SEC Info - Digital Turbine, Inc. - ‘10-K’ for 3/31/21

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Digital Turbine, Inc.

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of Digital Turbine, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of March 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended March 31, 2021, and our report dated June 10, 2021 expressed an unqualified opinion on those financial statements.

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting (“Management’s Report”). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of Triapodi Ltd., a wholly-owned subsidiary, whose financial statements reflect total assets and revenues constituting 10.4 and 0.4 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended March 31, 2021. As indicated in Management’s Report, Triapodi Ltd. was acquired during 2021. Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of Triapodi Ltd.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ GRANT THORNTON LLP

Dallas, Texas

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Digital Turbine, Inc. and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Digital Turbine, Inc. and Subsidiaries (collectively, the “Company”) as of March 31, 2020, the related consolidated statements of operations and comprehensive income / (loss), stockholders’ equity and cash flows for each of the two years in the period ended March 31, 2020, and the related notes to the consolidated financial statements (collectively, the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2020, and the results of its operations and its cash flows for the two years in the period ended March 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ SingerLewak LLP

We served as the Company’s auditor from 2009 to 2021.

Los Angeles, California

June 2, 2020

CONSOLIDATED FINANCIAL STATEMENTS

Digital Turbine, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

ASSETS

Current assets

Cash

i 30,778

i 21,534

Restricted cash

i 340

i 125

Accounts receivable, net of allowances for credit losses of $ i 5,488 and $ i 4,059, respectively

i 61,985

i 33,135

Prepaid expenses and other current assets

i 4,282

i 3,653

Total current assets

i 97,385

i 58,447

Property and equipment, net

i 13,050

i 8,183

Right-of-use assets

i 3,495

i 4,237

Deferred tax assets, net

i 12,963

i —

Intangible assets, net

i 53,300

i 43,882

Goodwill

i 80,176

i 69,262

TOTAL ASSETS

i 260,369

i 184,011

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable

i 34,953

i 31,579

Accrued license fees and revenue share

i 46,196

i 19,423

Accrued compensation

i 9,817

i 4,311

Accrued earn-out

i —

i 23,735

Short-term debt, net of debt issuance costs of $ i 443 and $ i 62, respectively

i 14,557

i 1,188

Other current liabilities

i 5,626

i 2,573

Total current liabilities

i 111,149

i 82,809

Long-term debt, net of debt issuance costs of $ i — and $ i 245, respectively

i —

i 18,505

Other non-current liabilities

i 4,108

i 5,243

Total liabilities

i 115,257

i 106,557

Stockholders' equity

Preferred stock

Series A convertible preferred stock at $ i i 0.0001 / par value; i i 2,000,000 / shares authorized, i i i i 100,000 / / / issued and outstanding (liquidation preference of $ i i 1 / )

i 100

Common stock

$ i i 0.0001 / par value: i i 200,000,000 / shares authorized; i 90,685,553 issued and i 89,949,847 outstanding at March 31, 2021; i 88,041,240 issued and i 87,306,784 outstanding at March 31, 2020

i 10

Additional paid-in capital

i 373,310

i 360,224

Treasury stock ( i i 754,599 / shares at March 31, 2021 and March 31, 2020)

( i 71)

Accumulated other comprehensive loss

( i 903)

( i 591)

Accumulated deficit

( i 227,334)

( i 282,218)

Total stockholders' equity

i 145,112

i 77,454

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

i 260,369

i 184,011

The accompanying notes are an integral part of these consolidated financial statements.

Digital Turbine, Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income / (Loss)

(in thousands, except per share amounts)

Year ended March 31,

2021

2020

2019

Net revenues

i 313,579

i 138,715

i 103,569

Costs of revenues and operating expenses

License fees and revenue share

i 178,649

i 83,588

i 65,981

Other direct costs of revenues

i 2,358

i 1,454

i 2,023

Product development

i 20,119

i 12,018

i 10,876

Sales and marketing

i 19,304

i 11,244

i 8,212

General and administrative

i 33,940

i 17,199

i 13,032

Total costs of revenues and operating expenses

i 254,370

i 125,503

i 100,124

Income from operations

i 59,209

i 13,212

i 3,445

Interest and other income / (expense), net

Change in estimated contingent consideration

( i 15,751)

i —

Interest income / (expense)

( i 1,003)

i 41

( i 1,120)

Foreign exchange transaction gain

i —

i 3

Change in fair value of convertible note embedded derivative liability

i —

( i 1,008)

Change in fair value of warrant liability

i —

( i 9,580)

( i 4,875)

Loss on extinguishment of debt

( i 452)

i —

( i 431)

Other income / (expense)

( i 146)

i 232

i 153

Total interest and other income / (expense), net

( i 17,352)

( i 9,307)

( i 7,278)

Income / (loss) from continuing operations before income taxes

i 41,857

i 3,905

( i 3,833)

Income tax provision / (benefit)

( i 13,027)

( i 10,375)

i 469

Income / (loss) from continuing operations, net of taxes

i 54,884

i 14,280

( i 4,302)

Loss from discontinued operations

i —

( i 380)

( i 1,708)

Loss from discontinued operations, net of taxes

i —

( i 380)

( i 1,708)

Net income / (loss)

i 54,884

i 13,900

( i 6,010)

Other comprehensive loss

Foreign currency translation adjustment

( i 312)

( i 235)

( i 31)

Comprehensive income / (loss)

i 54,572

i 13,665

( i 6,041)

Basic net income / (loss) per common share

Continuing operations

i 0.62

i 0.17

( i 0.06)

Discontinued operations

i —

( i 0.02)

Basic net income / (loss) per common share

i 0.62

i 0.17

( i 0.08)

Weighted-average common shares outstanding, basic

i 88,514

i 84,594

i 77,440

Diluted net income / (loss) per common share

Continuing operations

i 0.57

i 0.16

( i 0.06)

Discontinued operations

i —

( i 0.02)

Diluted net income / (loss) per common share

i 0.57

i 0.16

( i 0.08)

Weighted-average common shares outstanding, diluted

i 96,151

i 89,558

i 77,440

The accompanying notes are an integral part of these consolidated financial statements.

Digital Turbine, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

Preferred Stock
Shares

Amount

Common Stock
Shares

Amount

Treasury Stock
Shares

Amount

Additional
Paid-In
Capital

Accumulated
Other
Comprehensive
Income / (Loss)

Accumulated
Deficit

Total

Balance at March 31, 2018

i 100,000

i 100

i 76,108,823

i 10

i 754,599

( i 71)

i 318,066

( i 325)

( i 290,108)

i 27,672

Net loss

—

( i 6,010)

Foreign currency translation

—

( i 31)

—

( i 31)

Stock-based compensation

—

i 306,656

—

i 2,568

—

i 2,568

Options exercised

—

i 424,817

—

i 423

—

i 423

Warrants exercised

—

i 333,924

—

i 1,154

—

i 1,154

Stock issued for settlement of liability

—

i 4,446,265

—

i 10,582

—

i 10,582

Balance at March 31, 2019

i 100,000

i 100

i 81,620,485

i 10

i 754,599

( i 71)

i 332,793

( i 356)

( i 296,118)

i 36,358

Net income

—

i 13,900

Foreign currency translation

—

( i 235)

—

( i 235)

Settlement of derivative liability

—

i 17,588

—

i 17,588

Stock-based compensation

—

i 48,449

—

i 2,710

—

i 2,710

Stock-based compensation for services rendered

—

i 75,494

—

i 643

—

i 643

Options exercised

—

i 2,279,266

—

i 3,865

—

i 3,865

Warrants exercised

—

i 3,283,090

—

i 2,625

—

i 2,625

Balance at March 31, 2020

i 100,000

i 100

i 87,306,784

i 10

i 754,599

( i 71)

i 360,224

( i 591)

( i 282,218)

i 77,454

Net income

—

i 54,884

Foreign currency translation

—

( i 312)

—

( i 312)

Stock-based compensation

—

i 91,570

—

i 4,853

—

i 4,853

Stock-based compensation for services rendered

—

i 45,110

—

i 1,024

—

i 1,024

Options exercised

—

i 2,506,383

—

i 7,209

—

i 7,209

Balance at March 31, 2021

i 100,000

i 100

i 89,949,847

i 10

i 754,599

( i 71)

i 373,310

( i 903)

( i 227,334)

i 145,112

The accompanying notes are an integral part of these consolidated financial statements.

Digital Turbine, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

Year ended March 31,

2021

2020

2019

Cash flows from operating activities

Net income / (loss) from continuing operations, net of taxes

i 54,884

i 14,280

( i 4,302)

Adjustments to reconcile net income / (loss) to net cash used in operating activities:

Depreciation and amortization

i 7,114

i 2,342

i 2,766

Non-cash interest expense

i 94

i 6

i 798

Stock-based compensation

i 4,853

i 2,710

i 2,011

Stock-based compensation for services rendered

i 1,024

i 643

i 520

Change in fair value of convertible note embedded derivative liability

i —

i 1,008

Change in fair value of warrant liability

i —

i 9,580

i 4,875

Loss on extinguishment of debt

i 255

i —

i 431

Change in estimate of remaining contingent consideration

i 15,751

i —

Payment of contingent consideration in excess of amounts capitalized at acquisition

( i 15,751)

i —

(Increase) / decrease in assets:

Accounts receivable, gross

( i 25,378)

( i 2,431)

( i 6,040)

Allowance for credit losses

i 1,424

i 2,866

i 383

Prepaid expenses and other current assets

( i 586)

( i 747)

( i 430)

Deferred tax assets

( i 12,952)

i 40

i 556

Right-of-use asset

i 742

( i 1,858)

—

Increase / (decrease) in liabilities:

Accounts payable

( i 1,897)

i 16,168

( i 4,983)

Accrued license fees and revenue share

i 26,408

( i 3,630)

i 7,973

Accrued compensation

i 5,224

i 1,661

( i 525)

Other current liabilities

i 2,721

i 1,040

( i 253)

Other non-current liabilities

( i 1,135)

( i 9,000)

i 182

Net cash provided by operating activities - continuing operations

i 62,795

i 33,670

i 4,970

Net cash used in operating activities - discontinued operations

i —

( i 2,293)

( i 3,701)

Net cash provided by operating activities

i 62,795

i 31,377

i 1,269

Cash flows from investing activities

Capital expenditures

( i 9,204)

( i 4,845)

( i 2,314)

Acquisition of Appreciate, net of cash

( i 20,348)

i —

Acquisition of Mobile Posse, net of cash

( i 8,256)

( i 41,872)

i —

Net cash used in investing activities

( i 37,808)

( i 46,717)

( i 2,314)

Cash flows from financing activities

Proceeds from borrowings

i 15,000

i 20,000

i —

Payment of debt issuance costs

( i 469)

( i 313)

i —

Payment of contingent consideration

( i 16,956)

i —

Options and warrants exercised

i 7,209

i 6,488

i 734

Repayment of debt obligations

( i 20,000)

i —

( i 1,650)

Net cash provided by / (used in) financing activities

( i 15,216)

i 26,175

( i 916)

Effect of exchange rate changes on cash

( i 312)

( i 235)

( i 31)

Net change in cash

i 9,459

i 10,600

( i 1,992)

Cash and restricted cash, beginning of year

i 21,659

i 11,059

i 13,051

Cash and restricted cash, end of year

i 31,118

i 21,659

i 11,059

Supplemental disclosure of cash flow information

Interest paid

i 922

i 101

i 383

Income taxes paid

i 927

i —

Supplemental disclosure of non-cash financing activities

Common stock of the Company issued for extinguishment of debt

i —

i 10,582

Cashless exercise of warrants to purchase common stock of the Company

i —

i 144

De-recognition of liability upon warrant exercise

i —

i 17,593

i —

The accompanying notes are an integral part of these consolidated financial statements.

Digital Turbine, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts)

1. i Organization

Digital Turbine, Inc. ("Digital Turbine") was incorporated in the state of Delaware in 1998. Digital Turbine, through its subsidiaries, works at the convergence of media and mobile communications, delivering end-to-end products and solutions for mobile operators, application advertisers, device OEMs, and other third parties to enable them to effectively monetize media content and generate higher value user acquisition.

2. i Acquisitions

On February 28, 2020, the Company completed the acquisition of Mobile Posse, Inc. (“Mobile Posse”) pursuant to the previously reported stock purchase agreement with ACME Mobile, LLC (“ACME”), Mobile Posse, and certain equity holders of ACME. The Company acquired all of the outstanding capital stock of Mobile Posse in exchange for total consideration of: (1) $ i 41,500 in cash paid at closing; (2) working capital adjustments of $ i 453 paid in cash after closing; and (3) an earn-out of $ i 39,486, paid in cash quarterly and concluding at the end of the twelve-month period (the “Earn-Out Period”) following the closing of the Acquisition and based on the achievement of certain target net revenues, less associated revenue shares, over the Earn-Out Period. Note the total consideration listed above excludes cash acquired of $ i 4,613. Total consideration paid for the acquisition of Mobile Posse was $ i 81,439. None of the goodwill recognized for the Acquisition was deductible for tax purposes.

The fair values of the assets acquired and liabilities assumed at the date of acquisition are as follows:


Assets
Cash	$	i 4,613
Accounts receivable	i 10,864
Other current assets	i 422
Property, plant, and equipment	i 2,041
Right-of-use asset	i 2,379
Developed technology	i 1,600
Customer relationships	i 42,500
Goodwill	i 27,267
Other non current assets	i 1,473
Total Assets	$	i 93,159
Liabilities
Accounts payable	$	i 499
Accrued license fees and revenue share	i 6,847
Accrued compensation	i 180
Other current liabilities	i 827
Non-current deferred tax liability	i 10,854
Other non-current liabilities	i 3,469
Total Liabilities	$	i 22,676

Note the total consideration listed above excludes cash of $ i 4,613 and working capital adjustments.

