Quarterly report [Sections 13 or 15(d)]

FAIR VALUE OF FINANCIAL INSTRUMENTS

v3.25.3
FAIR VALUE OF FINANCIAL INSTRUMENTS
 6 Months Ended
Sep. 30, 2025
Fair Value Disclosures [Abstract]  
FAIR VALUE OF FINANCIAL INSTRUMENTS FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company’s assets measured and recorded at fair value on a recurring basis may consist of money market funds, which are included in cash and cash equivalents in the condensed consolidated balance sheets. These instruments are valued using quoted market prices in active markets (Level 1 fair value measurements) at the respective balance sheet dates.
No impairment charges were recognized for non-financial assets for the three and six months ended September 30, 2025 and 2024. The Company has no non-financial liabilities measured and recorded at fair value on a non-recurring basis.
Long-Term Debt
The Company’s financial liabilities were comprised primarily of long-term debt as of September 30, 2025. The carrying amounts of the Company’s debt instruments are recorded at amortized cost. The fair value of the Company’s long-term debt is disclosed for informational purposes only and is not recognized in the condensed consolidated balance sheets.

The fair value of the Company’s debt was estimated using a discounted cash flow approach based on the Company’s current borrowing rates for similar types of debt instruments, adjusted for credit and nonperformance
risk. The Company uses significant other observable market data and assumptions (Level 2 inputs, as defined in ASC 820, Fair Value Measurement) that it believes market participants would use in pricing such debt.

The carrying value and estimated fair value of the Company’s long-term debt were as follows (in thousands):

September 30, 2025 March 31, 2025
Carrying Value Fair Value Carrying Value Fair Value
Term Loans
 $ 106,086  $ 99,135  $ 102,507  $ 91,576 
PNC Credit Facility —  —  26,600  24,755 

Warrants
On September 23, 2025, the Company established the initial fair value for the Forbearance Warrant issued to Dialectic in connection with the Fifteenth Amendment. The fair value was subsequently remeasured as of September 30, 2025, and the resulting change in fair value was recognized in the condensed consolidated statement of operations under “Change in fair value of warrant liabilities.”

The Forbearance Warrant was valued using a Monte Carlo simulation model in conjunction with a Probability-Weighted Expected Return Model (“PWERM”). This model incorporates various assumptions, including the Company’s Common Stock price, expected volatility, risk-free interest rate, and the remaining contractual term of the warrant.

Because the valuation relies on significant unobservable inputs, the fair value of the Forbearance Warrant is classified as Level 3 within the fair value hierarchy.

The following table summarizes the key assumptions used in estimating the fair value of the Forbearance Warrant at issuance and at September 30, 2025:
September 30, 2025 September 23, 2025
Discount period (years) 6.98 years 7.0 years
Risk-free interest rate
3.57% - 3.89%
3.52% - 3.83%
Stock price volatility 98.00% 98.00%
Stock price at valuation date $9.92 $10.69
Probability1
35% - 15% - 50%
35% - 15% - 50%
Fair value (in thousands) $23,895 $25,420
(1) Scenario probability as of issuance was based on timing expectations of management that a liquidation event occurring was estimated at 35%; a fundamental transaction occurring was estimated at 15%; and none of the previous events was estimated at 50%.

The table below sets forth a summary of changes in the fair value of the Company’s warrant liabilities for the period ended September 30, 2025:

Balance at June 30, 2025 $ — 
Issuance of warrants 25,420 
Change in fair value of warrant liabilities (1,525)
Balance at September 30, 2025 $ 23,895