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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
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
Incorporation or Organization)
 (I.R.S. Employer
Identification No.)
110 San Antonio Street, Suite 160, Austin, TX
 
78701
(Address of Principal Executive Offices) (Zip Code)
(512) 387-7717
(Registrant’s Telephone Number, Including Area Code)
Securities Registered Pursuant to Section 12(b) of the Act:
Common Stock, Par Value $0.0001 Per ShareAPPSThe Nasdaq Stock Market LLC
(NASDAQ Capital Market)
(Title of Class)(Trading Symbol)(Name of Each Exchange on Which Registered)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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     No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes     No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated Filer
Non-Accelerated FilerSmaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No 
As of October 26, 2021, the Company had 96,625,684 shares of its common stock, $0.0001 par value per share, outstanding.



EXPLANATORY NOTE
Digital Turbine, Inc., referred to in this report as "Digital Turbine," the "Company," "we," "us," and "our," is filing this Amendment No. 1 on Form 10-Q/A (the "Amendment") to its Quarterly Report on Form 10-Q for the three and six months ended September 30, 2021, originally filed on November 2, 2021 (the "Original Report"). This Amendment amends and restates Items 1, 2, and 4 of Part I and Item 6 of Part II of the Original Report. In Item 1, this Amendment includes our restated condensed consolidated statements of operations and comprehensive income / (loss) for the three and six months ended September 30, 2021 to correct the errors discussed below.
In connection with the integration of the Company’s recently acquired businesses (AdColony Holding AS and Fyber N.V. (the “Acquired Companies”)), management performed a review of the presentation of revenue and license fees and revenue share expense based on accounting guidance for revenue recognition, including considerations of principal and agent (or “gross and net”) presentation. After a detailed review of the Acquired Companies' product lines and related contracts with customers and publishers, the Company concluded each Acquired Company acts as an agent in certain of their respective product lines and, as a result, revenue for those product lines should be reported net of license fees and revenue share expense. Previously, all revenue of the Acquired Companies, which are reported as separate segments referred to as In App Media – AdColony ("IAM-A") and In App Media – Fyber ("IAM-F"), were reported on a gross basis. The Company’s legacy business, which is reported in a separate segment referred to as On Device Media, is not impacted by the change described above and it's revenue continues to be reported on a gross basis.
In addition, management determined certain hosting costs for the Acquired Companies incorrectly reported as product development expenses should be reclassified as other direct costs of revenue and general and administrative expenses.
The corrections have the effect of:
1.Decreasing both net revenue and license fees and revenue share in a like amount on the condensed consolidated statements of operations and comprehensive income / (loss) for the three and six months ended September 30, 2021;
2.Increasing other direct costs of revenue and decreasing product development expenses in a like amount on the condensed consolidated statements of operations and comprehensive income / (loss) for the three and six months ended September 30, 2021; and
3.Increasing other direct costs of revenue and general and administrative expenses and decreasing product development expenses in a like amount on the condensed consolidated statements of operations and comprehensive income / (loss) for the six months ended September 30, 2021.
These corrections do not relate to or have any impact on the Company’s operating performance, income from operations, net income / (loss), or cash flows, and the financial position and liquidity of the Company remain unchanged.
This Amendment amends and restates Item 2 of Part I, which includes our revised discussion of operating results to reflect the impact of the correction discussed above. Item 4 of Part I includes our revised assessment of the effectiveness of our disclosure controls and procedures. This restatement resulted in the identification of a material weakness in our internal control over financial reporting.
In addition, the Exhibits index in Item 6 of Part II of the Original Report is hereby amended and restated in its entirety, and new certifications of the Company's principal executive officer and principal financial officer required under Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002, dated as of the filing of this Amendment, are filed and furnished, as applicable, as exhibits to this Amendment.
Except as described above, no other changes have been made to the Original Report. This Amendment continues to speak as of the date of the Original Report and does not reflect events occurring after the filing of the Original Report.