The amortization period for the intangible assets acquired in the transaction are as follows:


Intangible Asset						Remaining Useful Life
Developed technology						i 5 years
Customer relationships						i 18 years
Goodwill						Indefinite

The operating results of Mobile Posse, Inc. which are included in the accompanying Consolidated Statements of Operations and Comprehensive Income / (Loss) from the acquisition date to March 31, 2020, are as follows:


	Unaudited
Revenues	$	i 4,817
Costs of revenues	i 2,512
Operating expenses	i 1,290
Net income	$	i 1,015

Unaudited pro forma combined financial statements are presented below for informational purposes only. The unaudited pro forma combined statements of operations for the twelve months ended March 31, 2020 and March 31, 2019 for the Company, and the period from April 3, 2018 through March 31, 2019 for Mobile Posse, combine the historical consolidated statements of operations of the Company and Mobile Posse, giving effect to the acquisition as if it had been consummated on April 3, 2018, the beginning of the earliest period presented.

Following are the unaudited pro forma results as if the acquisition of Mobile Posse had occurred as of April 1, 2018.

Year ended March 31,

2020

2019

Unaudited

(in thousands, except per share amounts)

Net revenues

i 190,920

i 162,956

Net income

i 18,347

( i 1,387)

Basic net income / (loss) per common share

i 0.22

( i 0.02)

Diluted net income / (loss) per common share

i 0.20

( i 0.02)

On March 1, 2021, Digital Turbine, through its subsidiary DT EMEA, an Israeli company and wholly-owned subsidiary of the Company, entered into a Share Purchase Agreement with Triapodi Ltd., an Israeli company (d/b/a Appreciate) (“Appreciate”), the stockholder representative, and the stockholders of Appreciate, pursuant to which DT EMEA acquired, on March 2, 2021, all of the outstanding capital stock of Appreciate in exchange for total consideration of $ i 20,003 in cash. In connection with the Acquisition, under the terms of the Purchase Agreement, DT EMEA entered into bonus arrangements to pay up to $ i 6,000 in retention bonuses and performance bonuses to the founders and certain other employees of Appreciate. The Purchase Agreement contains customary representations and warranties, covenants, and indemnification provisions. The Company determined the operating results of the acquisition to not be material to the Consolidated Financial Statements for the year ended March 31, 2021 and, therefore, has not included pro forma financial information for the acquisition of Appreciate. None of the goodwill recognized for the Acquisition was deductible for tax purposes.

Due to the proximity of the Acquisition to our fiscal year ended March 31, 2021, the fair values of the assets acquired and liabilities assumed at the date of acquisition are presented on a preliminary basis and are as follows:


Assets
Cash	$	i 2,152
Accounts receivable	i 2,400
Other current assets	i 53
Property, plant, and equipment	i 17
Developed technology	i 8,200
Customer relationships	i 2,300
Trade Names	i 1,700
Goodwill	i 9,431
Total Assets	$	i 26,253
Liabilities
Accounts payable	$	i 5,271
Accrued license fees and revenue share	i 365
Accrued compensation	i 282
Other current liabilities	i 332
Total Liabilities	$	i 6,250
Total Consideration	$	i 20,003

The amortization period for the intangible assets acquired in the transaction are as follows:


Intangible Asset						Remaining Useful Life
Developed technology						i 10 years
Customer relationships						i 15 years
Trade names						i 10 years
Goodwill						Indefinite

The operating results of Appreciate, which are included in the accompanying Consolidated Statements of Operations and Comprehensive Income / (Loss) from the acquisition date to March 31, 2021, are as follows:


	Unaudited
Revenues	$	i 1,230
Costs of revenues and operating expenses	i 1,139
Net income	$	i 91

3. i Discontinued Operations

On April 29, 2018, the Company entered into i two distinct disposition agreements with respect to selected assets owned by our subsidiaries.

DT APAC and DT Singapore (together, “Pay Seller”), each wholly owned subsidiaries of the Company, entered into an Asset Purchase Pay Agreement (the “Pay Agreement”), dated as of April 23, 2018, with Chargewave Ptd Ltd (“Pay Purchaser”) to sell certain assets (the “Pay Assets”) owned by the Pay Seller related to the Company’s Direct Carrier Billing business. The Pay Purchaser is principally owned and controlled by Jon Mooney, an officer of the Pay Seller. At the closing of the asset sale, Mr. Mooney was no longer employed by the Company or Pay Seller. As consideration for this asset sale, Digital Turbine is entitled to receive certain license fees, profit-sharing, and equity participation rights as outlined in the Company’s Form 8-K filed on May 1, 2018 with the SEC. The transaction was completed on July 1, 2018 with an effective date of July 1, 2018. With the sale of these assets, the Company has determined that it will exit the segment of the business previously referred to as the Content business.

In accordance with the Pay Agreement, the Company assigned and transferred a material contract to the Pay Purchaser. Subsequently to the closing of the transaction associated with the Pay Agreement, the Company received notification from the Pay Purchaser that the partner to the material contract had terminated the contract with the Pay Purchaser. Due to the material contract being terminated, the Company has determined that the estimated earn-out from the Pay Purchaser to be $ i 0. As all the assets being transferred had been fully impaired prior to the closing of the transaction, the gain/loss on sale related to the Pay Agreement transaction is currently estimated at $ i 0. Furthermore, the Company retained certain receivables and payables for content delivered for the benefit of the partner to the material contract, where these certain receivables and payables were all recognized prior to the closing of the Pay Agreement. These amounts were presented as assets and liabilities held for disposal in prior presented periods. As of March 31, 2021, the Company has determined there to be uncertainty surrounding the collectability of the receivables due to a breakdown in ongoing discussions with the business partner. We have determined that the amounts recorded are more likely than not to be uncollectible due to disputes surrounding the content delivered, furthermore the related payables would also be contractually withheld unless payment is received at a later date. At this time, the Company has reserved for all balances remaining, both receivables and payables, related to the discontinued operations of the Pay business. The total impact to the Company if all of the remaining receivables and payables are subsequently collected is immaterial.

DT Media, a wholly-owned subsidiary of the Company, entered into an Asset Purchase Agreement (the “A&P Agreement”), dated as of April 28, 2018, with Creative Clicks B.V. (the “A&P Purchaser”) to sell business relationships with various advertisers and publishers (the “A&P Assets”) related to the Company’s Advertising and Publishing business. As consideration for this asset sale, we are entitled to receive a percentage of the gross profit, as defined by the A&P Agreement, derived from these customer agreements, for a period of i three years, as outlined in the Company’s Form 8-K filed on May 1, 2018 with the SEC. The transaction was completed on June 28, 2018 with an effective date of June 1, 2018. With the sale of these assets, the Company has determined that it will exit the operating segment of the business previously referred to as the A&P business, which was previously part of Advertising, the Company's sole continuing reporting unit. No gain or loss on sale was recognized related to this divestiture. All transferred assets and liabilities, with the exception of goodwill, were fully amortized prior to entering into the sales agreement. As the consideration given by the purchaser was already materially determined at March 31, 2018, goodwill was impaired to the estimated future cash flows of the divested business, which was effectively the purchase price. With the consummation of the sale, the remaining goodwill asset was netted against the purchase price receivable for a net impact of $ i 0 on the Consolidated Statement of Operations for the year ended March 31, 2019.

These dispositions have allowed the Company to benefit from a streamlined business model, simplified operating structure, and enhanced management focus.

The following table summarizes the financial results of our discontinued operations for all periods presented herein:

Condensed Statements of Operations and Comprehensive Loss

For Discontinued Operations

(in thousands, except per share amounts)

Year ended March 31,

2020

2019

Net revenues

i —

i 3,970

Total costs of revenues

( i 1,202)

i 1,788

Product development

i 60

i 732

Sales and marketing

i —

i 350

General and administrative

i 1,433

i 2,671

Loss from operations

( i 291)

( i 1,571)

Interest and other income / (expense), net

( i 89)

( i 137)

Loss from discontinued operations before income taxes

( i 380)

( i 1,708)

Income tax provision / (benefit)

i —

Loss from discontinued operations, net of taxes

( i 380)

( i 1,708)

Foreign currency translation adjustment

i —

Comprehensive loss

( i 380)

( i 1,708)

Basic and diluted net loss per common share

i i — /

( i i 0.02 / )

Weighted-average common shares outstanding, basic

i 84,594

i 77,440

Weighted-average common shares outstanding, diluted

i 89,558

i 77,440

The following table provides reconciling cash flow information for our discontinued operations:

Year ended March 31,

2020

2019

Cash flows from operating activities

Net loss from discontinued operations, net of taxes

( i 380)

( i 1,708)

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

Depreciation and amortization

i 19

i 279

Change in allowance for doubtful accounts

( i 1,589)

i 1,011

Loss on disposal of fixed assets

i 109

i —

Stock-based compensation

i —

i 37

(Increase) / decrease in assets:

Accounts receivable

i 3,472

i 5,119

Goodwill

i —

i 309

Prepaid expenses and other current assets

i —

i 54

Increase / (decrease) in liabilities:

Accounts payable

( i 3,158)

( i 5,631)

Accrued license fees and revenue share

( i 537)

( i 2,522)

Accrued compensation

( i 226)

( i 303)

Other current liabilities

( i 3)

( i 346)

Cash used in operating activities

( i 2,293)

( i 3,701)

Cash used in discontinued operations

( i 2,293)

( i 3,701)

4. i Summary of Significant Accounting Policies

Basis of Presentation

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for annual financial statements. The financial statements, in the opinion of management, include all adjustments necessary for a fair statement of the results of operations, financial position and cash flows for each period presented.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

Revenue from Contracts with Customers

The Company adopted ASC 606 on April 1, 2018, and ASC 606 is effective from the beginning of fiscal year 2019, using the modified retrospective method for all contracts not completed as of the effective date. For contracts that were modified before the effective date, the Company reflected the aggregate effect of all modifications when identifying performance obligations and allocating transaction price in accordance with practical expedient ASC 606-10-65-1-(f)-4, which did not have a material effect on the adjustment to accumulated deficit. The adoption of ASC 606 represents a change in accounting principle that will more closely align revenue recognition with the delivery of the Company's services and will provide financial statement readers with enhanced disclosures. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services.

Media Distribution Services

The Company’s Media Distribution business consists of an advertiser solution for unique and exclusive carrier and OEM inventory, which is comprised of services including:

•An application media software platform that enables carriers and OEMs to control, manage, and monetize applications installed at the time of activation and over the life of a mobile device. This allows operators to personalize the application activation experience for customers and monetize their home screens via Cost-Per-Install or CPI arrangements, Cost-Per-Placement or CPP arrangements, and/or Cost-Per-Action or CPA arrangements, with third-party advertisers. There are several different delivery methods available to operators and OEMs on first boot of the device. Optional notifications and other features are available throughout the life-cycle of the device, providing operators and OEMs opportunity for additional revenue streams;

•A content media software platform that enables programmatic advertising and targeted media delivery. This allows operators to monetize their operator-branded on-phone applications by showing in-application advertisements via cost-per-thousand impression arrangements and page-view arrangements; and

•Other services related to the core platform.

Application Media revenues totaled $ i 217,447, $ i 133,898, and $ i 103,569, respectively, for the years ended March 31, 2021, 2020, and 2019, while Content Media revenues, primarily related to the Mobile Posse acquisition on February 28, 2020, totaled $ i 96,132, $ i 4,817, and $ i 0, respectively.

Carriers and OEMs

As discussed above, contracts with carriers and OEMs are created to help the customer control, manage, and monetize the mobile device through the marketing of application slots or advertisement space/inventory to advertisers and delivering the applications or advertisements to the mobile device. The Company generally offers these services under a revenue share model or, to a lesser extent, a i customer contract per-device license fee model for a two-to-four year software as a service ("SaaS") license agreement. These agreements typically include the following services: the access to a SaaS platform, hosting, solution features, and general support and maintenance. The Company has concluded that each promised service is delivered concurrently, interdependently, and continuously with all other promised services over the contract term and, as such, has concluded these promises are a single performance obligation that is delivered to the customer over a series of distinct service periods over the contract term. The Company meets the criteria for overtime recognition because the customer simultaneously receives and consumes the benefits provided by the Company's performance as the Company performs, and the same method would be used to measure progress over each distinct service period. The fees for such services are not known at contract inception, but are measurable during each distinct service period. The Company's contracts do not include advance non-refundable fees. The Company’s fees for these services are based upon a revenue-share arrangement with the carrier or OEM. Both parties have agreed to share the revenue earned from third-party advertisers, discussed below, for these services.

Third-Party Advertisers

Application Management Software

Programmatic Advertising and Targeted Media Delivery

Gross vs Net Reporting

The Company has determined that it is the primary obligor for its advertiser services for application management and programmatic advertising and targeted media delivery when it controls the application slots or ad space/inventory. This is because it has been allocated such slots or space from the carrier or OEM and is responsible for marketing or monetizing the slots or space. The advertisers look to the Company to acquire such slots or space, and the company’s software is used to deliver the applications, ads or content to the mobile device. The Company also may manage application or ad campaigns of advertisers associated with these services. If the applications or advertisements are not delivered to the mobile device or the Company doesn’t comply with certain policies of the advertiser, the Company would be responsible and have to indemnify the customer for these issues. The Company also has discretion in setting the price of the slots or space based on market conditions, collects the transaction prices, and remits the revenue-share percentage of the transaction price to the carrier or OEM.

The company recognizes the transaction price received from advertisers, content providers, or websites gross and the carrier or OEM share of such transaction price as costs of revenues - license fees and revenue share - in the accompanying Consolidated Statements of Operations and Comprehensive Income / (Loss).

