Note

–

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

Quoted prices in active markets for identical assets.

• Level

Observable market-based inputs or unobservable inputs that are corroborated by market data.

• Level

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

4),

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 (in thousands):

	December 31 , 2016

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

Contingent Consideration	$	--	$	--	$	4,436	$	4,436

	March 31 , 2016

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

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

Under the Infitrak Agreement (See Note

7),

we were required to make

two

annual payments to the former owners based on future growth in gross profit (as defined in the Infitrak Earn-Out Agreement). In

July

2016

we made the

first

Earn-Out payment in the amount of

$6,000,000

CDN

($4,594,000).

The remaining 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

inputs. This contingent consideration liability is valued using a discounted cash flow model based on internal forecasts and our current cost of borrowing. There were no changes to the valuation methodology during the period.

The contingent consideration arising from this agreement is our only Level

asset or liability. The following table presents a roll forward of the contingent consideration payable for the

nine

months ended

December

31,

2016

and

2015

(in thousands):

	Nine Months Ended
	December 31 ,
	2016			2015
Opening balance	$	9,037		$	--
Payment		(4,594	)		--
Fair value adjustment – expense		137			--
Foreign exchange rate impact – included in other comprehensive gain		(144	)		--
Ending Balance	$	4,436		$	--