Digital Turbine, Inc.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED September 30, 2021
TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION
ITEM 1.    CONSOLIDATED FINANCIAL STATEMENTS
Digital Turbine, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets1
(in thousands, except par value and share amounts)
September 30, 2021March 31, 2021
(Unaudited)
ASSETS
Current assets  
Cash$95,522 $30,778 
Restricted cash695 340 
Accounts receivable, net228,107 61,985 
Prepaid expenses and other current assets20,852 4,282 
Total current assets345,176 97,385 
Property and equipment, net22,116 13,050 
Right-of-use assets17,914 3,495 
Deferred tax assets, net 12,963 
Intangible assets, net467,528 53,300 
Goodwill559,033 80,176 
Other non-current assets844  
TOTAL ASSETS$1,412,611 $260,369 
LIABILITIES AND STOCKHOLDER'S EQUITY  
Current liabilities 
Accounts payable$167,104 $34,953 
Accrued license fees and revenue share81,881 46,196 
Accrued compensation23,675 9,817 
Short-term debt13,423 14,557 
Other current liabilities20,549 5,626 
Acquisition purchase price liabilities335,500  
Total current liabilities642,132 111,149 
Long-term debt, net of debt issuance costs244,001  
Deferred tax liabilities, net19,571  
Other non-current liabilities18,525 4,108 
Total liabilities 924,229 115,257 
Commitments and contingencies (Note 14)
Stockholders' equity  
Preferred stock
Series A convertible preferred stock at $0.0001 par value; 2,000,000 shares authorized, 100,000 issued and outstanding (liquidation preference of $1)
100 100 
Common stock
$0.0001 par value: 200,000,000 shares authorized; 97,180,782 issued and 96,619,930 outstanding at September 30, 2021; 90,685,553 issued and 89,949,847 outstanding at March 31, 2021
10 10 
Additional paid-in capital741,781 373,310 
Treasury stock (754,599 shares at September 30, 2021 and March 31, 2021)
(71)(71)
Accumulated other comprehensive loss(36,721)(903)
Accumulated deficit(218,902)(227,334)
Total stockholders' equity attributable to Digital Turbine, Inc.486,197 145,112 
Non-controlling interest2,185  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,412,611 $260,369 
1In the quarter ending June 30, 2021, the Company initiated two significant acquisitions. Please refer to Note 4 in the accompanying condensed consolidated financial statements.
The accompanying notes are an integral part of these condensed consolidated financial statements.
4


Digital Turbine, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income / (Loss)1
(Unaudited)
(in thousands, except per share amounts)
Three months ended September 30,
Six months ended September 30,
2021202020212020
RestatedRestated
Net revenues$188,568 $70,893 $346,643 $129,905 
Costs of revenues and operating expenses
License fees and revenue share91,508 40,532 175,316 72,832 
Other direct costs of revenues7,827 662 12,295 1,222 
Product development13,915 4,217 26,839 8,625 
Sales and marketing17,479 4,835 31,215 9,153 
General and administrative41,307 8,531 65,301 15,335 
Total costs of revenues and operating expenses172,036 58,777 310,966 107,167 
Income from operations16,532 12,116 35,677 22,738 
Interest and other income / (expense), net
Change in fair value of contingent consideration(22,087)(10,757)(22,087)(10,757)
Interest expense, net(1,955)(287)(3,112)(593)
Foreign exchange transaction loss(249) (519) 
Other expense, net(477)(38)(512)(38)
Total interest and other income / (expense), net(24,768)(11,082)(26,230)(11,388)
Income / (loss) before income taxes(8,236)1,034 9,447 11,350 
Income tax provision / (benefit)(2,349)661 1,081 1,037 
Net income / (loss)(5,887)373 8,366 10,313 
Less: net loss attributable to non-controlling interest(35) (66) 
Net income / (loss) attributable to Digital Turbine, Inc.(5,852)373 8,432 10,313 
Other comprehensive loss
Foreign currency translation adjustment(15,892)(45)(36,673)(187)
Comprehensive income / (loss)(21,779)328 (28,307)10,126 
Less: comprehensive loss attributable to non-controlling interest(128) (921) 
Comprehensive income / (loss) attributable to Digital Turbine, Inc.$(21,651)$328 $(27,386)$10,126 
Net income / (loss) per common share
Basic$(0.06)$ $0.09 $0.11 
Diluted$(0.06)$ $0.08 $0.11 
Weighted-average common shares outstanding
Basic96,157 88,035 93,807 87,712 
Diluted96,157 96,057 100,457 94,988 
1In the quarter ending June 30, 2021, the Company initiated two significant acquisitions. Please refer to Note 4 in the accompanying condensed consolidated financial statements.
The accompanying notes are an integral part of these condensed consolidated financial statements.
5


