UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2014
or
¨ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 001-35958
DIGITAL TURBINE, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware |
|
22-2267658 |
(State or Other Jurisdiction of |
|
(I.R.S. Employer |
1300 Guadalupe Street Suite # 302, Austin TX |
|
78701 |
(Address of Principal Executive Offices) |
|
(Zip Code) |
(512) 387-7717
(Issuer’s Telephone Number, Including Area Code)
2811 Cahuenga Boulevard West, Los Angeles, CA, 90068
(former name, former address and former fiscal year if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of a “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One)
Large Accelerated Filer |
¨ |
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Accelerated Filer |
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¨ |
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Non-accelerated Filer |
¨ |
(do not check if smaller reporting company) |
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Smaller Reporting Company |
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x |
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of February 5, 2014, the Company had 37,824,011 shares of its common stock, $0.0001 par value per share, outstanding.
DIGITAL TURBINE, INC.
FORM 10-Q QUARTERLY REPORT FOR THE QUARTER ENDED DECEMBER 31, 2014
Table of Contents
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Page |
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Item 1. |
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1 |
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Consolidated Balance Sheets as of December 31, 2014 (Unaudited) and March 31, 2014 |
|
1 |
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2 |
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3 |
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4 |
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6 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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25 |
Item 3. |
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35 |
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Item 4 |
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35 |
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Item 1. |
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37 |
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Item 2. |
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37 |
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Item 3. |
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37 |
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Item 4. |
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37 |
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Item 5. |
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37 |
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Item 6. |
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38 |
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40 |
PART I – FINANCIAL INFORMATION
kITEM 1 – FINANCIAL STATEMENTS
Digital Turbine, Inc. and Subsidiaries
(In thousands, except share and per share amounts)
|
(unaudited) |
|
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December 31, |
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March 31, |
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||
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2014 |
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2014 |
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||
ASSETS |
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|
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|
|
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Current assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
11,384 |
|
|
$ |
21,805 |
|
Restricted cash |
|
200 |
|
|
|
200 |
|
Accounts receivable, net of allowances of $0 and $0, respectively |
|
5,545 |
|
|
|
5,102 |
|
Deposits |
|
96 |
|
|
|
24 |
|
Prepaid expenses and other current assets |
|
366 |
|
|
|
350 |
|
Total current assets |
|
17,592 |
|
|
|
27,481 |
|
Property and equipment, net |
|
414 |
|
|
|
465 |
|
Deferred tax assets |
|
28 |
|
|
|
3,238 |
|
Intangible assets, net |
|
8,004 |
|
|
|
9,074 |
|
Goodwill |
|
7,309 |
|
|
|
4,837 |
|
TOTAL ASSETS |
$ |
33,346 |
|
|
$ |
45,095 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
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Current liabilities |
|
|
|
|
|
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Accounts payable |
$ |
3,756 |
|
|
$ |
2,943 |
|
Accrued license fees and revenue share |
|
3,902 |
|
|
|
3,395 |
|
Accrued compensation |
|
1,883 |
|
|
|
1,681 |
|
Deferred tax liabilities |
|
28 |
|
|
|
2,987 |
|
Other current liabilities |
|
2,111 |
|
|
|
900 |
|
Total current liabilities |
|
11,680 |
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|