Software Development Costs

The Company applies the principles of FASB ASC 985-20, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed (“ASC 985-20”). ASC 985-20 requires that software development costs incurred in conjunction with product development be charged to research and development expense until technological feasibility is established. Thereafter, until the product is released for sale, software development costs must be capitalized and reported at the lower of unamortized cost or net realizable value of the related product. At this time, we do not invest significant capital into the research and development phase of new products and features as the technological feasibility aspect of our platform products has either already been met or is met very quickly.

The Company has adopted the “tested working model” approach to establishing technological feasibility for its products. Under this approach, the Company does not consider a product in development to have passed the technological feasibility milestone until the Company has completed a model of the product that contains essentially all the functionality and features of the final product and has tested the model to ensure that it works as expected. The Company capitalizes costs related to the development of software to be sold, leased, or otherwise marketed as we believe we have met the "tested working model" threshold. Development costs continue to be capitalized until the related software is released. The Company considers the following factors in determining whether costs can be capitalized: the emerging nature of the mobile market; the gradual evolution of the wireless carrier platforms and mobile phones for which it develops products; the uncertainty regarding a product’s revenue-generating potential; its lack of control over carrier distribution channels; and its historical practice of canceling products at any stage of the development process.

After products and features are released, all product maintenance cost are expensed.

Capitalized software development costs, whether for software developed to be sold, leased, or otherwise marketed or for internal use, are generally amortized over a i 3-year useful life.

/ i

Product Development Costs

The Company charges non-capitalizable costs related to design, development, deployment, and maintenance of products to product development expense as incurred. The types of costs included in product development expenses include salaries, contractor fees and allocated facilities costs.

Stock-Based Compensation

We have applied FASB ASC 718 Share-Based Payment (“ASC 718”) and accordingly, we record stock-based compensation expense for all of our stock-based awards.

Under ASC 718, we estimate the fair value of stock options granted using the Black-Scholes option pricing model. The fair value for awards that are expected to vest is then amortized on a straight-line basis over the requisite service period of the award, which is generally the option vesting term. The amount of expense recognized represents the expense associated with the stock options we expect to ultimately vest based upon an estimated rate of forfeitures; this rate of forfeitures is updated as necessary and any adjustments needed to recognize the fair value of options that actually vest or are forfeited are recorded.

The Black-Scholes option pricing model, used to estimate the fair value of an award, requires the input of subjective assumptions, including the expected volatility of our common stock, interest rates, dividend rates and an option’s expected life. As a result, the financial statements include amounts that are based upon our best estimates and judgments relating to the expenses recognized for stock-based compensation.

The Company grants restricted stock subject to market or performance conditions that vest based on the satisfaction of the conditions of the award. Unvested restricted stock entitles the grantees to dividends, if any, with voting rights determined in each agreement. The fair value of performance-based awards is determined using the market closing price on the grant date. Derived service periods and the periods charged with compensation expense for performance-based awards are estimated based on the Company’s judgment of likely future performance and may be adjusted in future periods depending on actual performance.

Income Taxes

The Company accounts for income taxes in accordance with FASB ASC 740-10, Accounting for Income Taxes (“ASC 740-10”), which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in its financial statements or tax returns. Under ASC 740-10, the Company determines deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of assets and liabilities along with net operating losses, if it is more likely than not the tax benefits will be realized using the enacted tax rates in effect for the year in which it expects the differences to reverse. To the extent a deferred tax asset cannot be realized, a valuation allowance is established.

ASC 740-10 prescribes that a company should use a more-likely-than-not recognition threshold based on the technical merits of the tax position taken. Tax positions that meet the “more-likely-than-not” recognition threshold should be measured as the largest amount of the tax benefits, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement in the financial statements. We recognize interest and penalties related to income tax matters as a component of the provision for income taxes.

•Future reversals of existing taxable temporary differences

•Future taxable income exclusive of reversing temporary differences and carryforwards

•Taxable income in prior carryback year(s) if carryback is permitted under the tax law

•Tax-planning strategies that would, if necessary, be implemented to, for example:

◦Accelerate taxable amounts to utilize expiring carryforwards

◦Change the character of taxable or deductible amounts from ordinary income or loss to capital gain or loss

◦Switch from tax-exempt to taxable investments

i Foreign Currency Translation

The Company uses the United States dollar for financial reporting purposes. Some of our foreign subsidiaries use their local currency as their functional currency. Assets and liabilities of foreign operations are translated using current rates of exchange prevailing at the balance sheet date. Equity accounts have been translated at their historical exchange rates when the capital transaction occurred. Statement of Operations amounts are translated at average rates in effect for the reporting period. The foreign currency translation adjustment loss of $ i 312, $ i 235, and $ i 31 in the years ended March 31, 2021, 2020, and 2019 has been reported as a component of comprehensive income / (loss) in the Consolidated Statements of Operations and Comprehensive Income / (Loss) and Consolidated Statements of Stockholders’ Equity.

Comprehensive Income / (Loss)

Comprehensive loss consists of two components, net loss and other comprehensive loss. Other comprehensive loss refers to gains and losses that, under generally accepted accounting principles, are recorded as an element of stockholders’ equity, but are excluded from net income. The Company’s other comprehensive loss currently includes only foreign currency translation adjustments.

Cash and Cash Equivalents

The Company considers all highly liquid short-term investments purchased with a maturity of three months or less to be cash equivalents.

i Restricted Cash

Cash accounts that are restricted as to withdrawal or usage are presented as restricted cash. As of March 31, 2021 and March 31, 2020, the Company had $ i 340 and $ i 125, respectively, of restricted cash held by a bank in a collateral account as collateral to cover the Company's corporate credit cards as well as a letter of credit issued to guarantee a facility lease in the prior period.

Accounts Receivable

Deposits

As of March 31, 2021, the Company had deposits of $ i 201 comprised of facility and equipment lease deposits, as compared to $ i 159 as of March 31, 2020.

Fair Value of Financial Instruments

The Company measures certain financial assets and liabilities at fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Where available, fair value is based on or derived from observable market prices or other observable inputs. Where observable prices or inputs are not available, valuation techniques are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity.

The carrying amounts of certain financial instruments, such as cash equivalents, short term investments, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities. The carrying value of our debt, less capitalized debt issuance costs, approximates fair value.

As of March 31, 2021 and 2020, the carrying value of cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued license fees, accrued compensation, debt, and other current liabilities approximates fair value due to the nature of such instruments.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the related assets. Estimated useful lives are the lesser of i 8-to- i 10 years or the term of the lease for leasehold improvements and i 3-to- i 5 years for other assets.

/ i

Leases

On April 1, 2019, we adopted Accounting Standards Update 2016-02, Leases (Topic 842), using the modified retrospective transition approach such that we accounted for leases that commenced before the effective date of ASU 2016-02 in accordance with previous GAAP unless the lease is modified, except that we recognized right-of-use ("ROU") assets and a lease liability for all such leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. Results and disclosure requirements for reporting periods beginning after June 30, 2019 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under Topic 840. The adoption of ASU No. 2016-02 resulted in the recognition of incremental right-of-use assets and related lease liabilities on the Consolidated Balance Sheet as of June 30, 2019.

Under Topic 842, we determine if an arrangement is a lease at inception. ROU assets and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, we consider only payments that are fixed and determinable at the time of commencement. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our incremental borrowing rate is a hypothetical rate based on our understanding of what our credit rating would be. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. When determining the probability of exercising such options, we consider contract-based, asset-based, entity-based, and market-based factors. Our lease agreements may contain variable costs such as common area maintenance, insurance, real estate taxes or other costs. Variable lease costs are expensed as incurred on the consolidated statements of operations. Our lease agreements generally do not contain any residual value guarantees or restrictive covenants.

The right-of-use asset components of our operating leases are included in right-of-use assets on our Consolidated Balance Sheets, while the current portion of our operating lease liabilities are included in other current liabilities and the long-term portion of our operating lease liabilities in other non-current liabilities on our Consolidated Balance Sheets.

Business Combinations

Goodwill and Indefinite Life Intangible Assets

Goodwill represents the excess of cost over fair value of net assets of businesses acquired. In accordance with FASB ASC 350-20, Goodwill and Other Intangible Assets, the value assigned to goodwill and indefinite lived intangible assets, including trademarks and trade names, through ASC 805, Business Combinations, is not amortized to expense, but rather evaluated on an at least annual basis to determine if there are potential impairments. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the implied fair value of the reporting unit goodwill is less than the carrying value. If the fair value of an indefinite lived intangible (such as trademarks and trade names) is less than its carrying amount, an impairment loss is recorded. Fair value is determined based on discounted cash flows, market multiples or appraised values, as appropriate. Discounted cash flow analysis requires assumptions about the timing and amount of future cash inflows and outflows, risk, the cost of capital, and terminal values. Each of these factors can significantly affect the value of the intangible asset. The estimates of future cash flows, based on reasonable and supportable assumptions and projections, require management’s judgment. Any changes in key assumptions about the Company’s businesses and their prospects, or changes in market conditions, could result in an impairment charge. Some of the more significant estimates and assumptions inherent in the intangible asset valuation process include: the timing and amount of projected future cash flows; the discount rate selected to measure the risks inherent in the future cash flows; and the assessment of the asset’s life-cycle and the competitive trends impacting the asset, including consideration of any technical, legal or regulatory trends.

Goodwill values assigned through ASC 805, Business Combinations, related to the acquisition of Appreciate are subject to adjustments prior to the finalization of the purchase price accounting one year from the date of acquisition.

Impairment of Long-Lived Assets and Finite Life Intangibles

Long-lived assets, including intangible assets subject to amortization, primarily consist of customer relationships and developed technology that have been acquired and are amortized using the straight-line method over their useful lives, ranging from five to i eighteen years, and are reviewed for impairment in accordance with FASB ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

There were i i i no / / indications of impairment present or that the carrying amounts may not be recoverable during the fiscal years ended March 31, 2021, 2020, and 2019.

Preferred Stock

The Company applies the guidance enumerated in FASB ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“ASC 480-10”), when determining the classification and measurement of preferred stock. Preferred shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value in accordance with ASC 480-10. All other issuances of preferred stock are subject to the classification and measurement principles of ASC 480-10. Accordingly, the Company classifies conditionally redeemable preferred shares (if any), which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control, as temporary equity. At all other times, the Company classifies its preferred shares in stockholders’ equity.

Concentrations of Credit Risk and Significant Customers

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash deposits and accounts receivable. A significant portion of the Company’s cash was held at one major financial institution as of March 31, 2021 and two major financial institutions as of March 31, 2020 that the Company's management has assessed to be of high credit quality. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250. At March 31, 2021 and March 31, 2020, the Company had $ i 27,128 and $ i 20,203 in excess of the FDIC-insured limit, respectively. The Company has not experienced any losses in such accounts.

The Company mitigates its credit risk with respect to accounts receivable by monitoring advertisers' and carriers' accounts receivable balances. As of March 31, 2021, one major customer, Outbrain Inc., represented i 13.0% of the Company's net accounts receivable balance. As of March 31, 2020, two major customers, Oath Inc., a subsidiary of Verizon Communications, and Outbrain Inc., represented i 11.6% and i 11.5% of the Company's net accounts receivable balance, respectively.

With respect to partner revenue concentration, the Company partners with mobile carriers and OEMs to deliver applications on our platform through the carrier network. During the fiscal year ended March 31, 2021, T-Mobile US Inc., including Sprint and other subsidiaries, a carrier partner, generated i 26.4%, AT&T Inc., including its Cricket subsidiary, a carrier partner, generated i 22.3%, Verizon Wireless, a subsidiary of Verizon Communications, a carrier partner, generated i 18.5%, and America Movil, primarily through its subsidiary Tracfone Wireless Inc., a carrier partner, generated i 10.8% of our net revenues. During the fiscal year ended March 31, 2020, Verizon Wireless, a subsidiary of Verizon Communications, a carrier partner, generated i 37.3%, AT&T Inc., including its Cricket subsidiary, a carrier partner, generated i 30.0%, and America Movil, primarily through its subsidiary Tracfone Wireless Inc., a carrier partner, generated i 10.7% of our net revenues. During the fiscal year ended March 31, 2019, Verizon Wireless, a subsidiary of Verizon Communications, a carrier partner, generated i 45.9% and AT&T Inc., including its Cricket subsidiary, a carrier partner, generated i 38.7% of our net revenues.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires the use of management's estimates. These estimates are subjective in nature and involve judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at fiscal year-end, and the reported amounts of revenues and expenses during the fiscal year. Actual results could differ from those estimates.

The COVID-19 pandemic has created and may continue to create significant uncertainty in macroeconomic conditions, which may cause further business slowdowns or shutdowns, depress demand for our advertising business, and adversely impact our results of operations. We expect uncertainties around our key accounting estimates to continue to evolve depending on the duration and degree of impact associated with the COVID-19 pandemic. Our estimates may change as new events occur and additional information emerges, and such changes may be recognized and disclosed in our consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848), which contains practical expedients for reference rate reform related activities that affect debt, leases, derivatives and other contracts. The guidance in ASU No. 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company continues to evaluate the impact of the guidance and may apply elections as applicable as changes in the market occur.

In January 2020, the FASB issued Accounting Standards Update 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) (ASU 2020-01), which clarifies the interaction of the accounting for equity securities under Topic 321, the accounting for equity method investments in Topic 323, and the accounting for certain forward contracts and purchased options in Topic 815. This guidance is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2021 on a prospective basis, with early adoption permitted. The Company will adopt ASU 2020-01 during the quarter ended June 30, 2022 and does not expect the impact of the future adoption of this standard to have a material impact on its consolidated results of operations, financial condition, and cash flows based on our current investments.

In December 2019, the FASB issued Accounting Standard Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes. This guidance is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2020 on a prospective basis, with early adoption permitted. The Company will adopt ASU 2019-12 during the quarter ended June 30, 2021 and does not expect the impact of the future adoption of this standard to have a material impact on its consolidated results of operations, financial condition, and cash flows.

