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, 2020

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 years ended March 31, 2020, 2019, and 2018, we determined that there were no indicators of impairment related to the Company's continuing operations.

The components of intangible assets as at March 31, 2020 and 2019 were as follows:



	As of March 31, 2020
	Cost		Accumulated Amortization			Net
Developed Technology	$	7,926	$	(5,861	)	$	2,065
Customer relationships	46,971		(5,154		)	41,817
Total	$	54,897	$	(11,015	)	$	43,882



	As of March 31, 2019
	Cost		Accumulated Amortization			Net
Developed Technology	$	5,826	$	(5,826	)	$	—
Total	$	5,826	$	(5,826	)	$	—

During the fiscal years ended March 31, 2020, 2019, and 2018, the Company recorded amortization expense in the amount of $218, $1,231, and $1,416, respectively. For the fiscal year ended March 31, 2020, amortization expense is a component of general and administrative operating expenses on the Statements of Operations and Comprehensive Income / (Loss). For the fiscal years ended March 31, 2019 and 2018, amortization expense is a component of other direct costs of revenues on the Statements of Operations and Comprehensive Income / (Loss). The determination of the expense category for amortization of intangible assets is determined by capitalization under ASC 350, Intangibles - Goodwill and Other, or ASC 985-20, Costs of Software to be Sold, Leased, or Otherwise Marketed. ASC 350 leads to accounting for amortization of intangible assets under operating expenses, while ASC 985-20 leads to accounting for amortization of intangible assets under other direct costs of revenues.

Based on the amortizable intangible assets as of March 31, 2020, the Company expects future amortization expense to be approximately $2,681 per year over the next five fiscal years and $30,482 in residual expense thereafter.

Below is a summary of intangible assets:



	Intangible Assets
Balance as of March 31, 2017	$	2,647
Amortization of intangibles	(1,416		)
Balance as of March 31, 2018	1,231
Amortization of intangibles	(1,231		)
Balance as of March 31, 2019	—
Purchase of Mobile Posse	44,100
Amortization of intangibles	(218		)
Balance as of March 31, 2020	$	43,882