Debt |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | Debt
Convertible Notes
On September 28, 2016, the Company sold $16,000 of aggregate principal 8.75% convertible notes maturing on September 23, 2020, unless converted, repurchased, or redeemed in accordance with their terms prior to such date. As of March 31, 2019, all of the Notes have been extinguished, the underlying indenture relieved, and all derivative liabilities related to the Notes settled.
Each purchaser of the convertible notes also received warrants to purchase shares of the Company's common stock. The warrants were issued under a Warrant Agreement (the "Warrant Agreement"), dated as of September 28, 2016, between Digital Turbine, Inc. and US Bank National Association, as the warrant agent.
The warrants were immediately exercisable on the date of issuance at an initial exercise price of $1.364 per share.
During the year ended March 31, 2019, 484,900 of the warrants were exercised. During the year ended March 31, 2020, the remaining 3,614,100 of the warrants were exercised. No outstanding warrants related to the Warrant Agreement remained outstanding at March 31, 2020.
Secured Credit Facility
On May 23, 2017, the Company entered a Business Finance Agreement (the “Credit Agreement”) with Western Alliance Bank (the “Bank”). The Credit Agreement provides for a $5,000 total facility.
The amounts advanced under the Credit Agreement mature in two (2) years, and accrue interest at the following rates and bear the following fees:
(1) Wall Street Journal Prime Rate + 1.25% (currently approximately 5.25%), with a floor of 4.0%.
(2) Annual Facility Fee of $45.5.
(3) Early termination fee of 0.5% if terminated during the first year.
The obligations under the Credit Agreement are secured by a perfected first position security interest in all assets of the Company and its subsidiaries, subject to partial (65%) pledges of stock of non-US subsidiaries. The Company’s subsidiaries Digital Turbine USA and Digital Turbine Media are co-borrowers.
In addition to customary covenants, including restrictions on payments (subject to specified exceptions), and restrictions on indebtedness (subject to specified exceptions), the Credit Agreement requires the Company to comply with the following financial covenants, measured on a monthly basis:
(1) Maintain a Current Ratio of at least 0.65, defined as unrestricted cash plus accounts receivable, divided by all current liabilities.
(2) Revenue must exceed 85% of projected quarterly revenue.
The Credit Agreement required that at least two-thirds (2/3rds) of the holders of the Notes at all times be subject to subordination agreements with the Bank. The Company obtained the consent of the holders of at least two-thirds (2/3rds) of the Notes, which were held by a small number of institutional investors. In consideration for such consents, the Company entered into a Second Supplemental Indenture, dated May 23, 2017 (the “Supplemental Indenture”) to the Indenture, and also entered into a First Amendment, dated May 23, 2017 (the “Warrant Amendment”) to the Warrant Agreement. The Supplemental Indenture and Warrant Amendment provided for a 30-day stock price measurement period to determine whether or not there would be any change to the conversion price or exercise price of the Company’s outstanding convertible notes or related warrants. The measurement period concluded on September 20, 2017, with no change to the existing $1.364 per share conversion or exercise price of our convertible notes or related warrants.
On May 22, 2019, the Company entered into an amendment to the Credit Agreement that extends the agreement through May 23, 2021 and provided for up to a $20,000 total facility, subject to draw limitations derived from current levels of eligible domestic receivables. The amounts advanced under the Credit Agreement, as amended, mature in two years, or May 22, 2021, and accrue interest at prime plus 0.50% subject to a 6.00% floor, with the prime rate defined as the greater of prime rate published in the Wall Street Journal or 5.50%. The Credit Agreement, as amended, also carried an annual facility fee of 0.20% of our available credit limit, and an unused line fee of 0.10% per annum.
On February 28, 2020, the Company entered into a new credit agreement (the "New Credit Agreement") with the Bank, which provides for (1) a term loan of $20,000, the proceeds of which the Company used to pay a portion of the closing cash purchase price for the Acquisition, and (2) a revolving line of credit of $5,000 to be used for working capital purposes. DT Media and DT USA are additional co-borrowers under the New Credit Agreement.
