2. Restatement of Previously Issued Consolidated Financial Statements

In connection with preparing its financial statements for the quarter ended June 30, 2018, the Company determined that it incorrectly interpreted the effective dates of changes in the accounting treatment of its net operating losses (“NOLs”) according to the new tax provisions instituted by the Tax Cuts and Jobs Act of 2017, which was signed into law on December 22, 2017 (the “TCJA”). The TCJA, among other items: (i) increased the NOL carryforward period from 20-years to an indefinite carryforward period and (ii) limited the percentage of NOLs that may be used to offset taxable income to 80%.

Under the TCJA, the 80% limitation applies to NOLs arising in taxable years “beginning after” December 31, 2017, which for the Company would be its fiscal year commencing on April 1, 2018 and ending on March 31, 2019 (“Fiscal 2019”). The TCJA, however, provides that the indefinite carryforward period applies to NOLs arising in taxable years “ending after” December 31, 2017, which for the Company would be its fiscal year beginning on April 1, 2017 and ending on March 31, 2018 (“Fiscal 2018”). Based on these dates, NOLs generated by the Company during Fiscal 2018 would both (i) not be subject to the 80% limitation and (ii) have an indefinite life.

In preparing its financial statements for the quarter ended December 31, 2017 and the year ended March 31, 2018 (the “Relevant Periods”), the Company, in consultation with its third-party tax firm, determined that it was unlikely that Congress intended to provide this double benefit to the NOLs generated by the Company during Fiscal 2018. As a result, the Company determined that an appropriate approach would be to continue to limit the carryforward period during Fiscal 2018 to 20 years, rather than apply an indefinite life to these NOLs.

Based on its review of available accounting literature in connection with preparing its financial statements for the quarter ended June 30, 2018, the Company determined that it should apply the accounting changes implemented by the TCJA in accordance with the effective dates set forth in the TCJA. Specifically, the Company determined that, based on the current language of the TCJA, the correct accounting treatment for the NOLs it generated during Fiscal 2018 is to apply an indefinite life to these NOLs.

Applying an indefinite life to the NOLs the Company generated during Fiscal 2018 enables the Company to utilize an increased amount of NOLs to offset the deferred tax liability created by the Company’s amortization of its indefinite-lived intangibles. The Company determined that it should recognize an additional deferred tax benefit of $5.6 million for the three months ended December 31, 2017 and $6.0 million for the fiscal year ended March 31, 2018. The Company determined that these changes had a material impact on the previously filed financial statements for the quarter ended December 31, 2017 and the fiscal year ended March 31, 2018. As a result, on August 9, 2018, the Company filed an amended Quarterly Report on Form 10-Q/A for the quarter ended December 31, 2017 and an amended Annual Report on Form 10-K/A for the year ended March 31, 2018, with restated financial statements and information for these periods.

This Form 10-K reflects the restated financial statements and information for Fiscal 2018 filed by the Company with the SEC on August 9, 2018 in its previously amended Quarterly and Annual Reports.

The table below sets forth the consolidated balance sheet, including the balances originally reported, the adjustments and the as restated balances for the fiscal year ended March 31, 2018 (in thousands):


	As
	Originally
	Reported		Adjustments		As restated
Liabilities
Deferred income tax liability	$	6,060	$	(6,060)	$	—
Total liabilities		17,871		(6,060)		11,811

Stockholders' Equity
Accumulated deficit	$	(133,299)	$	6,060	$	(127,239)
Total stockholders' equity		202,469		6,060		208,529

The table below sets forth the consolidated statements of operations, including the balance originally reported, the adjustment and the as restated balance for the fiscal year ended March 31, 2018 (in thousands, except per share data):


	As
	Originally
	Reported		Adjustments		As restated
Income tax benefit	$	(438)	$	(6,060)	$	(6,498)
Net loss		(30,628)		6,060		(24,568)
Net loss per common share basic and diluted	$	(2.12)	$	0.42	$	(1.70)

The table below sets forth the consolidated statement of stockholders’ equity, including the balances originally reported, the adjustments and the as restated balances for the fiscal year ended March 31, 2018 (in thousands):


			Total
	Accumulated		Stockholders'
	Deficit		Equity
Balance at March 31, 2018, As Reported	$	(133,299)	$	202,469
Adjustments		6,060		6,060
Balance at March 31, 2018, As Restated	$	(127,239)	$	208,529

The table below sets forth the consolidated statements of cash flows from operating activities, including the balances originally reported, the adjustments and the as restated balances for the year ended March 31, 2018 (in thousands):


	As
	Originally
	Reported		Adjustments		As restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(30,628)	$	6,060	$	(24,568)
Adjustments to reconcile net loss to net cash used by operating activities
Deferred Income Tax		(438)		(6,060)		(6,498)
Net cash flows used by operating activities	$	(21,986)		—	$	(21,986)