Liquidity |
12 Months Ended |
|---|---|
Mar. 31, 2017 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Liquidity |
Liquidity
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern.
Our primary sources of liquidity have historically been issuance of common and preferred stock and debt. As of March 31, 2017, we had cash totaling approximately $6,149. On September 28, 2016, the Company closed a private placement of $16,000 aggregate principal amount of 8.75% Convertible Senior Notes due 2020 (the “Notes”), netting cash proceeds to the Company of $14,316, after deducting the initial purchaser's discounts and commissions and the estimated offering expenses payable by Digital Turbine. The net proceeds from the issuance of the Notes were used to repay approximately $11,000 of secured indebtedness, consisting of approximately $3,000 to Silicon Valley Bank ("SVB") and $8,000 to North Atlantic Capital ("NAC"), retiring both such debts in their entirety, and will otherwise be used for general corporate purposes and working capital. Refer to Note 11 Debt for more details. The Company believes that it has sufficient cash and capital resources to operate its business for at least the next twelve months from the issuance date of this annual report on Form 10-K.
During fiscal year 2017, the Company operated in a net loss position. Until the Company becomes cash flow positive, the Company anticipates that its primary source of liquidity will be cash on hand. In addition, the Company may raise additional capital through future equity or, subject to restrictions contained in the indenture for the Notes, debt financing to provide for greater flexibility. If the Company issues additional equity securities to raise funds, the ownership percentage of its existing stockholders would be reduced. New investors may demand rights, preferences, or privileges senior to those of existing holders of common stock. During the evaluation by management of the Company’s financial position, factors such as working capital, current market capitalization, enterprise value, and the FY18 operating plan of the Company were considered when determining the ability of the Company to continue as a going concern. Based on the year over year revenue and gross margin increases, coupled with the Company’s reduction in operating expenses and access to debt, management has determined that when considering all relevant quantitative and qualitative factors that the company has sufficient cash and capital resources to continue to operate its business for at least twelve months from the issuance date of this annual report on Form 10-K. As of March 31, 2017, we were in discussions with a lender regarding additional secured indebtedness. This factor was considered as part of management’s plan when assessing the needs of the Company over the next twelve months. Had we not had access to this additional indebtedness, management’s assessment may have been different. Subsequent to year end, the Company successfully executed the additional secured indebtedness discussed above. See Note 21, Subsequent Events for more information.
In addition, the indenture for the Notes, and the related warrant agreement for the warrants issued in connection with the Notes, contain, among other protections, price-based anti-dilution rights. These rights could result in significant dilution to other stockholders in the event we were to complete certain types of financings at valuations below specified levels. At our January 2017 annual stockholders meeting, we received stockholder approval to issue the full amount of shares of our stock that could ultimately be issuable under the indenture for the Notes and the warrant agreement. However, as a result of the modification of our indenture for the Notes and related modification of the warrant agreement in connection with soliciting consent for incurrence of our May 2017 Bridge Bank credit facility (see Note 21, Subsequent Events), the January 2017 stockholder approval no longer applies and we would need to receive a new stockholder approval in order to issue the full amount of shares of our stock that could ultimately be issuable under the indenture for the Notes and the warrant agreement. We are required to seek such stockholder approval.
In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying consolidated balance sheet is dependent upon continued operations of the Company, which, in turn, is dependent upon the Company’s ability to generate positive cash flows from operations. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities, that might be necessary should the Company be unable to continue its existence.
|