment in full of the loans under the Revolving Credit Facility and, except with respect to the Cash Collateral Account described below, and the liens securing the obligations under the Bridge Facility will be junior to the liens securing the obligations under the Revolving Credit Facility.

Borrowings under the Bridge Facility are subject to certain conditions precedents, including (i) evidence of the deposit of up to $35.0 million in cash collateral into a deposit account (the “Cash Collateral Account”) subject to a lien and control agreement in favor of SVB, (ii) all conditions to the Offer shall have been satisfied, (iii) the truth, accuracy and completeness in all material respects of the representations and warranties contained in the Bridge Facility, and (iv) the absence of a continuing event of default under the Bridge Facility and a material adverse change (as determined by SVB).

The Bridge Facility contains representations and warranties, covenants, and events of default substantively similar to those governing the Revolving Credit Facility. The Bridge Facility will be secured by the same collateral securing the Revolving Credit Facility as well as the Cash Collateral Account. See “Management’s Discussion and Analysis of RhythmOne —Liquidity and Capital Resources — Indebtedness”.

It is currently expected that the Bridge Facility at maturity will be paid off with cash resources available to the combined RhythmOne and YuMe company.

The foregoing description of the Bridge Facility does not purport to be a complete description of its terms, and is qualified by reference to the complete text of the loan and security agreement governing the Bridge Facility, a copy of which is filed as an exhibit to the registration statement of which this prospectus/offer to exchange forms a part, and is incorporated herein by reference.

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THE OFFER

The Offer

RhythmOne, through Purchaser, is offering to acquire all of the outstanding YuMe Shares pursuant to an offer to exchange to all YuMe stockholders. YuMe stockholders who accept the Offer will receive a combination of cash and RhythmOne Shares. The Offer is being made pursuant to the terms and subject to the conditions set out herein and in the accompanying letter of transmittal, to exchange for each outstanding YuMe Share that is validly tendered in the Offer and not properly withdrawn.

The Offer is being made for all YuMe Shares. As at December 13, 2017, there were 35,036,377 YuMe Shares outstanding.

The Offer will commence on ●, 2017.

Terms of the Offer

Pursuant to the Merger Agreement, YuMe stockholders are being offered a combination of cash and share consideration for their YuMe Shares. For each YuMe Share held, YuMe stockholders are being offered

(i) $1.70 in cash without interest (the “Cash Consideration”); and

(ii) 0.7325 RhythmOne Shares, which gives effect to the 10-for-1 share consolidation of RhythmOne Shares implemented on September 25, 2017 (the “Share Consideration”, together with the Cash Consideration, the “Transaction Consideration”).

YuMe stockholders will not receive any fractional RhythmOne Shares in the Offer or the First Merger, and each YuMe stockholder who otherwise would be entitled to receive a fraction of a RhythmOne Share pursuant to the Offer or the First Merger will be paid an amount in cash (without interest) in lieu thereof, determined by multiplying (a) the RhythmOne trading price, rounded to the nearest one-hundredth of a cent by (b) the fraction of a share (after aggregating all YuMe Shares held by such holder and accepted for payment by Purchaser pursuant to the Offer or otherwise held by such holder at the Effective Time, as applicable, and rounded to the nearest one thousandth when expressed in decimal form) of RhythmOne Shares to which such holder would otherwise be entitled. No such holder shall be entitled to dividends, voting rights or any other rights in respect of any fractional share of RhythmOne Shares.

Distribution of Offering Materials

This prospectus/offer to exchange, the related letter of transmittal and other relevant materials will be delivered to record holders of YuMe Shares and to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on YuMe’s stockholder list or, if applicable, who are listed as participants in a clearing agency’s security position listing, so that they can in turn send these materials to beneficial owners of YuMe Shares.

Expiration Time

The Offer is scheduled to expire at the time that is one minute following 11:59 p.m. Pacific time on ●, 2018, unless and until Purchaser has extended or re-extended the period during which the Offer is open, subject to the terms and conditions of the Merger Agreement, in which event the term “Expiration Time” means the subsequent time and date at which the Offer, as so extended or re-extended by Purchaser, will expire.

Extension, Termination and Amendment of Offer

Subject to the provisions of the Merger Agreement, and unless the Offer or the Merger Agreement is terminated in accordance with its terms, (1) Purchaser must (and RhythmOne must cause Purchaser to) extend

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the Offer for any period required by law or any interpretation or position of the SEC applicable to the Offer, and (2) if the Offer Conditions are not satisfied at any scheduled Expiration Time, Purchaser must extend the Offer (and the corresponding Expiration Time) for one or more consecutive periods of 10 business days each (which any longer or shorter period for such extension to be mutually determined by RhythmOne and YuMe), if, as of the schedule Expiration Time, any condition to the Offer is not satisfied and has not been waived (to the extent waivable) by RhythmOne or Purchaser, until such offer condition is satisfied. Notwithstanding the foregoing, in no event will Purchaser be required to extend the Offer past March 31, 2018, which may be extended to the Outside Date in certain circumstances as provided for in the Merger Agreement.

If Purchaser does not accept any tendered YuMe Shares for exchange pursuant to the terms and conditions of the Offer for any reason, including as a result of termination of the Offer, Purchaser will cause to be returned such un-exchanged shares without expense to the tendering stockholder or, in the case of shares tendered by book-entry transfer into the Exchange Agent’s account at DTC, the shares to be returned will be credited to an account maintained with DTC following any such termination of the Offer.

Other than as described above, Purchaser may not extend, terminate or withdraw the Offer without the prior written consent of YuMe. Any decision to extend, terminate or withdraw the offer will be made public by a press release or otherwise by a public announcement.

Purchaser expressly reserves the right to waive any Offer condition or modify the terms of the Offer, including increasing the Transaction Consideration payable in the Offer. However, without the prior written consent of YuMe, Purchaser may not (and RhythmOne will not permit Purchaser to): (A) reduce the Transaction Consideration, (B) change or waive (i) the Minimum Tender Condition or (ii) the RhythmOne Representation and Warranty Condition, (C) impose conditions or requirements to the Offer in addition to the Offer Conditions, (D) extend or otherwise change the Expiration Time in a manner other than as required or permitted by the Merger Agreement, (E) change the form of consideration payable in the Offer, (F) decrease the maximum number of YuMe Shares sought to be purchased in the Offer, or (G) otherwise amend or modify any of the Offer Conditions or the other terms of the Offer in a manner that adversely affects any holder of YuMe Shares in its capacity as such. The Offer may not be withdrawn prior to the scheduled Expiration Time (as such Expiration Time may be extended or re-extended in accordance with the Merger Agreement) unless permitted by the Merger Agreement in accordance with its terms.

In the case of any extension, delay, termination, waiver or amendment of the Offer, Purchaser will promptly make a public announcement thereof, which, in the case of an extension, will be issued no later than 9:00 a.m., New York City time, on the next business day following the previously scheduled Expiration Time. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require that any material change in the information published, sent or given to stockholders in connection with the Offer be promptly disseminated to stockholders in a manner reasonably designed to inform them of such change) and without limiting the manner in which Purchaser may choose to make any public announcement, Purchaser assumes no obligation to publish, advertise or otherwise communicate any such public announcement of this type other than by issuing a press release or making a public announcement.

If Purchaser materially changes the terms of the Offer or the information concerning the Offer, or if Purchaser or YuMe waives a material condition of the Offer, Purchaser will extend the Offer to the extent legally required under the Exchange Act.

For purposes of the Offer, a “business day” is calculated in accordance with Rule 14d-1(g)(3) promulgated under the Exchange Act.

The parties do not anticipate making any subsequent offering period available after the Offer.

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Exchange of Shares

RhythmOne has retained Computershare Trust Company, N.A. as the depositary and exchange agent (the “Exchange Agent”) to handle the exchange of shares for the Transaction Consideration in both the Offer and the First Merger.

RhythmOne has retained Georgeson LLC as information agent (the “Information Agent”) in connection with the Offer. The Information Agent may contact holders of YuMe Shares by mail, telephone, facsimile, the internet, e-mail, newspapers and other publications of general distribution and in person and may request brokers, dealers, commercial banks, trust companies and other nominees to forward materials relating to the Offer to beneficial owners of YuMe Shares. RhythmOne will pay the Information Agent a customary fee for these services in addition to reimbursing it for its reasonable out-of-pocket expenses.

RhythmOne has engaged Georgeson Securities Corporation (“GSC”) to assist with the Offer as an accommodating broker in states where applicable securities laws require such offerings to be made by a registered broker-dealer. GSC is a registered broker-dealer in all fifty states of the United States, the District of Columbia and Puerto Rico. In the ordinary course of GSC’s businesses, GSC and its affiliates may actively trade or hold securities, including long or short positions in the securities or loans related to the Offer for the accounts of customers. GSC does not make any recommendations with respect to the Offer. Moreover, GSC has not prepared any materials or any report or opinion constituting recommendations or advice in connection with the Offer. RhythmOne will pay GSC a customary fee for these services.

RhythmOne will indemnify the Exchange Agent, the Information Agent and GSC against specified liabilities and expenses in connection with the Offer, including liabilities under the U.S. federal securities laws. Indemnification for liabilities under the U.S. federal securities laws may be unenforceable as against public policy.

Except as set forth above, RhythmOne will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of YuMe Shares pursuant to the Offer. RhythmOne will reimburse brokers, dealers, commercial banks and trust companies and other nominees, upon request, for customary clerical and mailing expenses incurred by them in forwarding offering materials to their customers.

