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Fair Value Measurements | 9 Months Ended
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Dec. 31, 2021
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Note 19 — Fair Value Measurements The following table presents the fair value of the Company’s financial liabilities that are measured at fair value on a recurring basis (in thousands):
|  | December 31, 2021 |
|  | Fair |  |  | Hierarchy Level |
|  | Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration liability from PodcastOne acquisition |  | $ | 2,937 |  |  | $ | - |  |  | $ | - |  |  | $ | 2,937 |
Contingent consideration from Gramophone acquisition |  |  | 174 |  |  |  | - |  |  |  | - |  |  |  | 174 |
Bifurcated embedded derivative on secured convertible notes payable |  |  | 21 |  |  |  | - |  |  |  | - |  |  |  | 21 |
Bifurcated embedded derivative on unsecured convertible note payable |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
|  | March 31, 2021 |
|  | Fair |  |  | Hierarchy Level |
|  | Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration liability from PodcastOne acquisition |  | $ | 2,423 |  |  | $ | - |  |  | $ | - |  |  | $ | 2,423 |
Contingent consideration liability from CPS acquisition |  |  | 2,513 |  |  |  | - |  |  |  | - |  |  |  | 2,513 |
Bifurcated embedded derivative on secured convertible debentures |  |  | 118 |  |  |  | - |  |  |  | - |  |  |  | 118 |
Bifurcated embedded derivative on unsecured convertible note payable |  |  | 13 |  |  |  | - |  |  |  | - |  |  |  | 13 |
The following table presents a reconciliation of the Company’s financial liabilities that are measured at Level 3 within the fair value hierarchy (in thousands):
|  | Amount |
Balance as of March 31, 2021 |  | $ | 5,067 |
Change in fair value of bifurcated embedded derivatives, reported in earnings |  |  | (110 | )
Change in fair value of contingent consideration liabilities, reported in earnings |  |  | (173 | )
Settlement of contingent consideration liability from CPS acquisition |  |  | (1,826 | )
Initial measurement of contingent consideration from Gramophone acquisition |  |  | 174 |
Balance as of December 31, 2021 |  | $ | 3,132 |
The following table presents a reconciliation of the Company’s derivative instruments for the nine month period ended December 31, 2020 (in thousands):
|  | Amount |
Balance as of March 31, 2020 |  | $ | 665 |
Initial measurement of contingent consideration from PodcastOne acquisition on July 1, 2020 |  |  | 1,100 |
Initial measurement of contingent consideration from CPS acquisition on December 22, 2020 |  |  | 1,254 |
Initial measurement of embedded derivatives on senior secured convertible notes issued on September 15, 2020 |  |  | 671 |
Adjustments reported in loss on extinguishment of debt |  |  | (228 | )
Fair value adjustments reported in earnings |  |  | (866 | )
Balance as of December 31, 2020 |  | $ | 2,596 |
Bifurcated embedded derivative on secured convertible notes payable and unsecured convertible notes payable The fair value of the bifurcated embedded derivatives on secured convertible notes payable and unsecured convertible notes payable was determined using the following significant unobservable inputs:
|  | December 31, |  |  | March 31, |
|  | 2021 |  |  | 2021 |
Bifurcated embedded derivative on secured convertible notes payable: |  |  |  |  |  |
Market yield |  |  | 4.7 | % |  |  | 17.0 | %
Bifurcated embedded derivative on unsecured convertible note payable: |  |  |  |  |  |  |  |
Market yield |  |  | N/A |  |  |  | 26.5 | %
Significant increases or decreases in the inputs noted above in isolation would result in a significantly lower or higher fair value measurement. The Company determined that as of the assessment date, the fair value of the bifurcated embedded derivatives is less than $0.1 million. The change in fair value of $0.1 million is recorded in other income (expense) on the Company’s condensed consolidated statements of operations for the nine month period ended December 31, 2021. The Company did not elect the fair value measurement option for the following financial assets or liabilities. The fair values of certain financial instruments measured at amortized cost and the hierarchy level the Company used to estimate the fair values are shown below (in thousands):
|  | December 31, 2021 |
|  | Carrying |  |  | Hierarchy Level |
|  | Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Secured convertible notes payable, net |  | $ | 13,395 |  |  | $ | - |  |  | $ | - |  |  | $ | 16,132 |
Unsecured convertible notes payable related party, net |  |  | 5,786 |  |  |  | - |  |  |  | - |  |  |  | 6,418 |
Unsecured convertible note payable |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
|  | March 31, 2021 |
|  | Carrying |  |  | Hierarchy Level |
|  | Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Secured convertible notes payable, net |  | $ | 13,047 |  |  | $ | - |  |  | $ | - |  |  | $ | 20,228 |
Unsecured convertible notes payable related party, net |  |  | 5,501 |  |  |  | - |  |  |  | - |  |  |  | 9,216 |
Unsecured convertible note payable |  |  | 1,976 |  |  |  | - |  |  |  | - |  |  |  | 2,167 |
The fair values of financial instruments not included in these tables are estimated to be equal to their carrying values as of December 31, 2021 and March 31, 2021. The Company’s estimates of the fair values were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop the estimated fair values. The fair value of the financial assets and liabilities, where the Company did not elect the fair value measurement option, were determined using the following significant unobservable inputs:
|  | December 31, |  |  | March 31, |
|  | 2021 |  |  | 2021 |
Secured convertible notes payable, net (binomial lattice model): |  |  |  |  |  |
Market yield |  |  | 4.7 | % |  |  | 17.0 | %
Unsecured convertible notes payable related party, net (yield model with a Black-Scholes-Merton option pricing model): |  |  |  |  |  |  |  |
Market yield |  |  | 4.9 | % |  |  | 23.0 | %
Unsecured convertible note payable (yield model with a Black-Scholes-Merton option pricing model): |  |  |  |  |  |  |  |
Market yield |  |  | - | % |  |  | 26.5 | %
Significant increases or decreases in the inputs noted above in isolation would result in a significantly lower or higher fair value measurement. Cash equivalents and restricted cash equivalents primarily consisted of short-term interest-bearing money market funds with maturities of less than 90 days and time deposits. The estimated fair values were based on available market pricing information of similar financial instruments. Due to their short maturity, the carrying amounts of the Company’s accounts receivable, accounts payable, accrued expenses and other long-term liabilities approximated their fair values as of December 31, 2021 and March 31, 2021. The Company’s note payable is not publicly traded and fair value is estimated to equal carrying value. The Company’s debentures and unsecured convertible notes payable with fixed rates are not publicly traded and the Company has estimated fair values using a variety of valuation models and market rate assumptions detailed above. The convertible notes payable and unsecured convertible notes are valued using a binomial lattice model and a yield model with a Black-Scholes-Merton option pricing model, respectively. The Company has estimated the fair value of contingent consideration related to the acquisitions of PodcastOne, CPS, and Gramophone based on the number of shares issuable based on the achievement of certain provisions within the purchase agreement, as detailed in Note 4 – Business Combinations, using the quoted price of the Company’s common stock on the balance sheet date.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=123874694&loc=d3e19207-110258 + Details
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