QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND THE MERGER

The following are answers to certain questions that you may have regarding the merger and the annual meeting. We urge you to read carefully the remainder of this document because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the appendices to, and the documents incorporated by reference in, this document. On January 20, 2015, we changed our name to “Digital Turbine, Inc.” but for purposes of this proxy statement/prospectus, we continue to refer to our company as “Mandalay Digital.”

GENERAL

As a prospectus, this document is being provided to Appia’s security holders because Mandalay Digital is offering to issue shares of its common stock for shares of Appia securities upon completion of the merger.

THE ANNUAL MEETING

THE MERGER

THE MERGER

The following is a description of the material aspects of the merger. While Mandalay Digital believes that the following description covers the material terms of the merger, the description may not contain all of the information that is important to Mandalay Digital stockholders and Appia stockholders. Mandalay Digital encourages its stockholders and the Appia security holders to carefully read this entire proxy statement/prospectus, including “Summary of the Merger Agreement” stating on page 81 and the merger agreement attached to this proxy statement/prospectus as Appendix A and incorporated herein by reference, for a more complete understanding of the merger.

Overview

The Mandalay Digital board of directors has approved, and on November 13, 2014 we entered into, the merger agreement, which provides for Merger Sub, a wholly-owned subsidiary of Mandalay Digital, to be merged with and into Appia, with Appia surviving the merger as a wholly-owned subsidiary of Mandalay Digital.

At the effective time of the merger, on the terms and subject to the conditions set forth in the merger agreement, all of the equity securities of Appia outstanding immediately prior to the effective time (including outstanding stock options, which will be assumed by Mandalay Digital), other than equity securities held by stockholders that exercise dissenters’ rights under applicable law, will be converted into the right to receive a number of shares (or, in the case of stock options being assumed, stock options) of Mandalay Digital common stock, equal to $100 million less Appia’s net debt and transaction expenses at the time of closing (subject to a working capital adjustment), divided by $4.50.

Mandalay Digital expects to issue, pursuant to the merger agreement, up to 19,500,000 shares of common stock (including shares underlying assumed stock options and 1,000,000 shares to be deposited into escrow). The aggregate number shares of Mandalay Digital common stock to be issued pursuant to the merger agreement will vary depending on a number of factors, including the amount of the estimated net debt at closing. The merger agreement does not provide for an adjustment in the aggregate number of shares of Mandalay Digital common stock or options to be issued by Mandalay Digital to Appia’s security holders in the acquisition in the event of fluctuations in the market value of Mandalay Digital’s common stock up through the closing date. However, the number of shares to be issued by Mandalay Digital pursuant to the merger agreement is subject to adjustment based on Appia’s working capital and net debt as of the closing date of the merger. We estimate that if the merger had closed on January 31, 2015, we would have issued 19,056,392 shares; additionally, we would have assumed options for 277,376 shares of our common stock, for an aggregate of 19,333,768 shares, which would represent approximately 33% of the Company’s outstanding shares of common stock as of November 13, 2014 (after giving effect to such issuance). Appia’s actual results of operations between the date of the financial information included in this proxy statement/prospectus and the closing date may differ from the forecasted results used in this estimate, resulting in differences between the forecast and actual amounts of Appia’s working capital and net debt, including transaction expenses, as of the closing date of the merger. See “The Merger – Consideration Payable in the Merger” located on page 69 of this proxy statement/prospectus for further information and a discussion of the assumptions in calculating the potential amount of shares to be issued by Mandalay Digital in the merger.

We will deposit 1,000,000 of the shares into an escrow account to cover indemnification claims by Mandalay Digital pursuant to the terms of the merger agreement, which shares will be released one year after the closing, subject to any then pending claims. As of January 20, 2015, there were 37,824,011 shares of our common stock outstanding. The shares of our common stock to be issued in the merger will be issued from our authorized but unissued shares of common stock.

Upon consummation of the merger, Mandalay Digital will guarantee Appia’s existing indebtedness outstanding as of closing, which amount is approximately $9.5 million (excluding the transaction fees and expenses) assuming the merger closed on January 31, 2015. See “The Merger – Consideration Payable

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in the Merger” located on page 69 of this proxy statement/prospectus for further information and assumptions about Appia’s forecasted indebtedness based on certain closing dates. Upon consummation, and as a condition to the closing, of the merger, Appia will enter into an amended loan agreement with its current senior lender, Silicon Valley Bank, and a securities purchase agreement with Mandalay Digital and North Atlantic pursuant to which Appia will issue to North Atlantic a subordinated debenture in the aggregate principal amount of $8.0 million, which amount is included in the $9.5 million referenced above, to retire a like amount of outstanding debt to North Atlantic.

Mandalay Digital will issue a secured guaranty of each of the SVB Debt and North Atlantic Debt whereby we will guarantee all of Appia’s obligations in connection with such indebtedness and pledge substantially all of its assets, including its intellectual property. The secured guarantees will contain cross-default provisions and covenants, among others, limiting our ability to undergo a change of control, incur indebtedness, grant liens, make dividends in cash and other customary covenants. The SVB Debt will mature at June 30, 2015, with respect to the revolving line, and April 1, 2016, with respect to the term loan. The North Atlantic Debt will mature two years after the date of issuance. SVB and North Atlantic will also enter into a subordination agreement pursuant to which North Atlantic will agree to, among other things, limit its rights to receive payment, exercise remedies and enforce its rights for a certain period while an event of default under the North Atlantic debt exists.

Mandalay will also issue to North Atlantic 200,000 shares of its common stock and a common stock warrant to purchase 400,000 shares of its common stock all of which will have registration rights requiring Mandalay Digital to file a registration statement 15 business days after the closing of the merger with Appia. The warrant will have an exercise price of $0.01 per share exercisable for 10 years, but it is not exercisable until the one year anniversary of the closing date of the merger and will terminate if Mandalay Digital repays the North Atlantic Debt prior to such one year anniversary. We intend to refinance the Appia debt as soon as practicable following the closing of the merger.

Appia stockholders will be subject to lock up restrictions lapsing with respect to one-third of such shares at each of the six, nine and 12 month anniversaries of the closing date. Upon the closing of the merger, Mandalay Digital will appoint Jud Bowman and Craig Forman as members to the board of directors.

Background of the Merger

From time to time, Mandalay Digital considers various potential strategic acquisition transactions to enhance shareholder value. Mandalay Digital has completed four strategic transactions since late 2011 and has reviewed others, including the opportunities to acquire intellectual property and technologies, to acquire distribution for products and services in geographies not currently served and to acquire a complementary advertising tech platform.

In May 2012, William Stone, Mandalay Digital’s Chief Executive Officer (and then a consultant to Mandalay Digital) contacted Judson S. Bowman, Appia’s Chief Executive Officer, to discuss potential operator business development relationships. Mr. Stone had previously been introduced to Mr. Bowman in 2009 when Appia (then named Pocketgear) acquired Handango, Inc., an independent, third party application store. Mr. Stone served on the board of directors of Handango at the time of the acquisition and had previously been the Chief Executive Officer of Handango (although Mr. Stone did not receive any consideration in connection with the acquisition). While the May 2012 meeting did not conclude with any specific next steps, Mr. Stone and Mr. Bowman agreed to stay in touch and look for opportunities to collaborate. In July and August 2013, Mr. Stone and Mr. Bowman had several conversations about the shared vision for Mandalay Digital and Appia and how both companies could be more valuable together versus standalone. Although Mandalay Digital and Appia shared a common vision, the combination of the parties’ valuation expectations and the limited operating history of each company made any potential acquisition discussions premature at the time. Thus, Mr. Bowman and Mr. Stone agreed to stay in touch and look for commercial opportunities to work together. They discussed

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one specific opportunity in July and August of 2013 where Mandalay Digital would potentially acquire some of Appia’s legacy assets and contracts. Although the parties did not enter into a commercial transaction at that time they agreed to continue to look for opportunities to work together in the future.

Mandalay Digital’s executive management team believed that given Mandalay Digital’s pending United States summer 2014 launch of its advertising business with DT Ignite and DT IQ, Mandalay Digital would benefit significantly from building, acquiring and/or contracting with third parties such as Appia to use a sophisticated mobile app advertising platform. In light of the length of time it would take to build such a platform, the related execution risk (and Appia’s status as a leading independent app installation network) and the pending launch of the advertising business, in March 2014, Mr. Stone contacted Mr. Bowman again to discuss potential strategic relationships and transactions.

On March 13, 2014, Mr. Stone and Andrew Schleimer, Mandalay Digital’s Executive Vice President and Chief Financial Officer (and then a consultant to Mandalay Digital), held a telephone conference with Mr. Bowman and Timothy Oakley, Appia’s Chief Financial Officer, to discuss Mandalay Digital’s capitalization, financial condition and operations.

On March 18, 2014, Mr. Stone delivered a non-binding letter of intent outlining a proposed structure and purchase price for an acquisition of Appia by Mandalay Digital. Mandalay Digital’s proposal contemplated total aggregate consideration of up to $110 million to acquire Appia on a cash free and debt free basis, consisting of $30 million in cash, $50 million in Mandalay Digital common stock and potential earnout consideration of up to $30 million (involving the same relative mix of cash and stock).

On March 22, 2014, representatives of America’s Growth Capital (AGC), financial advisors to Appia, responded to Mr. Stone’s proposal by proposing a $125 million aggregate purchase price for Appia, consisting of $30 million in cash, $65 million in Mandalay Digital common stock and $30 million of potential earnout consideration.

During the course of the next several months, representatives of Mandalay Digital and Appia, including Mr. Stone, Mr. Schleimer and Jeffrey Klausner, Mandalay Digital’s then Chief Financial Officer, engaged in a number of meetings and discussions regarding the terms of the proposed business combination transaction as well as preliminary due diligence matters. In March, 2014, Mandalay Digital engaged legal and accounting advisors to assist in its preliminary evaluation of a potential transaction, retaining Latham & Watkins LLP (Latham) as M&A counsel and Edward Thomas Associates, Inc. as external accounting advisor. Mandalay Digital provided Appia with a preliminary due diligence request on April 5, 2014 and, commencing April 17, 2014, Appia began providing Mandalay Digital and its outside advisors, including Latham and Edward Thomas Associates, with access to certain due diligence materials through an online data room.

Based on its preliminary due diligence investigation of Appia’s financial results, on April 23, 2014, Mandalay Digital submitted a revised non-binding letter of intent to Appia, proposing aggregate consideration of up to $100 million, consisting of $30 million of cash, $40 million of Mandalay Digital common stock and potential cash and stock earnout consideration of up to $30 million.