Upon the terms and subject to the satisfaction or waiver of the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), Purchaser will accept for exchange promptly after the Expiration Time, and will thereafter promptly exchange the Transaction Consideration for, YuMe Shares validly tendered in the Offer and not properly withdrawn. In all cases, a YuMe stockholder will receive consideration for tendered YuMe Shares only after timely receipt by the Exchange Agent of a confirmation of a book-entry transfer of those shares, a properly completed and duly executed letter of transmittal or an agent’s message in connection with a book-entry transfer (as described below), as applicable, and any other documents as may customarily be required by the Exchange Agent.

For purposes of the Offer, Purchaser will be deemed to have accepted for exchange shares validly tendered and not properly withdrawn if and when it notifies the Exchange Agent of its acceptance of those shares pursuant to the Offer. The Exchange Agent will deliver to the applicable YuMe stockholders any cash and RhythmOne Shares issuable in exchange for YuMe Shares validly tendered and accepted pursuant to the Offer promptly after receipt of such notice informing it of Purchaser’s acceptance. The Exchange Agent will act as the agent for tendering YuMe stockholders for the purpose of receiving cash and RhythmOne Shares from Purchaser and transmitting such cash and shares to the tendering YuMe stockholders. YuMe stockholders will not receive any interest on any cash that Purchaser pays in the Offer, even if there is a delay in making the exchange.

Without the prior written consent of YuMe, Purchaser shall not accept for payment or pay for any YuMe Shares if, as a result, Purchaser would acquire less than the number of YuMe Shares required to satisfy the Minimum Tender Condition to the Offer.

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If Purchaser does not accept any tendered YuMe Shares for exchange pursuant to the terms and conditions of the Offer for any reason, Purchaser will cause to be returned such un-exchanged shares without expense to the tendering stockholder or, in the case of shares tendered by book-entry transfer into the Exchange Agent’s account at DTC, the shares to be returned will be credited to an account maintained with DTC following expiration or termination of the Offer.

Withdrawal Rights

YuMe stockholders may withdraw tendered YuMe Shares at any time until the Expiration Time (as the same may be extended) or if Purchaser fails to promptly accept and pay for such tendered shares.

For the withdrawal of YuMe Shares tendered into the Offer to be effective, the Exchange Agent must receive a written notice of withdrawal from the YuMe stockholder at one of the addresses set forth in “Who Can Help Answer My Questions”, prior to the Expiration Time. The notice must include the YuMe stockholder’s name, address, social security number, the number of shares to be withdrawn and the name of the registered holder, if it is different from that of the person who tendered those shares, and any other information required pursuant to the Offer or the procedures of DTC, if applicable.

A financial institution must guarantee all signatures on the notice of withdrawal, unless the shares to be withdrawn were tendered for the account of an eligible institution. Most banks, savings and loan associations and brokerage houses are able to provide signature guarantees. An “eligible institution” is a financial institution that is a participant in the Securities Transfer Agents Medallion Program.

If YuMe Shares have been tendered pursuant to the procedures for book-entry transfer, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn shares and must otherwise comply with DTC’s procedures.

Purchaser will decide all questions as to the form and validity (including time of receipt) of any notice of withdrawal in its sole discretion, and its decision will be final and binding, provided that applicable securityholders may challenge any such determination in a court of competent jurisdiction. None of Purchaser, RhythmOne, YuMe, the Exchange Agent, the Information Agent or any other person is under any duty to give notification of any defects or irregularities in any tender or notice of withdrawal or will incur any liability for failure to give any such notification. Any YuMe Shares properly withdrawn will be deemed not to have been validly tendered for purposes of the Offer. However, a YuMe stockholder may re-tender withdrawn shares by following the applicable procedures discussed under the section “— Procedures for Tendering” at any time prior to the Expiration Time.

Procedures for Tendering

YuMe stockholders whose YuMe Shares are registered in the share register of YuMe, referred to as registered holders, must deliver a properly completed and duly executed letter of transmittal, with all applicable signature guarantees from an eligible guarantor institution, to the Exchange Agent at its address set forth in “Who Can Help Answer My Questions” prior to the Expiration Time.

Registered holders of YuMe Shares should send their properly completed and duly executed letters of transmittal only to the Exchange Agent and not to YuMe or the Information Agent. Letters of transmittal properly completed and duly executed must be received by the Exchange Agent before the Expiration Time to be accepted. The method of delivery of letters of transmittal is at your option and risk, and the delivery will be deemed made only when actually received by the Exchange Agent. In all cases, you should allow sufficient time to ensure timely delivery.

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YuMe stockholders whose YuMe Shares are held through a financial intermediary in “street name” (i.e., through a broker, dealer, commercial bank, trust company or other nominee) must instruct such nominee to arrange for a DTC participant holding the YuMe Shares in its DTC account to tender such YuMe Shares in the Offer to the Exchange Agent by means of delivery through the book-entry confirmation facilities of DTC of such YuMe Shares to the DTC account of the Exchange Agent, together with an agent’s message acknowledging that the tendering YuMe stockholder has received and agrees to be bound by the letter of transmittal, before the Expiration Time.

The term “agent’s message” means a message transmitted by DTC to, and received by, the Exchange Agent and forming a part of a book-entry confirmation, which states that DTC has received an express acknowledgment from the DTC participant tendering the YuMe Shares that are the subject of such book-entry confirmation, that such participant has received and agrees to be bound by the terms of the letter of transmittal and that Purchaser may enforce that agreement against such participant.

The Exchange Agent has established an account with respect to the YuMe Shares at DTC in connection with the Offer, and any financial institution that is a participant in DTC may make book-entry delivery of YuMe Shares by causing DTC to transfer such YuMe Shares prior to the Expiration Time into the Exchange Agent’s account in accordance with DTC’s procedure for such transfer. However, although delivery of YuMe Shares may be effected through book-entry transfer at DTC, the letter of transmittal with any required signature guarantees, or an agent’s message, along with any other required documents, must, in any case, be received by the Exchange Agent at one of its addresses set forth in “Who Can Help Answer My Questions” prior to the Expiration Time. Purchaser cannot assure YuMe stockholders that book-entry delivery of YuMe Shares will be available. Purchaser is not providing for guaranteed delivery procedures and therefore YuMe stockholders must allow sufficient time for the necessary tender procedures to be completed during normal business hours of DTC prior to the Expiration Time. Tendered shares received by the Exchange Agent after the Expiration Time will be disregarded and of no effect.

Signatures on all letters of transmittal must be guaranteed by an eligible institution, except in cases in which shares are tendered either by a registered holder of shares who has not completed the box entitled “Special Issuance Instructions” or the box entitled “Special Delivery Instructions” on the letter of transmittal or for the account of an eligible institution.

The method of delivery of YuMe Shares and all other required documents, including delivery through DTC, is at the option and risk of the tendering YuMe stockholder, and delivery will be deemed made only when actually received by the Exchange Agent. If delivery is by mail, Purchaser recommends registered mail with return receipt requested and properly insured. In all cases, YuMe stockholders should allow sufficient time to ensure timely delivery.

To prevent U.S. federal backup withholding, each YuMe stockholder that is a “United States person” (within the meaning of the Code) must provide the Exchange Agent with its correct taxpayer identification number and certify that it is not subject to backup withholding by completing the Internal Revenue Service (“IRS”) Form W-9 included with the letter of transmittal. Certain stockholders (including, among others, certain foreign persons) are not subject to these backup withholding requirements. In order for a foreign person to qualify as an exempt recipient for purposes of U.S. backup withholding, the stockholder must submit an IRS Form W-8BEN, or other applicable IRS Form W-8, signed under penalties of perjury, attesting to such person’s exempt status. In addition, foreign persons may be subject to U.S. federal withholding tax with respect to cash received pursuant to the Offer. For more information, see “Tax Withholding” in the instructions to the accompanying letter of transmittal.

The tender of shares pursuant to any of the procedures described above will constitute a binding agreement between Purchaser and the tendering YuMe stockholder upon the terms and subject to the satisfaction or waiver of the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment) and subject to certain withdrawal rights.

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No Guaranteed Delivery

Purchaser is not providing for guaranteed delivery procedures, and therefore YuMe stockholders must allow sufficient time for the necessary tender procedures to be completed during normal business hours of DTC prior to the Expiration Time. YuMe stockholders must tender their YuMe Shares in accordance with the procedures set forth in this prospectus/offer to exchange. In all cases, Purchaser will exchange shares tendered and accepted for exchange pursuant to the offer only after timely receipt by the Exchange Agent of shares (or timely confirmation of a book-entry transfer of such shares into the Exchange Agent’s account at DTC as described elsewhere in this prospectus/offer to exchange), a properly completed and duly executed letter of transmittal (or an agent’s message in connection with a book-entry transfer) and any other required documents.

Settlement of the Share Consideration

All YuMe stockholders who have validly tendered their YuMe Shares in the Offer and not properly withdrawn prior to the Expiration Time will be issued RhythmOne Shares in addition to Cash Consideration.

RhythmOne Shares are held in uncertificated or certificated form. Euroclear UK & Ireland Limited (“Euroclear”) is the Central Securities Depository for the United Kingdom and it operates the CREST settlement system, allowing securities trading in the United Kingdom to take place in uncertificated form and transfers of such securities to be settled electronically.

