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Note 6 - Fair Value Measurements
 12 Months Ended
Mar. 31, 2025
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, 2025.

 

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 money market accounts.

 

Short-term Cash Instruments

 

Short-term cash instruments 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 in markets that are not active, and are classified within Level 2 of the valuation hierarchy. Short-term cash instruments consist principally of certificates of deposits.

 

Contingent Consideration

 

Contingent consideration relates to the earnout payment set forth in the Stock Purchase Agreement governing the acquisition of Northeast Power Systems, Inc ("NEPSI") that provided that NEPSI could receive up to an additional 1,000,000 shares of common stock of the Company upon the achievement of certain specified revenue objectives over varying periods of up to four years following the NEPSI Acquisition Date which concluded in September of 2024. The Megatran Stock Purchase Agreement provided that the selling stockholders would be made whole as set forth in the agreement. We classified contingent consideration related to certain acquisitions within level 3 of the fair value hierarchy because the fair value is derived using significant unobservable inputs, which include revenue risk premium and revenue volatility. See Note 13, "Contingent Consideration" for further discussion. As of September 30, 2024, the Company had settled all outstanding contingent consideration. 

 

The following table provides the assets and liabilities carried at fair value on a recurring basis, measured as of  March 31, 2025 and 2024 (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, 2025:

                

Assets:

                

Cash equivalents

 $51,230  $51,230  $—  $— 

Short-term cash instruments

 $1,404  $—  $1,404  $— 

 

  

Total Carrying Value

  

Quoted Prices in Active Markets (Level 1)

  

Significant Other Observable Inputs (Level 2)

  

Significant Unobservable Inputs (Level 3)

 

March 31, 2024:

                

Assets:

                

Cash equivalents

 $71,392  $71,392  $—  $— 

Short-term cash instruments

 $1,440  $—  $1,440  $— 

Derivative liabilities:

                

Contingent Consideration

 $3,100  $—  $—  $3,100 

 

The table below reflects the activity for the Company’s contingent consideration derivative liability measured at fair value on a recurring basis (in thousands):

 

  

NEPSI Acquisition Contingent Consideration

  

NWL Acquisition Contingent Consideration

 

Balance at March 31, 2023

 $1,270  $— 

Change in fair value

  4,922   — 

Settlement of contingent consideration

  (3,092)  — 

Balance at March 31, 2024

 $3,100  $— 

Change in fair value

  3,404   3,278 

Settlement of contingent consideration

  (6,504)  (3,278)

Balance at March 31, 2025

 $-  $-