On April 28, 2014, Mandalay Digital’s Board of Directors (the Board) held a meeting and discussed, among other things, the Appia opportunity and the status of the proposed transaction including the proposed terms of the transaction. The Board directed Mandalay Digital’s management to continue discussions with Appia with the objective of entering into a non-binding letter of intent outlining the principal terms of a potential transaction.

On April 29, 2014, Mr. Stone, Mr. Schleimer, Mr. Bowman and a representative of AGC participated on a conference call to discuss the potential transaction.

Following this call on April 29, 2014, representatives of AGC submitted a counterproposal to Mandalay Digital which provided for up to $115 million of total consideration, consisting of $30 million in cash, $55 million of stock and potential cash and stock earnout consideration of $30 million.

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On May 6, 2014, Mr. Schleimer, Mr. Bowman and a representative of AGC met in person in New York City to negotiate open issues with respect to Mandalay Digital’s proposal. In addition to the amount of the overall purchase price, one of the issues of significant importance to Mandalay Digital in those discussions was the imposition of a minimum “floor” on the deemed value of Mandalay Digital’s stock for purposes of determining how many shares of Mandalay Digital stock would be issued in the transaction. Representatives of Appia, in turn, proposed an overall “cap” on the deemed value of Mandalay Digital’s stock for purposes of the transaction. The parties exchanged revised drafts of the non-binding letter of intent over the next several days.

On May 14, 2014, Mandalay Digital and Appia entered into non-binding letter of intent with respect to a business combination transaction which contemplated Mandalay Digital’s acquisition of Appia for total aggregate consideration of up to $115 million consisting of $30 million in cash, $55 million in Mandalay Digital stock and up to $30 million of proposed contingent earnout consideration. The May 2014 letter of intent provided that the number of shares of Mandalay Digital common stock to be issued in the transaction would be calculated based on the 25 trading day value of Mandalay Digital’s shares prior to the execution of definitive agreements with respect to the transaction, subject to a “floor” of $4.10 per share and a “cap” of $5.00 per share. Mandalay Digital’s common stock closed at $3.66 per share on May 14, 2014. The letter of intent also contemplated that the definitive agreements would provide for a termination fee of $2.0 million in the event Mandalay Digital was unable to consummate the transaction due to its inability to secure financing or stockholder approval.

On June 1, 2014, Mr. Stone and Mr. Schleimer circulated a memorandum to Mandalay Digital’s Board providing a status update with respect to the transaction. Mr. Stone and Mr. Schleimer also recommended the engagement of specialty financial advisory firms to assist with an evaluation of potential financing sources to fund the cash portion of the purchase price and to refinance Appia’s existing indebtedness.

During the course of the month of June 2014, representatives of Mandalay Digital and Appia engaged in numerous meetings and conference calls to discuss due diligence matters, as well as potential modifications to the structure of the proposed transaction.

On June 12, 2014 Mandalay Digital engaged two specialized financial advisory firms to assist Mandalay Digital in arranging potential debt financing alternatives.

From June 12 through August 1, 2014 Mr. Stone, Mr. Schleimer and Robert Deutschman, an outside director of Mandalay Digital, together with Mandalay Digital’s advisors, met with potential lenders on numerous occasions to determine financing alternatives and structures available to Mandalay Digital. Mandalay Digital held separate parallel discussions with Silicon Valley Bank (SVB) regarding a potential financing arrangement with respect to the proposed transaction.

On June 25, 2014 and July 23, 204, Mandalay Digital’s Board held meetings and discussed, among other things, the status of the proposed transaction, an update on transaction timing and process, and an update on the financing alternatives that would potentially be available to Mandalay Digital.

During July 2014, representatives of Mandalay Digital and Appia held numerous in person and telephonic meetings to, among other things, further discuss due diligence matters, for Appia to provide Mandalay Digital with an update on Appia’s second quarter financial results and to discuss potential alternative transaction structures.

On July 25, representatives of Mandalay Digital updated representatives of Appia on the status of discussions with potential sources of financing. At that time representatives of Mandalay Digital proposed to representatives of Appia that a portion of the consideration to be paid in the transaction should be in the form of subordinated notes to be issued to Appia stockholders so as to reduce the overall cost of funds in the transaction. In addition, Mandalay Digital and Appia’s representatives discussed the possibility of simplifying the transaction structure by eliminating the $30 million of potential earnout consideration in exchange for increasing the value of

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the consideration to be paid at closing by $15 million (to an aggregate of $100 million). Based on these discussions, it became clear that both parties believed that the elimination of the earnout consideration would simplify the transaction and better align the incentives of all parties (to maximize the value of Mandalay Digital common stock) following the closing of a transaction.

Consistent with the foregoing, on July 31, 2014, Mr. Schleimer delivered a new proposal to representatives of Appia for the structure and financing of the proposed transaction. The revised proposal contemplated payment of an aggregate of $100 million of consideration to acquire Appia on a cash free, debt free basis with a normalized level of working capital, consisting of $15.0 million in cash, $60 million of Mandalay Digital common stock and $25 million of Mandalay Digital subordinated notes (and no earnout consideration). A revised amended and restated letter of intent reflecting these terms was delivered to representatives of Appia on August 5, 2014.

On August 7, 2014, representatives of Appia advised Mr. Schleimer that Appia would be prepared to move forward under the new structure that had been proposed by Mandalay Digital if Mandalay Digital would agree to eliminate the “floor” and “cap” on the deemed value of Mandalay Digital shares for purposes of the transaction and if a conversion feature were added to the proposed subordinated notes.

On August 11, 2014, Mandalay Digital’s Board met via conference call to discuss the key terms and conditions of Mandalay Digital’s updated proposal and Appia’s response thereto, as well as the various financing alternatives that were potentially available to Mandalay Digital, including the possibility of paying a portion of the consideration in the form of subordinated notes to Appia equity holders.

Following this board meeting, representatives of Mandalay Digital informed representatives of Appia that Mandalay Digital would be willing to eliminate the “floor” and “cap” on the deemed value of Mandalay Digital stock but that Mandalay Digital would not agree to Appia’s proposal that the subordinated notes should be convertible into shares of Mandalay Digital common stock.

On August 18, 2014, Appia and Mandalay Digital signed a revised non-binding letter of intent generally reflecting the terms proposed in Mandalay Digital’s July 31, 2014 proposal, except that the “floor” and “cap” on the deemed value of Mandalay Digital stock was eliminated. Mandalay Digital’s common stock closed at $4.51 per share on August 18, 2014.

On August 22, 2014, Mr. Bowman, Mr. Oakley, Mr. Schleimer and representatives of AGC, Latham, Manatt, Phelps and Phillips, LLP, Mandalay Digital’s outside corporate and securities counsel (Manatt), Morningstar Law Group, Appia’s outside corporate and securities counsel (Morningstar), and Goodwin Procter LLP, Appia’s outside M&A counsel (Goodwin), participated in a call to discuss certain legal and timing issues related to the proposed transaction.

During the course of the next several weeks, representatives of Mandalay Digital and Appia met in person and by telephone to discuss the financial performance of the respective companies and other due diligence matters, including meetings of the respective senior management teams of Appia and Mandalay Digital in Orange County, California on September 10 and September 11, 2014. During this period, the parties also discussed the possibility of further simplifying the transaction structure by having all of the consideration paid in the form of Mandalay Digital common stock (and eliminating the subordinated notes). Mandalay Digital’s executive management team believed that this change in structure, if accomplished at an appropriate valuation of Mandalay Digital common stock, would benefit the combined company by significantly reducing its debt burden. Representatives of Appia indicated to representatives of Mandalay Digital that various Appia stockholders would prefer to pursue an all-stock transaction.

On September 15, 2014 Mr. Schleimer delivered a further amended and restated draft of a letter of intent to Appia’s representatives which contemplated that all of the consideration to be paid in the transaction would be

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paid in the form of Mandalay Digital common stock, subject to adjustment for the amount of net debt of Appia at closing and subject to a customary working capital adjustment. Although the parties never executed this further amended and restated letter of intent, they agreed in principle to this change in structure and instructed their legal advisors to begin preparing and negotiating drafts of definitive agreements.

On September 29, 2014, Mandalay Digital entered into a non-binding term sheet for a formula-based revolving line of credit with Silicon Valley Bank SVB to finance the acquisition and support working capital needs.

On October 3, 2014, representatives of Latham circulated on behalf of Mandalay Digital a draft of a proposed definitive merger agreement to representatives of Goodwin.

From October 3 until November 13, 2014, representatives of Appia, Mandalay Digital, Latham, Morningstar and Goodwin exchanged drafts of, and discussed terms of, the merger agreement, support agreements and other ancillary documents. These discussions focused on, among other things:

From October 3 until November 13, 2014, Mr. Stone and Mr. Schleimer held numerous meetings with Mr. Deutschman in his capacity as an outside director of Mandalay Digital to update and discuss with him the terms of the merger agreement, support agreements and other ancillary documents.

On October 6, 2014, Mr. Schleimer contacted AGC and informed them that based on conversations to date with potential sources of financing and input from Mandalay Digital’s Board, Mandalay Digital would be requesting that Appia’s existing lenders (North Atlantic Capital (NAC) and Silicon Valley Bank (SVB)) participate in the transaction by rolling over (or otherwise amending and/or restating) their existing debt facilities (subject to agreed-upon modifications) following the closing, thereby obviating the need for Mandalay Digital to secure outside third party financing to refinance those debt facilities.

During the week of October 6, 2014, representatives of Appia engaged in discussions with NAC and SVB and reported back to Mandalay Digital that both lenders had indicated their willingness to proceed on the basis of Mandalay Digital’s proposal, subject to negotiation and execution of definitive agreements and Mandalay Digital’s willingness to guarantee Appia’s indebtedness following the closing.

Based on the progress in discussions, Mandalay Digital decided that it would be prudent to engage an investment banking firm to render a fairness opinion in the event that Mandalay Digital proceeded with a transaction. On October 17, 2014, Mandalay Digital retained Needham & Company to render an opinion to the Mandalay Digital board as to the fairness, from a financial point of view, of the consideration that might be paid in a transaction with Appia.

On October 7, 2014, Mr. Stone, Mr. Schleimer, Mr. Bowman and Mr. Oakley participated in a telephone conference in which Mr. Bowman and Mr. Oakley presented Appia’s preliminary financial and operating results for the third quarter.