Existing RhythmOne Shares are currently available for settlement in the CREST system and RhythmOne will arrange for the RhythmOne Shares to be issued and allotted in connection with the Offer to be admitted to CREST. Euroclear requires RhythmOne to confirm to it that certain conditions are satisfied before admitting the RhythmOne Shares to be issued and allotted in connection with the Offer to CREST. It is expected that these conditions will be satisfied in respect of the RhythmOne Shares to be issued and allotted in connection with the Offer upon such shares being admitted to trading on AIM.

Registered YuMe stockholders

Upon receipt by the Exchange Agent of the applicable letter of transmittal and all related materials from a registered YuMe stockholder:

(a) the Exchange Agent will requisition RhythmOne Shares from the transfer agent for RhythmOne, and upon receipt, forward the certificate(s) representing the RhythmOne Shares the tendering YuMe stockholder is entitled to in the Offer; and

(b) such RhythmOne Shares will be registered in the name, or names, of such registered YuMe stockholder or as otherwise directed in the letter of transmittal.

In respect of the RhythmOne Shares to which such registered YuMe stockholder is entitled, such registered YuMe stockholder shall, at its election (made in the letter of transmittal), receive the RhythmOne Shares: (i) in registered physical certificate form, or (ii) to be held through a CREST participant. If a registered YuMe stockholder deposits more than one certificate representing YuMe Shares, the number of RhythmOne Shares issuable to such YuMe stockholder will be computed on the basis of the aggregate number of YuMe Shares tendered in the Offer by such registered YuMe stockholder.

Physical certificates representing the RhythmOne Shares issued to such tendering YuMe stockholder will be registered in such name or names and delivered to the address or addresses as such YuMe stockholder directed in their letter of transmittal (or if not completed, the address of such registered YuMe stockholder as it appears in the securities register of YuMe) promptly after receipt by the Exchange Agent of the required certificates and documents.

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Beneficial YuMe stockholders

YuMe stockholders whose YuMe Shares are registered in the name of a nominee must contact that nominee as the nominee will be responsible for completing the relevant documents to exchange the YuMe Shares of such beneficial YuMe stockholder for the RhythmOne Shares to which such beneficial YuMe stockholder is entitled pursuant to the Offer.

The nominee shall elect in the agent’s message that such YuMe Shares be held through a designated CREST account and complete all related materials. In the case of YuMe stockholders who hold their YuMe Shares through a nominee, in most cases, it is expected that the designated account will be the CREST account of, or of a nominee for, the relevant nominee of the YuMe stockholder. If the nominee does not make this election or if the nominee does not have a designated CREST account, such YuMe stockholder will receive a physical certificate representing the RhythmOne Shares to which such YuMe stockholder is entitled, registered in the name of the nominee for the benefit of such YuMe stockholder.

Grant of Proxy

By executing a letter of transmittal or an agent’s message in lieu thereof, a YuMe stockholder will irrevocably appoint Purchaser’s designees as such YuMe stockholder’s attorneys-in-fact and proxies, each with full power of substitution, to the full extent of such stockholder’s rights with respect to its shares tendered and accepted for exchange by Purchaser and with respect to any and all other shares and other securities issued or issuable in respect of those shares on or after the Expiration Time. That appointment is effective, and voting rights will be effected, when and only to the extent that Purchaser accepts tendered YuMe Shares for exchange pursuant to the Offer and deposits with the Exchange Agent the Transaction Consideration for such shares. All such proxies will be considered coupled with an interest in the tendered shares and therefore will not be revocable. Upon the effectiveness of such appointment, all prior proxies that the YuMe stockholder has given will be revoked, and such stockholder may not give any subsequent proxies (and, if given, they will not be deemed effective). Purchaser’s designees will, with respect to the shares for which the appointment is effective, be empowered, among other things, to exercise all of such stockholder’s voting and other rights as they, in their sole discretion, deem proper at any annual, special or adjourned meeting of YuMe’s stockholders or otherwise.

Purchaser reserves the right, prior to the expiration of the Offer, to require that, in order for YuMe Shares to be deemed validly tendered, immediately upon the exchange of such shares, Purchaser must be able to exercise full voting rights with respect to such shares. However, prior to acceptance for exchange by Purchaser in accordance with terms of the Offer, the appointment will not be effective, and Purchaser will have no voting rights as a result of the tender of shares until such acceptance.

Appraisal Rights

No appraisal rights are available to YuMe stockholders in connection with the Offer. However, if the First Merger is consummated, the holders of record of YuMe Shares immediately prior to the Effective Time who (1) did not tender their YuMe Shares in the Offer; (2) demand appraisal of their YuMe Shares in accordance with Section 262 of the DGCL and otherwise follow the procedures set forth in Section 262 of the DGCL; and (3) do not thereafter withdraw their demand for appraisal of such shares or otherwise lose their appraisal rights, in each case in accordance with the DGCL, will be entitled to have their shares appraised by the Delaware Court of Chancery and receive in lieu of the Transaction Consideration payment of the “fair value” of such shares, determined as of the Effective Time exclusive of any element of value arising from the accomplishment or expectation of the Transactions, together with a fair rate of interest, as determined by such court.

The “fair value” of any YuMe Shares could be based upon considerations other than, or in addition to, the price paid in the Offer and the First Merger and the market value of such shares. YuMe stockholders should recognize that the value so determined could be higher or lower than, or the same as, the Transaction

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Consideration. Moreover, RhythmOne and YuMe may argue in an appraisal proceeding that, for purposes of such proceeding, the fair value of such YuMe Shares is less than such amount.

Under Section 262 of the DGCL, if a merger is approved under Section 251(h) of the DGCL, either a constituent corporation before the effective date of the merger, or the surviving corporation within 10 days thereafter, shall notify each of the holders of any class or series of stock of such constituent corporation who is entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and must include in such notice a copy of Section 262 of the DGCL. The Schedule 14D-9 which will be mailed to YuMe stockholders will constitute the formal notice of appraisal rights under Section 262 of the DGCL.

As will be described more fully in the Schedule 14D-9, if a YuMe stockholders elects to exercise appraisal rights under Section 262 of the DGCL, such stockholder must do all of the following, among other things:

•

by the later of the consummation of the Offer and 20 days after the mailing of the Schedule 14D-9, deliver to YuMe a written demand for appraisal of YuMe Shares held by the stockholder, which demand must reasonably inform YuMe of the identity of the stockholder and that the stockholder is demanding appraisal;

•

not tender such holder’s YuMe Shares in the Offer; and

•

continuously hold of record the YuMe Shares from the date on which the written demand for appraisal is made through the Effective Time.

This does not purport to be a complete statement of the procedures to be followed by YuMe stockholders desiring to exercise any appraisal rights and is qualified in its entirety by reference to Section 262 of the DGCL. The proper exercise of appraisal rights requires strict and timely adherence to the applicable provisions of Delaware law. A copy of Section 262 of the DGCL will be included as Annex ● to the Schedule 14D-9.

Fees and Commissions

Tendering registered YuMe stockholders who tender shares directly to the Exchange Agent will not be obligated to pay any charges or expenses of the Exchange Agent or any brokerage commissions. Tendering YuMe stockholders who hold YuMe Shares through a broker, dealer, commercial bank, trust company or other nominee should consult that institution as to whether or not such institution will charge the stockholder any service fees in connection with tendering shares pursuant to the Offer. Except as set forth in the instructions to the letter of transmittal, transfer taxes on the exchange of shares pursuant to the Offer will be paid by Purchaser.

Matters Concerning Validity and Eligibility

Purchaser will determine questions as to the validity, form, eligibility (including time of receipt) and acceptance for exchange of any tender of shares, in its sole discretion, and its determination will be final and binding, provided that applicable securityholders may challenge any such determination in a court of competent jurisdiction. Purchaser reserves the absolute right to reject any and all tenders of shares that it determines are not in the proper form or the acceptance of or exchange for which may be unlawful. Purchaser also reserves the absolute right, subject to applicable laws, to waive any defect or irregularity in the tender of any shares. No tender of shares will be deemed to have been validly made until all defects and irregularities in tenders of such shares have been cured or waived. None of Purchaser, RhythmOne, the Exchange Agent, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in the tender of any shares or will incur any liability for failure to give any such notification. Subject to any rights of YuMe under the Merger Agreement, Purchaser’s interpretation of the terms and conditions of the Offer (including the letter of transmittal and instructions thereto) will be final and binding, provided that applicable securityholders may challenge any such determination in a court of competent jurisdiction.

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YuMe stockholders who have any questions about the procedure for tendering shares in the Offer should contact the Information Agent, Georgeson LLC, toll-free at (866) 856-2826 or at the address set forth in “Who Can Help Answer My Questions”.

Announcement of Results of the Offer

RhythmOne will announce the final results of the Offer, including whether all of the conditions to the Offer have been satisfied or, to the extent permitted, waived and whether Purchaser will accept the tendered YuMe Shares for exchange, as promptly as practicable following the Expiration Time. The announcement will be made by a press release in accordance with applicable securities laws and stock exchange requirements.

RhythmOne Shareholder Approvals

Neither the Offer nor the Mergers require approval of RhythmOne shareholders. However, RhythmOne held a general meeting of its shareholders (i) to approve a share consolidation at a ratio of one new RhythmOne Share for every ten RhythmOne Shares outstanding and (ii) to grant to the board of directors of RhythmOne the authority to issue RhythmOne Shares in the Offer and the First Merger. On September 25, 2017, the RhythmOne shareholders approved the share consolidation and the grant to the board of directors of RhythmOne of the authority to issue RhythmOne Shares in the Offer and the First Merger. As a result of the share consolidation, the number of outstanding RhythmOne Shares decreased to 49,566,754.