Digital Turbine, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows1
(Unaudited)
(in thousands)
Six months ended September 30,
20212020
Cash flows from operating activities  
Net income$8,366 $10,313 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization24,981 3,241 
Non-cash interest expense298 36 
Stock-based compensation5,695 3,668 
Stock-based compensation for services rendered3,935 458 
Change in fair value of contingent consideration22,087 10,757 
Right-of-use asset1,951 244 
Deferred income taxes178  
(Increase) / decrease in assets:
Accounts receivable, gross(61,855)(13,735)
Allowance for credit losses(31)597 
Prepaid expenses and other current assets(4,917)1,637 
Other non-current assets95  
Increase / (decrease) in liabilities:
Accounts payable51,676 4,776 
Accrued license fees and revenue share1,382 2,777 
Accrued compensation(45,694)1,225 
Other current liabilities2,643 4,005 
Other non-current liabilities(3,036)(333)
Net cash provided by operating activities7,754 29,666 
Cash flows from investing activities
Business acquisitions, net of cash acquired(148,056)(7,968)
Capital expenditures(10,411)(4,177)
Net cash used in investing activities(158,467)(12,145)
Cash flows from financing activities
Payment of contingent consideration (9,302)
Proceeds from borrowings267,134  
Payment of debt issuance costs(2,988) 
Options and warrants exercised2,155 3,526 
Repayment of debt obligations(46,256)(250)
Net cash provided by / (used in) financing activities220,045 (6,026)
Effect of exchange rate changes on cash(4,233)(187)
Net change in cash65,099 11,308 
Cash and restricted cash, beginning of period31,118 21,659 
Cash and restricted cash, end of period$96,217 $32,967 
Supplemental disclosure of cash flow information
Interest paid$2,199 $571 
Income taxes paid$693 $ 
Supplemental disclosure of non-cash activities
Common stock for the acquisition of Fyber$356,686 $ 
Unpaid cash consideration for the acquisition of Fyber Minority Interest$3,108 $ 
Unpaid cash consideration for the acquisition of AdColony$100,000 $ 
Fair value of contingent consideration in connection with business acquisitions$235,500 $ 
1In the quarter ending June 30, 2021, the Company initiated two significant acquisitions. Please refer to Note 4 in the accompanying condensed consolidated financial statements.
The accompanying notes are an integral part of these condensed consolidated financial statements.
6


Digital Turbine, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders' Equity1
(Unaudited)
(in thousands, except share counts)
Common Stock
Shares
AmountPreferred Stock
Shares
AmountTreasury Stock
Shares
AmountAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income / (Loss)
Accumulated
Deficit
Non-Controlling InterestTotal
Balance at March 31, 202189,949,847 $10 100,000 $100 754,599 $(71)$373,310 $(903)$(227,334)$ $145,112 
Net income / (loss)— — — — — — — — 14,284 (31)14,253 
Foreign currency translation— — — — — — — (20,019)— (762)(20,781)
Stock-based compensation207,758 — — — — — 2,365 — — — 2,365 
Stock-based compensation for services rendered— — — — — — 1,340 — — — 1,340 
Shares for acquisition of Fyber4,716,935 — — — — — 359,233 — — — 359,233 
Non-controlling interests in Fyber— — — — — — — — — 24,558 24,558 
Options exercised178,127 — — — — — 695 — — — 695 
Balance at June 30, 202195,052,667 $10 100,000 $100 754,599 $(71)$736,943 $(20,922)$(213,050)$23,765 $526,775 
Net loss— — — — — — — — (5,852)(35)(5,887)
Foreign currency translation— — — — — — — (15,799)— (93)(15,892)
Stock-based compensation28,477 — — — — — 3,330 — — — 3,330 
Stock-based compensation for services rendered— — — — — — 2,595 — — — 2,595 
Shares for acquisition of Fyber1,058,364 — — — — — (2,547)— — — (2,547)
Acquisition of non-controlling interests in Fyber— — — — — — — — — (21,452)(21,452)
Options exercised480,422 — — — — — 1,460 — — — 1,460 
Balance at September 30, 202196,619,930 $10 100,000 $100 754,599 $(71)$741,781 $(36,721)$(218,902)$2,185 $488,382 
1In the quarter ending June 30, 2021, the Company initiated two significant acquisitions. Please refer to Note 4 in the accompanying condensed consolidated financial statements.