During the week of October 14, 2014, representatives of Mandalay Digital, Appia and NAC exchanged drafts of a term sheet regarding the terms of the roll-over of the NAC debt following the closing.

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On October 23, 2014, Mr. Bowman, Mr. Schleimer and representatives of AGC, Latham and Goodwin met in New York City to discuss the terms of the Merger Agreement.

On October 28, 2014, NAC and Mandalay Digital signed a revised term sheet with respect to the replacement of the existing NAC debt facilities with a single new facility of equal principal amount following the closing.

From October 28 until November 13, 2014, representatives of Appia, Mandalay Digital, Latham, Morningstar, SVB and NAC exchanged drafts of, and discussed terms of, the SVB and NAC consent agreements to the debt roll-over and related loan documentation.

On November 3, 2014, Mr. Stone, Mr. Schleimer, Mr. Bowman and Mr. Forman held a conference call to negotiate certain terms of the Merger Agreement and ancillary documents. During this conference call Mr. Stone and Mr. Schleimer informed Mr. Bowman and Mr. Forman that Mandalay Digital would be willing to proceed with the transaction only if the Mandalay Digital common stock price were fixed at $4.50 per share for purposes of determining how many shares of Mandalay Digital common stock would be issued to Appia’s stockholders in the transaction. Mandalay Digital’s closing stock price on November 3, 2014 was $3.75 and, during the period from March 3, 2014 through November 3, 2014 had ranged from $3.16 to $5.89. On the following day, representatives of Appia informed representatives of Mandalay Digital that Appia’s principal stockholders would be willing to proceed with the transaction on the basis of a $4.50 deemed value for Mandalay Digital’s common stock (although the consideration would be allocated internally among Appia preferred and common stockholders according to the Appia charter documents and Appia’s internal agreements).

On November 9, 2014, Mandalay Digital’s Board of directors held a special meeting to review the transaction. At this meeting:

In addition, at this meeting members of the Board discussed the proposed termination fee of $1.5 million and expense reimbursement obligation of up to $500,000 that would be payable under certain circumstances by Mandalay Digital if Mandalay Digital’s stockholders did not approve the proposed transaction. Based on these discussions, the Board directed management to contact representatives of Appia to request a reduction in the amount of the proposed $1.5 million termination fee.

On November 9, 2014, Mr. Schleimer contacted representatives of Appia to discuss various outstanding issues, including the amount of the proposed termination fee and the lock up release dates. During that discussion, representatives of Appia indicated that they were prepared to agree to a reduction in the termination fee and separately requested the post-closing lock-up periods with respect to Mandalay Digital common stock issued in the transaction be relaxed (at that time, Mandalay Digital proposed to release shares from the lock-ups on the one year anniversary of the transaction with respect to Mr. Bowman and on the 6, 9 and 12 month anniversaries of the closing date (with respect to 25%, 25% and 50% of the shares respectively) with respect to all other Appia stockholders). Following these discussions, the parties agreed to reduce the amount of the termination fee from $1.5 million to $1.0 million and that the shares of Mandalay Digital common stock issued to all Appia stockholders would be released from the lock-up obligations in three equal installments on the 6, 9 and 12 month anniversaries of the closing date.

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From November 9, 2014 through November 13, 2014, representatives of Appia, Mandalay Digital, Latham, Goodwin, Morningstar, SVB and NAC exchanged drafts of definitive agreements relating to the merger and the debt financing transactions.

On November 12, 2014, Mandalay Digital’s Board of directors met to consider the proposed merger agreement, support agreements and debt financing arrangements with SVB and NAC. At this meeting:

After discussions with executive management, Latham, Manatt and Needham & Company, Mandalay Digital’s Board adopted resolutions approving the merger, the merger agreement, the debt financing arrangements and the transactions contemplated thereby.

On November 13, 2014, Appia’s board of directors adopted resolutions by written consent unanimously approving the merger, the merger agreement and the transaction contemplated thereby.

On November 13, 2014 after the public markets closed on that date, representatives of Appia and Mandalay Digital executed and delivered the merger agreement, the parties to the support agreements executed and delivered the support agreements and representatives of Appia, Mandalay Digital, NAC and SVB executed consents and waivers under the existing NAC and SVB debt facilities with respect the transaction, which included forms of the definitive financing arrangements to be executed by the parties at the closing.

After the public markets closed on that date, Mandalay Digital and Appia issued a press release announcing the execution of the merger agreement.

Reasons for the Merger and Recommendation of Mandalay Digital’s Board of Directors

By vote at a meeting held on November 12, 2014, Mandalay Digital’s board of directors determined that the merger agreement and the merger, including the issuance of Mandalay Digital common stock in connection with the merger are advisable and in the best interests of Mandalay Digital and its stockholders and approved the merger agreement, the merger and the other transactions contemplated thereby. Mandalay Digital’s board of directors recommends that Mandalay Digital stockholders vote FOR the issuance of up to 19,500,000 shares of our common stock pursuant to the merger agreement.

In evaluating the merger agreement, Mandalay Digital’s board of directors consulted with Mandalay Digital’s management, Mandalay Digital’s legal advisors and reviewed the analysis and opinion of Needham & Company and, in deciding to approve the merger agreement and to recommend that Mandalay Digital stockholders vote to approve the issuance of Mandalay Digital common stock to Appia stockholders pursuant to the merger agreement, Mandalay Digital’s board of directors considered several factors that it viewed as supporting its decision, including the following material factors:

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Mandalay Digital’s board of directors also considered a variety of risks and other potentially negative factors concerning the merger agreement and the transaction contemplated thereby. These factors included:

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This discussion of the information and factors considered by Mandalay Digital’s board of directors in reaching its conclusion and recommendations is not intended to be exhaustive and is not provided in any specific order or ranking. In view of the wide variety of factors considered by Mandalay Digital’s board of directors in evaluating the merger agreement and the transactions contemplated by it, including the merger, and the complexity of these matters, Mandalay Digital’s board of directors did not find it practicable to, and did not attempt to, quantify, rank or otherwise assign relative weight to those factors. In addition, different members of Mandalay Digital’s board of directors may have given different weight to different factors. Mandalay Digital’s board of directors did not reach any specific conclusion with respect to any of the factors considered and instead conducted an overall review of such factors and determined that, in the aggregate, the potential benefits considered outweighed the potential risks or possible negative consequences of approving the merger agreement and the issuance of shares of Mandalay Digital common stock thereunder.

Opinion of Needham & Company, LLC

We retained Needham & Company, LLC (“Needham & Company”) to render an opinion as to the fairness, from a financial point of view, to us of the consideration to be paid by us in the merger pursuant to the merger agreement. Needham & Company was not requested to, and did not, provide independent financial advice to us during the course of the negotiation or structuring of the merger or participate in the negotiation or structuring of the merger.

On November 12, 2014, Needham & Company delivered its oral opinion, which it subsequently confirmed in writing, to our board of directors that, as of that date and based upon and subject to the assumptions and other matters described in the written opinion, the consideration to be paid by us in the merger pursuant to the merger agreement was fair to us from a financial point of view. Needham & Company provided its opinion for the information and assistance of our board of directors (in its capacity as such) in connection with and for the purpose of the board’s evaluation of the transaction contemplated by the merger agreement. Needham & Company’s opinion relates only to the fairness, from a financial point of view, to us of the consideration to be paid by us in the merger, which was determined through arm’s length negotiations between Mandalay Digital and Appia and not by Needham & Company. Needham & Company’s opinion does not address any other aspect of the merger, or any related transaction, and does not constitute a recommendation to any stockholder of Mandalay Digital as to how that stockholder should vote or act on any matter relating to the merger.

The complete text of Needham & Company’s opinion, which sets forth the assumptions made, procedures followed, matters considered, and qualifications and limitations on and scope of the review undertaken by Needham & Company, is attached to this proxy statement/prospectus as Appendix C and is incorporated by reference in this proxy statement/prospectus. The summary of Needham & Company’s opinion set forth below is qualified in its entirety by reference to the full text of the opinion. Mandalay Digital stockholders should read this opinion carefully and in its entirety.

In arriving at its opinion, Needham & Company, among other things:

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In connection with its review and in arriving at its opinion, Needham & Company assumed and relied on the accuracy and completeness of all of the financial, accounting, legal, tax and other information discussed with or reviewed by it for purposes of its opinion and did not independently verify, nor did Needham & Company assume responsibility for independent verification of, any of that information. Needham & Company assumed the accuracy in all material respects of the representations and warranties contained in the merger agreement and all agreements related thereto. In addition, Needham & Company assumed that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986 and will be consummated on the terms and subject to the conditions set forth in the draft merger agreement furnished to Needham & Company without waiver, modification or amendment of any material term, condition or agreement thereof and that, in the course of obtaining the necessary regulatory or third party approvals, consents and releases for the merger, no material delay, limitation, restriction or condition will be imposed that would have an adverse effect on Mandalay Digital, Appia or the contemplated benefits of the merger. Needham & Company also assumed that any adjustments pursuant to the terms of the merger agreement to the aggregate exercise price of all Appia options, as provided to Needham & Company by Mandalay Digital and used by Needham & Company in its analyses, or the Adjustment Amount (as defined in the merger agreement) calculated as of September 30, 2014, would not be material to Needham & Company’s analyses. In addition, Needham & Company assumed that the financial forecasts for Mandalay Digital and Appia prepared by the respective managements of Mandalay Digital and Appia (including adjustments thereto expected by Mandalay Digital to result from the merger) were reasonably prepared on bases reflecting the best currently available estimates and judgments of such managements, at the time of preparation, of the future operating and financial performance of Mandalay Digital, Appia and the combined companies, and Needham & Company relied, without independent verification, upon the estimates of Mandalay Digital management of the potential cost savings and other synergies, including the amount and timing thereof, that may be achieved as a result of the merger. Needham & Company expressed no opinion with respect to any of those forecasts, including those costs savings and other synergies, or the assumptions on which they were based.