London Stock Exchange AIM Market

Prior to the completion of the Offer, RhythmOne will apply to the London Stock Exchange for admission to trading on AIM the RhythmOne Shares issuable as partial consideration to YuMe stockholders. The new RhythmOne Shares are expected to commence trading on the trading day immediately following the closing of the Offer.

No YuMe stockholder Approval

If the Offer is consummated, RhythmOne is not required to and will not seek the approval of YuMe’s remaining public stockholders before effecting the First Merger. Section 251(h) of the DGCL provides that following the consummation of a successful tender offer for the outstanding shares of voting stock of a corporation whose shares are listed on a national securities exchange, and subject to certain statutory provisions, if the acquiring corporation owns at least the amount of shares of each class or series of stock of the target corporation that would otherwise be required to adopt a merger agreement providing for the merger of the target corporation, and as soon as practicable thereafter each outstanding share of each class or series of stock of the target corporation subject to, but not tendered in, the tender offer is subsequently converted by virtue of such a merger into, or into the right to receive, the same amount and kind of consideration for their stock in the merger as was payable in the tender offer, the acquiring corporation can effect such a merger without the vote of the stockholders of the target corporation. If the Offer is completed, it will mean that the Minimum Tender Condition has been satisfied, and if the Minimum Tender Condition has been satisfied, it will mean that the First Merger may be consummated pursuant to Section 251(h) of the DGCL. Accordingly, if the Offer is completed, RhythmOne intends to effect the closing of the First Merger without a vote of the YuMe stockholders in accordance with Section 251(h) of the DGCL.

Non-Applicability of Rules Regarding “Going Private Transactions”

The SEC has adopted Rule 13e-3 under the Exchange Act, which is applicable to certain “going private” transactions, and which may under certain circumstances be applicable to the First Merger or another business combination following the purchase of shares pursuant to the Offer in which Purchaser seeks to acquire the remaining YuMe Shares not held by it. Purchaser believes that Rule 13e-3 will not be applicable to the First

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Merger because it is anticipated that the First Merger will be effected within one year following the consummation of the Offer and, in the First Merger, YuMe stockholders will receive the same consideration as that paid in the Offer. It is anticipated that, because the First Merger may be effected pursuant to Section 251(h) of the DGCL if the Offer is consummated, the First Merger will be consummated on the same day that the Offer is consummated.

Exchange Agent Contact Information

The contact information for the Exchange Agent for the Offer and the First Merger is:

Computershare Trust Company, N.A.


*By first class mail:*		*By registered mail or overnight courier:*

Computershare Trust Company, N.A. Attn Corporate Actions Voluntary Offer P.O. Box 43011 Providence, RI 02940-3011		Computershare Trust Company, N.A. Attn Corporate Actions Voluntary Offer 250 Royall Street Suite V Canton, MA 02021

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THE MERGER AGREEMENT

This section describes certain material terms of the Merger Agreement. The description in this section and elsewhere in this prospectus/offer to exchange is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A and is incorporated by reference into this prospectus/offer to exchange. This summary does not purport to be complete and may not contain all of the information about the Merger Agreement that is important to you in determining whether to tender your YuMe Shares in the Offer. RhythmOne encourages you to read the Merger Agreement carefully and in its entirety. The legal rights and obligations of the parties are governed by the specific language of the Merger Agreement and not this summary.

Explanatory Note Regarding the Merger Agreement and the Summary of the Merger Agreement; Representations, Warranties and Covenants in the Merger Agreement Are Not Intended to Function or Be Relied on as Public Disclosures

The Merger Agreement and the summary of terms included in this prospectus/offer to exchange have been provided to you with information regarding its terms and are not intended to provide any factual information about YuMe, RhythmOne, Purchaser, Merger Sub Two or any of their respective subsidiaries or affiliates. Such information can be found elsewhere in this prospectus/offer to exchange or in the public filings, as described in the section entitled “Where You can Find More Information”. The representations, warranties and covenants contained in the Merger Agreement have been made solely for the purposes of the Merger Agreement as of specific dates and solely for the benefit of parties to, or to third parties as specified in, the Merger Agreement and:

•

are not intended as statements of fact, but rather as a way of allocating the risk between the parties in the event the statements therein prove to be inaccurate;

•

have been modified or qualified by certain confidential disclosures that were made between the parties in connection with the negotiation of the Merger Agreement, which disclosures are not reflected in the Merger Agreement itself;

•

may no longer be true as of a given date;

•

may be subject to a contractual standard of materiality in a way that is different from those generally applicable to you or other YuMe stockholders and reports and documents filed with the SEC; and

•

may be subject in some cases to other exceptions and qualifications (including exceptions that do not result in, and would not reasonably be expected to have, a “material adverse effect”).

Accordingly, you should not rely on the representations, warranties or covenants or any descriptions thereof as characterizations of the actual state of facts or condition of YuMe, RhythmOne, Purchaser, Merger Sub Two or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date as of which the representations and warranties were made in the Merger Agreement, which subsequent information may or may not be fully reflected in the public disclosures of YuMe or RhythmOne. Accordingly, the representations and warranties and other provisions of the Merger Agreement or any description of such provisions should not be read alone, but instead should be read together with the information provided elsewhere in this prospectus/offer to exchange and in the documents incorporated by reference into this prospectus/offer to exchange. See “Where You Can Find More Information”.

The Offer

Purchaser is offering to exchange the Transaction Consideration for each outstanding YuMe Share that is validly tendered in the Offer and not validly withdrawn, other than YuMe Shares held in YuMe’s treasury and each YuMe Share owned by RhythmOne, Purchaser or any wholly-owned subsidiary of RhythmOne or YuMe immediately prior to the Effective Time, all of which YuMe Shares shall be cancelled without any conversion thereof, and no payment or distribution will be made with respect thereto (the “Excluded Shares”).

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Purchaser’s obligation to accept for exchange and to exchange YuMe Shares validly tendered in the Offer and not validly withdrawn is subject to the satisfaction or waiver of certain conditions as described in the Merger Agreement (the “Offer Conditions”), including there having been validly tendered and not withdrawn prior to the Expiration Time, a number of YuMe Shares which would represent at least a majority of the then issued and outstanding YuMe Shares, which calculation shall include the YuMe Shares resulting from the net exercise of all options that are vested as of immediately prior to the Effective Time and which have an exercise price less the Transaction Consideration value. This condition is referred to as the “Minimum Tender Condition.” See “— Conditions to the Offer” beginning on page 141 for a description of the other Offer Conditions, including YuMe having at least $32 million in cash and cash equivalents.

Subject to the terms and conditions of the Merger Agreement, and unless the Merger Agreement is terminated in accordance with its terms and no circumstance, fact, change, event or occurrence has occurred that would render it impossible for one or more of the Offer Conditions to be satisfied, Purchaser will (and RhythmOne will cause Purchaser to) commence the Offer to purchase all of the outstanding YuMe Shares, other than the Excluded Shares, at a price per share equal to the Transaction Consideration. In no event will the Offer commence later than ten (10) business days after the effectiveness of this registration statement on Form F-4, however, Purchaser will not be required to commence the Offer if YuMe is not prepared to file immediately with the SEC, and to disseminate to holders of YuMe Shares, the Schedule 14D-9 described in “— Registration Statement; Offer Documents; Schedule TO.”

The initial Expiration Time of the Offer is one minute following 11:59 p.m., Pacific time on the date that is twenty (20) business days following the commencement of the Offer (i.e. ● , 2018), unless otherwise agreed to in writing by RhythmOne and YuMe (such date or subsequent date to which the Expiration Time is extended in accordance with the terms of the Merger Agreement, the “Expiration Time.” Notwithstanding anything to the contrary contained in the Merger Agreement, unless the Merger Agreement has been terminated in accordance with its terms, Purchaser will (and RhythmOne will cause Purchaser to) extend the Offer: (i) for any period required by any law or any interpretation or position of the SEC applicable to the Offer; and (ii) for one or more consecutive periods of ten (10) business days each (with any longer or shorter period for such extension to be mutually determined by RhythmOne and YuMe), if, as of the scheduled Expiration Time, any Offer Condition is not satisfied and has not been waived (to the extent waivable) by RhythmOne or Purchaser, until such Offer Condition is satisfied. In no event shall Purchaser be required to extend the Offer to a date past March 31, 2018, which may be extended to the Outside Date in the event that the SEC Condition has not been met.

Purchaser has agreed (and RhythmOne has agreed to cause Purchaser to), on the terms and subject to the conditions of the Merger Agreement and the Offer, promptly and in accordance with applicable law following the Expiration Time, to accept for payment and, no later than three (3) business days after the Expiration Time, provide the Transaction Consideration to the Exchange Agent to pay for all YuMe Shares that are validly tendered pursuant to the Offer and not validly withdrawn prior to the Expiration Time. The Transaction Consideration payable in respect of each YuMe Share that is validly tendered and not validly withdrawn will be paid without interest, net to the holder thereof in cash, and subject to reduction for any applicable U.S. federal withholding, back-up withholding or other applicable tax withholdings. YuMe has agreed to use its reasonable best efforts to register (and instruct its transfer agent to register) the transfer of YuMe Shares accepted for purchase and payment effective immediately after accepted for payment.