The term loan was to be repaid on a quarterly basis, beginning in July 2020, until the term loan maturity date of February 28, 2025, at which time the remaining unpaid principal balance must be repaid. The quarterly principal payment amounts increased from $250 to $1,250 over the term of the term loan. The revolving line of credit was to matures on February 28, 2025.
Amounts outstanding under the New Credit Agreement accrue interest at an annual rate equal to LIBOR (or, if necessary, a broadly-adopted replacement index), subject to a 1.75% floor, plus 3.75%. The obligations under the New Credit Agreement are secured by a perfected first-priority security interest in all the assets of the Company and its subsidiaries. The New Credit Agreement contains customary covenants, representations and events of default, and also requires the Company to comply with a fixed charge coverage ratio and total funded debt to consolidated adjusted EBITDA ratio.
The New Credit Agreement contained representations and warranties by each of the parties to the New Credit Agreement, which were made only for purposes of the New Credit Agreement and as of specified dates.
In connection with the Company entering into the New Credit Agreement with the Bank, on February 28, 2020, the Company and the Bank terminated the existing Credit Agreement, dated as of May 23, 2017, between the Company, DT Media, DT USA, and the Bank (and the amendments thereto), which was the previous revolving credit facility of the Company.
In connection with the Company entering into the BoA Credit Agreement with the Bank as described below, on February 3, 2021, the Company and Western Alliance Bank terminated the New Credit Agreement, dated February 28, 2020, by and among the Company, DT Media, DT USA, and Western Alliance Bank (and the amendments thereto), which was the previous term loan and revolving credit facility of the Company.
BoA Revolving Line of Credit
On February 3, 2021, the Company entered into a credit agreement ("the BoA Credit Agreement') with Bank of America, N.A. (the “Bank”), which provides for a revolving line of credit of $100,000, with an accordion feature enabling the Company to increase the amount to up to $200,000, to be used for acquisitions, working capital, and general corporate purposes. DT Media and DT USA are additional co-borrowers under the BoA Credit Agreement. The revolving line of credit matures on February 3, 2024.
Amounts outstanding under the BoA Credit Agreement accrue interest at an annual rate equal to LIBOR (or, if necessary, a broadly-adopted replacement index) plus an applicable margin that ranges from 1.50% to 2.25%, depending on the Company’s consolidated leverage ratio. The obligations under the BoA Credit Agreement are secured by a grant of a security interest in substantially all of the assets of the Company and its subsidiaries. The BoA Credit Agreement contains customary covenants, representations, and events of default, and also requires the Company to comply with a maximum consolidated leverage ratio and minimum fixed charge coverage ratio.
Per the BoA Credit Agreement, the Company's consolidated leverage ratio shall be measured per the following tiers:
At March 31, 2021, there was $15,000 outstanding principal on the BoA Credit Agreement and the Company had $85,000 available to draw. As of March 31, 2021, the Company was in compliance with all BoA Credit Agreement covenants.
Subsequent to year end, this debt was modified. Please see Note "Subsequent Events" for more information regarding the modification.
Interest Expense
Inclusive of the convertible notes issued on September 28, 2016 and the Credit Agreement entered into on May 23, 2017 for fiscal year 2019, the New Credit Agreement for fiscal year 2020, and the New Credit Agreement and the BoA Credit Agreement for fiscal year 2021, the Company recorded $949, $101, and $322 of interest expense during the years ended March 31, 2021, 2020, and 2019 respectively.
Additionally, aggregate debt discount related to the convertible notes detailed above in fiscal year 2019, and debt issuance cost amortization in all presented years, is reflected on the Consolidated Statements of Operations and Comprehensive Income / (Loss) as interest expense. Inclusive of this amortization of $94 recorded during the year ended March 31, 2021, $6 recorded during the year ended March 31, 2020, and $798 recorded during March 31, 2019, the Company recorded $1,043, $107, and $1,120 of total interest expense for the years ended March 31, 2021, 2020, and 2019 respectively.
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