Fair Value Disclosures

3 Months Ended

Jun. 30, 2022

Note 9. Fair Value Disclosures

Financial Instruments Measured at Fair Value

In fiscal year 2023 the Company initiated certain equity investments. The Company defined these equity investments as trading securities for which the changes in fair value were immediately recognized through net income in each quarter, respectively. The Company recorded unrealized loss on equity investment of $0.8 million for the quarter ended June 30, 2022.

Financial Instruments Not Measured at Fair Value

The Company’s financial instruments consist of cash and restricted cash, finance receivables, repossessed assets, and the Line of Credit. For the cash, finance receivables, the line of credit, and note payable, the carrying value approximates fair value.

Based on current market conditions, any new or renewed line of credit would contain pricing that approximates the Company’s current Line of Credit. Based on these market conditions, the fair value of the Line of Credit as of June 30, 2022 was estimated to be equal to the book value. The interest rate for the Line of Credit is a variable rate based on SOFR pricing options. Similarly, the fair value for the note payable as of March 31, 2022 was equal to the book value. The interest rate for the note payable was 1%.


	(In thousands)
	Fair Value Measurement Using
Description	Level 1		Level 2		Level 3		Fair Value		Carrying Value
Cash:
June 30, 2022	$	3,551	$	-	$	-	$	3,551	$	3,551
March 31, 2022	$	4,775	$	-	$	-	$	4,775	$	4,775
Equity investments:
June 30, 2022	$	6,449	$	-	$	-	$	6,449	$	6,449
March 31, 2022	$	-	$	-	$	-	$	-	$	-
Finance receivables:
June 30, 2022	$	-	$	-	$	169,380	$	169,380	$	169,380
March 31, 2022	$	-	$	-	$	168,600	$	168,600	$	168,600
Repossessed assets:
June 30, 2022	$	-	$	-	$	988	$	988	$	988
March 31, 2022	$	-	$	-	$	658	$	658	$	658
Line of credit:
June 30, 2022	$	-	$	-	$	70,000	$	70,000	$	70,000
March 31, 2022	$	-	$	-	$	55,000	$	55,000	$	55,000
Note Payable:
June 30, 2022	$	-	$	-	$	-	$	-	$	-
March 31, 2022	$	3,244	$	-	$	-	$	3,244	$	3,244

The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a nonrecurring basis. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3. Management has determined that this level to be most appropriate for finance receivables, repossessed assets, and the Line of Credit shown in the table above.

Level 2 assets are financial assets and liabilities that do not have regular market pricing, but whose fair value can be determined based on other data values or market pricing. Management has determined that this level to be most appropriate for the line of credit shown in the table above.

Level 1 assets are financial assets that have a regular mark to market mechanism for setting a fair market value. These assets and liabilities are considered to have readily observable, transparent prices and therefore a reliable, fair market value. Management has determined that this level to be most appropriate for cash, note payable, and equity investments.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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