Quarterly report [Sections 13 or 15(d)]

FAIR VALUE OF FINANCIAL INSTRUMENTS

v3.26.3
FAIR VALUE OF FINANCIAL INSTRUMENTS
 6 Months Ended
Sep. 30, 2026
Fair Value Disclosures [Abstract]  
FAIR VALUE OF FINANCIAL INSTRUMENTS FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows the guidance in ASC 820, Fair Value Measurement, for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. 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 during the three and six months ended September 30, 2026 and 2025.

The carrying amounts reported in the accompanying condensed consolidated financial statements for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and other current liabilities approximate their respective fair values because of the short-term nature of these accounts.
Debt
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 debt were as follows (in thousands):
September 30, 2026 March 31, 2026
Carrying Value Fair Value Carrying Value Fair Value
Term Loan $ —  $ —  $ 55,906  $ 51,339 

On June 4, 2026, the Company paid the entire outstanding principal amount and terminated the Term Loan Credit Agreement, see Note 4 : Debt for further details,
Warrants
Forbearance Warrant
On September 23, 2025, the Company established the initial fair value for the Forbearance Warrant issued to Dialectic in connection with the Fifteenth Amendment, which allows the purchase of up to 2,653,308 shares of Common Stock at an exercise price of $8.81. The fair value was subsequently remeasured as of September 30, 2026 and March 31, 2026, and the resulting changes in fair value were recognized in the condensed consolidated statements of operations and comprehensive loss 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. 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 (as defined in ASC 820, Fair Value Measurement).

The following table summarizes the key assumptions used in estimating the fair value of the Forbearance Warrant at September 30, 2026 and March 31, 2026:
September 30, 2026 March 31, 2026
Discount period (years) 5.98 years 6.48 years
Risk-free interest rate
4.49% - 5.07%
3.65% - 4.02%
Stock price volatility 110.00% 100.00%
Stock price at valuation date $31.72 $4.75
Probability1
10% - 15% - 75%
15% - 15% - 70%
Fair value (in thousands) $80,000 $14,105

(1) Scenario probability at March 31, 2026 was based on timing expectations of management that a liquidation event occurring was estimated at 15%; a fundamental transaction occurring was estimated at 15%; and none of the previous events were estimated at 70%. Scenario probability at September 30, 2026 incorporated a 10% of a liquidation event occurring; a 15% of a fundamental transaction occurring; and none of the previous events were estimated at 75%.

The table below sets forth a summary of changes in the fair value of the Company’s Forbearance Warrant liability for the three and six months ended September 30, 2026:

Balance at March 31, 2026 $ 14,105 
Change in fair value of forbearance warrant for the 3 months ended June 30, 2026 16,290 
Balance at June 30, 2026 30,395 
Change in fair value of forbearance warrant for the 3 months ended September 30, 2026 49,605 
Balance at September 30, 2026
 $ 80,000 
Conversion Warrant
On June 1, 2026, the Company issued to Dialectic a warrant (the “Conversion Warrant”) to purchase up to 105,911 shares of Common Stock at an exercise price of $5.1940. The Company established the initial fair value for the Conversion Warrant issued to Dialectic in connection with the Sixteenth Amendment. The fair value was subsequently remeasured as of September 30, 2026, and the resulting change in fair value was recognized in the condensed consolidated statement of operations and comprehensive loss under “Change in fair value of warrant liabilities.”
The Conversion Warrant was valued using a Monte Carlo simulation model in conjunction with a Probability-Weighted Expected Return Model. 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 Conversion Warrant is classified as Level 3 within the fair value hierarchy (as defined in ASC 820, Fair Value Measurement). Significant changes in the Company's stock price, volatility, or changes in the key assumptions stated below could result in a significantly higher or lower fair value of the warrant liabilities.

The following table summarizes the key assumptions used in estimating the fair value of the Conversion Warrant at issuance and at September 30, 2026:
September 30, 2026 June 1, 2026
Discount period (years) 4.67 years 5 years
Risk-free interest rate
4.49% - 5.01%
3.81% - 4.14%
Stock price volatility 110.00% 100.00%
Stock price at valuation date $31.72 $10.49
Probability1
10% - 15% - 75%
10% - 15% - 75%
Fair value (in thousands) $3,255 $1,280

(1) Scenario probability as of issuance and at September 30, 2026 was based on timing expectations of management that a liquidation event occurring was estimated at 10%; a fundamental transaction occurring was estimated at 15%; and none of the previous events were estimated at 75%.
The table below sets forth a summary of changes in the fair value of the Company’s Conversion Warrant liability for the three and six months ended September 30, 2026:

Balance at March 31, 2026 $ — 
Issuance of Conversion Warrant 1,280 
Change in fair value of Conversion Warrant for the 3 months ended June 30, 2026 15 
Balance at June 30, 2026 1,295 
Change in fair value of Conversion Warrant for the 3 months ended September 30, 2026 1,960 
Balance at September 30, 2026
 $ 3,255 
Convertible Note
On June 4, 2026 and pursuant to the terms of the Conversion Agreement, the Company’s outstanding Convertible Note was canceled, and the Indenture was satisfied and discharged in full. At the time of settlement, the Company issued to Dialectic 14,104,620 shares of common stock with an aggregate fair value of $222.6 million, at a share price of $15.78. Of this amount, $219.7 million represents the fair value of the Convertible Note prior to conversion, and $2.8 million represents the deferred cash interest owed to Dialectic under the Term Loan Credit Agreement that was settled through the share issuance. The change in the fair value of the Convertible Note was recognized in the condensed consolidated statements of operations and comprehensive loss under “Change in fair value of Convertible Note”.

The table below sets forth a summary of changes in the fair value of the Company’s Convertible Note for the six months ended September 30, 2026:

Balance at March 31, 2026 $ 90,034 
Change in fair value of Convertible Note 129,715 
Conversion of Convertible Note (219,749)
Balance at September 30, 2026
 $ —