Digital Turbine, Inc.: Form 10-Q/A for the period ended Sep 30, 2008

The following discussion should be read in conjunction with, and is qualified in its entirety by, the Financial Statements and the Notes thereto included in this report. This discussion contains certain forward-looking statements that involve substantial risks and uncertainties. When used in this Quarterly Report on Form 10-QA, the words “anticipate,” “believe,” “estimate,” “expect” and similar expressions, as they relate to our management or us, are intended to identify such forward-looking statements. Our actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements as a result of a variety of factors including those set forth under “Risk Factors” in our Transitional Report on Form 10-KT for the Transition Period ended March 31, 2008. Historical operating results are not necessarily indicative of the trends in operating results for any future period.

Unless the context otherwise indicates, the use of the terms “we,” “our” “us” or the “Company” refer to the business and operations of Mandalay Media, Inc. (“Mandalay”) through its sole operating and wholly-owned subsidiary, Twistbox Entertainment, Inc. (“Twistbox”).

This discussion is included to compare the financial results of our successor to the financial results of predecessor.

Comparison of the Three Months Ended September 30, 2008 (Successor) and the Three Months Ended September 30, 2007 (Predecessor)

Revenues

(In thousands)

Games revenue includes both licensed and internally developed games for use on mobile phones. The growth in games revenue largely reflects additional revenue associated with management of a carrier platform for games in Germany, and additional development projects out of our games studio in the quarter. Other content includes a broad range of primarily licensed product delivered in the form of WAP, Video, Wallpaper and Mobile TV. The increase in other content revenue year over year relates to new revenue streams related to management of carrier advertising platforms and addition aggregation, and the expansion of direct to consumer activities in the US, as well as increased licensing revenue.

Cost of Revenues

(In thousands)

License fees represents costs payable to content providers for use of their intellectual property in products sold. Other direct cost of revenues includes amortization of the intangibles identified as part of the purchase price accounting and attributed to cost of revenues. The increase in margin is the result of the addition of higher margin revenue streams, particularly platform management and licensing.

Operating Expenses

(In thousands)

Product Development expenses include the costs to develop, edit and make content ready for consumption on a mobile phone. The decrease in expenses compared to the second quarter of the prior year, are primarily the result of restructuring during the year which resulted in a reduction in employees, particularly in the product development areas.

Sales and Marketing Expenses represent the costs of sales and marketing personnel, and advertising and marketing campaigns. A reduction in personnel costs was largely offset by increased advertising expenses.

General and administrative expenses represent management and support personnel costs in both Mandalay Media and Twistbox, and related expenses, as well as professional and consulting costs incurred, and other costs such as stock based compensation, depreciation and bad debt expenses. The increase in expense over the first quarter in the prior year is largely the result of stock option expense of $1.2 million, and additional management expenses at the holding company level.

Amortization of intangibles in the current quarter represents amortization of the intangibles identified as part of the purchase price accounting related to the Twistbox acquisition and attributed to operating expenses. Amortization expenses in the first quarter of the prior year represents the amortization predecessor intangible assets related to prior acquisitions by Twistbox.

Other Expenses

(In thousands)

Interest and other income/(expense) includes interest income on invested funds, interest expense related the Twistbox’s senior secured note, foreign exchange transaction gains and losses, and depreciation expense. The increase year over year is a result of an additional month of interest expense, since the secured note was initiated in July 2007, and foreign exchange losses versus gains in the prior period.

Comparison of the Six Months Ended September 30, 2008 and 2007

Revenues

(In thousands)

Games revenue includes both licensed and internally developed games for use on mobile phones. The growth in games revenue largely reflects additional revenue associated with management of a carrier platform for games in Germany, and additional development projects out of our games studio in the quarter. Other content includes a broad range of primarily licensed product delivered in the form of WAP, Video, Wallpaper and Mobile TV. The increase in other content revenue year over year relates to new revenue streams related to management of carrier advertising platforms and addition aggregation, and the expansion of direct to consumer activities in the US, as well as increased licensing revenue.

Cost of Revenues

(In thousands)

License fees represents costs payable to content providers for use of their intellectual property in products sold. Other direct cost of revenues includes amortization of the intangibles identified as part of the purchase price accounting and attributed to cost of revenues. The increase in margin is the result of the addition of higher margin revenue streams, particularly platform management and licensing.

Operating Expenses

(In thousands)

Product Development expenses include the costs to develop, edit and make content ready for consumption on a mobile phone. The decrease in expenses compared to the first six months of the prior year, are primarily the result of restructuring during the year which resulted in a reduction in employees, particularly in the product development areas.

Sales and Marketing Expenses represent the costs of sales and marketing personnel, and advertising and marketing campaigns. A reduction in personnel costs was partly offset by increased advertising expenses.

General and administrative expenses represent management and support personnel costs in both Mandalay Media and Twistbox, and related expenses, as well as professional and consulting costs incurred, and other costs such as stock based compensation, depreciation and bad debt expenses. The increase in expense over the first quarter in the prior year is largely the result of stock option expense of $2.0 million, and additional management expenses at the holding company level.

Amortization of intangibles in the current quarter represents amortization of the intangibles identified as part of the purchase price accounting related to the Twistbox acquisition and attributed to operating expenses. Amortization expenses in the first half of the prior year represents the amortization of predecessor intangible assets related to prior acquisitions by Twistbox.

Other Expenses

(In thousands)

Interest and other income/(expense) includes interest income on invested funds, interest expense related the Twistbox’s senior secured note, foreign exchange transaction gains and losses, and depreciation expense. The increase year over year is a result of an additional four months of interest expense, since the secured note was initiated in July 2007.