Other authoritative guidance issued by the FASB (including technical corrections to the FASB Accounting Standards Codification) and the SEC did not, or are not expected to have a material effect on the Company’s consolidated financial statements.

Accounting Pronouncements Adopted During the Period

In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2018-15, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). This guidance is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2019. As such, the Company adopted this standard during the quarter ended June 30, 2020 on a prospective basis, and such adoption has not had a material impact on the Company's consolidated results of operations, financial condition, and cash flows in the current presented periods.

In August 2018, the FASB issued ASU 2018-13: Fair Value Measurement (Topic 820). The amendments in this update modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, as a result of the FASB’s final deliberations of the financial reporting concepts pursuant to the March 4, 2014 issued FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements, as they relate to fair value measurement disclosures. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. This guidance is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2019. As such, the Company has adopted this standard during our quarter ended June 30, 2020, and it has not materially impacted our consolidated results of operations, financial condition and cash flows.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Financial Instruments—Credit Losses (Topic 326) amends guidelines on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. ASU 2016-13 affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. This guidance is effective for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2019. As such, the Company has adopted this standard during our quarter ended June 30, 2020, and it has not materially impacted our consolidated results of operations, financial condition and cash flows.

5. i Accounts Receivable

Billed

i 28,636

i 18,927

Unbilled

i 38,837

i 18,267

Allowance for credit losses

( i 5,488)

( i 4,059)

Accounts receivable, net

i 61,985

i 33,135

Billed accounts receivable represent amounts billed to customers that have yet to be collected. Unbilled accounts receivable represent revenue recognized and contractually eligible to be billed but billed after period end. All unbilled receivables as of March 31, 2021 are expected to be billed and collected within twelve months.

The Company recorded $ i 1,032, $ i 1,739, and $ i 300 of bad debt expense during the years ended March 31, 2021, 2020, and 2019 respectively.

6. i Property and Equipment

Computer-related equipment

i 20,736

i 11,649

Furniture and fixtures

i 714

i 681

Leasehold improvements

i 2,182

i 2,099

Property and equipment, gross

i 23,632

i 14,429

Accumulated depreciation

( i 10,582)

( i 6,246)

Property and equipment, net

i 13,050

i 8,183

Depreciation expense for the years ended March 31, 2021, 2020, and 2019 was $ i 4,338, $ i 2,124, and $ i 1,535, respectively.

During the years ended March 31, 2021, 2020, and 2019, depreciation expense includes $ i 1,980, $ i 670, and $ i 839, respectively, related to internal-use assets included in General and Administrative Expense and $ i 2,358, $ i 1,454, and $ i 696, respectively, related to internally-developed software to be sold, leased, or otherwise marketed included in Other Direct Costs of Revenue.

7. i Leases

The Company has entered into various non-cancellable operating lease agreements for certain offices. These leases currently have lease periods expiring between fiscal years 2024 and 2026. The lease agreements may include one or more options to renew. Renewals were not assumed in the Company's determination of the lease term unless the renewals were deemed to be reasonably assured at lease commencement. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The components of lease costs, weighted-average lease term, and discount rate are detailed below.

Schedule, by fiscal year, of maturities of lease liabilities as of:


	March 31, 2021
Fiscal year 2022	$	i 1,493
Fiscal year 2023	i 1,532
Fiscal year 2024	i 1,351
Fiscal year 2025	i 1,057
Fiscal year 2026	i 878
Thereafter	i —
Total undiscounted cash flows	i 6,311
(Less imputed interest)	( i 758)
Present value of lease liabilities	$	i 5,553

The current portion of our lease liabilities, payable within the next 12 months, is included in other current liabilities and the long-term portion of our lease liabilities is included in other non-current liabilities on our Consolidated Balance Sheets.

Associated with this financial liability, the Company has recorded a right-of-use asset of $ i 3,495, which is calculated using the present value of lease liabilities less any lease incentives received from our landlords and any deferred rent liability balance as of the date of implementation. The discount rates used to calculate the imputed interest above range from i 5.50% to i 6.75% and the weighted-average remaining lease term is i 4.35 years.

Associated with the Company's non-cancellable operating leases, during the fiscal years ended March 31, 2021, 2020, and 2019, the Company had straight-line rent expense of $ i 1,367, $ i 703, and $ i 643, respectively, and cash rent expense of $ i 1,390, $ i 733, and $ i 551, respectively.

8. i Intangible Assets

We make judgments about the recoverability of purchased finite-lived intangible assets whenever events or changes in circumstances indicate that an impairment may exist. Recoverability of finite-lived intangible assets is measured by comparing the carrying amount of the asset to the future undiscounted cash flows that the asset is expected to generate. We perform an annual impairment assessment in the fourth quarter of each year for indefinite-lived intangible assets, or more frequently if indicators of potential impairment exist, to determine whether it is more likely than not that the carrying value of the assets may not be recoverable. Recoverability of indefinite-lived intangible assets is measured by comparing the carrying amount of the asset to the future undiscounted cash flows that the asset is expected to generate. If we determine that an individual asset is impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset.

The assumptions and estimates used to determine future values and remaining useful lives of our intangible and other long-lived assets are complex and subjective. They can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our forecasts.

We complete our annual impairment tests in the fourth quarter of each year unless events or circumstances indicate that an asset may be impaired. During the fiscal years ended March 31, 2021, 2020, and 2019, we determined that there were i i i no / / indicators of impairment related to the Company's continuing operations.

The components of intangible assets as at March 31, 2021 and 2020 were as follows:

Cost

Accumulated Amortization

Net

Customer relationships

i 46,400

( i 4,171)

i 42,229

Developed technology

i 20,526

( i 11,141)

i 9,385

Brand/trade names

i 2,000

( i 314)

i 1,686

Total

i 68,926

( i 15,626)

i 53,300

Cost

Accumulated Amortization

Net

Customer relationships

i 46,971

( i 5,154)

i 41,817

Developed technology

i 7,926

( i 5,861)

i 2,065

Total

i 54,897

( i 11,015)

i 43,882

During the fiscal years ended March 31, 2021, 2020, and 2019, the Company recorded amortization expense in the amount of $ i 2,782, $ i 218, and $ i 1,231, respectively. For the fiscal years ended March 31, 2021 and 2020, amortization expense was a component of general and administrative operating expenses on the Consolidated Statements of Operations and Comprehensive Income / (Loss), due to the classification of acquired internal-use intangible assets accounted for under ASC 350, Intangibles - Goodwill and Other. For the fiscal year ended March 31, 2019, amortization expense was a component of other direct costs of revenues on the Consolidated Statements of Operations and Comprehensive Income / (Loss). This represented the remaining amortization of historical external-use intangible assets accounted for under ASC 985-20, Costs of Software to be Sold, Leased, or Otherwise Marketed.

Based on the amortizable intangible assets as of March 31, 2021, the Company expects future amortization expense to be approximately $ i i i i i 3,755 / / / / per year over the next five fiscal years and $ i 34,525 in residual expense thereafter.

Below is a summary of intangible assets:


	Intangible Assets
Balance as of March 31, 2018	$	i 1,231
Amortization of intangibles	( i 1,231)
Balance as of March 31, 2019	i —
Purchase of Mobile Posse	i 44,100
Amortization of intangibles	( i 218)
Balance as of March 31, 2020	i 43,882
Purchase of Appreciate	i 12,200
Amortization of intangibles	( i 2,782)
Balance as of March 31, 2021	$	i 53,300

9. i Goodwill

A reconciliation of the changes to the Company’s carrying amount of goodwill for the periods or as of the dates indicated:


	Media Distribution
Goodwill as of March 31, 2018	$	i 42,268
Adjustments	i —
Goodwill as of March 31, 2019	i 42,268
Purchase of Mobile Posse	i 26,994
Goodwill as of March 31, 2020	i 69,262
Adjustments to purchase price of Mobile Posse	i 1,483
Purchase of Appreciate	i 9,431
Goodwill as of March 31, 2021	$	i 80,176

Fair value is defined under ASC 820, Fair Value Measurements and Disclosures as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The Company considered the income and market approaches to derive an opinion of value. Under the income approach, the Company utilized the discounted cash flow method, and under the market approach, consideration was given to the guideline public company method, the merger and acquisition method, and the market capitalization method.

Goodwill is recorded when the purchase price for an acquisition exceeds the estimated fair value of the net tangible and identified intangible assets acquired. Goodwill is allocated to our reporting units based on relative fair value of the future benefit of the purchased operations to our existing business units as well as the acquired business unit. Reporting units may be operating segments as a whole or an operation one level below an operating segment, referred to as a component. Our reporting units are consistent with the operating segments identified in Part I, Item 1 under the section “Business” of this Form 10-K.

We perform an annual impairment assessment in the fourth quarter of each year, or more frequently if indicators of potential impairment exist, to determine whether it is more likely than not that the fair value of a reporting unit in which goodwill resides is less than its carrying value. For reporting units in which this assessment concludes that it is more likely than not that the fair value is more than its carrying value, goodwill is not considered impaired and we are not required to perform the goodwill impairment test. Qualitative factors considered in this assessment include industry and market considerations, overall financial performance, and other relevant events and factors affecting the reporting unit.

For reporting units in which the impairment assessment concludes that it is more likely than not that the fair value is less than its carrying value, we perform a goodwill impairment test, which compares the fair value of the reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired. If the carrying value of the reporting unit exceeds the fair value of the net assets assigned to that unit, an impairment charge is recorded in the amount by which the carrying value exceeds the fair value.

Determining the fair value of a reporting unit involves the use of significant estimates and assumptions. The goodwill impairment test we utilized in the fourth quarter ended March 31, 2021 utilized an income method to estimate a reporting unit’s fair value. The Company believes that the income method is the best method of determining fair value for our Company. The income method is based on a discounted future cash flow approach that uses the following reporting unit estimates: revenue, based on assumed growth rates; estimated costs; and appropriate discount rates based on a reporting unit's weighted-average cost of capital as determined by considering the observable weighted-average cost of capital of comparable companies. We test the reasonableness of the inputs and outcomes of our discounted cash flow analysis against available comparable market data and against the Company’s market capitalization value, which includes a control premium estimate. A reporting unit’s carrying value represents the assignment of various assets and liabilities.

Based on the analysis performed for fiscal year 2021, all continuing operations, which are comprised entirely of the Media Distribution reporting unit, have an estimated fair value in excess of the carrying value of the associated goodwill.

In the years ended March 31, 2021 and 2020, the Company determined there was i i no / impairment to goodwill.

10. i Debt

Short-term debt

Short-term debt, net of debt issuance costs of $ i 443 and $ i 62, respectively

i 14,557

i 1,188

Long-term debt

Long-term debt, net of debt issuance costs of $ i — and $ i 245, respectively

i —

i 18,505

Convertible Notes

On September 28, 2016, the Company sold $ i 16,000 of aggregate principal i 8.75% convertible notes maturing on September 23, 2020, unless converted, repurchased, or redeemed in accordance with their terms prior to such date. As of March 31, 2019, all of the Notes have been extinguished, the underlying indenture relieved, and all derivative liabilities related to the Notes settled.

Each purchaser of the convertible notes also received warrants to purchase shares of the Company's common stock. The warrants were issued under a Warrant Agreement (the "Warrant Agreement"), dated as of September 28, 2016, between Digital Turbine, Inc. and US Bank National Association, as the warrant agent.

The warrants were immediately exercisable on the date of issuance at an initial exercise price of $ i 1.364 per share.

During the year ended March 31, 2019, i 484,900 of the warrants were exercised. During the year ended March 31, 2020, the remaining i 3,614,100 of the warrants were exercised. i No outstanding warrants related to the Warrant Agreement remained outstanding at March 31, 2020.

Secured Credit Facility

On May 23, 2017, the Company entered a Business Finance Agreement (the “Credit Agreement”) with Western Alliance Bank (the “Bank”). The Credit Agreement provides for a $ i 5,000 total facility.

The amounts advanced under the Credit Agreement mature in two ( i 2) years, and accrue interest at the following rates and bear the following fees:

(1) Wall Street Journal Prime Rate + i 1.25% (currently approximately i 5.25%), with a floor of i 4.0%.

(2) Annual Facility Fee of $ i 45.5.

(3) Early termination fee of i 0.5% if terminated during the first year.

The obligations under the Credit Agreement are secured by a perfected first position security interest in all assets of the Company and its subsidiaries, subject to partial ( i 65%) pledges of stock of non-US subsidiaries. The Company’s subsidiaries Digital Turbine USA and Digital Turbine Media are co-borrowers.

In addition to customary covenants, including restrictions on payments (subject to specified exceptions), and restrictions on indebtedness (subject to specified exceptions), the Credit Agreement requires the Company to comply with the following financial covenants, measured on a monthly basis:

(1) Maintain a Current Ratio of at least i 0.65, defined as unrestricted cash plus accounts receivable, divided by all current liabilities.

(2) Revenue must exceed i 85% of projected quarterly revenue.

The Credit Agreement required that at least two-thirds (2/3rds) of the holders of the Notes at all times be subject to subordination agreements with the Bank. The Company obtained the consent of the holders of at least two-thirds (2/3rds) of the Notes, which were held by a small number of institutional investors. In consideration for such consents, the Company entered into a Second Supplemental Indenture, dated May 23, 2017 (the “Supplemental Indenture”) to the Indenture, and also entered into a First Amendment, dated May 23, 2017 (the “Warrant Amendment”) to the Warrant Agreement. The Supplemental Indenture and Warrant Amendment provided for a 30-day stock price measurement period to determine whether or not there would be any change to the conversion price or exercise price of the Company’s outstanding convertible notes or related warrants. The measurement period concluded on September 20, 2017, with no change to the existing $ i 1.364 per share conversion or exercise price of our convertible notes or related warrants.