Needham & Company did not assume any responsibility for or make or obtain any independent evaluation, appraisal or physical inspection of the assets or liabilities of Mandalay Digital, Appia or any of their respective subsidiaries nor did Needham & Company evaluate the solvency or fair value of Mandalay Digital, Appia or any of their respective subsidiaries under any state or federal laws relating to bankruptcy, insolvency or

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similar matters. Needham & Company’s opinion states that it was based on economic, monetary and market conditions as they existed and could be evaluated as of its date, and Needham & Company assumed no responsibility to update or revise its opinion based upon circumstances and events occurring after its date. Needham & Company’s opinion is limited to the fairness, from a financial point of view, to us of the consideration to be paid by us pursuant to the merger agreement and Needham & Company expressed no opinion as to the fairness of the merger to, or any consideration received in connection therewith by, the holders of any class of securities, creditors or other constituencies of Mandalay Digital, or as to our underlying business decision to engage in the merger or the relative merits of the merger as compared to other business strategies that might be available to us. In addition, Needham & Company expressed no opinion with respect to the amount or nature or any other aspect of any compensation payable to or to be received by any officers, directors or employees of any party to the merger, or any class of those persons, relative to the consideration to be paid by us pursuant to the merger agreement or with respect to the fairness of any such compensation. Needham & Company did not express any opinion as to what the value of our common stock will be when issued pursuant to the merger or the prices at which our common stock will actually trade at any time.

We imposed no limitations on Needham & Company with respect to the investigations made or procedures followed by Needham & Company in rendering its opinion.

In preparing its opinion, Needham & Company performed a variety of financial and comparative analyses. The following paragraphs summarize the material financial analyses performed by Needham & Company in arriving at its opinion. The order of analyses described does not represent relative importance or weight given to those analyses by Needham & Company. Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and in order to more fully understand the financial analyses used by Needham & Company, the tables must be read together with the full text of each summary. The following quantitative information, to the extent it is based on market data, is, except as otherwise indicated, based on market data as it existed on or prior to November 12, 2014, and is not necessarily indicative of current or future market conditions.

Contribution Analysis. Needham & Company reviewed and analyzed the implied percentage contribution of each of Mandalay Digital and Appia to pro forma combined operating results for the last 12 months ended September 30, 2014, and pro forma projected fiscal year 2015 and fiscal year 2016 combined operating results. In calculating the pro forma projected combined operating results, Needham & Company used Mandalay Digital management’s financial forecasts of Mandalay Digital’s projected fiscal years 2015 and 2016 operating results and Appia management’s financial forecasts of projected operating results for the four quarter periods that correspond to Mandalay Digital’s fiscal years 2015 and 2016. Needham & Company assumed that each company’s contribution to the applicable financial metric reflected its contribution to the combined company’s corresponding pro forma financial metric and did not take into account any of the possible synergies or expenses that may be realized as a result of or following completion of the merger. Needham & Company reviewed, among other things, the implied percentage contributions to pro forma combined revenue, gross profit, and earnings before interest, taxes, depreciation, amortization, and stock compensation expense, or adjusted EBITDA. Needham & Company also reviewed the implied percentage contributions to pro forma combined net cash as of September 30, 2014. The following tables present the results of this analysis and the estimated percentage ownership of the combined company on a pro forma basis by the Mandalay Digital stockholders and Appia stockholders, based on an assumed total of 20.1 million shares of our common stock to be issued pursuant to the merger assuming the Adjustment Amount (as defined in the merger agreement) calculated as of September 30, 2014. In calculating pro forma equity ownership, Needham & Company used the treasury stock method to calculate the number of pro forma fully diluted shares of our common stock outstanding after the merger.

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Information as to relative contributions to EBITDA for the last 12 months and projected fiscal year 2015 was not meaningful due to Mandalay Digital’s and Appia’s actual and projected negative EBITDA for those periods.

The results of the contribution analysis are not necessarily indicative of the contributions that the respective businesses may have in the future.

Selected Companies Analysis — Appia . Using publicly available information, Needham & Company compared selected historical and projected financial and market data ratios for Appia implied by the merger to the corresponding data and ratios of publicly traded companies that Needham & Company deemed relevant because they have lines of businesses that may be considered similar to or have similar characteristics with Appia’s lines of business. These companies, referred to as the Appia selected companies, consisted of the following:

Conversant, Inc.

Criteo S.A.

Mandalay Digital

Marin Software Incorporated

Millennial Media, Inc.

Rocket Fuel Inc.

The Rubicon Project, Inc.

Tremor Video, Inc.

TubeMogul, Inc.

YuMe, Inc.

The following table sets forth information concerning the following multiples for the Appia selected companies, to the extent publicly available, and for Appia implied by the merger:

Needham & Company also reviewed, to the extent publicly available, for the Appia selected companies, enterprise value as a multiple of LTM, projected calendar year 2014 and projected calendar year 2015 adjusted EBITDA, but did not compare the results with corresponding data of Appia because of Appia’s negative LTM, projected calendar year 2014 and projected calendar year 2015 adjusted EBITDA.

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Needham & Company calculated multiples for the Appia selected companies based on the closing stock prices of those companies on November 11, 2014 and for Appia based on an implied enterprise value of $78.7 million reflecting the assumed merger consideration of 20.1 million shares of our common stock assuming the Adjustment Amount (as defined in the merger agreement) calculated as of September 30, 2014 and our closing stock price on November 11, 2014. All financial information excludes the impact of non-recurring items. Adjusted EBITDA amounts excluded the impact of stock-based compensation expense.

Needham & Company also reviewed, for the selected companies and for Appia, and on a calendar year basis, projected 2013 to 2014, 2014 to 2015, and 2015 to 2016 revenue growth percentages, and noted that Appia’s projected decrease in revenue from 2013 to 2014 of 34.9% fell below the mean and median 2013 to 2014 revenue growth percentages of the selected companies of 35.3% and 25.6%, respectively, but that Appia’s projected 2014 to 2015 and 2015 to 2016 revenue growth percentages of 66.0% and 72.5% exceeded the mean and median projected growth percentages of the selected companies of 55.1% and 24.7% for 2014 to 2015 and 22.0% and 22.9% for 2015 to 2016, respectively.

Selected Transactions Analysis . Needham & Company analyzed publicly available financial information for the following selected merger and acquisition transactions, which represent transactions announced since June 1, 2011 that involved target companies that were advertising technology companies involved in lines of business that may be considered similar to or have similar characteristics with Appia’s lines of business and with enterprise values of less than $650 million:

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Needham & Company also analyzed publicly available financial information for the following selected merger and acquisition transactions, which represent additional transactions announced since June 1, 2011 that involved privately-held target companies that were advertising technology companies involved in lines of business that may be considered similar to or have similar characteristics with Appia’s lines of business and with enterprise values of less than $650 million. These selected transactions were differentiated from the transactions described in the preceding paragraph by the fact that, because the target companies were privately-held, disclosure of their underlying financial information was generally limited and/or not necessarily proximate to the announcement date of the transaction. While still being relevant information, this lack of proximity generally resulted in LTM metrics that were not fully comparable to those calculated for the transactions described in the preceding paragraph and, thus, were separately shown.

In reviewing the selected transactions, Needham & Company calculated for the selected transactions, to the extent publicly available, and for Appia implied by the merger:

Needham & Company also reviewed, for the selected transactions, enterprise value as a multiple of LTM adjusted EBITDA, but determined that the results were not meaningful because of Appia’s negative LTM adjusted EBITDA.

Needham & Company calculated multiples for Appia based on an implied enterprise value of $78.7 million reflecting the assumed merger consideration of 20.1 million shares of our common stock and our closing stock price on November 11, 2014.

The following table sets forth information concerning the multiples described above for the selected transactions and the same multiples implied by the merger.

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Discounted Cash Flow Analysis . Needham & Company performed an illustrative discounted cash flow analysis to determine indicators of illustrative implied equity values for Appia based on Appia management’s financial forecasts. Needham & Company calculated a range of indications of the present value of unlevered free cash flows for Appia for projected calendar years 2015 through 2017 using discount rates ranging from 15.0% to 20.0%. The range of discount rates, reflecting an estimated range of weighted average costs of capital of Appia, was selected by Needham & Company utilizing its professional judgment and experience after taking into account the trading price volatility and risk associated with the common stocks of the 10 selected publicly-traded advertising technology companies, including Mandalay Digital, listed under “Selected Companies Analysis—Appia” as a surrogate for Appia common stock, the current market environment, the opportunity cost of equity capital and other relevant factors. Needham & Company then calculated a range of illustrative terminal values at the end of 2017 by applying multiples ranging from 1.7x to 2.9x to Appia management’s estimate of its projected calendar year 2017 revenues. The range of multiples was selected by Needham & Company utilizing its professional judgment and experience after taking into account the enterprise value to LTM revenues multiple of 2.6x implied by the merger. These illustrative terminal values were then discounted to calculate ranges of implied indications of present values using discount rates ranging from 15.0% to 20.0%. Needham & Company then added the ranges of the implied present values of Appia’s unlevered free cash flows for the projected years to the ranges of implied present values of Appia’s terminal values to derive ranges of implied present enterprise values of Appia. Needham & Company then added net cash (debt) as of September 30, 2014, to derive a range of illustrative implied present equity values of $112.4 million to $222.4 million. Needham & Company noted that the equity value implied by the assumed consideration of 20.1 million shares of our common stock and our common stock closing stock price on November 11, 2014 of $3.45 was $69.2 milllion.

Selected Companies Analysis — Mandalay Digital . Using publicly available information, Needham & Company compared selected historical and projected financial and market data ratios for Mandalay Digital to the corresponding data and ratios of publicly traded companies that Needham & Company deemed relevant because they have lines of businesses that may be considered similar to or have similar characteristics with our lines of business. These companies, referred to as the Mandalay selected companies, consisted of the following:

Conversant, Inc.

Criteo S.A.

Marin Software Incorporated

Millennial Media, Inc.

Rocket Fuel Inc.

The Rubicon Project, Inc.

Tremor Video, Inc.

TubeMogul, Inc.

YuMe, Inc.

The following table sets forth information concerning the following multiples for the Mandalay selected companies, to the extent publicly available, and for us:

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Needham & Company also reviewed, for the Mandalay selected companies, enterprise value as a multiple of projected calendar 2016 revenues and enterprise value as a multiple of LTM, projected calendar year 2014 and projected calendar year 2016 adjusted EBITDA, but did not compare the results with our corresponding data because of our negative LTM and projected calendar year 2014 adjusted EBITDA and unavailable projected calendar year 2016 revenues and adjusted EBITDA.

Needham & Company calculated multiples for the Mandalay selected companies and for us based on the closing stock prices of those companies on November 11, 2014. All financial information excludes the impact of non-recurring items. Adjusted EBITDA amounts excluded the impact of stock-based compensation expense.

