• Filing Date: 2020-06-24
  • Form Type: 10-K
  • Description: Annual report
v3.20.1
FAIR VALUE OF FINANCIAL INSTRUMENTS
12 Months Ended
Mar. 31, 2020
Fair Value Disclosures [Abstract]  
FAIR VALUE OF FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has certain non-financial assets that are measured at fair value on a non-recurring basis when there is an indicator of impairment, and they are recorded at fair value only when an impairment is recognized. These assets include property and equipment and amortizable intangible assets. The Company did not record impairments to any non-financial assets in the fiscal years ended March 31, 2020, 2019 and 2018. The Company does not have any non-financial liabilities measured and recorded at fair value on a non-recurring basis. The carrying amounts reported in the accompanying consolidated financial statements for cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses and other current liabilities approximate their respective fair values because of the short-term nature of these accounts.

Warrants and Warrant Liability

The Company uses the Black-Scholes-Merton option valuation model for estimating fair value of common stock warrants. The expected life of warrants granted represent the period of time that they are expected to be outstanding. The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, exercise patterns, and post-vesting forfeitures. The Company estimates volatility based on the historical volatility of the common stock over the most recent period corresponding with the estimated expected life of the award. The Company bases the risk-free interest rate used in the Black-Scholes-Merton stock option valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent term equal to the expected life of the award. The Company has not paid any cash dividends on the common stock and does not anticipate paying any cash dividends in the foreseeable future.

During fiscal year 2018, the Company began issuing common stock warrants in connection with amendments to the TCW Term Loan. The warrants were initially accounted for as a liability and recorded at estimated fair value on a recurring basis due to exercise price reset provisions contained in the warrant agreements. As such, the Company estimated the fair value of the warrants at the end of each reporting period using the Black-Scholes-Merton valuation model. At the end of each reporting period, the Company recorded the changes in the estimated fair value during the period in other (income) expense in the consolidated statements of operations and comprehensive income (loss). The warrant liabilities are valued at issuance and each subsequent measurement date using the Black-Scholes-Merton option valuation model.

The following table shows the ranges of assumptions and estimates utilized within the Black-Scholes-Merton option valuation models for the period presented:
Inputs
 
Year Ended March 31,
 
 
2019
 
2018
Company's stock price
 
$1.62 - $2.40
 
$3.64 - $5.63
Exercise prices
 
$0.01 - $2.40
 
$0.01
Expected term (years)
 
4.5 to 5.0
 
4.8 to 5.0
Volatility
 
64.1% - 71.8%
 
59.8% - 69.1%
Risk free interest rate
 
2.5% - 3.0%
 
2.1% - 2.7%
Dividend rate
 
—%
 
—%


During the three months ended March 31, 2019, the exercise price for these warrants reset and became fixed, at which time they were considered to be indexed to the Company’s own stock and met the scope requirements for equity classification. The fair value of the warrants upon the exercise price reset was reclassified to stockholders’ deficit. The Company classified the warrant liability subject to recurring fair value measurement as Level 3 prior to the reclassification to stockholders’ deficit. As the outstanding warrants were reclassified to stockholders’ deficit in the three months ended March 31, 2019, there was no warrant liability as of March 31, 2020 and 2019.

The table presented below is a summary of changes in the fair value of the Company’s Level 3 valuations for the warrant liability for the periods presented (in thousands):
 
Warrant liability
As of March 31, 2018
$
272

   Issuances
5,683

   Settlements
(615
)
   Changes in fair value
297

   Reclassifications to stockholders' deficit
(5,637
)
As of March 31, 2019
$



Debt

The table below represents the carrying value and total estimated fair value of long-term debt as of March 31, 2020 and March 31, 2019, respectively. The fair value has been classified as Level 2 within the fair value hierarchy.

 
 
March 31,
 
 
2020
 
2019
 
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Senior Secured Term Loan
 
$
165,208

 
$
151,678

 
$
164,588

 
$
160,259

Amended PNC Credit Facility
 
2,620

 
2,226