Annual report pursuant to Section 13 and 15(d)

Description of Stock Plans

v3.21.1
Description of Stock Plans
 12 Months Ended
Mar. 31, 2021
Share-based Payment Arrangement [Abstract]  
Description of Stock Plans Description of Stock Plans
Employee Stock Plan
    On September 15, 2020, the Company’s stockholders approved the 2020 Equity Incentive Plan of Digital Turbine, Inc. (the “2020 Plan”), pursuant to which the Company may grant equity incentive awards to directors, employees and other eligible participants. A total of 12,000,000 shares of common stock are reserved for grant under the 2020 Plan. The types of awards that may be granted under the 2020 Plan include incentive and non-qualified stock options, stock appreciation rights, restricted stock, and restricted stock units. The 2020 Plan became effective on September 15, 2020 and has a term of ten years. Stock options may be either “incentive stock options” (“ISOs”), as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or non-qualified stock options (“NQSOs”).
Previous to the approval of the Plan, stock awards were issued under the Amended and Restated Digital Turbine, Inc. 2011 Equity Incentive Plan (the “2011 Plan”), which was approved and adopted by our stockholders by written consent on May 23, 2012. The 2011 Plan provided for grants of stock-based incentive awards to our and our subsidiaries’ officers, employees, non-employee directors, and consultants. Awards issued under the 2011 Plan can include stock options, stock appreciation rights, restricted stock, and restricted stock units. Stock options may be either ISOs, as defined in Section 422 of the Internal Revenue Code of 1986, as amended, or NQSOs.
The 2011 Plan and 2020 Plan are collectively referred to as "Digital Turbine's Incentive Plans."
The 2011 Plan reserved 20,000,000 shares for issuance, of which zero and 6,366,088 remained available as of March 31, 2021 and March 31, 2020, respectively. At the point when the 2011 Plan was retired, 4,452,064 shares remained unissued. No future grants will be issued pursuant to the 2011 Plan. All future awards will be issued under the 2020 Plan.
The 2020 Plan reserves 12,000,000 shares for issuance, of which 11,903,016 remained available for issuance as of March 31, 2021. The change over the period represents stock option grants, stock option forfeitures/cancellations returned to pool, and restricted shares/units of common stock of 97,193 shares, 209 shares, and zero shares, respectively.
Restricted Stock Units
    Awards of restricted stock units ("RSUs") may be either grants of time-based restricted units or performance-based restricted units that are issued at no cost to the recipient. The cost of these awards is determined using the fair market value of the Company’s common stock on the date of the grant. No capital transaction occurs until the units vest, at which time they are converted to restricted or unrestricted stock. Compensation expense for RSUs with a time condition is recognized on a straight-line basis over the requisite service period. Compensation expense for RSUs with a performance condition are recognized on a straight-line basis based on the most likely attainment scenario, which is re-evaluated each period.
In June 2018, the Company issued 232,558 RSUs to its Chief Executive Officer and Chief Financial Officer. The shares vest over three years. The fair value of the shares on the date of issuance was $400.
In May 2019, the Company issued 109,416 RSUs to its Chief Executive Officer and Chief Financial Officer. The shares vest over three years. The fair value of the shares on the date of issuance was $413.
In May 2020, the Company issued 109,034 RSUs to its Chief Executive Officer and Chief Financial Officer. The shares vest over three years. The fair value of the shares on the date of issuance was $700.
With respect to RSUs, the Company expensed $466, $220, and $140 during the years ended March 31, 2021, 2020, and 2019, respectively, to general and administrative expense on the Consolidated Statements of Operations and Comprehensive Income / (Loss). Remaining unamortized expense, with respect to RSUs, of $688 is expected to be recognized over a weighted-average period of approximately 2.17 years.
Number of Shares Weighted-Average Grant Date Fair Value
Unvested restricted units outstanding as of March 31, 2020 293,525  $ 2.48 
Granted 109,034  6.42 
Vested (91,570) 2.47 
Cancelled —  — 
Unvested restricted units outstanding as of March 31, 2021 310,989  $ 3.87 
Stock Option Agreements
    Stock options granted under the Company’s Stock Plans typically vest over a three-to-four-year period. These options, which are granted with option exercise prices equal to the fair market value of the Company’s common stock on the date of grant, generally expire up to ten years from the date of grant.