Pro Forma Transaction Analysis. Needham & Company prepared pro forma analyses of the financial impact of the merger based on an assumed merger consideration of 20.1 million shares of our common stock and using our management’s financial forecasts of our projected fiscal year 2016 operating results, Appia management’s financial forecasts of projected operating results for the four quarter periods that correspond to our fiscal year 2016, and estimates of synergies and transaction expenses from our management. Based on these estimates and assumptions, Needham & Company’s analysis showed that the merger would result in accretion to our estimated fiscal year 2016 non-GAAP earnings per share. The financial forecasts that underlie this analysis are subject to substantial uncertainty and, therefore, actual results may be substantially different, and these differences may be material.

No company, transaction or business used in the “Selected Companies Analysis—Appia,” “Selected Transactions Analysis” or “Selected Companies Analysis—Mandalay” as a comparison is identical to Appia, Mandalay Digital or the merger. Accordingly, an evaluation of the results of these analyses is not entirely mathematical; rather, it involves complex considerations and judgments concerning differences in the financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the selected companies or selected transactions or the business segment, company or transaction to which they are being compared.

The summary set forth above does not purport to be a complete description of the analyses performed by Needham & Company in connection with the rendering of its opinion. The preparation of a fairness opinion is a complex analytical process involving various determinations as to the most appropriate and relevant quantitative and qualitative methods of financial analyses and the application of those methods to the particular circumstances and, therefore, such an opinion is not readily susceptible to summary description. Accordingly, Needham & Company believes that its analyses must be considered as a whole and that selecting portions of its analyses or the factors it considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying its analyses and opinion. Needham & Company did not attribute any specific

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weight to any factor or analysis considered by it. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that such analysis was given greater weight than any other analysis.

In performing its analyses, Needham & Company made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond our or Appia’s control. Any estimates contained in or underlying these analyses, including estimates of future performance, are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those estimates. Additionally, analyses relating to the values of businesses or assets do not purport to be appraisals or necessarily reflect the prices at which businesses or assets may actually be sold or the prices at which any securities have traded or may trade at any time in the future. Accordingly, these analyses and estimates are inherently subject to substantial uncertainty. Needham & Company’s opinion and its related analyses were only one of many factors considered by our board of directors in its evaluation of the merger and should not be viewed as determinative of the views of our board of directors or management with respect to the exchange ratio or the merger.

Under the terms of its engagement letter with Needham & Company, we have paid or agreed to pay Needham & Company a nonrefundable fee for rendering the Needham & Company opinion that we and Needham & Company believe is customary for transactions of this nature. Needham & Company’s fee is not contingent on the consummation of the merger. In addition, we have agreed to reimburse Needham & Company for certain of its out-of-pocket expenses and to indemnify Needham & Company and related persons against various liabilities, including certain liabilities under the federal securities laws.

Needham & Company is a nationally recognized investment banking firm. As part of its investment banking services, Needham & Company is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of securities, private placements and other purposes. Needham & Company was retained by our board of directors to render an opinion in connection with the merger based on Needham & Company’s experience as a financial advisor in mergers and acquisitions as well as Needham & Company’s familiarity with us and our industry generally. Needham & Company has not in the past two years provided investment banking or financial advisory services to us or Appia for which Needham & Company has have received compensation. Needham & Company may in the future provide investment banking and financial advisory services to Mandalay Digital, Appia or their respective affiliates unrelated to the merger, for which services Needham & Company would expect to receive compensation. In the normal course of its business, Needham & Company may actively trade the equity securities of Mandalay Digital for its own account or for the account of its customers and, therefore, may at any time hold a long or short position in those securities.

Conditions to Completion of the Merger

Our and Appia’s obligation to complete the merger is subject to the satisfaction or waiver of various conditions, including the following:

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For further information relating to the various conditions to closing of the merger, see the section entitled “Summary of the Merger Agreement —Conditions to the Consummation of the Merger” on page 92.

Expected Timing of the Merger

We and Appia expect to complete the merger after all the conditions to the merger in the merger agreement are satisfied or waived, including after the receipt of approval of our stockholders of the issuance of shares of our common stock at our annual meeting and receipt of the approval of the requisite vote by Appia’s stockholders, and the receipt of all required regulatory approvals. We and Appia currently expect to complete the merger during the first calendar quarter of 2015. However, it is possible that factors outside of either company’s control could cause the merger to be completed at a later time or not at all. The merger agreement provides that the merger agreement may be terminated at any time prior to closing of the merger if, among other things, the conditions to the effectiveness of the merger have not been satisfied or waived on or before April 30, 2015 and the party requesting the termination has not willfully breached a covenant in the merger agreement that causes the condition not to occur.

Consideration Payable in the Merger

At the effective time of the merger, on the terms and subject to the conditions set forth in the merger agreement, all of the equity securities of Appia outstanding immediately prior to the effective time (including shares of common stock issuable upon exercise of stock options to be assumed by Mandalay Digital pursuant to the merger agreement), other than stockholders exercising dissenter’s rights under applicable law, will be converted into the right to receive a number of shares (or, in the case of stock options being assumed, stock options) of Mandalay Digital common stock, equal to $100 million less Appia’s net debt and transaction fees and expenses at the time of closing (subject to a working capital adjustment), divided by $4.50. For further information see “Summary of the Merger Agreement – Conversion of Securities in the Merger” starting on page 81.

The following table illustrates the aggregate number of shares that Mandalay Digital would issue to the Appia stockholders assuming a closing date of September 30, 2014, February 28, 2015, January 31, 2015 and March 31, 2015. The September 30, 2014 information is based on the unaudited pro forma financial statements included in the section “Unaudited Pro Forma Condensed Combined Financial Information” on page 101 of this proxy statement/prospectus. The information included for January 31, February 28, and March 31, 2015 is based on information and financial projections provided by Appia and is based on certain assumptions, including the following:

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The information provided in the table below is for illustrative purposes only. The actual aggregate number of shares that Mandalay Digital will issue at the closing of the merger will be based on the existing indebtedness, aggregate transaction fees and expenses and working capital at that time. There can be no guarantee that the assumptions on which the forecasts in the table below will be correct. In addition, there can be no assurance that Appia’s working capital adjustment and net debt will not be significantly higher or lower than projected. This information was not prepared with a view to public disclosure or compliance with the published guidelines of the SEC or guidelines established by the American Institute of Certified Public Accountants regarding forecasts or projections. These forecasts do not purport to present our operations in accordance with U.S. GAAP. Appia’s actual results of operations between the date of the financial information included in this proxy statement/prospectus and the closing date may differ materially from the forecasted results used in this estimate, resulting in differences between the forecast and actual amounts of Appia’s working capital and net indebtedness as of the closing date of the merger.

No independent accountants have compiled, examined or performed any procedures with respect to this information nor have any independent accountants expressed any opinion or any other form of assurance on such information or its achievability or the assumptions on which they are based.

(in thousands, except per-share amounts):

Based on Appia’s estimated indebtedness, transaction fees and expenses and working capital adjustment and assuming a closing date during the first quarter of calendar 2015, Mandalay Digital currently expects to issue, pursuant to the merger agreement, up to 19,500,000 shares of common stock (including shares underlying assumed stock options and 1,000,000 shares to be deposited into escrow). If the merger had closed on January 31, 2015, we estimate that we would have issued 19,056,392 shares; additionally we would have assumed options for 277,376 shares of our common stock, for an aggregate of 19,333,768 shares, which would represent approximately 33% of the Company’s outstanding shares of common stock as of November 13, 2014 (after giving effect to such issuance). The merger agreement does not provide for an adjustment in the aggregate number of shares of Mandalay Digital common stock or options to be issued by Mandalay Digital to Appia’s security holders in the acquisition in the event of fluctuations in the market value of Mandalay Digital’s common stock up through the closing date. We will deposit 1,000,000 of the shares issued at the closing into an escrow account to cover indemnification claims by Mandalay Digital pursuant to the terms of the merger agreement, which shares will be released one year after the closing, subject to any then pending claims. As of January 20, 2015, there were 37,824,011 shares of our common stock outstanding. The shares of our common stock to be issued in the merger will be issued from our authorized but unissued shares of common stock.

Debt obligations and Guarantees

Upon consummation of the merger, Mandalay Digital will guarantee Appia’s existing indebtedness outstanding as of closing, which amount is approximately $9.5 million (excluding the transaction fees and expenses) assuming the merger had closed on January 31, 2015. See “The Merger – Consideration Payable

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in the Merger” located on page 69 of this proxy statement/prospectus for further information and assumptions about Appia’s forecasted indebtedness based on certain closing dates. Upon consummation, and as a condition to the closing, of the merger, Appia will enter into an amended loan agreement with its current senior lender, Silicon Valley Bank, and a securities purchase agreement with Mandalay Digital and North Atlantic pursuant to which Appia will issue to North Atlantic a subordinated debenture in the aggregate principal amount of $8.0 million, which amount is included in the $9.5 million referenced above, to retire a like amount of outstanding debt to North Atlantic. We will also issue a secured guaranty of each of the SVB Debt and North Atlantic Debt whereby we will guarantee all of Appia’s obligations in connection with such indebtedness and pledge substantially all of its assets, including its intellectual property. The secured guarantees will contain cross-default provisions and covenants, among others, limiting our ability to undergo a change of control, incur indebtedness, grant liens, make dividends in cash and other customary covenants. Mandalay will also issue to North Atlantic 200,000 shares of its common stock and a common stock warrant to purchase 400,000 shares of its common stock all of which will have registration rights requiring Mandalay Digital to file a registration statement 15 business days after the closing of the merger with Appia. The warrant will have an exercise price of $0.01 per share exercisable for 10 years, but it is not exercisable until the one year anniversary of the closing date of the merger and will terminate if Mandalay Digital repays the North Atlantic Debt prior to such one year anniversary. We intend to refinance the Appia debt as soon as practicable following the closing of the merger.

Material U.S. Federal Income Tax Consequences of the Merger

The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and it is a condition to the completion of the merger that Mandalay Digital and Appia each receive written opinions from their respective outside legal counsel, dated as of the closing date of the merger, to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. Such opinions will be based on certain assumptions, representations and covenants, including representations and covenants contained in representation letters provided by Mandalay Digital, Merger Sub and Appia. Assuming the merger qualifies as a reorganization, Appia stockholders generally will not recognize gain or loss for U.S. federal income tax purposes upon the exchange of their shares of Appia stock for shares of Mandalay Digital common stock in connection with the merger. The issuance of shares of Mandalay common stock in connection with the merger will not be a taxable transaction to Mandalay Digital stockholders for U.S. federal income tax purposes.

