Annual report pursuant to Section 13 and 15(d)

Acquisitions

v3.21.1
Acquisitions
 12 Months Ended
Mar. 31, 2021
Business Combinations [Abstract]  
Acquisitions Acquisitions
On February 28, 2020, the Company completed the acquisition of Mobile Posse, Inc. (“Mobile Posse”) pursuant to the previously reported stock purchase agreement with ACME Mobile, LLC (“ACME”), Mobile Posse, and certain equity holders of ACME. The Company acquired all of the outstanding capital stock of Mobile Posse in exchange for total consideration of: (1) $41,500 in cash paid at closing; (2) working capital adjustments of $453 paid in cash after closing; and (3) an earn-out of $39,486, paid in cash quarterly and concluding at the end of the twelve-month period (the “Earn-Out Period”) following the closing of the Acquisition and based on the achievement of certain target net revenues, less associated revenue shares, over the Earn-Out Period. Note the total consideration listed above excludes cash acquired of $4,613. Total consideration paid for the acquisition of Mobile Posse was $81,439. None of the goodwill recognized for the Acquisition was deductible for tax purposes.
The fair values of the assets acquired and liabilities assumed at the date of acquisition are as follows:
Assets
Cash $ 4,613 
Accounts receivable 10,864 
Other current assets 422 
Property, plant, and equipment 2,041 
Right-of-use asset 2,379 
Developed technology 1,600 
Customer relationships 42,500 
Goodwill 27,267 
Other non current assets 1,473 
Total Assets $ 93,159 
Liabilities
Accounts payable $ 499 
Accrued license fees and revenue share 6,847 
Accrued compensation 180 
Other current liabilities 827 
Non-current deferred tax liability 10,854 
Other non-current liabilities 3,469 
Total Liabilities $ 22,676 
Note the total consideration listed above excludes cash of $4,613 and working capital adjustments.
The amortization period for the intangible assets acquired in the transaction are as follows:
Intangible Asset Remaining Useful Life
Developed technology 5 years
Customer relationships 18 years
Goodwill Indefinite
The operating results of Mobile Posse, Inc. which are included in the accompanying Consolidated Statements of Operations and Comprehensive Income / (Loss) from the acquisition date to March 31, 2020, are as follows:
  Unaudited
Revenues $ 4,817 
Costs of revenues 2,512 
Operating expenses 1,290 
Net income $ 1,015 
Unaudited pro forma combined financial statements are presented below for informational purposes only. The unaudited pro forma combined statements of operations for the twelve months ended March 31, 2020 and March 31, 2019 for the Company, and the period from April 3, 2018 through March 31, 2019 for Mobile Posse, combine the historical consolidated statements of operations of the Company and Mobile Posse, giving effect to the acquisition as if it had been consummated on April 3, 2018, the beginning of the earliest period presented.
Following are the unaudited pro forma results as if the acquisition of Mobile Posse had occurred as of April 1, 2018.
Year ended March 31,
2020 2019
Unaudited Unaudited
(in thousands, except per share amounts)
Net revenues $ 190,920  $ 162,956 
Net income $ 18,347  $ (1,387)
Basic net income / (loss) per common share $ 0.22  $ (0.02)
Diluted net income / (loss) per common share $ 0.20  $ (0.02)
On March 1, 2021, Digital Turbine, through its subsidiary DT EMEA, an Israeli company and wholly-owned subsidiary of the Company, entered into a Share Purchase Agreement with Triapodi Ltd., an Israeli company (d/b/a Appreciate) (“Appreciate”), the stockholder representative, and the stockholders of Appreciate, pursuant to which DT EMEA acquired, on March 2, 2021, all of the outstanding capital stock of Appreciate in exchange for total consideration of $20,003 in cash. In connection with the Acquisition, under the terms of the Purchase Agreement, DT EMEA entered into bonus arrangements to pay up to $6,000 in retention bonuses and performance bonuses to the founders and certain other employees of Appreciate. The Purchase Agreement contains customary representations and warranties, covenants, and indemnification provisions. The Company determined the operating results of the acquisition to not be material to the Consolidated Financial Statements for the year ended March 31, 2021 and, therefore, has not included pro forma financial information for the acquisition of Appreciate. None of the goodwill recognized for the Acquisition was deductible for tax purposes.
Due to the proximity of the Acquisition to our fiscal year ended March 31, 2021, the fair values of the assets acquired and liabilities assumed at the date of acquisition are presented on a preliminary basis and are as follows:
Assets
Cash $ 2,152 
Accounts receivable 2,400 
Other current assets 53 
Property, plant, and equipment 17 
Developed technology 8,200 
Customer relationships 2,300 
Trade Names 1,700 
Goodwill 9,431 
Total Assets $ 26,253 
Liabilities
Accounts payable $ 5,271 
Accrued license fees and revenue share 365 
Accrued compensation 282 
Other current liabilities 332 
Total Liabilities $ 6,250 
Total Consideration $ 20,003 
The amortization period for the intangible assets acquired in the transaction are as follows:
Intangible Asset Remaining Useful Life
Developed technology 10 years
Customer relationships 15 years
Trade names 10 years
Goodwill Indefinite
The operating results of Appreciate, which are included in the accompanying Consolidated Statements of Operations and Comprehensive Income / (Loss) from the acquisition date to March 31, 2021, are as follows:
  Unaudited
Revenues $ 1,230 
Costs of revenues and operating expenses 1,139 
Net income $ 91