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Fair Value Measurements
 12 Months Ended
Sep. 30, 2024
Fair Value Measurements [Abstract]  
Fair Value Measurements

6. FAIR VALUE MEASUREMENTS

The Company’s financial instruments consist principally of cash equivalents, short and long-term marketable securities. The fair value of a financial instrument is the amount that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows:

 

Level 1:

Inputs are based on quoted market prices for identical assets or liabilities in active markets at the measurement date.

Level 2:

Inputs include quoted prices for similar assets or liabilities in active markets and/or quoted prices for identical or similar assets or liabilities in markets that are not active near the measurement date.

Level 3:

Inputs include management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation.

 

The fair value of the Company’s cash equivalents and marketable securities were determined based on Level 1 and Level 2 inputs. The valuation techniques used to measure the fair value of the “Level 2” instruments were based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data. The valuation techniques used to measure the Term Loan debt and warrant liabilities were determined based on Level 3 inputs not observable in the market and significant to the instruments’ valuations. Refer to Note 12, Term Loan and Warrant Liabilities, for additional information regarding the valuation techniques and significant inputs used.

Other than the Term Loan and the warrant liabilities, the Company did not have any financial instruments in the Level 3 category as of September 30, 2024. The Company did not have any financial instruments in the Level 3 category as of September 30, 2023. The Company believes that the recorded values of its other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations. There have been no changes in Level 3 and no changes in valuation techniques for financial instruments measured at fair value on a recurring basis for the periods ended September 30, 2024 and September 30, 2023.

Instruments Measured at Fair Value on a Recurring Basis

Cash equivalents and marketable securities: The following tables present the Company’s cash equivalents and marketable securities’ costs, gross unrealized gains and losses, and fair value by major security type recorded as cash equivalents or short-term or long-term marketable securities as of September 30, 2024 and 2023. Unrealized gains and losses from the remeasurement of marketable securities are recorded in accumulated other comprehensive loss until recognized in earnings upon the sale or maturity of the security.

 

 

September 30, 2024

 

 

Cost Basis

 

 

Unrealized
Gain

 

 

Unrealized
Loss

 

 

Fair Value

 

 

Cash
Equivalents

 

 

Short-term
Securities

 

 

Long-term
Securities

 

Level 1:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

301

 

 

$

—

 

 

$

—

 

 

$

301

 

 

$

301

 

 

$

—

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 2:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 

401

 

 

 

—

 

 

 

—

 

 

 

401

 

 

 

152

 

 

 

—

 

 

 

249

 

U.S. government agency bonds

 

 

2,591

 

 

 

3

 

 

 

—

 

 

 

2,594

 

 

 

 

 

 

2,594

 

 

 

—

 

Municipal securities

 

 

2,127

 

 

 

2

 

 

 

—

 

 

 

2,129

 

 

 

—

 

 

 

2,129

 

 

 

—

 

Corporate bonds

 

 

3,219

 

 

 

3

 

 

 

—

 

 

 

3,222

 

 

 

—

 

 

 

3,222

 

 

 

—

 

Subtotal

 

 

8,338

 

 

 

8

 

 

 

—

 

 

 

8,346

 

 

 

152

 

 

 

7,945

 

 

 

249

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

8,639

 

 

$

8

 

 

$

—

 

 

$

8,647

 

 

$

453

 

 

$

7,945

 

 

$

249

 

 

 

September 30, 2023

 

 

Cost Basis

 

 

Unrealized
Gain

 

 

Unrealized
Loss

 

 

Fair Value

 

 

Cash
Equivalents

 

 

Short-term
Securities

 

 

Long-term
Securities

 

Level 1:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

2,307

 

 

$

—

 

 

$

—

 

 

$

2,307

 

 

$

2,307

 

 

$

—

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 2:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 

301

 

 

 

—

 

 

 

—

 

 

 

301

 

 

 

—

 

 

 

301

 

 

 

—

 

Municipal securities

 

 

926

 

 

 

—

 

 

 

(7

)

 

 

919

 

 

 

—

 

 

 

919

 

 

 

—

 

Corporate bonds

 

 

264

 

 

 

—

 

 

 

(3

)

 

 

261

 

 

 

—

 

 

 

261

 

 

 

—

 

Subtotal

 

 

1,491

 

 

 

—

 

 

 

(10

)

 

 

1,481

 

 

 

—

 

 

 

1,481

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

3,798

 

 

$

—

 

 

$

(10

)

 

$

3,788

 

 

$

2,307

 

 

$

1,481

 

 

$

—

 

 

The Company manages debt investments as a single portfolio of highly marketable securities that is intended to be available to meet current cash requirements. Historically, the gross unrealized losses related to the Company’s portfolio of available-for-sale debt securities were immaterial, and primarily due to normal market fluctuations and not due to increased credit risk or other valuation concerns. There were no gross unrealized losses on available-for-sale debt securities as of September 30, 2024, and historically, such gross unrealized losses have been temporary in nature. The Company believes that it is probable the principal and interest will be collected in accordance with the contractual terms. The debt investment portfolio is reviewed at least quarterly, or when there are changes in credit risks or other potential valuation concerns, to identify and evaluate whether an allowance for doubtful accounts for expected credit losses or impairment would be necessary. Factors considered in determining whether a loss is temporary include the magnitude of the decline in market value, the length of time the market value has been below cost (or adjusted cost), credit quality, and the Company’s ability and intent to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value.