On May 22, 2019, the Company entered into an amendment to the Credit Agreement that extends the agreement through May 23, 2021 and provided for up to a $ i 20,000 total facility, subject to draw limitations derived from current levels of eligible domestic receivables. The amounts advanced under the Credit Agreement, as amended, mature in i two years, or May 22, 2021, and accrue interest at prime plus i 0.50% subject to a i 6.00% floor, with the prime rate defined as the greater of prime rate published in the Wall Street Journal or i 5.50%. The Credit Agreement, as amended, also carried an annual facility fee of i 0.20% of our available credit limit, and an unused line fee of i 0.10% per annum.

On February 28, 2020, the Company entered into a new credit agreement (the "New Credit Agreement") with the Bank, which provides for (1) a term loan of $ i 20,000, the proceeds of which the Company used to pay a portion of the closing cash purchase price for the Acquisition, and (2) a revolving line of credit of $ i 5,000 to be used for working capital purposes. DT Media and DT USA are additional co-borrowers under the New Credit Agreement.

The term loan was to be repaid on a quarterly basis, beginning in July 2020, until the term loan maturity date of February 28, 2025, at which time the remaining unpaid principal balance must be repaid. The quarterly principal payment amounts increased from $ i 250 to $ i 1,250 over the term of the term loan. The revolving line of credit was to matures on February 28, 2025.

Amounts outstanding under the New Credit Agreement accrue interest at an annual rate equal to LIBOR (or, if necessary, a broadly-adopted replacement index), subject to a i 1.75% floor, plus i 3.75%. The obligations under the New Credit Agreement are secured by a perfected first-priority security interest in all the assets of the Company and its subsidiaries. The New Credit Agreement contains customary covenants, representations and events of default, and also requires the Company to comply with a fixed charge coverage ratio and total funded debt to consolidated adjusted EBITDA ratio.

The New Credit Agreement contained representations and warranties by each of the parties to the New Credit Agreement, which were made only for purposes of the New Credit Agreement and as of specified dates.

In connection with the Company entering into the New Credit Agreement with the Bank, on February 28, 2020, the Company and the Bank terminated the existing Credit Agreement, dated as of May 23, 2017, between the Company, DT Media, DT USA, and the Bank (and the amendments thereto), which was the previous revolving credit facility of the Company.

In connection with the Company entering into the BoA Credit Agreement with the Bank as described below, on February 3, 2021, the Company and Western Alliance Bank terminated the New Credit Agreement, dated February 28, 2020, by and among the Company, DT Media, DT USA, and Western Alliance Bank (and the amendments thereto), which was the previous term loan and revolving credit facility of the Company.

BoA Revolving Line of Credit

On February 3, 2021, the Company entered into a credit agreement ("the BoA Credit Agreement') with Bank of America, N.A. (the “Bank”), which provides for a revolving line of credit of $ i 100,000, with an accordion feature enabling the Company to increase the amount to up to $ i 200,000, to be used for acquisitions, working capital, and general corporate purposes. DT Media and DT USA are additional co-borrowers under the BoA Credit Agreement. The revolving line of credit matures on February 3, 2024.

Amounts outstanding under the BoA Credit Agreement accrue interest at an annual rate equal to LIBOR (or, if necessary, a broadly-adopted replacement index) plus an applicable margin that ranges from i 1.50% to i 2.25%, depending on the Company’s consolidated leverage ratio. The obligations under the BoA Credit Agreement are secured by a grant of a security interest in substantially all of the assets of the Company and its subsidiaries. The BoA Credit Agreement contains customary covenants, representations, and events of default, and also requires the Company to comply with a maximum consolidated leverage ratio and minimum fixed charge coverage ratio.

Per the BoA Credit Agreement, the Company's consolidated leverage ratio shall be measured per the following tiers:


Consolidated Leverage Ratio	Interest Rate
Less than i 1.25:1.0	i 1.50	%
From i 1.25:1.0 to i 2.25:1.0	i 1.75	%
From i 2.25:1.0 to i 3.25:1.0	i 2.00	%
Greater than i 3.25:1.0	i 2.25	%

At March 31, 2021, there was $ i 15,000 outstanding principal on the BoA Credit Agreement and the Company had $ i 85,000 available to draw. As of March 31, 2021, the Company was in compliance with all BoA Credit Agreement covenants.

Subsequent to year end, this debt was modified. Please see Note "Subsequent Events" for more information regarding the modification.

Interest Expense

Inclusive of the convertible notes issued on September 28, 2016 and the Credit Agreement entered into on May 23, 2017 for fiscal year 2019, the New Credit Agreement for fiscal year 2020, and the New Credit Agreement and the BoA Credit Agreement for fiscal year 2021, the Company recorded $ i 949, $ i 101, and $ i 322 of interest expense during the years ended March 31, 2021, 2020, and 2019 respectively.

Additionally, aggregate debt discount related to the convertible notes detailed above in fiscal year 2019, and debt issuance cost amortization in all presented years, is reflected on the Consolidated Statements of Operations and Comprehensive Income / (Loss) as interest expense. Inclusive of this amortization of $ i 94 recorded during the year ended March 31, 2021, $ i 6 recorded during the year ended March 31, 2020, and $ i 798 recorded during March 31, 2019, the Company recorded $ i 1,043, $ i 107, and $ i 1,120 of total interest expense for the years ended March 31, 2021, 2020, and 2019 respectively.

11. i Description of Stock Plans

Employee Stock Plan

On September 15, 2020, the Company’s stockholders approved the 2020 Equity Incentive Plan of Digital Turbine, Inc. (the “2020 Plan”), pursuant to which the Company may grant equity incentive awards to directors, employees and other eligible participants. A total of i 12,000,000 shares of common stock are reserved for grant under the 2020 Plan. The types of awards that may be granted under the 2020 Plan include incentive and non-qualified stock options, stock appreciation rights, restricted stock, and restricted stock units. The 2020 Plan became effective on September 15, 2020 and has a term of i ten years. Stock options may be either “incentive stock options” (“ISOs”), as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or non-qualified stock options (“NQSOs”).

Previous to the approval of the Plan, stock awards were issued under the Amended and Restated Digital Turbine, Inc. 2011 Equity Incentive Plan (the “2011 Plan”), which was approved and adopted by our stockholders by written consent on May 23, 2012. The 2011 Plan provided for grants of stock-based incentive awards to our and our subsidiaries’ officers, employees, non-employee directors, and consultants. Awards issued under the 2011 Plan can include stock options, stock appreciation rights, restricted stock, and restricted stock units. Stock options may be either ISOs, as defined in Section 422 of the Internal Revenue Code of 1986, as amended, or NQSOs.

The 2011 Plan and 2020 Plan are collectively referred to as "Digital Turbine's Incentive Plans."

The 2011 Plan reserved i 20,000,000 shares for issuance, of which i zero and i 6,366,088 remained available as of March 31, 2021 and March 31, 2020, respectively. At the point when the 2011 Plan was retired, i 4,452,064 shares remained unissued. No future grants will be issued pursuant to the 2011 Plan. All future awards will be issued under the 2020 Plan.

The 2020 Plan reserves i 12,000,000 shares for issuance, of which i 11,903,016 remained available for issuance as of March 31, 2021. The change over the period represents stock option grants, stock option forfeitures/cancellations returned to pool, and restricted shares/units of common stock of i 97,193 shares, i 209 shares, and i zero shares, respectively.

Restricted Stock Units

Awards of restricted stock units ("RSUs") may be either grants of time-based restricted units or performance-based restricted units that are issued at no cost to the recipient. The cost of these awards is determined using the fair market value of the Company’s common stock on the date of the grant. No capital transaction occurs until the units vest, at which time they are converted to restricted or unrestricted stock. Compensation expense for RSUs with a time condition is recognized on a straight-line basis over the requisite service period. Compensation expense for RSUs with a performance condition are recognized on a straight-line basis based on the most likely attainment scenario, which is re-evaluated each period.

In June 2018, the Company issued i 232,558 RSUs to its Chief Executive Officer and Chief Financial Officer. The shares vest over i three years. The fair value of the shares on the date of issuance was $ i 400.

In May 2019, the Company issued i 109,416 RSUs to its Chief Executive Officer and Chief Financial Officer. The shares vest over i three years. The fair value of the shares on the date of issuance was $ i 413.

In May 2020, the Company issued i 109,034 RSUs to its Chief Executive Officer and Chief Financial Officer. The shares vest over i three years. The fair value of the shares on the date of issuance was $ i 700.

With respect to RSUs, the Company expensed $ i 466, $ i 220, and $ i 140 during the years ended March 31, 2021, 2020, and 2019, respectively, to general and administrative expense on the Consolidated Statements of Operations and Comprehensive Income / (Loss). Remaining unamortized expense, with respect to RSUs, of $ i 688 is expected to be recognized over a weighted-average period of approximately i 2.17 years.

Number of Shares

Weighted-Average Grant Date Fair Value

Unvested restricted units outstanding as of March 31, 2020

i 293,525

i 2.48

Granted

i 109,034

i 6.42

Vested

( i 91,570)

i 2.47

Cancelled

i —

Unvested restricted units outstanding as of March 31, 2021

i 310,989

i 3.87

Stock Option Agreements

Stock options granted under the Company’s Stock Plans typically vest over a three-to- i four-year period. These options, which are granted with option exercise prices equal to the fair market value of the Company’s common stock on the date of grant, generally expire up to i ten years from the date of grant.

Stock Option Activity

i The following table summarizes stock option activity for the Stock Plans during the years ended March 31, 2021 and 2020:

Number of
Shares

Weighted-Average
Exercise Price
(per share)

Weighted-Average
Remaining Contractual
Life (in years)

Aggregate Intrinsic
Value
(in thousands)

Options Outstanding, March 31, 2019

i 9,128,885

i 1.80

i 7.31

i 16,347

Granted

i 2,624,244

i 5.00

Forfeited / Canceled

( i 488,952)

i 2.05

Exercised

( i 2,279,747)

i 1.70

Options Outstanding, March 31, 2020

i 8,984,430

i 2.75

i 7.17

i 16,517

Granted

i 1,999,997

i 8.49

Forfeited / Canceled

( i 331,599)

i 5.61

Exercised

( i 2,506,383)

i 2.87

Options Outstanding, March 31, 2021

i 8,146,445

i 4.01

i 6.86

i 622,249

Vested and expected to vest (net of estimated forfeitures) at March 31, 2021 (a)

i 7,994,718

i 3.92

i 6.82

i 611,356

Exercisable, March 31, 2021

i 5,469,049

i 2.39

i 5.92

i 426,418

a.For options vested and expected to vest, options exercisable, and options outstanding, the aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between Digital Turbine's closing stock price on March 31, 2021 and the exercise price multiplied by the number of in-the-money options) that would have been received by the option holders had the holders exercised their options on March 31, 2021. The intrinsic value changes based on changes in the price of Digital Turbine's common stock.

i Information about options outstanding and exercisable at March 31, 2021 is as follows:

Options Outstanding

Options Exercisable

Number of Shares

Weighted-Average Exercise Price

Weighted-Average Remaining Life (Years)

Number of Shares

Weighted-Average Exercise Price

$ i 0.01 - i 5.00

i 5,578,097

i 2.13

i 5.91

i 4,908,281

i 1.96

$ i 5.01 - i 10.00

i 2,314,183

i 5.66

i 8.85

i 547,958

i 5.61

$ i 10.01 - i 15.00

i 126,272

i 13.43

i 9.27

i —

$ i 15.01 - i 20.00

i 31,288

i 15.54

i 9.35

i 5,959

i 15.54

$ i 20.01 - and over

i 96,605

i 56.69

i 9.80

i 6,851

i 41.25

i 8,146,445

i 4.01

i 6.86

i 5,469,049

i 2.39

Other information pertaining to stock options for the Stock Plans is as follows:


	Year ended March 31,
	2021		2020		2019
Total fair value of options vested	$	i 4,816	$	i 2,577	$	i 1,977
Total intrinsic value of options exercised (a)	$	i 97,603	$	i 10,890	$	i 603

a.The total intrinsic value of options exercised represents the total pre-tax intrinsic value (the difference between the stock price at exercise and the exercise price multiplied by the number of options exercised) that was received by the option holders who exercised their options during the fiscal year.

During the years ended March 31, 2021, 2020, and 2019, the Company granted options to purchase i 1,999,997, i 2,624,244, and i 1,463,925 shares of its common stock, respectively, to employees with weighted-average grant-date fair values of $ i 4.69, $ i 2.86, and $ i 1.02, respectively.

At March 31, 2021, 2020, and 2019, there was $ i 9,612, $ i 4,787, and $ i 2,639 of total unrecognized stock-based compensation expense, net of estimated forfeitures, related to unvested stock options expected to be recognized over a weighted-average period of i 2.2 years, i 2.3 years, and i 1.9 years, respectively.

Valuation of Awards

For stock options granted under Digital Turbine’s Incentive Plans, the Company typically uses the Black-Scholes option pricing model to estimate the fair value of stock options at grant date. The Black-Scholes option pricing model incorporates various assumptions, including volatility, expected term risk-free interest rates, and dividend yields. i The assumptions utilized in this model during fiscal years 2021, 2020, and 2019 are presented below.

Year ended March 31,

2021

2020

2019

Risk-free interest rate

i 0.21% to i 0.66%

i 0.64% to i 2.25%

i 2.38% to i 2.96%

Expected life of the options

i 4.93 to i 5.23 years

i 5.02 to i 9.83 years

i 5.52 to i 9.19 years

Expected volatility

i 64% to i 72%

i 64% to i 66%

i 66%

Expected dividend yield

i —%

Expected forfeitures

i 6%- i 7%

i 29%

Expected volatility is based on a blend of implied and historical volatility of Digital Turbine's common stock over the most recent period commensurate with the estimated expected term of Digital Turbine’s stock options. Digital Turbine uses this blend of implied and historical volatility, as well as other economic data, because management believes such volatility is more representative of prospective trends. The expected term of an award is based on historical experience and on the terms and conditions of the stock awards granted to employees.

