Debt |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt |
Debt
Senior Debt
On March 6, 2015, in connection with the Company’s acquisition of Appia, Inc., DT Media entered into a Second Amended and Restated Loan and Security Agreement with SVB in connection with the closing of the Appia, Inc. acquisition, which included a term loan and revolving line of credit. This amendment replaced and restated Appia Inc's prior loan agreement with SVB, and was then amended and restated in June 2015 (as described under "Revolving Line of Credit"). As of March 31, 2016, the term loan has been fully paid off, whereas at March 31, 2015 the balance was $600.
Revolving Line of Credit
On June 11, 2015, DT Media, and SVB, entered into a Third Amended and Restated Loan and Security Agreement, pursuant to which SVB agreed to amend and restate the existing Second Amended and Restated Loan and Security Agreement to increase the revolving line of credit available under such facility from $3,500 to $5,000, to extend the maturity date under the facility from June 30, 2015 to June 30, 2016, and to make certain other changes to the terms of the existing agreement.
The revolving line of credit under this amendment allows DT Media to borrow up to the lesser of $5,000 or the Borrowing Base, which is 80% of eligible accounts receivable after consideration of other amounts outstanding, under the revolving line of credit. At March 31, 2016 and March 31, 2015, DT Media had borrowed $3,000 under the revolving line. The revolving line matures on June 30, 2016, with interest payable monthly at a floating annual rate equal to (a) during any month for which DT Media maintained an adjusted quick ratio (as customarily defined) of not less than 1.00:1.00 as of the last day of a month, the prime rate as reported by The Wall Street Journal, plus (1.75%) and (b) at all other times, the prime rate as reported by The Wall Street Journal, plus (2.75%). At March 31, 2016, the interest rate was 6.25%.
On November 30, 2015, DT Media and SVB, entered into an amendment to the Third Amended and Restated Loan and Security Agreement dated June 11, 2015. Pursuant to this amendment, the adjusted EBITDA financial covenant was removed and replaced with the requirement to maintain an adjusted quick ratio of not less than 0.90:1.00 unless (a) there are no advances outstanding under the revolving facility, or (b) if the Company’s cash and cash equivalents held at SVB or SVB's Affiliates is greater than or equal to $15,000. Furthermore, the Streamline Period, which is not a financial covenant but applies to application of receivables, was amended so that it is achieved if DT Media’s trailing three-month period revenue is not less than 85% of projections for the three months ending August 31, 2015 through November 30, 2015, 75% of projections for the three months ending December 31, 2015 and thereafter, with the projected revenue for such three month period as set forth in DT Media’s operating budget provided to SVB. This amendment also added the requirement for the Company to deliver consolidated financial statements in addition to DT Media. At March 31, 2016, DT Media and the Company were compliant with all covenants. The Company was non-Streamline as of March 31, 2016.
DT Media’s obligations under this amendment are secured by substantially all of DT Media’s assets. Additionally, Digital Turbine, Inc. has guaranteed DT Media’s obligations under this amendment, and pledged substantially all of its assets, including its intellectual property, to SVB in support of this amendment.
Pursuant to the amendment to the Third Amended and Restated Loan and Security Agreement dated June 11, 2015, entered into by DT Media and SVB on November 30, 2015, the covenant requirement was put in place for the Company to maintain an adjusted quick ratio of not less than 0.90:1.00 unless (a) there are no advances outstanding under the revolving facility, or (b) if the Company’s cash and cash equivalents held at SVB or SVB's Affiliates is greater than or equal to $15,000. As of April 30, 2016, given the Company did not meet the requirements set forth in (a) and (b) noted previously, the Company was required to maintain an adjusted quick ratio of not less than 0.90:1.00. As of April 30, 2016, the Company's quick ratio was estimated at 0.89 versus the 0.90 minimum level.
On June 10, 2016, prior to the required testing of the above-mentioned covenant, SVB and DT Media entered into a Consent Agreement, effective as of May 31, 2016, whereby SVB provided its consent to DT Media (for a de minimis fee) to not exercise any rights or remedies solely in connection with the non-compliance with such covenant for the period ended April 30, 2016, without which consent DT Media would have been in default of the Loan Agreement. Please see "Risk Factors" included in PART I Item 1A. of this Annual Report on Form 10-K within section "General Risk - The Company has secured indebtedness, which could limit its financial flexibility", regarding financial covenant compliance.