Other than in connection with a valid termination of the Merger Agreement, and subject to its obligations to extend the Offer in accordance with the Merger Agreement, Purchaser may not terminate or withdraw the Offer prior to the Expiration Time of the Offer without the prior written consent of YuMe. In the event that the Merger Agreement is terminated in accordance with its terms, Purchaser must (and RhythmOne must cause Purchaser to) promptly (and in any case within twenty four (24) hours of such termination), terminate the Offer and will not be required to acquire any YuMe Shares pursuant to the Offer. If Purchaser terminates or withdraws the Offer, it will promptly return, and will cause any depository acting on its behalf to return, in accordance with applicable law, all tendered YuMe Shares to the registered holders thereof.

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RhythmOne and Purchaser have expressly reserved the right to increase the Transaction Consideration, waive any Offer Condition or make any other changes in the terms of the Offer. However, without the prior written consent of YuMe, neither RhythmOne nor Purchaser will: reduce the Transaction Consideration, change or waive the Minimum Tender Condition or the condition relating to RhythmOne’s, Purchaser’s or Merger Sub Two’s breach or failure to perform any of its representations, warranties, covenants or other agreements contained in the Merger Agreement, impose conditions or requirements to the Offer in addition to those described in “— Conditions to the Offer,” extend or otherwise change the Expiration Time in a manner other than as required or permitted by the Merger Agreement, change the form of consideration payable in the Offer, decrease the maximum number of YuMe Shares sought to be purchased in the Offer, or otherwise amend or modify any of the Offer Conditions or the other terms of the Offer in a manner that adversely affects any holder of YuMe Shares in its capacity as such.

No fraction of a RhythmOne Share will be issued by virtue of the Offer or the First Merger, but in lieu thereof, each holder of YuMe Shares who otherwise would be entitled to receive a fraction of a RhythmOne Share (after aggregating all YuMe Shares tendered in the Offer (and not validly withdrawn) by such holder or otherwise held by such holder as of the Effective Time, as applicable) will be paid an amount of cash (without interest) determined by multiplying (a) the RhythmOne trading price, rounded to the nearest one-hundredth of a cent by (b) the fraction of a share (after aggregating all YuMe Shares held by such holder and accepted for payment by Purchaser pursuant to the Offer or otherwise held by such holder at the Effective Time, as applicable, and rounded to the nearest one thousandth when expressed in decimal form) of RhythmOne Shares to which such holder would otherwise be entitled. No such holder shall be entitled to dividends, voting rights or any other rights in respect of any fractional share of RhythmOne Shares.

Schedule TO; Offer Documents; Registration Statement

Purchaser (or RhythmOne, as applicable) shall, on the commencement date of the Offer, file a tender offer statement on Schedule TO with the SEC, which will contain certain specified Offer documents, including but not limited to, an offer to purchase, a letter of transmittal, and other ancillary Offer documents pursuant to which the Offer shall be made (such Schedule TO and the documents included therein pursuant to which the Offer shall be made, together with any supplements or amendments thereto, the “Offer Documents”) and take all steps necessary to cause these Offer Documents to be disseminated to YuMe stockholders, as and to the extent required by applicable securities laws.

RhythmOne agreed to, within five business (5) days following the date of the Merger Agreement, issue a circular to its shareholders and a notice calling a general meeting of its shareholders on twenty (20) clear days’ notice at which the shareholders were asked to resolve (a) to authorize the allotment and issuance of the Share Consideration for the First Merger, (b) to amend RhythmOne’s existing articles of association, (c) to consolidate every 10 issued ordinary shares of £0.01 each in the capital of RhythmOne into one ordinary share of £0.10 each in the capital of RhythmOne and (d) to authorize RhythmOne to make certain off-market purchases of its own shares. On September 25, 2017, the RhythmOne shareholders approved these resolutions.

RhythmOne agreed, with YuMe’s reasonable cooperation, to use reasonable best efforts to (a) have the registration statement declared effective under the Securities Act as promptly as practicable after its filing, (b) ensure that the registration statement and Offer Documents comply in all material respects with the applicable provisions of the Securities Act and the Exchange Act, and (c) keep the registration statement effective for so long as necessary to complete the First Merger.

Unless YuMe’s board of directors has effected a change of recommendation, YuMe agreed to promptly furnish in writing to RhythmOne and Purchaser, information concerning YuMe, its subsidiaries, and the holders of YuMe Shares that is required by applicable law or otherwise reasonably advisable to be included in the Offer Documents and the registration statement. YuMe agreed to use reasonable best efforts to cause YuMe’s current and former accountants to promptly deliver to RhythmOne and Purchaser duly executed consents of such

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accountants to allow RhythmOne and Purchaser to include or incorporate by reference in the registration statement YuMe’s financial statements and such accountants’ report therein. RhythmOne, Purchaser and YuMe agreed to cooperate in good faith to determine the information regarding YuMe that is necessary or reasonably advisable to include in the Offer Documents and the registration statement in order to satisfy applicable laws. Each of RhythmOne, Purchaser and YuMe agreed to promptly correct any information provided by it or any of its respective representatives for use in the Offer Documents and the registration statement if and to the extent that such information has become false or misleading in any material respect. To the extent permitted by applicable law, RhythmOne and Purchaser will have no responsibility with respect to any information supplied by YuMe for inclusion or incorporation by reference in the Offer Documents and the registration statement. RhythmOne and Purchaser agreed, with YuMe’s cooperation, to take all reasonable steps to cause the Offer Documents and the registration statement, as so corrected, to be filed with the SEC and to be disseminated to the holders of YuMe Shares, in each case as and to the extent required by applicable laws, or by the SEC or its staff.

RhythmOne agreed to cause the registration statement and the Offer Documents to comply as to form and substance in all material respects with requirements of applicable law. Each of RhythmOne and Purchaser has agreed to (a) provide YuMe and its counsel with reasonable opportunity to review and comment on the Offer Documents and the registration statement (and any amendments or supplements to any of the foregoing) prior to the filing thereof with the SEC, and give reasonable consideration to any timely comments thereon made by YuMe or its counsel, (b) promptly notify YuMe of the receipt of, and promptly provide YuMe with copies of, all comments from, and all correspondence with, the SEC or its staff with respect to any Offer Document or the registration statement and promptly notify YuMe of any request by the SEC or its staff for any amendment or supplement thereto or for additional information, (c) provide YuMe and its counsel with a reasonable opportunity to review and comment on any proposed correspondence between RhythmOne or any of its representatives on the one hand and the SEC or its staff on the other hand with respect to any Offer Document or the registration statement and give reasonable consideration to any timely comments thereon made by YuMe or its counsel, and (d) promptly provide YuMe with final copies of any correspondence sent by it or any of its representatives to the SEC or its staff with respect to any Offer Document or the registration statement, and of any amendments or supplements to any Offer Document or the registration statement. RhythmOne will also take any other action required to be taken under the Securities Act, the Exchange Act, any applicable foreign or state securities or “blue sky” laws and the rules and regulations thereunder in connection with the issuance of the RhythmOne Shares pursuant to the Offer or the First Merger, and will pay all expenses related thereto, and YuMe will timely furnish all information concerning YuMe and the holders of YuMe Shares as may be reasonably requested in connection with any such actions.

YuMe Actions

On the date of the filing of the Schedule TO by RhythmOne and Purchaser with the SEC, YuMe has agreed to file with the SEC and disseminate to holders of YuMe Shares, to the extent required by Rule 14d-9 under the Exchange Act and any other applicable law, a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the Offer, containing, among other things, (a) the recommendation of YuMe’s board of directors that the holders of YuMe Shares accept the Offer and tender their YuMe Shares pursuant to the Offer, unless and until such recommendation is changed in accordance with the terms of the Merger Agreement; (b) the opinion of the YuMe’s financial advisor; (c) a fair summary of the financial analysis conducted by such financial advisor in accordance with applicable law; and (d) the notice and other information required by Section 262(d)(2) of the DGCL.

YuMe has also agreed to cause the Schedule 14D-9 (a) to comply in all material respects with the Exchange Act and other applicable laws and (b) on the date first filed with the SEC and on the date first published, sent or given to the holders of YuMe Shares, not to contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading, except that no covenant is made by YuMe with respect to information supplied by or on behalf of Parent or Purchaser in writing specifically for inclusion in the

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Schedule 14D-9. Each of YuMe, RhythmOne and Purchaser have agreed to promptly correct any information provided by it for use in the Schedule 14D-9 if and to the extent that such information will have become false or misleading in any material respect. YuMe has further agreed to take all steps necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented to be filed with the SEC and disseminated to holders of YuMe Shares, in each case as and to the extent required by applicable laws. RhythmOne and its counsel will be given a reasonable opportunity to review and comment upon the Schedule 14D-9 and any amendments or supplements thereto prior to filing such documents with the SEC or dissemination of such documents to the holders of YuMe Shares. YuMe has agreed to (a) provide RhythmOne and its counsel with a copy of any written comments or telephonic notification of any oral comments that YuMe or its counsel may receive from the SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt of such comments, (b) give RhythmOne prompt telephonic notice of any material discussions with the SEC staff, (c) consult with RhythmOne and Purchaser and their counsel prior to responding to such comments, and (d) provide to RhythmOne and Purchaser and their counsel a copy of any written responses thereto and telephonic notice of any oral responses or discussions with the SEC staff. Notwithstanding the foregoing, YuMe’s obligations in the preceding sentence will not apply from and after the time YuMe’s board of directors effects a change in recommendation, as described in “— Change of Recommendation.”