Total stock compensation expense for the Company’s equity plans, which includes stock options, restricted stock, and warrants issued, is included in the following Consolidated Statements of Operations and Comprehensive Income / (Loss) component. See Note "Capital Stock Transactions" regarding restricted stock.


	Year ended March 31,
	2021		2020		2019
General and administrative	$	i 5,876	$	i 3,353	$	i 2,531

12. i Capital Stock Transactions

Preferred Stock

There are i 2,000,000 shares of Series A Convertible Preferred Stock, $ i 0.0001 par value per share (“Series A”), authorized and i 100,000 shares issued and outstanding, which are currently convertible into i 20,000 shares of common stock. The Series A holders are entitled to: (1) vote on an equal per share basis as common stock, (2) dividends paid to the common stock holders on an as-if-converted basis and (3) a liquidation preference equal to the greater of $ i 10 per share of Series A (subject to adjustment) or such amount that would have been paid to the common stock holders on an as-if-converted basis.

Common Stock and Warrants

For the years ended March 31, 2021 and 2020, the Company issued i 2,506,383 and i 2,279,747 shares, respectively, of common stock for the exercise of employee options.

For the years ended March 31, 2021 and 2020, the Company issued i zero and i 3,283,090 shares, respectively, of common stock to the holders of warrants upon exercise.

i The following table provides activity for warrants issued and outstanding during the year ended March 31, 2021:

Number of Warrants Outstanding

Weighted-Average Exercise Price

Outstanding as of March 31, 2020

i 25,000

i 2.04

Issued

i —

Exercised

i —

Canceled/Expired

i —

Outstanding as of March 31, 2021

i 25,000

i 2.04

Restricted Stock Agreements

From time to time, the Company enters into restricted stock agreements (“RSAs”) with certain employees and consultants. The RSAs have performance conditions, market conditions, time conditions, or a combination thereof. In some cases, once the stock vests, the individual is restricted from selling the shares of stock for a certain defined period, from i three months to i two years, depending on the terms of the RSA. As reported in our Current Reports on Form 8-K filed with the SEC on February 12, 2014 and June 25, 2014, the Company adopted a Board Member Equity Ownership Policy that supersedes any post-vesting lock-up in RSAs that are applicable to people covered by the policy, which includes the Company’s Board of Directors and Chief Executive Officer.

During the years ended March 31, 2021 and 2020, the Company issued i 45,110 and i 75,493 restricted shares, respectively, to its directors for services. The shares vest over i 1 year.

With respect to RSAs, during the years ended March 31, 2021, 2020, and 2019, the Company expensed $ i 558, $ i 424, and $ i 380 related to time condition RSAs, respectively, to general and administrative expense on the Consolidated Statements of Operations and Comprehensive Income / (Loss). As of March 31, 2021, i 22,555 shares remain unvested.

i The following is a summary of restricted stock awards and activities for all vesting conditions for the years ended March 31, 2021 and 2020, respectively:

Number of Shares

Weighted-Average Grant Date Fair Value

Unvested restricted stock outstanding as of March 31, 2019

i 153,328

i 1.39

Granted

i 75,494

i 5.58

Vested

( i 191,076)

i 2.22

Cancelled

i —

Unvested restricted stock outstanding as of March 31, 2020

i 37,746

i 5.58

Granted

i 45,110

i 13.88

Vested

( i 60,301)

i 8.68

Cancelled

i —

Unvested restricted stock outstanding as of March 31, 2021

i 22,555

i 13.88

All restricted shares, vested and unvested, cancellable and not cancelled, have been included in the outstanding shares as of March 31, 2021.

At March 31, 2021 and March 31, 2020, there was $ i 209 and $ i 140, respectively, of unrecognized stock-based compensation expense, net of estimated forfeitures, related to unvested restricted stock awards expected to be recognized over a weighted-average period of approximately i 0.34 and i 0.34 years, respectively.

Vesting of Restricted Stock Units

During the years ended March 31, 2021, 2020, and 2019, the Company entered into restricted stock units (RSU) agreements with certain officers of the Company to issue i 109,034, i 109,416, and i 232,558 shares of common stock, respectively, upon vesting. As of March 31, 2021, i 140,022 RSUs related to these agreements were vested and an equivalent number of shares of commons stock were issued. See Note "Description of Stock Plans" above for further detail on unvested units.

13. i Net Income / (Loss) per Common Share

Basic and diluted net income / (loss) per share is calculated by dividing net income / (loss) by the weighted-average number of shares of common stock outstanding during the period, less shares subject to repurchase, and excludes any dilutive effects of employee stock-based awards in periods where the Company has net losses. Because the Company had a net loss for the year ended March 31, 2019, all potentially dilutive shares of common stock were determined to be anti-dilutive and, accordingly, were not included in the calculation of diluted net loss per share for those fiscal years.

100

The following table sets forth the computation of net income / (loss) per share of common stock (in thousands, except per share amounts):

Year ended March 31,

2021

2020

2019

Income / (loss) from continuing operations, net of taxes

i 54,884

i 14,280

( i 4,302)

Weighted-average common shares outstanding, basic

i 88,514

i 84,594

i 77,440

Basic net income / (loss) per common share

i 0.62

i 0.17

( i 0.06)

Weighted-average common shares outstanding, diluted

i 96,151

i 89,558

i 77,440

Diluted net income / (loss) per common share

i 0.57

i 0.16

( i 0.06)

Common stock equivalents excluded from net loss per diluted share because their effect would have been anti-dilutive

i —

i 3,312

14. i Employee Benefit Plans

The Company has a qualified contributory retirement plan under section 401(k) of the IRC covering eligible full-time employees. Employees may voluntarily contribute eligible compensation up to the annual IRS limit. During the years ended March 31, 2021, 2020, and 2019, the Company made matching contributions of $ i 558, $ i 267, and $ i 226, respectively.

15. i Related-Party Transactions

None.

16. i Income Taxes

The provision / (benefit) for income taxes by taxing jurisdiction was as follows:

Year ended March 31,

2021

2020

2019

Current state and local

i 204

i 182

i —

Current non-U.S.

i 38

( i 55)

( i 63)

Total current

i 242

i 127

( i 63)

Deferred U.S. federal

( i 13,185)

( i 7,928)

i —

Deferred state and local

( i 204)

( i 2,624)

i —

Deferred non-U.S.

i 120

i 50

i 532

Total deferred

( i 13,269)

( i 10,502)

i 532

Total income tax provision / (benefit)

( i 13,027)

( i 10,375)

i 469

Income before income taxes included income / (loss) from domestic operations of $ i 44,800, $ i 3,800, and ($ i 9,300) for the years ended March 31, 2021, 2020, and 2019, respectively, and income / (loss) from foreign operations of ($ i 2,800), ($ i 300), and $ i 3,700 for the years ended March 31, 2021, 2020, and 2019, respectively.

101

A reconciliation of income tax expense using the statutory U.S. income tax rate compared with the actual income tax provision follows:

Year ended March 31,

2021

2020

2019

Statutory federal income taxes

i 8,819

i 741

( i 1,163)

State income taxes, net of federal benefit

( i 1,284)

i 144

i —

Non-deductible expenses

i 926

i 272

i 1,097

Change in warrant liability

i —

i 2,012

i 1,024

Change in Mobile Posse earn-out

i 3,238

i —

Excess deductions for stock compensation

( i 16,523)

( i 1,384)

( i 47)

Change in uncertain tax liability

i 591

i 32

( i 5)

Change in valuation allowance

( i 11,223)

( i 12,262)

( i 2,422)

Return-to-provision adjustments

i 2,243

i —

i 2,411

Other miscellaneous

i 186

i 70

( i 426)

Income tax provision / (benefit)

( i 13,027)

( i 10,375)

i 469

Fiscal year 2020 and 2019 amounts recast for immaterial differences to match reported financial statements.

ASC 740 requires the consideration of a valuation allowance, on a jurisdictional basis, to reflect the likelihood of realization of deferred tax assets. Significant management judgment is required in determining any valuation allowance recorded against deferred tax assets. During the year ended March 31, 2021, the Company’s pre-tax income in the U.S. continued to increase such that the Company was no longer in a cumulative three-year loss position. Following the acquisition and integration of Mobile Posse, the Company was able to sustain this pre-tax income position throughout the full fiscal year. In the fourth quarter ended March 31, 2021, based on management’s assessment of this income trend following the integration of Mobile Posse, we determined that the U.S. deferred tax assets were more likely than not realizable based on expected future taxable income. A net tax benefit of $ i 11,782 was realized in the fiscal year ended March 31, 2021 as a result of the release of the U.S. valuation allowance.

For the year ended March 31, 2021, an adjustment to prior period deferred tax balances for net operating losses and stock-based compensation was recorded, resulting in a reduction to deferred tax assets of $ i 2,243. The majority of the adjustment was for the removal of the deferred tax asset for expired equity awards and adjustments to the net operating losses related to transfer pricing. A similar adjustment to net operating loss deferred assets was recorded in the year ended March 31, 2019, in the amount of $ i 2,411, as a result of updates to transfer pricing studies.

As part of the stock acquisition of Mobile Posse on February 28, 2020, the Company recorded a net U.S. deferred tax liability of $ i 10,552 on the opening balance sheet. The deferred tax liability primarily related to intangible assets recorded at fair market value for financial accounting compared to the carryover of historical tax basis. The acquired deferred tax liabilities represent a source of positive evidence with respect to the Company’s ability to realize deferred tax assets. In accordance with ASC 805-740-30-3, a change in the acquirer’s valuation allowance as a result of a business combination is recorded as a component of income tax expense. As a result of the business combination, the Company released $ i 10,552 of valuation allowance as a component of income tax expense in the year ended March 31, 2020.

102

Deferred tax assets and liabilities consist of the following:

Year ended March 31,

2021

2020

2019

Deferred income tax assets

Net operating loss carry-forward

i 25,630

i 21,913

i 23,471

Stock-based compensation

i 1,675

i 3,775

i 3,996

Other

i 3,887

i 2,284

i 1,228

Gross deferred income tax assets

i 31,192

i 27,972

i 28,695

Valuation allowance

( i 5,287)

( i 15,977)

( i 27,972)

Net deferred income tax assets

i 25,905

i 11,995

i 723

Deferred income tax liabilities

Depreciation and amortization

( i 2,627)

( i 1,648)

( i 678)

Intangibles and goodwill

( i 10,315)

( i 10,356)

i —

Other

i —

( i 5)

Net deferred income tax assets / (liabilities)

i 12,963

( i 9)

i 40

Fiscal year 2020 amounts recast for immaterial differences to match reported financial statements.

As of March 31, 2021, the Company had U.S. federal net operating loss (NOL) carryforwards of $ i 87,341, state of approximately $ i 35,722, Australia of approximately $ i 6,399, and Israel of approximately $ i 15,802. U.S. federal NOL of $ i 77,902 and state NOLs expire between 2028 and 2037, and $ i 9,439 of the U.S. federal NOL has an unlimited carryover period. Australia and Israel NOLs have unlimited carryover periods. Utilization of the NOLs in the U.S. are governed by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), as well as similar state and foreign limitations that place limitations on the amount of NOLs able to be utilized following ownership changes. Due to the accumulation of annual allowances as of March 31, 2021, the U.S. NOLs are no longer subject to limitation. A valuation allowance of $ i 5,287 is recorded against deferred tax assets as of March 31, 2021, of which $ i 3,272 relates to non-U.S. locations with a history of losses, $ i 417 for U.S. federal deferred tax assets, and $ i 1,598 for state NOL carryforwards.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits for the years ended March 31, 2021, 2020, and 2019 is as follows:

2021

2020

2019

Balance at April 1

i 787

i 788

i 838

Additions for tax position of prior years

i 585

i —

Reductions for tax positions of prior years

i —

( i 1)

( i 50)

Balance at March 31

i 1,372

i 787

i 788

Included in the net deferred tax assets balances at March 31, 2021, 2020, and 2019 on our Consolidated Balance Sheets are $ i 1,372, $ i 787, and $ i 788, respectively, of unrecognized tax benefits, which would affect the annual effective tax rate if recognized. The Company recognized $ i 23, $ i 33, and $ i 45 of expense for interest and penalties on uncertain income tax liabilities in income tax expense for the years ended March 31, 2021, 2020, and 2019, respectively. The Company does not expect the amount of unrecognized tax benefits to change significantly in the next twelve months.

The Company’s U.S. federal, state, and foreign income tax returns generally remain subject to examination for the tax years ended 2016 through 2021.

103

17. i Segment and Geographic Information

The Company manages its business in i i one / operating and reportable segment: Media Distribution. Our chief operating decision maker does not evaluate operating segments using asset information.

The Company attributes its long-lived assets, which primarily consist of property and equipment, to a country primarily based on the physical location of the assets. Goodwill and intangibles are not included in this allocation.

i The following table sets forth geographic information on our net revenues and net property and equipment for the years ended March 31, 2021, 2020, and 2019. Net revenues by geography are based on the billing addresses of our customers.

