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Note 13 - Warrants and Derivative Liabilities
 9 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Derivative Instruments and Hedging Activities Disclosure [Text Block]
13.
Warrants and Derivative Liabilities
 
Contingent Consideration
 
The Company evaluated the Acquisition earnout payment set forth in the Stock Purchase Agreement (see Note
2,
"NEPSI Acquisition" for further details), which
may
require settlement in the Company's common stock, and determined the contingent consideration qualified for liability classification and derivative treatment under ASC
815,
Derivatives and Hedging
. As a result, for each period, the fair value of the contingent consideration will be remeasured and the resulting gain or loss will be recognized in operating expenses until the share amount is fixed.
 
Following is a summary of the key assumptions used in a Monte Carlo simulation to calculate the fair value of the contingent consideration related to the Acquisition:
 
   
December 31,
    
October 1,
  
Fiscal Year 2020
  
2020
    
2020
  
Revenue risk premium
    
6.90
 %    
7.10
 %
Revenue volatility
    
30
 %    
30
 %
Stock Price
   $
23.42
     $
14.23
  
Payment delay (days)
    
80
      
—
  
Fair value
  
$6.7 million
    
$4.0 million
  
 
The Company recorded a net loss of $
2.7
 million resulting from the increase in the fair value of the contingent consideration in both the 
three
and
nine
 months ended 
December 31, 2020
.
 
Warrants
 
The Company accounted for its warrants as liabilities due to certain adjustment provisions within the instruments, which required that they be recorded at fair value. The warrants were subject to revaluation at each balance sheet date and any change in fair value was recorded as a change in fair value of warrants until the earlier of its expiration or its exercise at which time the warrant liability was reclassified to equity. The Company calculated the fair value of the warrants utilizing an integrated lattice model. See Note
7,
"Fair Value Measurements", for further discussion.  As of
December 31, 2020
, the Company had 
no
remaining outstanding warrants.
 
Hercules Warrants
 
On
December 19, 2014,
the Company entered into a
second
amendment to the Loan and Security Agreement with Hercules (the "Hercules Second Amendment"). In conjunction with the Hercules Second Amendment, the Company issued the Hercules Warrant which replaced the First Warrant and the Second Warrant.  The Hercules Warrant was exercisable at any time after its issuance at an exercise price of
$7.85
per share, subject to certain price-based and other anti-dilution adjustments, including the equity offering in
May 2017,
the acquisition of Infinia Technology Corporation ("ITC") with common stock in
September 2017
and sales of common stock under the ATM entered into in
January 2017.  
This warrant had a fair value of
$0.4
million as of
March 31, 2019.  
On
April 8, 2019,
Hercules notified the Company of its intent to exercise this warrant on a cashless basis.  Hercules received
22,821
shares of the Company's common stock on
April 17, 2019. 
As a result of this exercise the Company recorded a net gain of
$0.1
million to change in fair value of warrants, resulting from the decrease in the fair value of the Hercules Warrant during the
nine
 months ended
December 31, 2019
.  
 
November 2014
Warrant
 
On
November 13, 2014,
the Company completed an offering of
909,090
units of the Company's common stock with Hudson Bay Capital. Each unit consisted of
one
share of the Company's common stock and
0.9
of a warrant to purchase
one
share of common stock, or a warrant to purchase in the aggregate
818,181
shares.  The Hudson Warrants were exercisable at any time, at an exercise price equal to
$7.81
per share, subject to certain price-based and other anti-dilution adjustments including those noted above.  On
November 13, 2019,
Hudson partially exercised the Hudson Warrants for
786,000
restricted shares of Company common stock at
$7.81
per share
. 
The remaining
32,181
warrants expired on
November 13, 2019.
The Company recorded net gains of
$0.5
 million and
$4.6
 million to change in fair value of warrants, resulting from the decrease in the fair value of the Hudson Warrants during the
three
and 
nine
months ended
December 31, 2019
, respectively.