|
11,906 |
|
Long term contingent liability, less discount of $0 and $762, respectively |
|
- |
|
|
|
238 |
|
Total liabilities |
$ |
11,680 |
|
|
$ |
12,144 |
|
Stockholders' equity |
|
|
|
|
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Preferred stock |
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Series A convertible preferred stock at $0.0001 par value; 200,000 shares authorized, 100,000 issued and outstanding (liquidation preference of $1,000,000) |
|
100 |
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|
100 |
|
Common stock, $0.0001 par value: 200,000,000 shares authorized; 38,606,885 issued and 37,852,285 outstanding at December 31, 2014; 38,143,028 issued and 37,388,429 outstanding at March 31, 2014; |
|
7 |
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|
|
7 |
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Additional paid-in capital |
|
197,330 |
|
|
|
193,422 |
|
Treasury Stock (754,599 shares at December 31, 2014 and March 31, 2014) |
|
(71 |
) |
|
|
(71 |
) |
Accumulated other comprehensive loss |
|
(97 |
) |
|
|
(199 |
) |
Accumulated deficit |
|
(175,603 |
) |
|
|
(160,308 |
) |
Total stockholders' equity |
|
21,666 |
|
|
|
32,951 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
33,346 |
|
|
$ |
45,095 |
|
1
Digital Turbine, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
(In thousands, except per share amounts)
|
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3 Months Ended |
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3 Months Ended |
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9 Months Ended |
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9 Months Ended |
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||||
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December 31, |
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December 31, |
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December 31, |
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December 31, |
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||||
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2014 |
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2013 |
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2014 |
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2013 |
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||||
Net revenues |
|
$ |
7,006 |
|
|
$ |
6,809 |
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|
$ |
18,023 |
|
|
$ |
18,352 |
|
Cost of revenues |
|
|
|
|
|
|
|
|
|
|
|
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|
|
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License fees and revenue share |
|
|
4,609 |
|
|
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4,421 |
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11,720 |
|
|
|
11,054 |
|
Other direct cost of revenues |
|
|
413 |
|
|
|
455 |
|
|
|
1,102 |
|
|
|
1,314 |
|
Total cost of revenues |
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|
5,023 |
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|
|
4,876 |
|
|
|
12,823 |
|
|
|
12,368 |
|
Gross profit |
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|
1,983 |
|
|
|
1,933 |
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5,200 |
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|
|
5,984 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
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|
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Product development |
|
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1,718 |
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|
|
2,039 |
|
|
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5,832 |
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|
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6,034 |
|
Sales and marketing |
|
|
485 |
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|
|
472 |
|
|
|
1,989 |
|
|
|
1,381 |
|
General and administrative |
|
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5,171 |
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3,110 |
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12,094 |
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|
|
10,202 |
|
Total operating expenses |
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7,375 |
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5,621 |
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19,915 |
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17,617 |
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Loss from operations |
|
|
(5,391 |
) |
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|
(3,688 |
) |
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(14,714 |
) |
|
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(11,633 |
) |
Interest and other income / (expense) |
|