Year ended March 31,

2021

2020

2019

Net revenues

United States and Canada

i 193,804

i 90,245

i 72,898

Europe, Middle East, and Africa

i 79,752

i 34,970

i 18,606

Asia Pacific and China

i 34,774

i 11,865

i 9,324

Mexico, Central America, and South America

i 5,249

i 1,635

i 2,741

Consolidated net revenues

i 313,579

i 138,715

i 103,569

Property and equipment, net

United States and Canada

i 12,995

i 8,132

i 3,405

Europe, Middle East, and Africa

i 40

i 38

i 15

Asia Pacific and China

i 15

i 13

i 10

Mexico, Central America, and South America

i —

Consolidated property and equipment, net

i 13,050

i 8,183

i 3,430

18. i Commitments and Contingencies

Operating Lease Obligations

The Company leases office facilities under non-cancellable operating lease agreements expiring between fiscal years 2024 and 2026.

The following table provides a summary of future minimum payments under initial terms of leases as of:


Year ending March 31,
2022	$	i 1,493
2023	i 1,532
2024	i 1,351
2025	i 1,057
2026	i 878
Thereafter	i —
Total Minimum Lease Payments	$	i 6,311

These amounts do not reflect future escalations for real estate taxes and building operating expenses. Rental expense for continuing operations amounted to $ i 1,611, $ i 1,093, and $ i 1,065, for the years ended March 31, 2021, 2020, and 2019, respectively.

104

Legal Matters

The Company may be involved in various claims, suits, assessments, investigations, and legal proceedings that arise from time to time in the ordinary course of its business. The Company accrues a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company reviews these accruals at least quarterly and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel, and other relevant information. To the extent new information is obtained and the Company's views on the probable outcomes of claims, suits, assessments, investigations, or legal proceedings change, changes in the Company's accrued liabilities would be recorded in the period in which such determination is made. For some matters, the amount of liability is not probable or the amount cannot be reasonably estimated and, therefore, accruals have not been made.

19. i Valuation of Qualifying Accounts

Fiscal Year

Description

Balance at Beginning of Period

Charged to Income Statement

Charged to Allowance

Balance at End of Period

(in thousands)

Trade Receivables

2021

Allowance for doubtful accounts

i 4,059

i 1,032

i 397

i 5,488

2020

Allowance for doubtful accounts

i 895

i 1,739

i 1,425

i 4,059

2019

Allowance for doubtful accounts

i 512

i 300

i 83

i 895

20. i Subsequent Events

April 2021 Credit Facility

Subsequent to year end, on April 29, 2021, the Company entered into an amended and restated Credit Agreement (the “New Credit Agreement”) with Bank of America, N.A., as a lender and administrative agent, and a syndicate of lenders, which provides for a revolving line of credit of $ i 400,000 to be used for working capital, permitted acquisitions, capital expenditures, and other lawful corporate purposes. DT Media and DT USA are additional co-borrowers under the Credit Agreement, and Mobile Posse is a guarantor (together with the Company, DT Media and DT USA, collectively, the “Loan Parties”). This modification replaced the existing BoA Credit Agreement. The New Credit Agreement contains an accordion feature that permits an increase of the revolver by up to $ i 75,000 plus an amount that would enable the Loan Parties to remain in compliance with a consolidated secured net leverage ratio, on such terms as agreed to by the parties.

The revolving line of credit matures on April 29, 2026.

Amounts outstanding under the Credit Agreement accrue interest at an annual rate equal to, at the Company’s election, (i) LIBOR plus between i 1.50% and i 2.25% based on the Company’s consolidated leverage ratio or (ii) a base rate determined based upon the highest of (a) the federal funds rate plus i 0.50%, (b) Bank of America, N.A.’s prime rate or (c) LIBOR plus i 1.00%, plus between i 0.50% and i 1.25% based on the Company’s consolidated leverage ratio. The Credit Agreement contains customary covenants, representations and events of default, and also requires the Company to comply with a maximum consolidated secured net leverage ratio and minimum consolidated interest coverage ratio.

The Loan Parties’ payment and performance obligations under the New Credit Agreement and related loan documents are secured by their grant of a security interest in substantially all of their personal property assets, whether now existing or hereafter acquired, subject to certain exclusions. If the Loan Parties acquire any real property assets with a fair market value in excess of $ i 5,000, they are required to grant a security interest in such real property as well. All such security interests are required to be first priority security interests, subject to certain permitted liens.

105

Acquisition of AdColony

On April 29, 2021, DT Media completed the acquisition of AdColony Holding AS, a Norway company (“AdColony”), pursuant to a Share Purchase Agreement with AdColony and Otello Corporation ASA, a Norway company and the sole shareholder of AdColony (“Otello”). DT Media acquired all of the outstanding capital stock of AdColony in exchange for an estimated total consideration in the range of $ i 350,000 to $ i 375,000, to be paid as follows: (1) $ i 100,000 in cash paid at closing (which was subject to customary closing purchase price adjustments), (2) $ i 100,000 in cash to be paid six months after closing, and (3) an estimated earn-out in the range of $ i 150,000 to $ i 175,000, to be paid in cash, based on AdColony achieving certain future target net revenues, less associated cost of goods sold, over a twelve-month period ending on December 31, 2021 (the “Earn-Out Period”). Under the terms of the earn-out, DT Media would pay Otello a certain percentage of actual net revenues (less associated cost of goods sold) of AdColony depending on the extent to which AdColony achieves certain target net revenues (less associated cost of goods sold) over the Earn-Out Period. The earn-out payment will be made following the expiration of the Earn-Out Period. The Company paid the closing amount and intends to pay the remainder of the purchase price with a combination of available cash on hand and borrowings under its existing senior credit facility along with future capital financing.

Acquisition of Fyber

On May 25, 2021, the Company and DT Media completed the initial closing of the acquisition of i 523,553,108 shares, representing approximately i 95.1% of the outstanding voting shares (the “Majority Fyber Shares”) of Fyber N.V., a public limited liability company registered with the Netherlands Chamber of Commerce Business Register (“Fyber”), pursuant to a Sale and Purchase Agreement between Tennor Holding B.V., Advert Finance B.V., and Lars Windhorst (collectively, the “Seller”), the Company, and DT Luxembourg. The Seller transferred and delivered i 400,000,000 shares of the Majority Fyber Shares to DT Media on the closing date and will deliver the remaining i 123,553,108 shares of the Majority Fyber Shares to DT Media in June 2021. The remaining approximately i 4.9% of the shares in Fyber (the “Minority Fyber Shares”) are widely held by other shareholders of Fyber (the “Minority Fyber Shareholders”).

DT Media acquired the Majority Fyber Shares in exchange for an estimated aggregate consideration of up to $ i 600,000, consisting of (i) $ i 150,000 in cash, which was subject to adjustments for certain items including the amount of cash consideration to be paid to the Minority Fyber Shareholders for the Minority Fyber Shares, paid at the closing of the acquisition, (ii) i 3,216,935 newly issued shares of common stock of the Company equal in value to $ i 235,000 (based on the volume-weighted average price of the common stock on NASDAQ during the 30-day period prior to the closing date), issued at the closing of the acquisition, (iii) i 2,599,653 newly issued shares of common stock of the Company equal in value to $ i 165,000 (based on the volume-weighted average price of the common stock on NASDAQ during the 30-day period prior to the closing date), to be issued in June 2021 after the receipt by the Company of a tax exemption certificate from the Israel Tax Authority, and (iv) contingent upon Fyber’s net revenues being equal or higher than $ i 100,000 for the 12-month earn-out period ending on March 31, 2022, as determined in the manner set forth in the Sale and Purchase Agreement, a certain number of shares of Company common stock, which will be newly-issued to the Seller at the end of the earn-out period, and under certain circumstances, an amount of cash, which value of such shares and cash in aggregate will not exceed $ i 50,000 (subject to set-off against certain potential indemnification claims against the Seller). The Company paid the cash closing amount on the closing date, and intends to pay the remainder of the cash consideration for the acquisition with a combination of available cash on hand, borrowings under the Company’s senior credit facility, and proceeds from future capital financings.

106

21. i Unaudited Quarterly Results

The following table sets forth our quarterly consolidated statements of operations (in thousands, except per share amounts) for each quarter of fiscal years 2021 and 2020. We have prepared the quarterly consolidated statements of operations data on a basis consistent with the audited consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. In the opinion of management, the financial information in these tables reflects all adjustments, consisting only of normal recurring adjustments that management considers necessary for fair presentation of this data. This information should be read in conjunction with the audited consolidated financial statements and related notes included in this Part II, Item 8 of this Annual Report on Form 10-K. The results of historical periods are not necessarily indicative of the results for any future period.

Three Months Ended

Net revenues

i 95,082

i 88,592

i 70,893

i 59,012

i 39,351

i 36,016

i 32,795

i 30,553

Total costs of revenues and operating expenses

i 79,128

i 68,075

i 58,777

i 48,390

i 36,426

i 31,884

i 29,680

i 27,513

Income from operations

i 15,954

i 20,517

i 12,116

i 10,622

i 2,925

i 4,132

i 3,115

i 3,040

Total interest and other income / (expense), net

( i 1,023)

( i 4,941)

( i 11,082)

( i 306)

i 721

( i 830)

( i 4,380)

( i 4,818)

Income / (loss) from operations before income taxes

i 14,931

i 15,576

i 1,034

i 10,316

i 3,646

i 3,302

( i 1,265)

( i 1,778)

Income tax (benefit) / (provision)

( i 15,125)

i 1,061

i 661

i 376

( i 10,381)

i 41

i 72

( i 107)

Net income / (loss) from operations, net of taxes

i 30,056

i 14,515

i 373

i 9,940

i 14,027

i 3,261

( i 1,337)

( i 1,671)

Basic net income / (loss) per common share from continuing operations

i 0.34

i 0.16

i —

i 0.11

i 0.16

i 0.04

( i 0.02)

Weighted-average common shares outstanding, basic

i 89,665

i 89,003

i 88,035

i 87,386

i 86,784

i 85,876

i 83,909

i 81,814

Diluted net income / (loss) per common share from continuing operations

i 0.31

i 0.15

i —

i 0.11

i 0.15

i 0.04

( i 0.02)

Weighted-average common shares outstanding, diluted

i 97,709

i 96,976

i 96,057

i 93,108

i 91,875

i 92,472

i 83,909

i 81,814


ITEM 9.			CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

None.

107


ITEM 9A.			CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer, who is our principal executive officer, and our chief financial officer, who is our principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of March 31, 2021, the end of the period covered by this Annual Report. The term “disclosure controls and procedures,” as set forth in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), includes, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2021, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting, or in other factors identified in connection with the evaluation required by Exchange Act Rules 13a-15(d) or 15d-15(d), that occurred during the fiscal periods covered by this Annual Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management's Annual Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with accounting principles generally accepted in the United States of America. Management regularly monitors its internal control over financial reporting and actions are taken to correct deficiencies as they are identified.

Under the supervision and with the participation of management, including the principal executive and principal financial officers, the Company conducted an evaluation of the effectiveness of internal control over financial reporting. This assessment was based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this evaluation under the framework in Internal Control – Integrated Framework, management concluded that the Company maintained effective internal control over financial reporting as of March 31, 2021, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).

Management has excluded Triapodi, Ltd. from its assessment of internal control over financial reporting as of March 31, 2021 because it was acquired by the Company during fiscal year 2021. Total assets, including intangible assets created through ASC 805, Business Combinations, and total revenues of Triapodi, Ltd. represent approximately 10.4%, or $27,150, and 0.4%, or $1,230, respectively, of the related consolidated financial statement amounts of the Company as of, and for the fiscal year ended, March 31, 2021.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Further, because of changes in conditions, internal control effectiveness may vary over time.

Grant Thornton LLP, an independent registered public accounting firm, has issued an attestation report on our internal control over financial reporting. This report is included in Part II, Item 8 of this Annual Report on Form 10-K.


ITEM 9B.			OTHER INFORMATION

None.

108

PART III


ITEM 10.			DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The information required by this item is incorporated by reference to our Proxy Statement for the 2021 Annual Meeting of Stockholders.


ITEM 11.			EXECUTIVE COMPENSATION

The information required by this item is incorporated by reference to our Proxy Statement for the 2021 Annual Meeting of Stockholders.


ITEM 12.			SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

2020 Equity Incentive Plan and Amended and Restated 2011 Equity Incentive Plan

On September 15, 2020, the Company’s stockholders approved the 2020 Equity Incentive Plan of Digital Turbine, Inc. (the “2020 Plan”), pursuant to which the Company may grant equity incentive awards to directors, employees and other eligible participants. A total of 12,000,000 shares of common stock are reserved for grant under the 2020 Plan. The types of awards that may be granted under the 2020 Plan include incentive and non-qualified stock options, stock appreciation rights, restricted stock, and restricted stock units. The 2020 Plan became effective on September 15, 2020 and has a term of ten years. Stock options may be either “incentive stock options” (“ISOs”), as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or non-qualified stock options (“NQSOs”).

Previous to the approval of the 2020 Plan, stock awards were issued under the Amended and Restated Digital Turbine, Inc. 2011 Equity Incentive Plan (the “2011 Plan”), which was approved and adopted by our stockholders by written consent on May 23, 2012. The 2011 Plan provided for grants of stock-based incentive awards to our and our subsidiaries’ officers, employees, non-employee directors, and consultants. Awards issued under the 2011 Plan can include stock options, stock appreciation rights, restricted stock, and restricted stock units. Stock options may be either ISOs, as defined in Section 422 of the Internal Revenue Code of 1986, as amended, or NQSOs.

The 2011 Plan and 2020 Plan are collectively referred to as "Digital Turbine's Incentive Plans."

The 2011 Plan reserved 20,000,000 shares for issuance, of which zero remain available as of March 31, 2021. No future grants will be issued pursuant to the 2011 Plan. At the point when the 2011 Plan was retired, 4,452,064 remained unissued. All future awards will be issued under the 2020 Plan.

The 2020 Plan reserves 12,000,000 shares for issuance, of which 11,903,016 remained available for issuance as of March 31, 2021.

Equity Compensation Plan Information

The following table sets forth information concerning Digital Turbine's Incentive Plans as of March 31, 2021.