In connection with the Offer, YuMe will (and will instruct its transfer agent to) furnish RhythmOne or its designated agent promptly with mailing labels containing the names and addresses of the record holders of YuMe Shares as of a recent date, together with copies of all lists of stockholders and security position listings as of a recent date, and shall furnish to Purchaser such information and assistance (including updated lists of stockholders and security position listings) as RhythmOne or Purchaser may reasonably request in communicating the Offer to YuMe stockholders. Subject to the requirements of applicable law, and except for such steps as are necessary to disseminate the Offer Documents, the registration statement and any other documents necessary to consummate the Transactions, RhythmOne and Purchaser will, until the consummation of the Offer, (a) hold in confidence the information contained in any such labels, listings and files, (b) use such information only in connection with the Offer and the First Merger and (c) if the Merger Agreement is terminated, upon request, deliver to YuMe all copies of such information then in their possession.

YuMe has also agreed to, and cause its subsidiaries to, and use reasonable best efforts to cause its representatives to, at the sole expense of RhythmOne, provide such cooperation as may reasonably be requested by RhythmOne in connection with the financing of the Transactions, including reasonable cooperation in providing due diligence information to potential financing sources, participating in lender meetings and rating agency presentations, assisting in the preparation of offering and related documents and, contingent upon the consummation of the Transactions, executing loan documentation and providing or obtaining ancillary certificates, comfort letters and legal opinions.

The Mergers

Upon the terms and subject to the conditions set forth in the Merger Agreement, and as soon as practicable following the consummation of the Offer in accordance with the DGCL (including Section 251(h)):

•

Purchaser will be merged with and into YuMe, in accordance with the DGCL (including Section 251(h)), whereupon the separate existence of Purchaser will cease, with YuMe surviving the First Merger (YuMe, as the surviving entity in the First Merger, sometimes being referred to herein as the “First Surviving Corporation”), such that following the First Merger, the First Surviving Corporation will be a wholly-owned direct subsidiary of RhythmOne;

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immediately thereafter, and as part of the same plan, in accordance with the DGCL, the First Surviving Corporation will be merged with and into Merger Sub Two, whereupon the separate corporate existence of the First Surviving Corporation will cease with Merger Sub Two surviving the Second Merger (Merger Sub Two, as the surviving entity of the Second Merger, sometimes being referred to herein as the “Surviving Corporation”) such that following the Second Merger, the Surviving Corporation will be a wholly-owned direct subsidiary of RhythmOne; and

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•

immediately thereafter, and as part of the same plan, all issued and outstanding shares of Merger Sub Two will be transferred to RhythmOne (US) Holding, Inc.

The Mergers will have the effects provided in the Merger Agreement and as specified in the DGCL. The First Merger will be governed by Section 251(h) of the DGCL.

Tax Consequences

The Offer and the Mergers, taken together, may qualify as a “reorganization” within the meaning of Section 368(a) of the Code. None of the parties to the Merger Agreement made any representation regarding whether the Offer and the Mergers, taken together, will so qualify.

Further Action

Each of YuMe, RhythmOne, Purchaser and Merger Sub Two have agreed to take all necessary actions to cause the First Merger to become effective as soon as practicable following Purchaser’s acceptance of YuMe Shares tendered in the Offer without a meeting of YuMe’s stockholders, as provided in Section 251(h) of the DGCL and upon the terms and subject to the conditions of the Merger Agreement. In addition, and without limiting the generality of the foregoing, none of YuMe, RhythmOne or Purchaser will, and each of YuMe, RhythmOne and Purchaser will cause their respective subsidiaries and representatives not to, take any action that could render Section 251(h) of the DGCL inapplicable to the First Merger. If at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of the Merger Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of YuMe, Purchaser or Merger Sub Two, the officers and directors of the Surviving Corporation are fully authorized in the name of the YuMe, Purchaser and Merger Sub Two or otherwise to take, and shall take, all such lawful and necessary action.

RhythmOne Board of Directors

On or immediately after the Closing Date, the RhythmOne board of directors will take such reasonable actions as are necessary under RhythmOne’s articles of association and applicable law (a) to appoint two (2) individuals as directors of RhythmOne who are designated by YuMe, who shall initially be Eric Singer and John Mutch (together, the “Company Nominees” and each a “Company Nominee”), subject to the prior approval and acceptance of the RhythmOne’s board of directors acting reasonably and to the completion by RhythmOne’s nominated advisor of due diligence checks to its satisfaction on each Company Nominee; and (b) provide for a RhythmOne board of directors at such time that comprises a total of seven (7) directors; provided, however, that if, prior to the Effective Time, any individual designated as a Company Nominee is unable or unwilling to serve on RhythmOne’s board of directors as a result of illness, death, resignation or any other reason, YuMe will designate another individual to serve in such person’s place.

As of the date of the Merger Agreement, RhythmOne was not aware of any reason why Mr. Singer or Mr. Mutch would not be eligible to serve on the RhythmOne’s board of directors. On or immediately after the Closing Date, RhythmOne’s board of directors will appoint an individual designated by YuMe, who shall initially be Eric Singer, as the chairman of RhythmOne’s board of directors, subject again to the prior approval of RhythmOne’s board of directors acting reasonably; provided, however, that in the event that, prior to the Effective Time, Mr. Singer is unable or unwilling as a result of illness, death, resignation or any other reason, to serve as the chairman of RhythmOne’s board of directors, YuMe will designate another individual to so serve. Any substitute nominee that is nominated by YuMe will be subject to the prior approval and acceptance of RhythmOne’s board of directors acting reasonably and to the completion by RhythmOne’s nominated advisor of due diligence checks to its satisfaction on any such substitute nominee. The Company Nominees will serve as directors of RhythmOne until RhythmOne’s first annual meeting of shareholders following the closing of the Transactions. RhythmOne’s board of directors will, subject to compliance with their fiduciary duties, cause the

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Company Nominees to be nominated and recommended for election as directors of RhythmOne at RhythmOne’s first annual meeting following the Closing.

Closing and Effective Time of the Mergers

The Closing of the Mergers will take place at 8:00 a.m. (East Coast time) on the same date as Purchaser’s acceptance of YuMe Shares tendered in the Offer, except if the condition regarding judgments and legal prohibitions described in “— Conditions to the Mergers” beginning on page 143 will not be satisfied or waived by such date, in which case it shall take place on no later than the first business day on which such condition is satisfied or waived.

Each merger will become effective at the time when the relevant certificate of merger is duly filed with the Secretary of State of the State of Delaware unless a later date is agreed to by YuMe and RhythmOne and is specified therein. The First Merger (the merger of Purchaser with and into YuMe) must precede the Second Merger (the merger of the First Surviving Corporation with and into Merger Sub Two).

Directors and Officers; Certificate of Incorporation; By-laws

The amended and restated certificate of incorporation and bylaws of Purchaser in effect immediately prior to the Effective Time will be the certificate of incorporation and bylaws, respectively, of the First Surviving Corporation, in each case, until thereafter changed or amended in accordance with their terms or applicable law.

The amended and restated certificate of incorporation and bylaws of Merger Sub Two as in effect immediately prior to the effective time of the Second Merger (the “Second Effective Time”) will be the certificate of incorporation and bylaws of the Surviving Corporation, until thereafter changed or amended in accordance with their terms or applicable law.

Following the effectiveness of the First Merger, the directors of Purchaser immediately prior to the Effective Time will be the initial directors of the First Surviving Corporation, until the earlier of their death, resignation or removal or until their successors have been duly elected and qualified. Following the effectiveness of the Second Merger, the directors of Merger Sub Two immediately prior to the Second Effective Time will be the directors of the Surviving Corporation.

The officers of Purchaser immediately prior to the Effective Time will continue as the officers of the First Surviving Corporation, and unless otherwise determined by RhythmOne, the officers of the First Surviving Corporation immediately prior to the Second Effective Time will be the officers of the Surviving Corporation, until their respective successors are duly elected, designated or qualified, or their earlier death, resignation or removal.

Treatment of Purchaser Common Stock and Merger Sub Two Common Stock

First Merger

At the Effective Time, by virtue of the First Merger and without any action on the part of the parties to the Merger Agreement or the holder of shares of common stock of Purchaser, each share of common stock of Purchaser, will automatically be converted into and become one fully paid and nonassessable share of common stock, par value $0.001 per share, of the First Surviving Corporation, and all certificates representing shares of the common stock of Purchaser will be deemed for all purposes to represent the number of shares of common stock of the First Surviving Corporation into which they were converted.

Second Merger

At the Second Effective Time, by virtue of the Second Merger and without any action on the part of the parties to the Merger Agreement or holders of any securities of the First Surviving Corporation or Merger Sub

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Two, each share of Merger Sub Two issued and outstanding immediately prior to the Second Effective Time will remain outstanding as a share of common stock of the Surviving Corporation and all shares of common stock of the First Surviving Corporation will no longer be outstanding and will automatically be cancelled and will cease to exist without any consideration being payable therefor.