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Interest income / (expense) |
|
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5 |
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|
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(4 |
) |
|
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(122 |
) |
|
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(1,637 |
) |
Foreign exchange transaction gain |
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39 |
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5 |
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32 |
|
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|
61 |
|
Change in fair value of warrant derivative liabilities loss |
|
|
- |
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- |
|
|
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- |
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(811 |
) |
Loss on extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
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- |
|
|
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(442 |
) |
Gain / (loss) on settlement of debt |
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|
1 |
|
|
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27 |
|
|
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(9 |
) |
|
|
60 |
|
Gain/ (loss) on disposal of fixed assets |
|
|
- |
|
|
|
(1 |
) |
|
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2 |
|
|
|
1 |
|
Gain on change on valuation of long term contingent liability |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
603 |
|
Other expense |
|
|
(25 |
) |
|
|
- |
|
|
|
(13 |
) |
|
|
- |
|
Total interest and other income / (expense) |
|
|
21 |
|
|
|
27 |
|
|
|
(110 |
) |
|
|
(2,165 |
) |
Loss from operations before income taxes |
|
|
(5,369 |
) |
|
|
(3,661 |
) |
|
|
(14,825 |
) |
|
|
(13,798 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Income tax provision |
|
|
114 |
|
|
|
7 |
|
|
|
469 |
|
|
|
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Net loss from continuing operations, net of taxes |
|
|
(5,484 |
) |
|
|
(3,668 |
) |
|
|
(15,294 |
) |
|
|
(13,807 |
) |
Loss from operations of discontinued component |
|
|
- |
|
|
|
(508 |
) |
|
|
- |
|
|
|
(2,277 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) |
|
$ |
(5,484 |
) |
|
$ |
(4,176 |
) |
|
$ |
(15,294 |
) |
|
$ |
(16,084 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income / (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
$ |
32 |
|
|
$ |
(63 |
) |
|
$ |
102 |
|
|
$ |
375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss: |
|
$ |
(5,452 |
) |
|
$ |
(4,239 |
) |
|
$ |
(15,192 |
) |
|
$ |
(15,709 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share |
|
$ |
(0.15 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.41 |
) |
|
$ |
(0.63 |
) |
Continuing operations |
|
$ |
(0.15 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.41 |
) |
|
$ |
(0.54 |
) |
Discontinued operations |
|
$ |
- |
|
|
$ |
(0.01 |
) |
|
$ |
- |
|
|
$ |
(0.09 |
) |
Net loss |
|
$ |
(0.15 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.41 |
) |
|
$ |
(0.63 |
) |
Weighted average common shares outstanding, basic and diluted |
|
|
37,799 |
|
|
|
31,329 |
|
|
|
37,576 |
|
|
|
25,544 |
|
2
Digital Turbine, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity (Unaudited)
(In thousands, except share amounts)
|
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|
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|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Other |
|
|
|
|
|
|
|
|
|
||
|
Common Stock |
|
|
|
|
|
|
Preferred Stock |
|
|
|
|
|
|
Treasury Stock |
|
|
|
|
|
|
Paid-In |
|
|
Comprehensive |
|
|
Accumulated |
|
|
|
|
|
||||||
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Income/(Loss) |
|
|
Deficit |
|
|
Total |
|
||||||||||
Balance at March 31, 2014 |
|
37,388,429 |
|
|
$ |
7 |
|
|
|
100,000 |
|
|
$ |
100 |
|
|
|
754,600 |
|
|
$ |
(71 |
) |
|
$ |
193,422 |
|
|
$ |
(199 |
) |
|
$ |
(160,308 |
) |
|
$ |
32,951 |
|
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,610 |
) |
|
|
(4,610 |
) |
Foreign currency translation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
38 |
|
|
|
— |
|
|
|
38 |
|
Vesting of shares issued to employee |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
100 |
|
|
|
— |
|
|
|
— |
|
|
|
100 |
|
Vesting of options issued to employees |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
718 |
|
|
|
— |
|
|
|
— |
|
|
|
718 |
|
Vesting of restricted stock for services |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
76 |
|
|
|
— |
|
|
|
— |
|
|
|
76 |
|
Shares issued as settlement of debt |
|
50,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
188 |
|
|
|
— |
|
|
|
— |
|
|
|
188 |
|
Balance at June 30, 2014 |
|
37,438,429 |
|
|
|
7 |
|
|
|
100,000 |
|
|
|
100 |
|
|
|
754,600 |
|
|
