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Note 12 - Contingent Consideration

12 Months Ended

Mar. 31, 2022

Business Combination, Contingent Consideration [Text Block]

12. Contingent Consideration

Contingent Consideration

The Company evaluated the NEPSI Acquisition earnout payment set forth in the Stock Purchase Agreement (see Note 3, "Acquisitions" 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.

The 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 NEPSI Acquisition:

Fiscal Year 2021	March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
Revenue risk premium		6.50	%		6.60	%		6.60	%		6.60	%
Revenue volatility		33	%		33	%		30	%		30	%
Stock Price	$	7.61		$	10.88		$	14.58		$	17.39
Payment delay (days)		80			80			80			80
Fair value (millions)	$	1.2		$	2.6		$	4.7		$	7.2

Fiscal Year 2020	March 31, 2021			December 31, 2020			October 1, 2020
Revenue risk premium		6.70	%		6.90	%		7.10	%
Revenue volatility		30	%		30	%		30	%
Stock Price	$	18.96		$	23.42		$	14.23
Payment delay (days)		80			80			-
Fair value (millions)	$	7.1		$	6.7		$	4.0

The Company recorded a net gain of $5.9 million from the decrease in the fair value of the contingent consideration in the twelve months ended March 31, 2022. The change in the fair value of the Company's contingent consideration for the earnout payment on the NEPSI Acquisition resulted in a loss of $3.1 million in the year ended March 31, 2021.