Treatment of YuMe Shares and Equity Awards

Common Stock

Conversion of YuMe Shares

At the Effective Time, by virtue of the First Merger and without any action on the part of RhythmOne, Purchaser, YuMe or the holders of any YuMe Shares, each YuMe Share issued and outstanding immediately prior to the Effective Time (other than (a) the Excluded Shares or (b) YuMe Shares that are held by any stockholder who is entitled to demand and properly demands appraisal of such YuMe Shares pursuant to, and who complies in all respects with, Section 262 of the DGCL (See “— Appraisal Shares”)) will be cancelled and converted automatically into the right to receive the Transaction Consideration, subject to any withholding of taxes required by applicable laws.

As of the Effective Time, all such YuMe Shares will no longer be outstanding and will automatically be cancelled and will cease to exist, and each holder of a YuMe Share will cease to have any rights with respect thereto, except the right to receive the Transaction Consideration upon surrender of share certificates or uncertificated shares, as set forth below, without interest.

Each Excluded Share will be cancelled without any conversion thereof and no payment or distribution will be made with respect thereto.

YuMe Options

At the Effective Time, by virtue of the First Merger, each outstanding unvested YuMe Option that is held by an employee, director or consultant of YuMe or any of its subsidiaries who remains or becomes an employee, director or consultant of RhythmOne or one of its subsidiaries at the Effective Time (a “continuing service provider”) with an exercise price less than the Transaction Consideration value, will, without any further action on the part of any holder thereof, be converted into an option (“converted RhythmOne option”) to purchase that number of RhythmOne Shares (rounded down to the nearest whole number) equal to the product of (a) the number of YuMe Shares subject to such unvested YuMe stock option, and (b) the equity award conversion ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to the quotient obtained by dividing (1) the exercise price per YuMe Share for such unvested option immediately prior to the Effective Time, by (2) such equity award conversion ratio. The converted RhythmOne options will have the same vesting schedule, exercisability terms and other terms and conditions as the corresponding unvested YuMe stock options. Each outstanding unvested YuMe stock option that is held by a person that is not a continuing service provider will not be assumed by RhythmOne and will be cancelled and have no further effect following the Effective Time.

At the Effective Time, each outstanding vested YuMe stock option with an exercise price less than the Transaction Consideration value, will, without any further action on the part of any holder thereof, be converted into a number of YuMe Shares equal to (a) the number of YuMe Shares issuable upon the exercise in full of such vested YuMe stock option, minus (b) the net exercise amount in respect of such vested YuMe stock options, which represents the exercise price of the vested options plus any applicable withholding taxes, which will be paid to the appropriate governmental authority and treated for all purposes as having been paid to the holder of the vested YuMe stock option. The YuMe Shares resulting from such conversion will be considered YuMe Shares for all purposes of the Merger Agreement.

Each YuMe Option with an exercise price that is not less than the Transaction Consideration value that is outstanding immediately prior to the Effective Time will not be assumed by RhythmOne and will be cancelled and have no further effect following the Effective Time.

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The “Transaction Consideration value” for purposes of the Merger Agreement means the sum of (i) the Cash Consideration payable under the Merger Agreement plus (ii) the product of (x) the Share Consideration payable under the Merger Agreement multiplied by (y) the volume-weighted average per share trading price of RhythmOne Shares on AIM over the five (5) consecutive trading days ending on the trading day immediately preceding the Effective Time, rounded to the nearest one ten-thousandth, where the price per RhythmOne Share in U.S. Dollars shall be determined using the spot exchange rate posted on Bloomberg at approximately 10:30 a.m. (P.T.) on the trading day immediately preceding the Effective Time.

The “equity award conversion ratio” for purposes of the Merger Agreement means the quotient of (i) the Transaction Consideration value divided by (ii) the volume-weighted average per share trading price of RhythmOne Shares on AIM over the five (5) consecutive trading days ending on the trading day immediately preceding the Effective Time, rounded to the nearest one ten-thousandth, where the price per RhythmOne Share in U.S. Dollars shall be determined using the spot exchange rate posted on Bloomberg at approximately 10:30 a.m. (P.T.) on the trading day immediately preceding the Effective Time.

YuMe RSUs

At the Effective Time, by virtue of the First Merger and without any further action on the part of any holder thereof, the YuMe RSUs outstanding as of the Effective Time will be converted into restricted stock units of RhythmOne Shares (“converted RhythmOne RSUs”) equal to the product (rounded down to the nearest whole number) of (a) the number of YuMe Shares subject to such YuMe RSUs immediately prior to the Effective Time, and (b) the equity award conversion ratio set forth in the Merger Agreement. Any converted RhythmOne RSUs so issued will be subject to the same terms and conditions (including vesting terms) as were applicable under such YuMe RSUs. See “Interests of Certain Persons in the Transactions — Interests of YuMe’s Directors and Executive Officers in the Transactions — YuMe RSUs”.

Notwithstanding the above, if a YuMe RSU is subject to an agreement with an individual holder in effect as of the date of the Merger Agreement that provides that such YuMe RSU will be settled in connection with a change of control involving YuMe (without the required occurrence of termination or any other event), or if a YuMe RSU otherwise becomes vested on or before the Effective Time (and has not already been settled), such YuMe RSU will be treated as YuMe Shares as described above. Any applicable taxes that are required to be withheld with respect to the settlement of YuMe RSUs at the Effective Time will be withheld from the RhythmOne Shares that would otherwise be issued on settlement.

Treatment of YuMe Employee Stock Purchase Plan

As soon as reasonably practicable following the date of the Merger Agreement and in any event prior to Purchaser’s acceptance of YuMe Shares tendered in the Offer, YuMe will take all actions necessary to ensure that (a) except for the six-month offering period under the YuMe ESPP that commenced on August 20, 2017 (the “Final Offering”), no offering period will be authorized or commenced on or after the date of the Merger Agreement, (b) if, with respect to the Final Offering, Purchaser accepts YuMe Shares tendered in the Offer prior to February 19, 2018, (1) each individual participating in the Final Offering will receive notice of the Transactions, (2) the YuMe ESPP will terminate in its entirety immediately prior to Purchaser’s acceptance of YuMe Shares tendered in the Offer, and (3) each participant’s accumulated contributions under the YuMe ESPP will be refunded to the relevant participant following such termination and will not be used to purchase YuMe Shares, and (c) no further rights will be granted or exercised under the YuMe ESPP after its termination.

Following written notice from RhythmOne delivered not less than ten (10) business days prior to the Effective Time, at or prior to the Effective Time, YuMe, YuMe’s board of directors and the compensation committee of YuMe’s board of directors, as applicable, shall adopt any resolutions and take all steps necessary to (i) cause all of YuMe’s stock plans to terminate at or prior to the Effective Time; and (ii) ensure that from and after the Effective Time, none of RhythmOne, Purchaser, Merger Sub Two, YuMe or any of their successors or

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affiliates will be required to deliver YuMe Shares or other capital stock of YuMe to any person pursuant to or in settlement of awards pursuant thereto.

Appraisal Shares

YuMe Shares that are issued and outstanding immediately prior to the Expiration Time that are held by any person who (a) is entitled to demand and properly demands appraisal of such YuMe Shares pursuant to, and who complies in all respects with, Section 262 of the DGCL and (b) as of the Expiration Time, has neither effectively withdrawn nor lost such person’s rights to such appraisal and payment under the DGCL with respect to such YuMe Shares, will not be converted into the right to receive Transaction Consideration, but rather the holders of such YuMe Shares will be entitled to be paid the fair value of such Appraisal Shares in accordance with Section 262 of the DGCL. However, if any such holder fails to perfect or otherwise waives, withdraws or loses the right to appraisal under Section 262 of the DGCL, then the right of such holder to be paid the fair value of such holder’s Appraisal Shares will cease and such Appraisal Shares will be deemed to have been converted as of the Effective Time into, and to have become exchangeable solely for the right to receive, the Transaction Consideration. YuMe has agreed to give RhythmOne prompt notice (and in no event more than two (2) business days) of (a) any demand YuMe receives for appraisal of YuMe Shares (and will give RhythmOne the opportunity (at RhythmOne’s election) to direct and control all negotiations and proceedings with respect to any such demand) and (b) any notice of exercise by any holder of YuMe Shares of appraisal rights in accordance with the DGCL. YuMe will not (and will not agree to), without the prior written consent of RhythmOne, voluntarily make any payment with respect to, or settle, or offer to settle, any such demands or applications, or waive any failure to timely deliver a written demand for appraisal or timely take any other action to perfect appraisal rights in accordance with the DGCL.

