Goodwill (Tables)

12 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The rollforward of goodwill was as follows (in thousands):

	Direct		Total
Balance, March 31, 2021	$	—	$	—
Business acquisition (Note 2)	24,510		24,510
Balance, March 31, 2022	$	24,510	$	24,510

In accordance with ASC 350 — Intangibles — Goodwill and Other, we perform our goodwill and indefinite-lived trade names impairment valuations annually, on March 31, or sooner if triggering events are identified. As of March 31, 2022, we had a total of $24.5 million of goodwill resulting from our VAY acquisition in September 2021 (Note 2), which is 100% assigned to our Direct reporting unit.

We assigned assets and liabilities to each reporting unit based on either specific identification or by using judgment for the remaining assets and liabilities that are not specific to a reporting unit. We determined the fair value of our reporting units in Step 1 of the ASC 350 analysis using the income approach and the market approach. In addition, we determined the fair value by adding a control premium observed from recent transactions of comparable companies to determine the reasonableness of that assumption and the fair values of the reporting units estimated in Step 1. Significant unobservable inputs and assumptions inherent in the valuation methodologies from Level 3 inputs were employed and include, but were not limited to, prospective financial information, growth rates, terminal value, royalty rates, discount rates, and comparable multiples from publicly traded companies in our industry. We compared the carrying amount of each reporting unit to its respective fair value. We reconciled the aggregate fair values of the reporting units determined in Step 1 (as described above) to the enterprise market capitalization plus a reasonable control premium. This total value was compared to a trailing 30-day average market capitalization of approximately $137 million as of March 31, 2022.

The Direct reporting unit's fair value exceeded the carrying value by more than 10%.

As a result, the market capitalization reconciliation analysis proved support for the reasonableness of the fair values estimated for each individual reporting unit and our conclusion of no impairment charge for goodwill and indefinite-lived intangibles.

The indefinite-lived intangible assets evaluation was performed using the relief from royalty method. This analysis was based on the estimated future cash flows generated for each separate brand/trademark. We compared the carrying amount to the estimated fair values. Based on our evaluation, the indefinite-lived intangible assets were recoverable.

Subsequent to year end and through the date of this filing, we are observing continued market volatility including a further decline in our market capitalization, which, in part, increases the possibility of a future impairment charge in the near term. If the facts and circumstances surrounding our assumptions change, our goodwill impairment analysis may fail. Assumptions and estimates to determine far values are complex and often subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our internal forecasts. For example, if our future operating results do not meet current forecasts or if we continue to experience a sustained decline in our market capitalization, adjusted for estimated control premium, that is determined to be indicative of a reduction in fair value one or more of our reporting units, we may be required to record future impairment charges for goodwill. An impairment could have a material effect on our consolidated balance sheet and results of operations.