As of September 30, 2024, there were no unrealized loss positions related to available-for-sale debt securities. The following table summarizes the fair value and gross unrealized losses related to available-for-sale debt securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2023:

 

 

 

As of September 30, 2023

 

 

 

In loss position < 12 months

 

 

In loss position > 12 months

 

 

Total in loss position

 

 

 

Fair Value

 

 

Gross Unrealized Loss

 

 

Fair Value

 

 

Gross Unrealized Loss

 

 

Fair Value

 

 

Gross Unrealized Loss

 

Certificates of deposit

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

U.S. government agency bonds

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Municipal securities

 

 

684

 

 

 

(2

)

 

 

235

 

 

 

(5

)

 

 

919

 

 

 

(7

)

Corporate bonds

 

 

—

 

 

 

—

 

 

 

261

 

 

 

(3

)

 

 

261

 

 

 

(3

)

 

$

684

 

 

$

(2

)

 

$

496

 

 

$

(8

)

 

$

1,180

 

 

$

(10

)

 

Instruments measured at Fair Value on a Non-Recurring Basis

Nonfinancial assets: Nonfinancial assets such as goodwill, other intangible assets, long-lived assets held and used, and right-of-use assets (“ROU assets”) are measured at fair value when there is an indicator of impairment and recorded at fair value only when impairment is recognized or for a business combination.

Goodwill and intangible assets are recognized at fair value during the period in which an acquisition is completed, from updated estimates during the measurement period, or when they are considered to be impaired. These non-recurring fair value measurements, primarily for goodwill and intangible assets acquired, were based on Level 3 inputs. The Company estimates the fair value of long-lived assets on a non-recurring basis based on a market valuation approach, engaging independent valuation experts to assist in the determination of fair value. There were no goodwill impairment charge for the year ended September 30, 2024 and September 30, 2023.

The following table presents nonfinancial assets that were subject to fair value measurement during the twelve months ended September 30, 2024. Certain intangible assets, operating lease ROU assets and goodwill are subject to foreign currency translation adjustments.

 

 

 

 

 

Fair Value Measurements at September 30, 2024

 

Carrying Value

 

Carrying Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

Gain (Loss)

 

Intangible assets from Evertel acquisition

 

$

2,550

 

 

$

—

 

 

$

—

 

 

$

2,550

 

 

$

—

 

Goodwill from Evertel acquisition

 

$

2,923

 

 

$

—

 

 

$

—

 

 

$

2,923

 

 

$

—

 

The following table presents nonfinancial assets that were subject to fair value measurement during the twelve months ended September 30, 2023. There were no business combinations during the twelve months ended September 30, 2023. Certain intangible assets, operating lease ROU assets and goodwill are subject to foreign currency translation adjustments.

 

 

 

 

 

Fair Value Measurements at September 30, 2023

 

Carrying Value

 

Carrying Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

Gain (Loss)

 

Operating Lease ROU Asset

 

$

79

 

 

$

—

 

 

$

—

 

 

$

79

 

 

$

—

 

Contingent consideration liability: In connection with the Evertel acquisition, the Company recorded a liability related to future performance criteria. A payment of up to $1,050 is payable based on future performance. The Company engaged independent valuation experts to assist in determining the fair value of the contingent consideration. The contingent liability was recorded at the fair value at the acquisition date and subject to subsequent remeasurement adjustment if performance criteria were not achieved. The change in fair value was recorded in other income/expense in the accompanying consolidated statement of operations. The change in the carrying amount of the contingent liability is as follows:

 

Balance as of acquisition date

 

$

890

 

Remeasurement adjustment

 

 

(16

)

Payment

 

 

(874

)

Balance as of September 30, 2024

 

$

—

 

The Company paid $219 in cash and issued 236,343 shares of common stock to the former owners of Evertel during the third quarter of 2024. As of September 30, 2024, there was no remaining contingent consideration liability.

 

Acquisition Holdback Liability: In connection with the Evertel acquisition, the Company recorded a holdback liability related to potential future misrepresentations and indemnifications against third-party claims. The holdback liability will be released twelve months from the closing date, subject to amounts withheld for actual, pending or potential claims. The holdback liability was recorded at the present value, which was the fair value at the acquisition date. The Company engaged independent valuation experts to assist in determining the present value of the holdback liability. The expected future payment was discounted using a rate representative of the Company’s payment risk and credit rating. Accretion is recorded in each subsequent reporting period based on the discount factor used to arrive at the original fair value. This change in fair value is recorded in other income/expense in the accompanying consolidated statement of operations. The changes in the carrying amount of the holdback liability is as follows:

 

Balance as of acquisition date

 

$

230

 

Accretion

 

 

20

 

Balance as of September 30, 2024

 

$

250