Tax matters are very complicated, and the tax consequences of the merger to a particular stockholder will depend on such stockholder’s circumstances. Accordingly, you are urged to consult your tax advisor for a full understanding of the tax consequences of the merger to you, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws. For more information, see the section entitled “Material U.S. Federal Income Tax Consequences” beginning on page  78.

Regulatory Approvals Required For the Merger

Other than (i) the requirement that this proxy statement/prospectus be filed with the SEC; (ii) the requirement that the SEC declare the registration statement of which this proxy statement/prospectus is a part effective and that we distribute this proxy statement/prospectus as required under the Securities Act and the Exchange Act; and (iii) the requirement that we make certain other filings under the Exchange Act and pursuant to NASDAQ Stock Market rules, we are not aware of any material federal or state regulatory requirements or approvals that must be complied with or obtained in connection with the merger. We cannot predict whether we will obtain all required regulatory approvals to complete the merger, or whether any approvals will include conditions that would be detrimental to us or the combined company.

Fees and Expenses of the Merger

Generally, all fees and expenses incurred in connection with the merger agreement, the merger, or the transactions related thereto will be paid by the party incurring such fees and expenses. See “Summary of Merger Agreement – Termination of the Merger Agreement” on page 96 for a description of fees payable upon termination.

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Anticipated Accounting Treatment of the Merger

The acquisition of Appia by us in the merger will be accounted for under the acquisition method of accounting in accordance with U.S. GAAP. From the date of the completion of the merger, the combined company’s results of operations will include Appia’s operating results and Appia’s assets and liabilities, including identifiable intangible assets, at fair value with the excess purchase price allocated to goodwill.

Appraisal Rights of Holders of Mandalay Digital Common Stock

Under Delaware law and our Certificate of Incorporation, our stockholders are not entitled to any rights to seek appraisal of their shares of our common stock or to exercise any “dissenter’s rights” or preemptive rights in connection with the proposal to approve the share issuance to be made pursuant to the merger agreement.

Securities Law Restrictions on Shares of Mandalay Common Stock Received in the Merger

We anticipate that all shares of our common stock issued to Appia security holders in connection with the merger will be freely transferable under applicable U.S. securities laws, except as to each recipient of Mandalay Digital shares that is considered an “affiliate” (as such term is defined in the Securities Act) of Mandalay Digital, in which case such affiliates will be permitted to sell the shares of our common stock received in the merger only pursuant to an effective registration statement or an exemption from the registration requirements of the Securities Act. Shares issued pursuant to the merger agreement will also be subject to lock-up restrictions as described below. This proxy statement/prospectus does not register the resale of shares of our stock held by affiliates.

Lock-up Restrictions

All of the Appia stockholders that signed the support agreements agreed that, and pursuant to the terms of the merger agreement, the shares of Mandalay Digital common stock to be received by stockholders in the merger are all subject to lock up restrictions, which restrictions will lapse with respect to one-third of such stockholders share of Mandalay Digital common stock at each of the six, nine and 12 month anniversaries of the closing date. See section entitled “Ancillary Agreements – The Support Agreement” on page 98.

Rights Pertaining to the Shares of Common Stock Received in the Merger

The shares of our common stock to be issued in the merger will be the same class of capital stock as our currently outstanding common stock and thus have rights identical to our currently outstanding shares of common stock. See the section entitled “Comparison of Rights of Stockholders of Mandalay Digital and Appia” on page 124.

Dividends on Mandalay Digital Common Stock Received in the Merger

We have not declared cash dividends on our common stock since our inception and we do not anticipate paying any cash dividends in the foreseeable future. Following completion of the merger, the holders of our common stock will be entitled to receive any dividends as may be declared by our board of directors from funds legally available therefor; provided, however, that we will be subject to covenants restricting our ability to pay dividends pursuant to the terms of the secured guarantees that we will enter into in connection with the closing of the merger. The dividend policy of the combined company will be determined by our board of directors.

Interests of Certain Appia Directors, Officers, and Affiliates in the Merger

Appia’s executive officers and members of Appia’s board may have interests in the merger that are different from, or are in addition to, the interests of Appia stockholders generally. Appia’s board was aware of

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these interests and considered them, among other matters, in adopting resolutions approving and declaring advisable the merger, the merger agreement and the transactions contemplated thereby and recommending to the stockholders of Appia that they consent to the merger agreement and merger.

Executive Officer Employment Arrangements

Judson Bowman, Appia’s chief executive officer, is party to an employment agreement with Appia. In the event that Mr. Bowman is not employed by the surviving entity after the merger, Mr. Bowman will be entitled to receive salary continuation payments at his current annual base salary of $200,000 for a period of eighteen (18) months and medical, disability and life insurance coverage at substantially the same coverage levels as Mr. Bowman has on the date of his termination for a period of eighteen (18) months. Mr. Bowman would be required to execute a general release in favor of Appia to receive his salary and benefits continuation.

Timothy Oakley, Appia’s chief financial officer, is party to an employment letter with Appia. If Mr. Oakley’s employment is terminated by Appia without cause, Mr. Oakley is entitled to receive salary continuation payments at his current annual base salary of $184,250 for a period of ninety (90) days. Mr. Oakley is required to execute a general release in favor of Appia to receive his salary continuation.

Non-Compete Agreement

Mr. Bowman has entered into a Non-Compete Agreement with Mandalay Digital in connection with the execution of the merger agreement that becomes effective upon the consummation of the merger. The Non-Compete Agreement restricts Mr. Bowman for eighteen (18) months following the closing of the merger (i) from providing services to, or otherwise assisting, any business that is competitive with the business of Appia as it is conducted as of the closing date, (ii) from employing or soliciting any employee, consultant, agent or representative of Appia to cease his or her relationship with Appia, and (iii) from soliciting any advertiser, publisher, vendor or supplier to Appia to cease doing business with Appia or to reduce the amount of business that such person does with Appia. Mr. Bowman has not received any additional consideration in connection with the Non-Compete Agreement. It is a condition to the obligations of Mandalay to consummate the merger that the Non-Compete Agreement has not been challenged as unenforceable or repudiated by Mr. Bowman.

Accelerated Vesting of Restricted Stock and Options

Craig Forman, the chairman of Appia’s board, holds a restricted stock grants for 196,500 shares of Appia common stock and an option to purchase 46,968 shares of Appia common stock at an exercise price of $0.28 per share. As of November 13, 2014, 114,000 shares under the restricted stock grants and 35,226 shares subject to the option were unvested. At the closing of the merger, assuming continued service by Mr. Forman to Appia until that time, 27,500 of the unvested shares under the restricted stock grants shall immediately vest and all unvested shares subject to the option shall immediate vest and become exercisable. Such shares are included in the amount of shares to be issued pursuant to the merger agreement.

Ken Hayes, Appia’s chief revenue officer, holds options to purchase 123,250 shares of Appia common stock at exercise prices of $0.26 to $0.28 per share. As of November 13, 2014, 61,189 shares subject to the options were unvested. At the closing of the merger, assuming continued service by Mr. Hayes to Appia until that time, 14,845 unvested shares will immediately vest and become exercisable. If Mr. Hayes’ employment with Appia is terminated without cause within twelve (12) months following the Closing Date, certain of his unvested shares will immediately vest and become exercisable. Such shares are included in the amount of shares to be issued pursuant to the merger agreement.

Timothy Oakley, Appia’s chief financial officer, holds a restricted stock grant for 175,000 shares of Appia common stock. As of November 13, 2014, 98,438 shares under the restricted stock grant were unvested. At the closing of the merger, assuming continued service by Mr. Oakley to Appia until that time, 63,985 unvested shares will immediately vest. Such shares are included in the amount of shares to be issued pursuant to the merger agreement.

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Indemnification; Directors’ and Officers’ Insurance

Following the consummation of the merger for a period of six (6) years, the surviving entity in the merger will indemnify each director or officer of Appia for any and all actions taken by those individuals prior to the Effective Time to the fullest extent and in the same manner as Appia provided indemnification to those directors and officers pursuant to Appia’s Certificate of Incorporation and director and officer indemnity agreements in effect at the Effective Time. In addition, if any indemnified person becomes a defendant in any actual action, the surviving entity will advance to that individual his or her legal and other expenses consistent with the terms and conditions for that advancement under Appia’s indemnification provisions and agreements. Under the terms of the merger agreement, Appia will purchase an extended reporting period endorsement under Appia’s existing directors’ and officers’ liability insurance coverage for Appia’s directors and officers that will provide such directors and officers with coverage for six (6) years following the Effective Time, and the cost of such insurance will be treated as an expense of Appia in connection with the transaction and therefore will be deducted from the consideration available to the Appia stockholders.

Approval of the Merger by Appia Stockholders

The merger and the other transactions contemplated by the merger agreement will require the approval of the holders of (y) at least a majority of the outstanding shares of Appia common stock and Appia preferred stock (voting on an as converted to Appia common stock basis) and (z) two-thirds of the outstanding shares of Appia Series A Preferred Stock, Appia Series B Preferred Stock, Appia Series C Preferred Stock and Appia Series D Preferred Stock (voting on an as converted to Appia common stock basis), in each case entitled to vote upon the merger and the other transactions contemplated by the merger agreement. For further information, see “Ancillary Agreements – The Support Agreement” on page 98.

Directors of Mandalay Digital Following the Merger

Upon the close of the merger, Mandalay Digital will appoint Jud Bowman, Appia’s founder and chief executive officer, and Craig Forman, Appia’s Executive Chairman, as members to the board of directors. Below is further information about Messrs. Bowman and Forman.

Jud Bowman is the founder of Appia, and has served as its Chief Executive Officer since the company’s inception in 2008. Prior to Appia, Mr. Bowman co-founded Motricity (Nasdaq: MOTR) in September 1999 and served as the Chief Technology Officer until 2008. Mr. Bowman is currently on leave from Stanford University, where he was named a President’s Scholar, and is a graduate of the North Carolina School of Science and Mathematics.