7



Digital Turbine, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders' Equity1
(Unaudited)
(in thousands, except share counts)
Common Stock
Shares
AmountPreferred Stock
Shares
AmountTreasury Stock
Shares
AmountAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income / (Loss)
Accumulated
Deficit
Non-Controlling InterestTotal
Balance at March 31, 202087,306,784 $10 100,000 $100 754,599 $(71)$360,224 $(591)$(282,218)$ $77,454 
Net income— — — — — — — — 9,940 — 9,940 
Foreign currency translation— — — — — — — (142)— — (142)
Stock-based compensation— — — — — — 1,438 — — — 1,438 
Stock-based compensation for services rendered— — — — — — 173 — — — 173 
Options exercised224,012 — — — — — 437 — — — 437 
Balance at June 30, 202087,530,796 $10 100,000 $100 754,599 $(71)$362,272 $(733)$(272,278)$ $89,300 
Net income— — — — — — — — 373 — 373 
Foreign currency translation— — — — — — — (45)— — (45)
Stock-based compensation61,553 — — — — — 2,230 — — — 2,230 
Stock-based compensation for services rendered45,110 — — — — — 285 — — — 285 
Options exercised1,059,644 — — — — — 3,089 — — — 3,089 
Balance at September 30, 202088,697,103 $10 100,000 $100 754,599 $(71)$367,876 $(778)$(271,905)$ $95,232 
The accompanying notes are an integral part of these condensed consolidated financial statements.
8


Digital Turbine, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 2021
(in thousands, except share and per share amounts)
1.    Description of Business
Digital Turbine, Inc., through its subsidiaries (collectively "Digital Turbine" or the "Company"), is a leading end-to-end solution for mobile technology companies to enable advertising and monetization solutions. Its digital media platform powers frictionless end-to-end application for brand discovery and advertising, user acquisition and engagement, operational efficiency, and monetization opportunities. The Company provides on-device solutions to all participants in the mobile application ecosystem that want to connect with end users and consumers who hold the device, including mobile carriers and device original equipment manufacturers (“OEMs”) that participate in the app economy, app publishers and developers, and brands and advertising agencies.
2.    Restatement of Condensed Consolidated Financial Statements
On May 11, 2022, management and the Audit Committee of the Board of Directors of the Company concluded (a) the Company will restate its financial statements for the three months ended June 30, 2021, the three and six months ended September 30, 2021, and the three and nine months ended December 31, 2021 (the “Relevant Periods”), and (b) the Company’s previously issued unaudited interim condensed consolidated financial statements for the Relevant Periods included in its Quarterly Reports on Form 10-Q for the Relevant Periods, as originally filed with the Securities and Exchange Commission on August 9, 2021, November 2, 2021, and February 8, 2022, respectively, should no longer be relied upon.
In connection with the integration of the Company’s recently acquired businesses (AdColony Holding AS and Fyber N.V. (the “Acquired Companies”)), management performed a review of the presentation of revenue and license fees and revenue share expense based on accounting guidance for revenue recognition, including considerations of principal and agent (or “gross and net”) presentation. After a detailed review of the Acquired Companies' product lines and related contracts with customers and publishers, the Company concluded each Acquired Company acts as an agent in certain of their respective product lines and, as a result, revenue for those product lines should be reported net of license fees and revenue share expense. Previously, all revenue of the Acquired Companies, which are reported as separate segments referred to as In App Media – AdColony ("IAM-A") and In App Media – Fyber ("IAM-F"), were reported on a gross basis. The Company’s legacy business, which is reported in a separate segment referred to as On Device Media, is not impacted by the change described above and it's revenue continues to be reported on a gross basis. Further, the acquisitions of the Acquired Companies were completed during the three-month period ended June 30, 2021, and, as a result, there is no impact to the fiscal year ended March 31, 2021.
In addition, management determined certain hosting costs for the Acquired Companies reported as product development expenses should be reclassified as other direct costs of revenue and general and administrative expenses.
The corrections have the effect of:
1.Decreasing both net revenue and license fees and revenue share in a like amount on the condensed consolidated statements of operations and comprehensive income / (loss) for the three and six months ended September 30, 2021;
2.Increasing other direct costs of revenue and decreasing product development expenses in a like amount on the condensed consolidated statements of operations and comprehensive income / (loss) for the three and six months ended September 30, 2021; and
3.Increasing other direct costs of revenue and general and administrative expenses and decreasing product development expenses in a like amount on the condensed consolidated statements of operations and comprehensive income / (loss) for the six months ended September 30, 2021.
These corrections do not relate to or have any impact on the Company’s operating performance, income from operations, net income / (loss), or cash flows, and the financial position and liquidity of the Company remain unchanged.
9


