Note 15 - Fair Value Measurements

12 Months Ended

Mar. 31, 2016

Fair Value, Measurement Inputs, Disclosure [Text Block]

Note 15. Fair Value Measurements

We follow authoritative guidance (GAAP) which requires that assets and liabilities carried at fair value be classified and disclosed in one of the established categories. A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three categories are defined as follows:

• Level 1: Quoted prices in active markets for identical assets.

• Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

• Level 3: Significant inputs to the valuation model are unobservable inputs.

Assets and liabilities measured on a recurring basis:

Our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities (including certain contingent consideration amounts that are short-term in nature) are carried at cost, which is considered to be representative of their fair value due to the short term maturity of these instruments. The recorded value of the Line of Credit and Term Loan (See Note 6), approximates fair value due to their variable rate structure.

The following table presents items required to be measured at fair value on a recurring basis by the level in which they are classified within the valuation hierarchy as follows:

	Year Ended March 31, 2016

	Level 1		Level 2		Level 3		Total
Assets:
	$	--	$	--	$	--	$	--
Liabilities:

Contingent Consideration	$	--	$	--	$	9,037	$	9,037

Under the Infitrak Agreement (See Note 2), we will make two annual payments to the former owners based on future growth in gross profit (as defined in the Earn-Out Agreement). This contingent consideration payable is a standalone liability that is measured at fair value on a recurring basis for which there is no available quoted market price, principal market or market participants. As such, the inputs for this instrument are unobservable and therefore classified as Level 3 inputs. This contingent consideration liability is valued using a discounted cash flow model based on internal forecasts and our current cost of borrowing.

The contingent consideration arising from this agreement is our only Level 3 asset or liability. The following table presents a roll forward of the contingent consideration payable for the years ended March 31, 2016 and 2015 (in thousands):

	March 31,
	2016			2015
Opening balance	$	--		$	--
Amount related to Infitrak Acquisition		9,271			--
Measurement period adjustment(s)		--			--
Payments/accruals		--			--
Transfers in/out of Level 3		--			--
Fair value adjustment – expense		85			--
Foreign exchange rate impact – included in other comprehensive loss		(319	)		--
Ending Balance	$	9,037		$	--