Subordinated Debenture and Warrant
On March 6, 2015, in connection with the acquisition of DT Media, the Company entered into a Securities Purchase Agreement with North Atlantic, pursuant to which DT Media sold a senior secured debenture with a principal amount of $8,000 (the “New Debenture”) to North Atlantic. The New Debenture was issued in exchange for two debentures previously sold by Appia, Inc. to North Atlantic, which were cancelled.
The New Debenture matures on March 6, 2017, at which time the principal amount is due and payable. The Company may prepay the New Debenture in whole or in part at any time without penalty. The New Debenture bears interest at 10% per annum for the first twelve months, and 14% thereafter; interest is payable monthly.
DT Media’s obligations under the New Debenture are secured by all of DT Media’s assets; additionally, Digital Turbine, Inc. has guaranteed DT Media’s obligations under the New Debenture, and pledged substantially all of its assets, including its intellectual property, to North Atlantic in support of the New Debenture. The New Debenture is subordinated to the Amended and Restated Credit Facility.
In connection with the issuance of the New Debenture, the Company issued to North Atlantic (i) 200,000 shares of the Company’s common stock, and (ii) a warrant to purchase an additional 400,000 shares of the Company’s common stock at an exercise price of $0.001 per share. The warrant is not exercisable until the one year anniversary of the closing date of the merger and would have terminated if the Company had repaid the New Debenture prior to such one year anniversary. The value of the common shares, and the estimated value of the warrant, have been recorded as debt discount and are being amortized over the term of the New Debenture during the years ended March 31, 2016, 2015. During the years ended March 31, 2016 and 2015, debt discount amortized amounted to $470 and $34, respectively, with the debt discount balance amounting to $440 and $910 at March 31, 2016 and 2015, respectively.
On February 17, 2016, DT Media and North Atlantic, entered into an amendment to the Securities Purchase Agreement dated March 6, 2015 where DT Media agreed to the prepayment premium in the table below if the debt is retired within the date ranges set forth. Although the Company’s debt to North Atlantic is not due until March 6, 2017, if the debt is not retired by May 6, North Atlantic has a right to receive a warrant for 400,000 shares (0.6% of outstanding as of March 31, 2016) and a board observer right. As the Company is in discussions to refinance its debt, it sought to defer the issuance of the warrant (and board observer rights) in exchange for the prepayment premium. Accordingly, pursuant to this amendment, the warrant vesting was modified to May 6, 2016.
On May 6, 2016, DT Media and North Atlantic, entered into a Second Amendment to Securities Purchase Agreement, where DT Media agreed to pay North Atlantic the amount of $140 as a fee in connection with the preparation, negotiation, and execution of this amendment. Pursuant to this amendment, the warrant vesting date was modified to June 15, 2016 (the “Retirement Date”) and provided that the vesting date may be further extended by North Atlantic to no later than June 22, 2016, if North Atlantic believes, in its reasonable discretion, that (i) DT Media is unable to refinance the obligations by the vesting date, (ii) reasonable progress has been made by DT Media in refinancing the obligations, and (iii) in all likelihood, DT Media will be able to refinance the obligations by June 22, 2016. If these conditions are not satisfied or the debt is not refinanced by June 15, 2016, then a warrant for 400,000 shares would be issued to North Atlantic and North Atlantic would receive a board observer. The payment of $140 to North Atlantic was in lieu of any prepayment premium described above.
On June 13, 2016, DT Media and North Atlantic entered into a Third Amendment to Securities Purchase Agreement, where DT Media agreed to pay North Atlantic the amount of $60 as consideration to extend the Retirement Date to July 15, 2016.
The New Debenture, and the Company’s secured guarantees of such debt, contain covenants, among others, limiting the Company’s ability to undergo a change of control, incur indebtedness, grant liens, make dividends in cash, and other customary covenants. At March 31, 2016, DT Media and the Company were compliant with all such covenants.
The Company’s required principal repayments for its outstanding debt as of March 31, 2016, are as follows:
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