Craig Forman currently serves as the Executive Chairman of the board of directors of Appia. From March 2006 to May 2009, Mr. Forman previously served as President of Value Added Services and subsequently as President of Access & Audience at EarthLink Inc. where he also led such shared services as Operations, Information Technology and Customer Support. Prior to joining EarthLink, Mr. Forman was a senior executive at Yahoo Inc., where he had served since February 2004 as head of that Internet portal company’s Media and Information businesses. Mr. Forman is currently the non-executive chairman of Success Television, a company he founded before joining EarthLink, and a director of McClatchy Co., a leading U.S. newspaper and information company (NYSE: MNI) and Yellow Media Ltd. (TSE:Y), a leading Canadian digital media and marketing solutions company. Mr. Forman has a master’s degree in law from Yale and an undergraduate degree from Princeton.

* Represents less than 1%.

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SUMMARY OF THE MERGER AGREEMENT

Below is a summary of the merger agreement, which is attached to this proxy statement/prospectus as Appendix A and is incorporated by reference into this document. You should read the merger agreement in addition to this Summary. The merger agreement, not this summary, is the legal document which governs the merger. Capitalized terms used in this section and not otherwise defined in this proxy statement/prospectus have the meanings ascribed to them in the merger agreement.

Cautionary Statement Concerning Representations and Warranties Contained in the Merger Agreement

You should not rely upon the representations and warranties contained in the merger agreement or the descriptions of such representations and warranties in this proxy statement/prospectus, as factual information about Mandalay Digital or Appia. In reviewing the agreements included or incorporated by reference in this proxy statement/prospectus, it is important to note that they are included to provide investors and stockholders with information regarding their terms, and are not intended to provide any other factual or disclosure information about Mandalay Digital or Appia or the other parties to the agreements. These representations and warranties have been made solely for the benefit of the other parties to the merger agreement, and were not intended to be and should not be relied upon by stockholders of Mandalay Digital or Appia; should not be treated as categorical statements of fact, but rather as a way of allocating risk between the parties; have in some cases been qualified by disclosures that were made to the other party in connection with the negotiation of the merger agreement, which disclosure schedules are not reflected in the merger agreement or disclosed in this proxy statement/prospectus; may apply standards of materiality in a way that is different from what may be material to investors; and were made only as of the date of the merger agreement or such other date or dates as may be specified in the merger agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Information about Mandalay Digital can be found elsewhere in this proxy statement/prospectus and in other public filings Mandalay Digital makes with the SEC. Information about Appia can be found elsewhere in this proxy statement/prospectus.

General

The Boards of Directors of both Mandalay Digital and Appia have adopted and approved the merger agreement, which provides for the acquisition by Mandalay Digital of Appia through the merger. The merger will result in DTM Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Mandalay Digital, merging with and into Appia, so that Appia, as the surviving corporation, will become a wholly-owned subsidiary of Mandalay Digital. The surviving corporation will be renamed Digital Turbine Media, Inc. In exchange for their shares of Appia’s common stock, preferred stock, and/or options to purchase shares of Appia common stock, the Appia stockholders will receive shares of Mandalay Digital common stock and/or options to purchase shares of Mandalay Digital common stock. Former Appia stockholders will not have any equity ownership interest in the surviving corporation.

Conversion of Securities in the Merger

The Aggregate Stock Consideration is equal to $100,000,000 minus (i) the deemed value of 1,000,000 Mandalay Digital shares to be deposited in escrow ($4,500,000) plus (ii) the aggregate exercise price of all options to purchase shares of Appia common stock plus (iii) the Adjustment Amount (which can be a negative

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number). For purposes of the merger agreement, the “Adjustment Amount” means an amount, which may be a positive or a negative number, equal to (A) the estimated Working Capital as of the closing minus $1,350,000 (the working capital target), minus (B) the estimated Net Debt as of the closing. The number of shares of Mandalay Digital common stock to be issued is determined by dividing the Aggregate Stock Consideration by $4.50 (the “Price Per Share”). As discussed in detail below, the aggregate number shares of Mandalay Digital common stock to be issued in connection with the merger will vary depending on a number of factors, including the amount of the estimated Net Debt at closing.

At the effective time of the merger, each issued and outstanding share of Appia preferred stock (if not otherwise converted into Appia common stock) will be cancelled and extinguished and will be converted automatically into the right to receive the consideration set forth below without interest:

At the effective time of the merger, each issued and outstanding share of Appia common stock (other than any shares of Appia restricted common stock, Dissenting Shares and Treasury Shares) will be cancelled and converted into the right to receive the Per Share Common Consideration and its pro rata portion of shares released from escrow which shall be subject to adjustment and in accordance with the terms of Appia’s restated charter. Each issued and outstanding share of Appia capital stock that is held in the treasury of Appia or owned by Appia, Mandalay Digital or DTM Merger Sub, Inc. will be automatically cancelled and will receive no consideration.

Each issued and outstanding share of the common stock of DTM Merger Sub, Inc. will be converted into and become one fully paid and nonassesable share of common stock of Digital Turbine Media, Inc. (the surviving corporation in the merger).

For the purpose of calculating the Per Share Common Consideration, the Price Per Share ($4.50 per share) and the shares of Mandalay Digital common stock issuable to the holders of Appia common stock, Appia preferred stock, Appia options, Appia restricted common stock and Series C Warrants (as defined below), adjustments will be made to reflect the effect of any stock split, split-up, reverse stock split, dividend or distribution of securities convertible into Appia common stock, Appia preferred stock or Mandalay Digital common stock, reorganization, recapitalization, reclassification or other like change with respect to Appia common stock, Appia preferred stock or Mandalay Digital common stock having a record date occurring on or after the date of the merger agreement and prior to the effective time of the merger. The merger agreement provides that in no event will the number of shares of Mandalay Digital common stock being issued for all

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outstanding shares of Appia capital stock, all Appia options and all Series C Warrants be greater than the Parent Stock Closing Consideration except as a result of adjustments.

The aggregate number shares of Mandalay Digital common stock to be issued in connection with the merger will vary depending on a number of factors, including when the closing occurs and the amount of the Net Debt at closing.

(in thousands, except per-share amounts):

The allocation of shares of Mandalay Digital common stock to be issued in the merger among stockholders of Appia will vary depending on a number of factors, including when the closing occurs, the amount of the Net Debt at closing and the final calculation of the closing price per share of the Mandalay Digital common stock. The final allocation of shares of Mandalay Digital common stock to be issued in the merger among stockholders of Appia will depend on the final calculation of the closing price per share of the Mandalay Digital Common Stock, which is referred to as the Closing Price Per Share in the merger agreement. The Closing Price Per Share shall be equal to the average of the closing prices of the Mandalay Digital common stock over the 30 day period ending three calendar days prior to the closing of the merger, which we refer to as VWAP, except however if the VWAP is greater than $4.50, in which case the Closing Price Per Share shall be equal to $4.50, or if the VWAP is less than $3.50, in which case the Closing Price Per Share shall be equal to $3.50.

Treatment of Series C Warrants

Series C Warrants include, under the merger agreement, the Series C Penny Warrants and Series C Other Warrants under the Preferred Stock Purchase Warrants dated April 4, 2013 and October 31, 2013. The treatment of Series C Warrants under the merger agreement is as follows:

Treatment of Appia Options and Restricted Common Stock

Immediately following the effective time of the merger, each share of Appia restricted stock and each Appia option held by a non-employee director of Appia as of November 13, 2014, will vest in full and become

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exercisable. At the effective time of the merger, each Appia option that is outstanding at the effective time and that is held by a holder who is (a) an employee of Appia or PocketGear and continues his or her employment with Mandalay Digital or one of its subsidiaries or remains or becomes an employee of the surviving corporation or (b) an independent contractor or consultant of Appia or PocketGear who continues its service with Appia, PocketGear or Mandalay Digital, other than a service provider who is not eligible to be included on the Form S-8 registration statement, will be assumed by Mandalay Digital subject to the same terms, conditions and restrictions. Following the effective time, (a) options to purchase Appia common stock will convert to options to purchase a number of shares of Mandalay Digital stock equal to the product of the number of Mandalay Digital shares subject to the outstanding Mandalay Digital option immediately prior to the effective time multiplied by the Option Exchange Ratio (as defined in the merger agreement), rounded down to the nearest whole number of shares of Mandalay Digital common stock, (b) the per share exercise price for Mandalay Digital common stock issuable upon exercise of each assumed option to purchase stock will be equal to the quotient determined by dividing the per share exercise price outstanding immediately prior to the effective time by the Option Exchange Ratio, rounded up to the nearest whole cent, and (c) all references to “Appia” in the 2008 Stock Incentive Plan of Appia and the stock option agreements will instead be references to Mandalay Digital.

Each outstanding, unexercised option to purchase Appia common stock that is vested and exercisable at the effective time and held by a holder (a) that does not continue his or her employment with Mandalay Digital or one of its subsidiaries or remains or becomes an employee of the Surviving Corporation or (b) an independent contractor or consultant of Appia or PocketGear who does not continues his or her service with Appia, PocketGear or Mandalay Digital, other than a service provider who is not eligible to be included on the Form S-8 registration statement (each, a “Deemed Exercise Option”), will be cancelled at the effective time in exchange for a right to receive, subject to any withholding obligations contemplated in the merger agreement, on or after the effective time, the number of shares of Mandalay Digital common stock equal to the quotient obtained by dividing (i) the product of (x) the excess, if any, of the Per Share Common Consideration Equivalent Amount (as defined in the merger agreement) over the applicable exercise price of such option to purchase Appia common stock, times (y) the number of Appia shares subject to the outstanding, unexercised vested option to purchase common stock immediately prior to the effective time, divided by (ii) $4.50, rounded down to the nearest whole share. If the applicable exercise price of such option exceeds the Per Share Common Consideration, no payment will be made and the holder will have no further rights or interests from and after effective time. Each outstanding, unexercised Appia option that is unvested and unexercisable at the effective time and that is held by a holder that does not fall under (a) or (b) above will be cancelled at the effective time for no consideration and in no event will Mandalay Digital assume the Appia options.

At the effective time of the merger, each award of shares of Appia restricted common stock that is outstanding and unvested at the effective time of the merger (each, a “Restricted Stock Award”) will be assumed by Mandalay Digital subject to the same terms, conditions and restrictions and (i) will cover a number of shares of Mandalay Digital common stock equal to the product of the number of Appia shares subject to the outstanding restricted stock immediately prior to the effective time, multiplied by the Per Share Common Consideration, rounded down to the nearest whole number of shares of Mandalay Digital common stock, (ii) a number of the Mandalay Digital common stock subject to the assumed Restricted Stock Award equal to the applicable pro rata allocation of escrowed shares will be held in the escrow account and (iii) all references to “Appia” in the 2008 Stock Incentive Plan of Appia and the stock option agreements will instead be references to Mandalay Digital. Mandalay Digital has agreed to prepare and file with the SEC a registration statement on Form S-8 and use its reasonable best efforts to have it declared effective as soon as reasonably practicable. Appia has agreed to take all necessary actions to effect the termination of the 2008 Stock Incentive Plan and the Appia options and restricted common stock.