|
(71 |
) |
|
|
194,504 |
|
|
|
(161 |
) |
|
|
(164,918 |
) |
|
|
29,461 |
|
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,201 |
) |
|
|
(5,201 |
) |
Foreign currency translation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
32 |
|
|
|
— |
|
|
|
32 |
|
Vesting of shares issued to employee |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
100 |
|
|
|
— |
|
|
|
— |
|
|
|
100 |
|
Vesting of options issued to employees |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
889 |
|
|
|
— |
|
|
|
— |
|
|
|
889 |
|
Vesting of restricted stock for services |
|
45,375 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
172 |
|
|
|
— |
|
|
|
— |
|
|
|
172 |
|
Warrant exercised |
|
300,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
375 |
|
|
|
— |
|
|
|
— |
|
|
|
375 |
|
Balance at September 30, 2014 |
|
37,783,804 |
|
|
|
7 |
|
|
|
100,000 |
|
|
|
100 |
|
|
|
754,600 |
|
|
|
(71 |
) |
|
|
196,040 |
|
|
|
(129 |
) |
|
|
(170,119 |
) |
|
|
25,828 |
|
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,484 |
) |
|
|
(5,484 |
) |
Foreign currency translation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
32 |
|
|
|
— |
|
|
|
32 |
|
Vesting of shares issued to employee |
|
55,064 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
178 |
|
|
|
— |
|
|
|
— |
|
|
|
178 |
|
Vesting of options issued to employees |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,068 |
|
|
|
— |
|
|
|
— |
|
|
|
1,068 |
|
Vesting of restricted stock for services |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
44 |
|
|
|
— |
|
|
|
— |
|
|
|
44 |
|
for services |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Adjust treasury stock |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Warrant exercised |
|
13,417 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Balance at December 31, 2014 |
|
37,852,285 |
|
|
$ |
7 |
|
|
|
100,000 |
|
|
$ |
100 |
|
|
|
754,599 |
|
|
$ |
(71 |
) |
|
$ |
197,330 |
|
|
$ |
(97 |
) |
|
$ |
(175,603 |
) |
|
$ |
21,666 |
|
3
Digital Turbine, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
(In thousands)
|
9 Months Ended |
|
|
9 Months Ended |
|
||
|
December 31, |
|
|
December 31, |
|
||
|
2014 |
|
|
2013 |
|
||
Cash flows from operating activities |
|
|
|
|
|
|
|
Net (loss)/income |
$ |
(15,294 |
) |
|
$ |
(16,084 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on disposal of discontinued operations, net of taxes |
|
- |
|
|
|
1,634 |
|
Depreciation and amortization |
|
1,168 |
|
|
|
1,584 |
|
Amortization of debt discount |
|
- |
|
|
|
186 |
|
Interest and PIK interest accrued |
|
- |
|
|
|
101 |
|
Finance costs |
|
- |
|
|
|
1,724 |
|
Stock and stock option compensation |
|
2,975 |
|
|
|
1,354 |
|
Stock issued for services |
|
369 |
|
|
|
2,173 |
|
Warrants issued for services |
|
- |
|
|
|
406 |
|
Stock issued as settlement of debt with a supplier |
|
- |
|
|
|
51 |
|
Settlement of debt with a supplier |
|
- |
|
|
|
182 |
|
Revaluation of contingent liability |
|
- |
|
|
|
(603 |
) |
Increase in fair value of derivative liabilities |
|
- |
|
|
|
811 |
|
(Increase) / decrease in assets, net of effect of disposal of subsidiary: |
|
|
|
|
|
|
|
Accounts receivable |
|
(443 |
) |
|
|
(1,506 |
) |
Deposits |
|
(73 |
) |
|
|
439 |
|
Deferred tax assets |
|
3,210 |
|
|
|
- |
|
Prepaid expenses and other current assets |
|
(16 |
) |
|
|
346 |
|
Increase / (decrease) in liabilities, net of effect of disposal of subsidiary: |
|
|
|
|
|
|
|
Accounts payable |
|
438 |
|
|
|
(443 |
) |
Accrued license fees and revenue share |
|
507 |
|
|
|
3,011 |
|
Accrued compensation |
|
202 |
|
|
|
229 |
|
Other liabilities and other items |
|
(1,748 |
) |
|
|
(2,501 |
) |
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
(8,705 |
) |
|
|
(6,906 |
) |
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
Purchase and disposal of property and equipment, net |
|
67 |
|
|
|
(61 |
) |
Settlement of contingent liability |
|
(49 |
) |
|
|
- |
|
Cash used in acquisition of assets |
|
(2,125 |
) |
|
|
|
|
Cash used in acquisition of subsidiary |
|
- |
|
|
|
(1,287 |
) |
Cash acquired with acquisition of subsidiary |
|
- |
|
|
|
513 |
|
Net cash used in investing activities |
|
(2,107 |
) |
|
|
(835 |
) |
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
Repayment of debt obligations |
|
- |
|
|
|
(3,657 |
) |
Issuance of shares for cash |
|
- |
|
|
|
14,924 |
|
Warrant exercised |
|
375 |
|
|
|
- |
|
Net cash provided by financing activities |
|
375 |
|
|
|
11,267 |
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
16 |
|
|
|
(19 |
) |
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
(10,421 |
) |
|
|
3,507 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period |
|
21,805 |
|
|
|
1,149 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
$ |
11,384 |
|
|
$ |
4,656 |
|
4
Supplemental disclosure of cash flow information: |
|