	Number of securities to be issued upon exercise of outstanding options, warrants, and rights (a)	Weighted average exercise price of outstanding options, warrants, and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plan approved by security holders
Amended and Restated 2011 Equity Incentive Plan	8,049,840	$	2.75	—
2020 Equity Incentive Plan	96,605	56.69		11,903,016
Equity compensation plan not approved by security holders	—	—		—
Total	8,146,445	4.01		11,903,016

Other information required by this item is incorporated by reference to our Proxy Statement for the 2021 Annual Meeting of Stockholders.

109


ITEM 13.			CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information required by this item is incorporated by reference to our Proxy Statement for the 2021 Annual Meeting of Stockholders.


ITEM 14.			PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated by reference to our Proxy Statement for the 2021 Annual Meeting of Stockholders.

110

PART IV


ITEM 15.			EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

We have filed the following documents as part of this Annual Report on Form 10-K:

1. Consolidated Financial Statements

Our Consolidated Financial Statements are listed in the "Index to Consolidated Financial Statements" under Part II, Item 8 of this Annual Report on Form 10-K.


Reports of Independent Registered Public Accounting Firms			69

Consolidated Financial Statements
Consolidated Balance Sheets			73
Consolidated Statements of Operations and Comprehensive Income / (Loss)			74
Consolidated Statements of Stockholders' Equity			75
Consolidated Statements of Cash Flows			76
Notes to Consolidated Financial Statements			77
The supplementary financial information required by this Item 8 is set forth in the Notes to Consolidated Financial Statements under the Note "Supplemental Consolidated Financial Information."

2. Financial Statement Schedules

Valuation of qualifying accounts for the three fiscal years ended March 31, 2021, 2020, and 2019 are included in Note "Valuation of Qualifying Accounts" of Notes to Consolidated Financial Statements included in Part II, Item 8. All other schedules called for by Form 10-K are omitted because they are inapplicable or the required information is shown in the Consolidated Financial Statements, or Notes thereto, included herein.

3. Exhibits

See the Exhibits index located below following Item 16 of this Annual Report on Form 10-K.


ITEM 16.			FORM 10-K SUMMARY

None.


Exhibit No.						Description
2.1						Pay Asset Purchase Agreement, dated as of April 23, 2018, incorporated by reference to our Current Report on Form 8-K (File No. 001-35958), filed with the Commission on May 1, 2018 . ^
2.2						A&P Asset Purchase Agreement, dated as of April 28, 2018, incorporated by reference to our Current Report on Form 8-K (File No. 001-35958), filed with the Commission on May 1, 2018 . ^
2.3						Stock Purchase Agreement, dated February 6, 2020, by and among Digital Turbine Media, Inc., ACME Mobile,LLC, Mobile Posse, Inc., and certain equityholders of ACME Mobile, LLC party thereto (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Commission on February 10, 2020).
2.4						Share Purchase Agreement, dated March 1, 2021, by and among Digital Turbine (EMEA) Ltd., Triapodi Ltd. (d/b/a Appreciate), the stockholder representative, and the stockholders of Triapodi Ltd. (d/b/a Appreciate) (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Commission on March 3, 2021).
2.5						Share Purchase Agreement, dated February 26, 2021, by and among the Company, DT Media, AdColony Holding AS, and Otello Corporation ASA (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Commission on March 1, 2021).
2.6						Sale and Purchase Agreement, dated March 22, 2021, by and among Tennor Holding B.V., Advert Finance B.V., and Lars Windhorst, as sellers, and Digital Turbine and Digital Turbine Luxembourg S.à r.l., a private limited company under the laws of the Grand Duchy of Luxembourg and a subsidiary of Digital Turbine, as purchaser (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Commission on March 23, 2021).

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2.7						First Amendment Agreement to the Sale and Purchase Agreement, dated May 25, 2021, by and among Tennor Holding B.V., Advert Finance B.V., Lars Windhorst , Digital Turbine, Inc., Digital Turbine Media, Inc., and Digital Turbine Luxembourg S.à r.l., (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Commission on May 28, 2021).
3.1						Certificate of Incorporation, incorporated by reference to our Current Report on Form 8-K (File No. 000-10039), filed with the Commission on November 14, 2007. *
3.2						Certificate of Merger merging Mediavest, Inc., a New Jersey corporation, with and into NeuMedia Media, Inc., a Delaware corporation, as filed with the Secretary of State of the State of Delaware, incorporated by reference to our Current Report on Form 8-K (File No. 000-10039), filed with the Commission on November 14, 2007.
3.3						Certificate of Ownership merging Mandalay Digital Group, Inc. into Neumedia, Inc., dated February 2, 2012, incorporated by reference to our Annual Report on Form 10-K (File No. 000-10039), filed with the Commission on June 29, 2012.
3.4						Certificate of Amendment of Certificate of Incorporation, dated August 14, 2012, incorporated by reference to Appendix B of the Registrant’s Definitive Information Statement on Form 14-C (File No. 000-10039), filed with the Commission on July 10, 2012.
3.5						Certificate of Amendment of Certificate of Incorporation, dated March 28, 2013, incorporated by reference to our Current Report on Form 8-K (File No. 000-10039), filed with the Commission on April 18, 2013.
3.6						Certificate of Correction of Certificate of Amendment, dated April 9, 2013, incorporated by reference to our Current Report on Form 8-K (File No. 000-10039), filed with the Commission on April 18, 2013.
3.7						Certificate of Amendment of Certificate of Incorporation, as amended, filed with the Secretary of State of the State of Delaware on January 13, 2015, incorporated by reference to our Current Report on Form 8-K (File No. 000-10039), filed with the Commission on January 16, 2015.
3.8						Bylaws, incorporated by reference to our Current Report on Form 8-K (File No. 000-10039), filed with the Commission on November 14, 2007.
3.9						Certificate of Amendment of the Bylaws of NeuMedia, Inc., dated February 2, 2012, incorporated by reference to our Current Report on Form 8-K (File No. 000-10039), filed with the Commission on February 7, 2012.
3.10						Certificate of Amendment of the Bylaws dated March 6, 2015 (incorporated by reference to our Current Report on Form 8-K (File No. 001-10039) filed with the Commission on March 11, 2015).
3.11						Amendment of Bylaws of Digital Turbine, Inc., adopted March 17, 2015, incorporated by reference to our Current Report on Form 8-K (File No. 000-10039), filed with the Commission on March 20, 2015.
3.12						Fourth Amendment to Bylaws of Digital Turbine, Inc. (incorporated by reference to Exhibit 3.1 of the Quarterly Report on Form 10-Q filed with the Commission on February 3, 2021).
4.1						Registration Rights Agreement, dated as of September 28, 2016, by the Company and certain guarantors entities, incorporated by reference to Exhibit 4.3 of our Current Report on Form 8-K (File No. 001-35958), filed with the Commission on September 29, 2016.
4.2						Form of Common Stock Certificate, incorporated by reference to Exhibit 4.8 to the Company’s Registration Statement on Form S-1/A (File No. 333-214321) filed with the Commission on December 23, 2016.
4.3						Description of our Capital Stock. *
10.1						Form of Indemnification with Directors and Executive Officers, incorporated by reference to our Current Report on Form 8-K (File No. 000-10039 ), filed with the Commission on May 10, 2012. †
10.2						Amended and Restated 2011 Equity Incentive Plan of Mandalay Digital Group, Inc., incorporated by reference to our Current Report on Form 8-K (File No. 000-10039), filed with the Commission on May 30, 2012.
10.2.1						Amended and Restated 2011 Equity Incentive Plan Notice of Grant and Restricted Stock Agreement of Mandalay Digital Group, Inc, incorporated by reference to our Current Report on Form 8-K (File No. 000-10039), filed with the Commission on May 30, 2012.
10.2.2						Amended and Restated 2011 Equity Incentive Plan Notice of Grant and Stock Option Agreement of Mandalay Digital Group, Inc., incorporated by reference to our Current Report on Form 8-K (File No. 000-10039), filed with the Commission on May 30, 2012.
10.3						Employment Agreement, effective September 9, 2014, between the Company and Bill Stone, incorporated by reference to our Current Report on Form 8-K (File No. 001-35958), filed with the Commission on September 15, 2014. †
10.3.1						Amendment, effective May 26, 2016, to Employment Agreement between the Company and William Stone, incorporated by reference to our Current Report on Form 8-K (File No. 000-10039 ), filed with the Commission on June 1, 2016. †
10.3.2						Second Amendment, dated March 16, 2018, to Employment Agreement between the Company and William Stone, incorporated by reference to our Current Report on Form 8-K (File No. 000-10039 ), filed with the Commission on March 21, 2018. †
10.4						Board Equity Ownership Policy, as amended, incorporated by reference to our Current Report on Form 8-K (File No. 001-35958) filed with the Commission on June 25, 2014. †

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10.5						Software as a Service Agreement between Cellco Partnership d/b/a Verizon Wireless and the Company, incorporated by reference to Exhibit 10.28 to our Registration Statement on Form S-1/A (File No. 333-214321), filed January 6, 2017. ††
10.5.1						Software as a Service Renewal Agreement between Cellco Partnership d/b/a Verizon Wireless and the Company, dated as of August 14, 2018, incorporated by reference to Exhibit 10.24 to our Current Report on Form 10-Q (File No. 001-35958), filed with the Commission on November 5, 2018. ††
10.6						Employment Agreement between the Company and Barrett Garrison, dated September 12, 2016, incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K (File No. 001-35958), filed with the Commission on August 31, 2016. †
10.6.1						Amendment, effective September 7, 2018, to Employment Agreement between the Company and Barrett Garrison, incorporated by reference to our current report on Form 8-K (File No. 001-35958), filed with the Commission on September 10, 2018. †
10.7						License and Software Agreement between AT&T Mobility LLC and the Company, dated as of November 2, 2015, incorporated by reference to Exhibit 10.25 of our Current Report on Form 10-Q (File No, 001-35958), filed with the Commission on November 5, 2018. ††
10.7.1						Amendment No. 1 to the License and Software Agreement between AT&T Mobility and the Company, dated as of October 17, 2018, incorporated by reference to Exhibit 10.25.1 of our Current Report on Form 10-Q (File No, 001-35958), filed with the Commission on November 5, 2018.
10.8						Amendment No. 1 to the Supplement No. 1 to the License and Software Agreement between AT&T Mobility and the Company, dated as of October 17, 2018, incorporated by reference to Exhibit 10.25.2 of our Current Report on Form 10-Q (File No, 001-35958), filed with the Commission on February 5, 2019. ††
10.9						2020 Equity Incentive Plan of Digital Turbine, Inc., and First Amendment and Israeli Appendix thereto. *
10.10						Form of Option Agreement. *
10.11						Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K filed with the Commission on September 21, 2020).
10.12						Form of Restricted Stock Unit Agreement (Time-Vesting). *
10.13						Form of Restricted Stock Unit Agreement (Performance-Vesting). *
10.14						Credit Agreement, dated February 3, 2021, by and among Digital Turbine, Inc., Digital Turbine Media, Inc., Digital Turbine USA, Inc., Mobile Posse, Inc., and Bank of America, N.A. (incorporated by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q filed with the Commission on February 3, 2021).
10.15						Credit Agreement, dated April 29, 2021, by and among Digital Turbine, Inc., Digital Turbine Media, Inc., Digital Turbine USA, Inc., Mobile Posse Inc., and Bank of America, N.A. as administrative agent and a lender, the lenders party thereto, BofA Securities, Inc., Wells Fargo Securities, LLC and PNC Bank, NA as Lead Arranger, Bookrunners and Syndication Agents, and CapitalOne and JPMorgan Chase Bank, N.A, as Co-Documentation Agents (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed with the Commission on May 4, 2021).
21.1						List of Subsidiaries. *
23.1						Consent of Independent Registered Public Accounting Firm. *
23.2						Consent of Independent Registered Public Accounting Firm. *
31.1						Certification of William Stone, Principal Executive Officer. *
31.2						Certification of Barrett Garrison, Principal Financial Officer. *
32.1						Certification of William Stone, Principal Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
32.2						Certification of Barrett Garrison, Principal Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
101						INS XBRL Instance Document. *
101						SCH XBRL Schema Document. *
101						CAL XBRL Taxonomy Extension Calculation Linkbase Document. *
101						DEF XBRL Taxonomy Extension Definition Linkbase Document. *
101						LAB XBRL Taxonomy Extension Label Linkbase Document. *
101						PRE XBRL Taxonomy Extension Presentation Linkbase Document. *

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* Filed herewith

** The certifications attached as Exhibit 32.1 and 32.2 that accompany this Annual Report on Form 10-K are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Digital Turbine, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-K, irrespective of any general incorporation language contained in such filing.

† Management contract or compensatory plan or arrangement

†† Confidential treatment requested and received as to certain portions

^ Non-material schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company undertakes to furnish supplemental copies of any of the omitted schedules and exhibits upon request by the U.S. Securities and Exchange Commission.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Digital Turbine, Inc.

Dated: June 10, 2021

By:

/s/ William Stone

William Stone

Chief Executive Officer

(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ Robert Deutschman

Chairman of the Board

Robert Deutschman

/s/ William Stone

Chief Executive Officer
(Principal Executive Officer) and Director

William Stone

/s/ Barrett Garrison

Chief Financial Officer
(Principal Financial Officer)

Barrett Garrison

/s/ David Wesch

Chief Accounting Officer
(Principal Accounting Officer)

David Wesch

/s/ Roy Chestnutt

Director

Roy Chestnutt

/s/ Holly Hess Groos

Director

Holly Hess Groos

/s/ Mohan Gyani

Director

Mohan Gyani

/s/ Jeffrey Karish

Director

Jeffrey Karish

/s/ Michelle Sterling

Director