Stock Option Activity
    The following table summarizes stock option activity for the Stock Plans during the years ended March 31, 2021 and 2020:
Number of
Shares		 Weighted-Average
Exercise Price
(per share)		 Weighted-Average
Remaining Contractual
Life (in years)		 Aggregate Intrinsic
Value
(in thousands)
Options Outstanding, March 31, 2019 9,128,885  $ 1.80  7.31 $ 16,347 
Granted 2,624,244  5.00 
Forfeited / Canceled (488,952) 2.05 
Exercised (2,279,747) 1.70 
Options Outstanding, March 31, 2020 8,984,430  2.75  7.17 16,517 
Granted 1,999,997  8.49 
Forfeited / Canceled (331,599) 5.61 
Exercised (2,506,383) 2.87 
Options Outstanding, March 31, 2021 8,146,445  $ 4.01  6.86 $ 622,249 
Vested and expected to vest (net of estimated forfeitures) at March 31, 2021 (a) 7,994,718  $ 3.92  6.82 $ 611,356 
Exercisable, March 31, 2021 5,469,049  $ 2.39  5.92 $ 426,418 
a.For options vested and expected to vest, options exercisable, and options outstanding, the aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between Digital Turbine's closing stock price on March 31, 2021 and the exercise price multiplied by the number of in-the-money options) that would have been received by the option holders had the holders exercised their options on March 31, 2021. The intrinsic value changes based on changes in the price of Digital Turbine's common stock.
    Information about options outstanding and exercisable at March 31, 2021 is as follows:
Options Outstanding Options Exercisable
Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Life (Years) Number of Shares Weighted-Average Exercise Price
$0.01 - 5.00
 5,578,097  2.13  5.91 4,908,281  1.96 
$5.01 - 10.00
 2,314,183  5.66  8.85 547,958  5.61 
$10.01 - 15.00
 126,272  13.43  9.27 —  — 
$15.01 - 20.00
 31,288  15.54  9.35 5,959  15.54 
$20.01 - and over
 96,605  56.69  9.80 6,851  41.25 
8,146,445  4.01 6.86 5,469,049  2.39
Other information pertaining to stock options for the Stock Plans is as follows:
  Year ended March 31,
  2021 2020 2019
Total fair value of options vested $ 4,816  $ 2,577  $ 1,977 
Total intrinsic value of options exercised (a) $ 97,603  $ 10,890  $ 603 
a.The total intrinsic value of options exercised represents the total pre-tax intrinsic value (the difference between the stock price at exercise and the exercise price multiplied by the number of options exercised) that was received by the option holders who exercised their options during the fiscal year.
    During the years ended March 31, 2021, 2020, and 2019, the Company granted options to purchase 1,999,997, 2,624,244, and 1,463,925 shares of its common stock, respectively, to employees with weighted-average grant-date fair values of $4.69, $2.86, and $1.02, respectively.
    At March 31, 2021, 2020, and 2019, there was $9,612, $4,787, and $2,639 of total unrecognized stock-based compensation expense, net of estimated forfeitures, related to unvested stock options expected to be recognized over a weighted-average period of 2.2 years, 2.3 years, and 1.9 years, respectively.
Valuation of Awards
For stock options granted under Digital Turbine’s Incentive Plans, the Company typically uses the Black-Scholes option pricing model to estimate the fair value of stock options at grant date. The Black-Scholes option pricing model incorporates various assumptions, including volatility, expected term risk-free interest rates, and dividend yields. The assumptions utilized in this model during fiscal years 2021, 2020, and 2019 are presented below.
  Year ended March 31,
  2021 2020 2019
Risk-free interest rate
0.21% to 0.66%
0.64% to 2.25%
 2.38% to 2.96%
Expected life of the options
4.93 to 5.23 years
5.02 to 9.83 years
5.52 to 9.19 years
Expected volatility
64% to 72%
64% to 66%
 66%
Expected dividend yield —% —% —%
Expected forfeitures
6%-7%
 29% 29%
Expected volatility is based on a blend of implied and historical volatility of Digital Turbine's common stock over the most recent period commensurate with the estimated expected term of Digital Turbine’s stock options. Digital Turbine uses this blend of implied and historical volatility, as well as other economic data, because management believes such volatility is more representative of prospective trends. The expected term of an award is based on historical experience and on the terms and conditions of the stock awards granted to employees.
Total stock compensation expense for the Company’s equity plans, which includes stock options, restricted stock, and warrants issued, is included in the following Consolidated Statements of Operations and Comprehensive Income / (Loss) component. See Note "Capital Stock Transactions" regarding restricted stock.
Year ended March 31,
2021 2020 2019
General and administrative $ 5,876  $ 3,353  $ 2,531