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Closing Consideration Schedule

Appia has agreed to deliver to Mandalay Digital, no later than five business days prior to the closing date, a “Closing Consideration Schedule” setting forth, as of closing:

Fractional Shares

No fractional shares of Mandalay Digital common stock will be issued in connection with the merger and no dividends or other distributions with respect to the Mandalay Digital common stock will be payable on or with respect to any fractional share.

Escrow of Consideration; Escrow Account

At the closing, Mandalay Digital, the stockholder representative and American Stock Transfer Company, the Escrow Agent, will enter into the escrow agreement pursuant to which Mandalay Digital will cause to be deposited 1,000,000 shares of Mandalay Digital common stock in an escrow account to be held for the satisfaction of any post-closing purchase price adjustments and any indemnification claims by Mandalay Digital. For purposes of satisfying claims for indemnification or any post-closing adjustment to the purchase price, all shares of Mandalay Digital common stock in the escrow account will be deemed to have a value equal to $4.50 (the “Price Per Share”), as may be adjusted pursuant to the terms of the merger agreement. The Appia stockholders who contribute a portion of the aggregate consideration that they are entitled to receive under the terms of the merger agreement to the escrow will be the owners of the shares deposited in the escrow account and will be entitled to vote all escrowed shares on their own behalf.

In the event of any claim for indemnification under the merger agreement, the Parent Indemnitees (as defined below) will be first to recover any damages from the escrow account then, subject to certain limitations,

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if the remaining shares are insufficient to cover damages, the Parent Indemnitees may seek recovery directly from each Appia stockholder on a pro rata basis. Pursuant to the merger agreement, within five days following the one-year anniversary of the closing date, Mandalay Digital and stockholder representative will instruct the Escrow Agent to deliver to each the applicable Appia stockholders his, her or its pro rata allocation of (i) Mandalay Digital shares of common stock remaining in the escrow account minus (ii) (a) pending claims determined as of the one-year anniversary divided by (b) the Price Per Share. See the section entitled “Summary of the Merger Agreement—Survival; Indemnification” below at page 88.

Working Capital/Net Debt Adjustment

No later than five (5) business days prior to the closing date, Appia will prepare and deliver to Mandalay Digital an unaudited statement of estimated Working Capital as of the Closing Date (the “Pre-Closing Statement”), which shall fairly present in all material respects the estimated Working Capital (the “Estimated Working Capital”) and the estimated Net Debt (the “Estimated Net Debt”) of Appia as of the closing date and of the Adjustment Amount, which Adjustment Amount will be used to calculate the Aggregate Stock Consideration as described above (see “Summary of the Merger Agreement—Conversion of Securities in the Merger” on page 81).

No later than 135 calendar days following the closing, Mandalay Digital has agreed to prepare and deliver to the Stockholder Representative an unaudited statement of Working Capital as of the Closing Date (the “Closing Statement”) presenting Appia’s Working Capital and Net Debt as of the Closing Date and setting forth the final Adjustment Amount.

If the final Adjustment Amount is a positive number, Mandalay Digital agrees to issue to each Appia Equityholder, its pro rata portion of such amount by check or wire transfer of immediately available funds to the Exchange Agent for distribution. If the final Adjustment Amount is a negative number, then Mandalay Digital and Stockholder Representative will execute and deliver joint written instructions to the Escrow Agent instructing distribution to Mandalay Digital from the Escrow Account of a number of shares of Mandalay Digital Common Stock equal to the final Adjustment Amount divided by the Price Per Share.

Appia Designees to Mandalay Digital Board of Directors

Mandalay Digital and Appia agree to cooperate to take all actions reasonably necessary so that immediately following the effective date: (a) the number of directors that will comprise all of the members of the board of directors of Mandalay Digital is increased as required and (b) two individuals currently serving on the Appia’s Board of Directors, and designated by Appia within five calendar days following the date of execution of the merger agreement, are appointed to Mandalay Digital’s Board of Directors. For more information about the designees, see “The Merger – Directors of Mandalay Digital Following the Merger” on page 74.

Stockholder Representative

By executing the merger agreement and upon executing the written consent, the stockholders of Appia, Shareholder Representative Services LLC is appointed as the stockholder representative for purposes of taking certain actions and giving certain consents on behalf of any Appia stockholder relating to the merger agreement and the escrow agreement.

Stockholder Representative Expense Fund

Upon the closing, Appia will wire to the stockholder representative US$25,000 to serve as the expense fund to pay and reimburse the stockholder representative for any third party expenses incurred in connection with the stockholder representative performing its duties pursuant to the merger agreement or the escrow agreement. Any losses incurred in connection with the stockholder representative’s execution and performance of his duties

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(including legal fees and related expenses), may be received from (i) the funds in the expense fund and (ii) to the extent any amounts remain at the end of the escrow period, amounts in the escrow account.

Closing and Effectiveness of the merger

The closing of the merger is to take place on the fifth business day following the satisfaction or, to the extent permitted under the merger agreement and by applicable law, waiver of all conditions to the obligations of the parties set forth in the merger agreement and described below (other than such conditions as may, by their terms, only be satisfied at the closing or on the Closing Date, but subject to such satisfaction or waiver thereof) (see “Summary of the Merger Agreement—Conditions to the Consummation of the Merger” on page 93).

Exchange of Appia Stock Certificates for the Merger Consideration

The merger agreement provides that Digital Turbine Media, Inc. will, cause American Stock Transfer & Trust Company, the exchange agent appointed by Mandalay Digital in connection with the merger, to mail within three business days following the effective time, to each record holder of Appia capital stock, a letter of transmittal and instructions for surrendering and exchanging the record holder’s Appia share certificates for Mandalay Digital common stock. Upon surrender of an Appia share certificate for exchange to the exchange agent, together with a duly completed and validly executed letter of transmittal, and such other documents as the exchange agent may reasonably require, the record holder of the Appia certificate will be entitled to receive the number of uncertificated shares of Mandalay Digital common stock entitled to receive under the merger agreement and as set forth on the Closing Consideration Schedule. No interest will be paid on the merger consideration payable in connection with the merger agreement.

If any Appia share certificate has been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such certificate to be lost, stolen or destroyed and, if required by Mandalay Digital or the exchange agent, the delivery by such person of an indemnification agreement acceptable to Mandalay Digital and the exchange agent, or if required by the exchange agent, posting by such person of a bond in such amount as Mandalay Digital or the exchange agent may determine is reasonably necessary as indemnity against any claim that may be made against it with respect to such certificate, the exchange agent will deliver in exchange for such lost, stolen or destroyed certificate the consideration payable in respect thereof.

Mandalay Digital, Digital Turbine Media, Inc., the Exchange Agent and the Escrow Agent are entitled to deduct and withhold from consideration otherwise payable under the merger agreement to any Appia Equityholder or Person, amounts needed to be withheld with respect to making any such payment under the Code (as defined in the merger agreement) or any provision of state, local or foreign tax law.

Transfer Restrictions on Mandalay Digital Common Stock

All shares of Mandalay Digital common stock to be issued in connection with the merger shall be subject to restrictions on the transfer of such shares during the one year period following the closing date. The transfer restrictions expire (i) 180 days following the closing date with respect to 33 and 1/3% of each Appia Equityholder’s Mandalay Digital common stock, (ii) 270 days following the closing date with respect to 33 and 1/3% of each Appia Equityholder’s shares of Mandalay Digital common stock and (iii) 365 days following the Commencement Date with respect to 33 and 1/3% of each Appia Equityholder’s Mandalay Digital common stock.

Appraisal Rights

Any shares of Appia company capital stock that are issued and outstanding immediately prior to the effective time of the merger and that have not approved the merger via an affirmative vote or written consent (or which the holder has not effectively withdrawn or lost such holder’s appraisal rights), and with respect to which a

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demand for appraisal has been properly made in accordance with the DGCL, will not be converted into or represent a right to receive the merger consideration otherwise payable with respect to such shares of Appia common stock and preferred stock. If any holder of dissenting shares has effectively withdrawn or loses its appraisal rights, such shares will receive the consideration set forth in the merger agreement. Appia has agreed to give Mandalay Digital (i) prompt notice of any written demand for appraisal received and (ii) the opportunity to participate in all negotiations and proceedings with respect to any demands made prior to closing. Communications between Appia and any Appia stockholder will require the consent of Mandalay Digital. Any excess dissenting share payments will be recoverable by Mandalay Digital. For purposes of distributing any portion of escrowed shares, no dissenting stockholder will participate in the escrow and any payment by Mandalay Digital that would have been required to be made to such holder of dissenting shares will be retained by Mandalay Digital.

Representations and Warranties

The merger agreement contains customary representations and warranties of the parties. These include representations and warranties of Appia with respect to, among other things: organization; the equity interests and liabilities of its subsidiary; capitalization; authorization; consents and approvals; absence of certain changes; facilities; condition and sufficiency of assets; contracts and commitments; permits; no conflict or violation; financial statements and other financial information; undisclosed liabilities; books and records; litigation; labor matters; compliance with law; intellectual property; employee benefit plans; transactions with certain persons; certain payments; tax matters; insurance; publishers; advertisers; accounts receivable; compliance with environmental laws; banking relationships; no brokers; disclosure documents; no other agreements to sell the assets or capital stock of Appia and vote required. The merger agreement also contains customary representations and warranties of Mandalay Digital and DTM Merger Sub, Inc., including among other things: organization; authorization; no conflict or violation; Mandalay Digital common stock; no brokers; SEC reports and financial statements; disclosure documents; Mandalay Digital capitalization; litigation;, absence of certain changes; compliance with law and intellectual property.

The representations, warranties and covenants made by Appia in the merger agreement are qualified by information contained in a disclosure memorandum delivered to Mandalay Digital and DTM Merger Sub, Inc. in connection with the execution of the merger agreement. The representations, warranties and covenants made by Mandalay Digital and DTM Merger Sub, Inc. in the merger agreement are also qualified by information contained in a disclosure memorandum delivered to Appia in connection with the execution of the merger agreement. Certain representations and warranties were made as of a specific date.

Survival; Indemnification

Survival of Representations and Warranties and Covenants