Note

. Indebtedness

During the year ended

March 31, 2020,

we paid off the balance of our

$20,000

term loan and our line of credit and terminated our

$80,000

revolving line of credit. We recorded the balance of our unamortized debt discount in the amount of

$238

to interest expense and amortization of debt discount on the Statements of Operations in conjunction with the extinguishment of the term loan.

August 12, 2019,

we issued the Notes, which consist of an aggregate principal amount of

$172,500

of convertible senior notes which includes the underwriters' exercise in full of an option to purchase an additional

$22,500.

The net proceeds of the Notes Offering, after deducting underwriting discounts and commissions and other related offering expenses payable, were approximately

$167,070.

The Notes mature on

August 15, 2025,

unless earlier repurchased or converted and bear interest at a rate of

1.375%

payable semi annually in arrears on

February 15

and

August 15

of each year beginning on

February 15, 2020.

The Notes are initially convertible at a conversion rate of

3.5273

shares of the common stock per

$1,000

principal amount of Notes, which is equivalent to an initial conversion price of approximately

$283.50

per share of common stock. Noteholders

may

convert their Notes at their option only in the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on

December

31,

2019

(and only during such calendar quarter), if the last reported sale price per share of our common stock exceeds

130%

of the conversion price for each of at least

trading days during the

consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (ii) during the

five

consecutive business days immediately after any

consecutive trading day period (such

consecutive trading day period, the “measurement period”) in which the trading price per

$1,000

principal amount of Notes for each trading day of the measurement period was less than

98%

of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day; (iii) upon the occurrence of certain corporate events or distributions on our common stock, including certain distributions, the occurrence of a fundamental change (as defined in the indenture governing the Notes) or a transaction resulting in the Company’s common stock converting into other securities or property or assets; and (iv) at any time from, and including,

April

15,

2025

until the close of business on the

second

scheduled trading day immediately before the maturity date. Upon conversion, we will pay or deliver, as the case

may

be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election. Our current intent is to settle conversions entirely in shares of common stock. We will reevaluate this policy from time to time as conversion notices are received from holders of the Notes. The circumstances required to allow the holders to convert their Notes were

not

met during the year ended

March 31, 2020.

As of

March 31, 2020,

the if-converted value of the Notes did

not

exceed the principal balance.

If a fundamental change occurs prior to the maturity date, holders

may

require us to repurchase all or a portion of their Notes for cash at a price equal to

100%

of the principal amount of the Notes to be repurchased plus unpaid accrued interest. Holders of Notes who convert their Notes in connection with a notice of a redemption or a make-whole fundamental change

may

be entitled to a premium in the form of an increase in the conversion rate of the Notes.

As of

March 31, 2020,

the conditions allowing holders of the Notes to convert have

not

been met and therefore, the notes are

not

yet convertible and are recorded as a long-term liability on our Consolidated Balance Sheets as of

March 31, 2020.

We accounted for the transaction by bifurcating the Notes into liability and equity components. The carrying amount of the liability component was

$141,427

upon issuance and was calculated by using the income approach and measuring the fair value of a similar debt instrument that does

not

have an associated convertible feature. The implied interest rate (a Level

unobservable input) assuming

conversion option was estimated using the Tsiveriotis-Frenandes model; all other assumptions used in measuring the fair value represent what market participants would use in pricing the liability component, including market interest rates, credit standing, and yield curves, all of which are defined as Level

observable inputs. The carrying amount of the equity component representing the conversion option was

$31,073

and was determined by deducting the fair value of the liability component from the par value of the Notes. The equity component is

not

remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount (the "Debt Discount") will be amortized to interest expense using the effective interest method over the

six

-year contractual term of the Notes.

Debt issuance costs related to the Notes comprised of discounts and commissions payable to the initial purchasers of

$5,175

and

third

party offering costs of

$255.

We allocated the total amount incurred to the liability and equity components of the Notes based on their relative values. Issuance costs attributable to the liability component were

$4,452

and will be amortized to interest expense using the effective interest method over the contractual term. Issuance costs attributable to the equity component were netted with the equity component in stockholders’ equity.

The net carrying amount of the Notes were as follows:

	March 31, 2020			March 31, 2019
Principal outstanding	$	172,500		$	--
Unamortized debt discount		(28,205	)		--
Unamortized debt issuance costs		(4,017	)		--
Net carrying value	$	140,278		$	--

The net carrying amount of the equity component of the Notes were as follows:

	March 31, 2020			March 31, 2019
Amount allocated to conversion option	$	31,073		$	--
Less: allocated issuance costs and deferred taxes		(8,338	)		--
Equity component, net	$	22,735		$	--

We recognized interest expense on the Notes as follows:

	Year Ended March 31,
	2020		2019
Coupon interest expense at 1.375%	$	1,502	$	--
Amortization of debt discounts and issuance costs		3,314		--
Total	$	4,816	$	--

The effective interest rate of the liability component of the note is approximately

5.5%.