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Note 6 - Fair Value Measurements
 12 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

6. Fair Value Measurements

 

A valuation hierarchy for disclosure of the inputs to valuation used to measure fair value has been established. This hierarchy prioritizes the inputs into three broad levels as follows:

 

Level 1 

-

Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

 

 

 

Level 2 

-

Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

 

 

 

Level 3 

-

Unobservable inputs that reflect the Company’s assumptions that market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available, including its own data.

 

The Company provides a gross presentation of activity within Level 3 measurement roll-forward and details of transfers in and out of Level 1 and 2 measurements.  A change in the hierarchy of an investment from its current level is reflected in the period during which the pricing methodology of such investment changes.  Disclosure of the transfer of securities from Level 1 to Level 2 or Level 3 is made in the event that the related security is significant to total cash and investments.  The Company did not have any transfers of assets and liabilities from Level 1, Level 2 or Level 3 of the fair value measurement hierarchy during the year ended March 31, 2022.

 

A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

 

Valuation Techniques

 

Cash Equivalents

 

Cash equivalents consist of highly liquid instruments with maturities of three months or less that are regarded as high quality, low risk investments and are measured using such inputs as quoted prices, and are classified within Level 1 of the valuation hierarchy. Cash equivalents consist principally of certificates of deposits and money market accounts.

 

Marketable Securities

 

Marketable securities consist of certificates of deposit with maturities of less than 12 months that are measured using such inputs as quoted prices and are classified within Level 1 of the valuation hierarchy. The Company determines the appropriate classification of its marketable securities at the time of purchase and re-evaluates such classification as of each balance sheet date.  All marketable securities are considered available for sale and are carried at fair value. The Company had no outstanding marketable securities as of March 31, 2022 and the Company recognized no change in the twelve months ended March 31, 2022. The Company recognized less than $0.1 million in unrealized gains on marketable securities, which is recorded in other income, for the fiscal year ending March 31, 2021.  

 

The Company periodically reviews the realizability of each short and long term marketable security when impairment indicators exist with respect to the security.  If other than temporary impairment of value of the security exists, the carrying value of the security is written down to its estimated fair value.

 

Contingent Consideration

 

Contingent consideration relates to the earnout payment for the NEPSI Acquisition. See Note 3 "Acquisitions" and Note 12, "Contingent Consideration" for further discussion. The Company relied on a Monte Carlo simulation pricing method to determine the fair value of the contingent consideration on the NEPSI Acquisition Date and will continue to revalue the fair value of the contingent consideration at each subsequent balance sheet date until the final settlement date, with the resulting gain or loss recorded in operating expenses. 

 

The following table provides the assets and liabilities carried at fair value on a recurring basis, measured as of  March 31, 2022 and 2021 (in thousands):

 

  Total Carrying Value  Quoted Prices in Active Markets (Level 1)  Significant Other Observable Inputs (Level 2)  Significant Unobservable Inputs (Level 3) 

March 31, 2022:

                

Assets:

                

Cash equivalents

 $17,641  $17,641  $—  $— 

Marketable securities

 $—  $—  $—  $— 

Derivative liabilities:

                

Contingent Consideration

 $1,200  $—  $—  $1,200 

 

  Total Carrying Value  

Quoted Prices in Active Markets (Level 1)

  Significant Other Observable Inputs (Level 2)  Significant Unobservable Inputs (Level 3) 

March 31, 2021:

                

Assets:

                

Cash equivalents

 $54,104  $54,104  $—  $— 

Marketable securities

 $5,140  $5,140  $—  $— 

Derivative liabilities:

                

Contingent Consideration

 $7,050  $—  $—  $7,050 

 

The table below reflects the activity for the Company’s major classes of liabilities measured at fair value on a recurring basis (in thousands):

 

  

Acquisition Contingent Consideration

 

Balance at April 1, 2020

 $- 

Issuance of contingent consideration

  3,990 

Change in fair value

  3,060 

Balance at March 31, 2021

 $7,050 

Change in fair value

  (5,850)

Balance at March 31, 2022

 $1,200