Representations and Warranties

The parties made customary representations and warranties in the Merger Agreement that are subject, in some cases, to specified exceptions and qualifications contained in the Merger Agreement and, with respect to YuMe’s representations and warranties, the matters contained in confidential disclosure schedules delivered by YuMe to RhythmOne concurrently with the execution of the Merger Agreement. YuMe’s representations and warranties relate to, among other things:

•

due organization, existence, good standing and authority to carry on YuMe’s business as it is currently being conducted and currently planned to be conducted;

•

the accuracy and completeness of each of YuMe’s and YuMe’s subsidiaries certificate of incorporation, bylaws or similar organizational documents;

•

YuMe’s and YuMe’s subsidiaries’ capitalization;

•

YuMe’s corporate power and authority to execute, deliver, and consummate the Transactions, and the enforceability of the Merger Agreement against YuMe, subject to certain specified customary assumptions and exceptions;

•

the adoption by the YuMe board of directors of resolutions (a) determining that the Merger Agreement, including the Offer, the Mergers and the other transactions contemplated thereby, are fair to and in the best interests of YuMe and its stockholders, (b) electing that the Merger Agreement and the Transactions be expressly governed by Section 251(h) of the DGLC, (c) adopting and approving the Merger Agreement, declaring the advisability of the Merger Agreement and approving the Transactions contemplated thereby, including the Offer and the Mergers, in accordance with the requirements of the DGCL, (d) approving the execution, delivery and performance by YuMe of the Merger Agreement and the consummation of the Transactions, including the Offer and the Mergers, and (e) recommending that the YuMe stockholders accept the Offer and tender their YuMe Shares pursuant to the Offer, in each case, on the terms and subject to the conditions of the Merger Agreement;

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•

that the YuMe board of directors has taken all actions so that the restrictions applicable to “business combinations” in Section 203 of the DGCL, are, and will be, to the extent such restrictions can be rendered inapplicable by the action of the YuMe board of directors under applicable law, inapplicable to the execution, delivery and performance of the Merger Agreement and to the consummation of the Offer, the Mergers and the other transactions contemplated thereby;

•

the absence of violations of, breaches of or conflicts with, YuMe’s constitutional documents, applicable law and certain agreements as a result of YuMe’s entrance into and performance under the Merger Agreement, subject to certain specified standard qualifications and assumptions;

•

that no vote or consent of the YuMe stockholders is needed for the adoption of the Merger Agreement or for the consummation by YuMe of the First Merger;

•

YuMe’s SEC reports (including all amendments) since January 1, 2014, the financial statements included therein, and the absence of any outstanding or unresolved written comments from the SEC with respect to YuMe’s SEC reports;

•

books, records and accounts of YuMe and its subsidiaries;

•

YuMe’s disclosure controls and procedures and internal controls over financial reporting;

•

compliance with certain requirements of the Securities Act, the Exchange Act, the Sarbanes-Oxley Act of 2002 and the rules and regulations of the NYSE;

•

the absence of certain undisclosed liabilities;

•

the absence of a YuMe Material Adverse Effect (as defined herein) since December 31, 2016, and the absence of specified actions since December 31, 2016 that would be in violation of certain interim operating covenants under the Merger Agreement if taken after date of the Merger Agreement;

•

the absence of actions, claims, suits or proceedings against YuMe or any of its subsidiaries, and the absence of judgments and continuing governmental investigations against YuMe or any of its subsidiaries;

•

employee benefit plans and ERISA;

•

tax matters;

•

environmental matters;

•

compliance with applicable laws;

•

possession of licenses and permits needed to carry out the respective businesses of YuMe and its subsidiaries and compliance therewith;

•

intellectual property;

•

labor and other employment matters;

•

insurance;

•

material contracts, the absence of any material default under any material contract, and the absence of any event that with the lapse of time or the giving of notice or both would constitute a material default under, any material contract;

•

related party transactions;

•

property and assets;

•

privacy matters;

•

compliance with restrictions on certain payments by YuMe and its subsidiaries, including those that would violate any provisions of the federal Foreign Corrupt Practices Act of 1977, the federal Anti-Kickback Act of 1986 and the U.K. Bribery Act of 2010 and other anti-corruption laws of similar effect;

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•

compliance with certain export laws and regulations and economic sanction laws by YuMe and its subsidiaries;

•

the receipt of an opinion from Deutsche Bank;

•

information supplied by YuMe for inclusion in the Offer Documents, the Schedule 14D-9 and the registration statement on Form F-4 of which this prospectus/offer to exchange is a part;

•

the absence of any undisclosed broker’s or finder’s fees; and

•

YuMe’s solvency.

Many of YuMe’s representations and warranties are qualified by, among other things, exceptions relating to the absence of a “YuMe Material Adverse Effect,” which means any change, event, violation, inaccuracy, effect or circumstance that, individually or taken together with all other changes, events, violations, inaccuracies, effects or circumstances that have occurred on or prior to the date of determination of the occurrence of the YuMe Material Adverse Effect, is materially adverse to the business, financial condition or results of operations of YuMe and its subsidiaries considered as a single enterprise. However, a YuMe Material Adverse Effect will not include any change, event, violation, inaccuracy, effect or circumstance to the extent attributable to:

(A)

general political, economic or market conditions or general changes or developments in the industry in which YuMe and its subsidiaries operate;

(B)

national or international political conditions, acts of terrorism or war (whether or not declared) or natural disasters occurring after the date of the Merger Agreement;

(C)

the announcement of the Merger Agreement or the pendency of the Transactions (or related leaks or rumors), including any negative impact on or disruption in relationships, contractual or otherwise, with customers, suppliers, distributors, employees, partners, vendors or any other third person (provided that this exception will not apply to any representation or warranty pertaining to the execution and delivery of the Merger Agreement by YuMe, the performance of YuMe of its obligations thereunder, or the consummation of the Transactions);

(D)

the compliance by YuMe with the terms of the Merger Agreement (other than with the provisions thereto relating to the conduct of YuMe’s and its subsidiaries’ businesses in the ordinary and usual course of business), including any action taken or refrained from being taken by YuMe pursuant to or in accordance with the Merger Agreement and any action taken or refrained from being taken by YuMe, in each case, which RhythmOne has expressly approved, consented to or requested in writing following the date of the Merger Agreement (provided that any adverse change, event, violation, inaccuracy, effect or circumstance resulting from the manner in which YuMe takes or fails to take such action or complies with the terms of the Merger Agreement will not be excluded by this exception);

(E)

changes in law or any applicable accounting regulations or principles or the interpretations thereof;

(F)

changes in the price or trading volume of YuMe Shares, in and of itself (provided that any adverse change, event, violation, inaccuracy, effect or circumstance that may have caused or contributed to such change in market price or trading volume will not be excluded under this exception);

(G)

any failure, in and of itself, by YuMe and its subsidiaries to meet public or internal estimates, expectations, budgets, plans or projections relating to revenue, earnings or other financial performance or results of operations for any period (provided that any adverse change, event, violation, inaccuracy, effect or circumstance that may have caused or contributed to any such failure will not be excluded under this exception);

(H)

changes in the industry in which YuMe and its subsidiaries operate; or

(I)

any securityholder litigation.

except, with respect to items (A), (B), (E) and (H) above, to the extent that such change, event, violation, inaccuracy, effect or circumstance has had a disproportionate adverse effect on YuMe and its subsidiaries relative

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to other companies operating in the industries in which YuMe and its subsidiaries conduct business, in which case only the incremental disproportionate adverse impact may be taken into account in determining whether there has occurred a YuMe Material Adverse Effect.

The Merger Agreement also contains customary representations and warranties made by RhythmOne that are subject to specified exceptions and qualifications contained in the Merger Agreement and the matters contained in confidential disclosure schedules delivered by RhythmOne to YuMe concurrently with the execution of the Merger Agreement. The representations and warranties of RhythmOne, Purchaser and Merger Sub Two to YuMe under the Merger Agreement relate to, among other things:

•

RhythmOne’s, Purchaser’s and Merger Sub Two’s due organization, existence, good standing (where relevant), authority to own, operate and lease their properties and to carry on their business as it is currently being conducted;

•

the accuracy and completeness of the memorandum of association and articles of association of RhythmOne and the certificate of incorporation of Purchaser and Merger Sub Two and bylaws or other organizational documents of RhythmOne, Purchaser and Merger Sub Two;

•

neither Purchaser nor Merger Sub Two carrying on business since incorporation, nor will carry on any business prior to the Effective Time, other than the execution of the Merger Agreement and performance of the obligations thereunder;

•

RhythmOne’s, Purchaser’s and Merger Sub Two’s ownership of shares;

•

RhythmOne’s, Purchaser’s, Merger Sub Two’s and RhythmOne’s subsidiaries’ capitalization;

•

the corporate power and authority of RhythmOne, Purchaser and Merger Sub Two to execute, deliver, and consummate the Transactions, and the enforceability of the Merger Agreement against RhythmOne, Purchaser and Merger Sub Two, subject to certain specified customary assumptions and exceptions;

•

the adoption by the respective board of directors of each of RhythmOne, Purchaser and Merger Sub Two of resolutions approving the Merger Agreement, the Offer, the First Merger and the other transactions contemplated by the Merger Agreement;

•

the absence of violations of, breaches of or conflicts with, the constitutional documents of RhythmOne, Purchaser or Merger Sub Two, applicable law and certain agreements as a result of RhythmOne’s, Purchaser’s or Merger Sub Two’s entrance into and performance under the Merger Agreement, subject to certain specified standard qualifications and assumptions;

•

RhythmOne’s public disclosure since January 1, 2014, and financial statements for the years ended March 31, 2017 and March 31, 2016;

•

RhythmOne’s books, records and accounts;

•

RhythmOne’s disclosure controls and procedures and internal controls over financial reporting;

•

compliance with applicable requirements of London Stock Exchange plc governing admission to AIM and the regulation of companies whose securities are admitted to trading on AIM (including any guidance notes and schedules);

•

the absence of certain undisclosed liabilities;

•

the absence of a RhythmOne Material Adverse Effect (as defined herein) since March 31, 2017, and the absence of specified actions since March 31, 2017 that would be in violation of certain interim operating covenants under the Merger Agreement if taken after date of the Merger Agreement;

•

information supplied by RhythmOne for inclusion in the Offer Documents, the Schedule 14D-9 and the registration statement on Form