The following table summarizes the impact of the restatements on select unaudited condensed consolidated statements of operations and comprehensive income / (loss) line items:
Three months ended September 30, 2021Six months ended September 30, 2021
ReportedAdjustmentRestatedReportedAdjustmentRestated
Net revenues$310,205$(121,637)$188,568$522,820$(176,177)$346,643
Costs of revenues and operating expenses
License fees and revenue share213,145(121,637)91,508351,493(176,177)175,316
Other direct costs of revenues3,8383,9897,8276,3715,92412,295
Product development17,904(3,989)13,91533,451(6,612)26,839
Sales and marketing17,47917,47931,21531,215
General and administrative41,30741,30764,61368865,301
Total costs of revenues and operating expenses293,673172,036487,143310,966
Income from operations$16,532$16,532$35,677$35,677
The adjustments in the table above also affect the tables and disclosures within Note 3, "Basis of Presentation and Summary of Significant Accounting Policies," Note 4, "Acquisitions," and Note 5, "Segment Information" of these financial statements.
3.    Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“GAAP”). The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. The Company consolidates the financial results and reports non-controlling interests representing the economic interests held by other equity holders of subsidiaries that are not 100% owned by the Company. The calculation of non-controlling interests excludes any net income / (loss) attributable directly to the Company. All intercompany balances and transactions have been eliminated in consolidation.
These financial statements should be read in conjunction with the Company's audited financial statements and related notes included in its Annual Report on Form 10-K for the fiscal year ended March 31, 2021 (the "2021 Form 10-K").
Unaudited Interim Financial Information
These accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial reporting. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring items, considered necessary to present fairly the Company’s financial condition, results of operations, comprehensive income, stockholders’ equity, and cash flows for the interim periods indicated. The results of operations for the three and six months ended September 30, 2021, are not necessarily indicative of the operating results for the full fiscal year.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Significant estimates and assumptions reflected in the financial statements include revenue recognition, allowance for credit losses, stock-based compensation, fair value of acquired intangible assets and goodwill, useful lives of acquired intangible assets and property and equipment, fair value of contingent earn-out considerations (please see Note 14, "Commitments and Contingencies," for further information on the fair value of the Company's contingent earn-out considerations), incremental borrowing rates for right-of-use assets and lease liabilities, and tax valuation allowances. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ materially from management’s estimates using different assumptions or under different conditions.
10


In light of the ongoing and quickly evolving COVID-19 pandemic, management has considered the impacts of the COVID-19 pandemic on the Company’s critical and significant accounting estimates and as of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates or judgments or revise the carrying value of its assets or liabilities as a result of the COVID-19 pandemic. These estimates may change as new events occur and additional information is obtained and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s condensed consolidated financial statements.
Summary of Significant Accounting Policies