Operating Lease Obligations

The Company leases office facilities and equipment under non-cancelable operating leases expiring in various years through 2022.

Following is a summary of future minimum payments under initial terms of leases as of:

These amounts do not reflect future escalations for real estate taxes and building operating expenses. Rental expense for continuing operations amounted to $629 and $250, for the years ended March 31, 2015 and 2014, respectively.

Other Obligations

As of March 31, 2015, the Company was obligated for payments under various employment contracts with initial terms greater than one year at March 31, 2015. Annual payments relating to these commitments at March 31, 2015 are as follows:

Legal Matters

Digital Turbine may be involved in various claims, suits, assessments, investigations, and legal proceedings that arise from time to time in the ordinary course of its business, including those identified below. Digital Turbine accrues a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Digital Turbine reviews these accruals at least quarterly and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel, and other relevant information. To the extent new information is obtained and Digital Turbine's views on the probable outcomes of claims, suits, assessments, investigations, or legal proceedings change, changes in Digital Turbine's accrued liabilities would be recorded in the period in which such determination is made. For some matters, the amount of liability is not probable or the amount cannot be reasonably estimated and therefore accruals have not been made. The following is a discussion of Digital Turbine's significant legal matters and other proceedings.  

Coral Tell Ltd. Matter

On May 30, 2013, a class action suit in the amount of NIS 19,200  or $5,300 was filed in the Tel-Aviv Jaffa District Court against Coral Tell Ltd., an Israeli company which owns and operates a website offering advertisements and Coral Tell Ltd is currently being sued in a class action lawsuit regarding phone call overages and has served a third party notice against Logia and two additional companies for our alleged involvement in facilitating the overages. The suit relates to a service offered by the Coral Tell website, enabling advertisers to display a virtual cellular number in the advertisement instead of their real cellular number. The plaintiff claims that calls were charged for the connection time between two segments of the call, instead of the second segment alone; that the caller was charged even if the advertiser did not answer the call (as the charge began upon initiation of the first segment); and that the caller was charged for text messages sent to the advertiser, although the service did not support delivery of text messages. We have no contractual relationship with this company. We believe the lawsuit is without merit and a finding of liability on our part remote. After conferring with advisors and counsel, management believes that the ultimate liability, if any, in the aggregate will not be material to the financial position or results or operations of the Company for any future period.

On November 25, 2013, the Israeli Supreme Court ordered the parties to submit their position as to whether the defendant (applicant) has a right to appeal the Israeli District’s Court decision or must request the Israeli Supreme Court to grant a right to appeal.

On December 25, 2013, after reviewing the parties’ positions, the Israeli Supreme Court ordered the respondents (Cellcom, Logia, Ethrix) to submit their response to defendant’s petition to grant the right to appeal, by January 26th, 2014. Appellant responded thereafter and the appeal is now under review and pending judgment. Usually, in petitions such as this the Israeli Supreme Court makes a judgment based on the parties’ written responses.

The Defendant appealed the ruling of July 2013, and on April 1, 2015 the Supreme Court rejected the appeal. This means that the third party notices, Logia included, will be addressed and heard after judgment is made in the case between the Plaintiff and Defendant.

Digital Turbine does not believe there is a probable and estimable claim. Accordingly, Digital Turbine has not accrued any liability.

Settlement of Potential Claim

The Company has had a disagreement with an investor of the Company regarding their respective rights and obligations to each other regarding certain investments.  Although no claims have been made as of March 31, 2015, each of the Parties recognizes that the disagreements they have had could in the future lead to claims being made and believe it is in their respective best interests to avoid such claims by entering into an agreement whereby the Company has offered to settle the matter in exchange for a certain number of shares of common stock of the Company.  

This agreement by management to settle the matter was reached prior to March 31, 2015 and has been extended to the shareholder through a settlement offer that as of March 31, 2015 is being reviewed and considered by the shareholder and their legal counsel.

Although the matter is still unsettled as of March 31, 2015, the extension of an offer settlement by management is representative of the probable standard referred to in ASC 450.

As of March 31, 2015, the eventual settlement of this matter is viewed as probable and thus an accrual representing the fair value was accrued in this Annual Form 10-K in an amount equal to $381.

As of March 31, 2015 Digital Turbine does not believe there is a reasonable possibility that a material loss exceeding the amounts already accrued for these or other proceedings or matters has been incurred. However, since the ultimate resolution of any such proceedings and matters is inherently unpredictable, Digital Turbine's business, financial condition, results of operations, or cash flows could be materially affected in any particular period by unfavorable outcomes in one or more of these proceedings or matters. Whether the outcome of any claim, suit, assessment, investigation, or legal proceeding, individually or collectively, could have a material adverse effect on Digital Turbine's business, financial condition, results of operations, or cash flows will depend on a number of variables, including the nature, timing, and amount of any associated expenses, amounts paid in settlement, damages, or other remedies or consequences.