Fair Value Measurements

A valuation hierarchy for disclosure of the inputs to valuation used to measure fair value has been established. This hierarchy prioritizes the inputs into

three

broad levels as follows:

Level 1	-	Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2	-	Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3	-	Unobservable inputs that reflect the Company's assumptions that market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available, including its own data.

The Company provides a gross presentation of activity within Level

measurement roll-forward and details of transfers in and out of Level

and

measurements. A change in the hierarchy of an investment from its current level is reflected in the period during which the pricing methodology of such investment changes. Disclosure of the transfer of securities from Level

to Level

or Level

is made in the event that the related security is significant to total cash and investments. The Company did

not

have any transfers of assets and liabilities from Level

Level

or Level

of the fair value measurement hierarchy during the

nine

months ended

December 31, 2020

A financial asset's or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Valuation Techniques

Cash Equivalents

Cash equivalents consist of highly liquid instruments with maturities of

three

months or less that are regarded as high quality, low risk investments, are measured using such inputs as quoted prices and are classified within Level

of the valuation hierarchy. Cash equivalents consist principally of certificates of deposits and money market accounts.

Marketable Securities

Marketable securities consist of certificates of deposit that are measured using such inputs as quoted prices and are classified within Level

of the valuation hierarchy. The Company determines the appropriate classification of its marketable securities at the time of purchase and re-evaluates such classification as of each balance sheet date. All marketable securities are considered available for sale and are carried at fair value. Changes in fair value are recorded to other income (expense), net. The Company recognized

change in the

three

months ended

December 31, 2020

and

$0.2

million in unrealized losses on marketable securities, which is recorded in other income (expense), net, for the

nine

months ended

December 31, 2020

and less than a

$0.1

million gain which was recognized during the

nine

months ended

December 31, 2020

upon the sale of

one

of the certificates of deposit. The Company did

not

recognize any gains or losses on marketable securities in the

three

and

nine

months ended

December 31, 2019

The Company periodically reviews the realizability of each short and long term marketable security when impairment indicators exist with respect to the security. If other than temporary impairment of value of the security exists, the carrying value of the security is written down to its estimated fair value.

Contingent Consideration

Contingent consideration relates to the earnout payment set forth in the Stock Purchase Agreement that provides that the selling stockholders

may

receive up to an additional

1,000,000

shares of common stock of the Company upon the achievement of certain specified revenue objectives over varying periods of up to

four

years following the Acquisition Date. See Note

13,

"Warrants and Derivative Liabilities" and Note

“NEPSI Acquisition” for further discussion. The Company relied on a Monte Carlo method to determine the fair value of the contingent consideration on the Acquisition Date and will continue to revalue the fair value of the contingent consideration using the same method at each subsequent balance sheet date until the contingencies are resolved and the shares to be issued are determined, with the change in fair value recorded in the current period operating loss.

Warrants

The Company issued the Hudson Warrants in conjunction with an equity offering to Hudson Bay Capital in

November 2014

and issued warrants to purchase

58,823

shares of the Company's common stock in conjunction a Loan and Security Agreement with Hercules Technology Growth Capital, Inc. (“Hercules Warrants”). The Hercules Warrants were exercised on

April 8, 2019.

The Hudson Warrants were partially exercised on

November 13, 2019

and the remaining unexercised warrants expired on

November 13, 2019.

As of

December 31, 2020

, the Company has

remaining outstanding warrants.

The Company historically relied on various assumptions in a lattice model to determine the fair value of warrants. The Company had valued the warrants within Level

of the valuation hierarchy. See Note

13,

“Warrants and Derivative Liabilities,” for a discussion of the warrants and the valuation assumptions used.

The following table provides the assets and liabilities carried at fair value on a recurring basis, measured as of

December 31, 2020

and

March 31, 2020

(in thousands):

	Total Carrying Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2020:
Assets:
Cash equivalents	$	56,101	$	56,101	$	—	$	—
Marketable securities	$	10,239	$	10,239	$	—	$	—
Derivative liabilities:
Contingent consideration	$	6,730	$	—	$	—	$	6,730

	Total Carrying Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2020:
Assets:
Cash equivalents	$	19,394	$	19,394	$	—	$	—
Marketable securities	$	35,195	$	35,195	$	—	$	—

The table below reflects the activity for the Company's derivative liability measured at fair value on a recurring basis (in thousands):

	Acquisition Contingent Consideration
April 1, 2020	$	-
Issuance of contingent consideration		3,990
Mark to market adjustment		2,740
Balance at December 31, 2020	$	6,730