Digital Turbine, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Intangible Assets

Intangible Assets

12 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

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 year ended March 31, 2017, we determined that certain intellectual property acquired through the XYO acquisition was fully impaired as the Company is currently recognizing no revenue and has no foreseeable future plans to utilize the technology. As such, the Company will record an impairment charge to intangible assets amounting to the net book value of $757 as of March 31, 2017. There were no other indications of impairment present during the fiscal year ended March 31, 2017.

There were no indicators of impairment during the fiscal year ended March 31, 2016. In the fiscal year ended March 31, 2015, the Company determined there was a need to accelerate amortization expense by $224 due to the Company's decision to stop using the Appia trade name, rename, and re-brand the trademarks acquired through the Appia acquisition. There were no other indications of impairment present during the period ended March 31, 2015.

The components of intangible assets as at March 31, 2017 and 2016 were as follows:



	As of March 31, 2017
	Cost		Accumulated Amortization			Net
Software	$	11,544	$	(8,191	)	$	3,353
Trade name / trademark	380		(380		)	—
Customer list	11,300		(10,152		)	1,148
License agreements	355		(291		)	64
Total	$	23,579	$	(19,014	)	$	4,565



	As of March 31, 2016
	Cost		Accumulated Amortization			Net
Software	$	11,544	$	(4,949	)	$	6,595
Trade name / trademark	380		(380		)	—
Customer list	11,300		(5,534		)	5,766
License agreements	355		(226		)	129
Total	$	23,579	$	(11,089	)	$	12,490

The Company has included amortization of acquired intangible assets directly attributable to revenue-generating activities in cost of revenues. The Company has included amortization of acquired intangible assets not directly attributable to revenue-generating activities in operating expenses.

During the years ended March 31, 2017, 2016, and 2015, the Company recorded amortization expense in the amount of $7,168, $10,537, and $2,010, respectively.

Included in the $10,537 amortization expense recorded during the year ended March 31, 2016 is $2,404 of amortization expense recorded for customer relationship intangible assets related to a customer relationship the Company terminated from our September 2012 acquisition of Logia Mobile Ltd.

Based on the amortizable intangible assets as of March 31, 2017, we estimate amortization expense for the next five years to be as follows:



For the Twelve Month Period Ending March 31,	Amortization Expense
2018	$	2,272
2019	1,375
2020	114
2021	114
2022	114
Thereafter	576
Total	$	4,565

Below is a summary of intangible assets:



	Intangible Assets
Balance as of March 31, 2014	9,074
Amortization of intangibles	(2,010		)
Purchase price allocation adjustment	(1,472		)
Acquisition of XYO	1,500
Acquisition of Appia	17,780
Capitalized developed software	64
Balance as of March 31, 2015	24,936
Amortization of intangibles	(8,168		)
Customer relationship intangible asset write-off	(2,404		)
Reduction in software intangibles related to Sift transaction	(1,874		)
Balance as of March 31, 2016	12,490
Amortization of intangibles	(7,168		)
XYO intangible asset impairment	(757		)
Balance as of March 31, 2017	$	4,565