XML 22 R11.htm IDEA: XBRL DOCUMENT
v3.22.2.2

Fair Value Measures | 9 Months Ended
--- | ---
Sep. 30, 2022
Fair Value Disclosures [Abstract] |
Fair Value Measures | Note 4 — Fair Value Measures Fair Values of Assets and Liabilities In accordance with ASC Topic 820 “Fair Value Measurement”, the Company measures fair value at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the assumptions that market participants would use in pricing an asset or liability (the inputs) are based on a tiered fair value hierarchy consisting of three levels, as follows:
| Level 1: | Observable inputs such as quoted prices for identical assets or liabilities in active markets.
| Level 2: | Other inputs that are observable directly or indirectly, such as quoted prices for similar instruments in active markets or for similar markets that are not active.
| Level 3: | Unobservable inputs for which there is little or no market data which require the Company to develop its own assumptions about how market participants would price the asset or liability.
Valuation techniques for assets and liabilities include methodologies such as the market approach, the income approach, or the cost approach, and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are only utilized to the extent that observable inputs are not available or cost-effective to obtain. At September 30, 2022 and December 31, 2021, the Company’s assets and liabilities measured at fair value on a recurring basis were as follows:
|  | September 30, 2022 |  |  | December 31, 2021 |
|  | Fair Value Measurements Using Input Types |  |  | Fair Value Measurements Using Input Types |
(In thousands) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mutual funds (included in cash and cash equivalents) |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 178 |  |  | $ | — |  |  | $ | — |  |  | $ | 178 |
Municipal bonds |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 9,961 |  |  |  | — |  |  |  | — |  |  |  | 9,961 |
Corporate bonds |  |  | 381 |  |  |  | — |  |  |  | — |  |  |  | 381 |  |  |  | 34,589 |  |  |  | — |  |  |  | — |  |  |  | 34,589 |
Total assets |  | $ | 381 |  |  | $ | — |  |  | $ | — |  |  | $ | 381 |  |  | $ | 44,728 |  |  | $ | — |  |  | $ | — |  |  | $ | 44,728 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration |  | $ | — |  |  | $ | — |  |  | $ | 643 |  |  | $ | 643 |  |  | $ | — |  |  | $ | — |  |  | $ | 6,137 |  |  | $ | 6,137 |
Warrant liabilities |  |  | — |  |  |  | — |  |  |  | 971 |  |  |  | 971 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total liabilities |  | $ | — |  |  | $ | — |  |  | $ | 1,614 |  |  | $ | 1,614 |  |  | $ | — |  |  | $ | — |  |  | $ | 6,137 |  |  | $ | 6,137 |
Fair Value of Financial Instruments The Company has certain financial instruments which consist of cash and cash equivalents, marketable securities, warrant liabilities, and contingent consideration. Fair value information for each of these instruments is as follows:
| ● | Cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and deferred revenue liabilities approximate their fair values based on the short-term nature of these instruments.
| ● | Marketable securities classified as current held-to-maturity securities are recorded at amortized cost, which at September 30, 2022, approximated fair value.
| ● | The Company’s deferred consideration was recorded in connection with acquisitions during the first quarter of 2022 and fiscal 2021 using an estimated fair value discount at the time of the transaction. As of September 30, 2022 and December 31, 2021, the carrying value of the deferred consideration approximated fair value, respectively.
| ● | The Company’s Warrant Liabilities are marked-to-market each reporting period with the changes in fair value of warrant liability are recorded to other income (expense), net in the accompanying consolidated statements of operations until the warrants are exercised. The fair value of the warrant liability is estimated using a Black-Scholes option-pricing model.
Marketable Securities As of September 30, 2022, the Company held investments in mutual funds, municipal bonds and corporate bonds. The Company records mutual funds at fair value in the accompanying consolidated balance sheet as part of cash and cash equivalents. The municipal and corporate bonds are considered held-to-maturity securities and are recorded at amortized cost in the accompanying consolidated balance sheet. The fair values of these investments were estimated using recently executed transactions and market price quotations. The Company considers current assets as those investments which will mature within the next 12 months including, interest receivable on long-term bonds. The composition of the Company’s marketable securities are as follows:
(In thousands) |  | September 30, 2022 |  |  | December 31, 2021 |
Current marketable securities |  |  |  |  |  |
Municipal bonds |  | $ | — |  |  | $ | 9,961 |
Corporate bonds |  |  | 381 |  |  |  | 34,589 |
|  | $ | 381 |  |  | $ | 44,550 |
At September 30, 2022, marketable securities consisted of the following:
(In thousands) |  | Amortized cost |  |  | Unrealized loss |  |  | Estimated fair value |
Current marketable securities (due within 1 year) |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  | $ | 381 |  |  | $ | (10 | ) |  | $ | 371 |
|  | $ | 381 |  |  | $ | (10 | ) |  | $ | 371 |
At December 31, 2021, marketable securities consisted of the following:
(In thousands) |  | Amortized cost |  |  | Unrealized loss |  |  | Estimated fair value |
Current marketable securities (due within 1 year) |  |  |  |  |  |  |  |  |
Municipal bonds |  | $ | 9,961 |  |  | $ | (9 | ) |  | $ | 9,952 |
Corporate bonds |  |  | 34,589 |  |  |  | (72 | ) |  |  | 34,517 |
|  | $ | 44,550 |  |  | $ | (81 | ) |  | $ | 44,469 |
Contingent Consideration The Company has classified its net liability for contingent earn-out considerations to the sellers relating to one acquisition completed during the first quarter of 2022 and two acquisitions completed during fiscal 2021. The fair value for the contingent consideration associated with these acquisitions is within Level 3 of the fair value hierarchy because the associated fair value is determined using significant unobservable inputs, which included the key assumptions to model future revenue, costs of goods sold and operating expense projections. A description of the Company’s acquisitions completed during the first quarter of 2022 and fiscal 2021 are included within Note 8 – Business Combinations, included elsewhere in the notes to the consolidated financial statements.
(In thousands) |  | Nine Months Ended September 30, 2022 |  |  | Year Ended December 31, 2021 |
Contingent consideration – beginning of period |  | $ | 6,137 |  |  | $ | — |
Accrued contingent consideration |  |  | 1,420 |  |  |  | 4,725 |
Accretion of contingent consideration |  |  | 145 |  |  |  | — |
Payments made on contingent liabilities |  |  | (5,550 | ) |  |  | — |
Change in estimated fair value |  |  | (1,509 | ) |  |  | 1,412 |
Contingent consideration – end of period |  | $ | 643 |  |  | $ | 6,137 |
The Company included contingent consideration within accrued expenses and other current liabilities in its consolidated balance sheets as of September 30, 2022 and December 31, 2021, respectively. See below for additional information related to each acquisition’s contingent consideration. Contingent Consideration – PurePressure The Company, in its review of actual revenue performance as compared to its originally projected revenue estimates, noted that PurePressure’s revenue trend is materially below the originally estimated revenue trends incorporated into the Company’s original fair value estimates at the time of the acquisition. As a result, the Company has reduced its fair value estimate of achievement for PurePressure’s first earn-out period. During the third quarter ended September 30, 2022, the Company reduced the estimated fair value of the contingent consideration liability associated with PurePressure’s first earn-out period by approximately $602 thousand. As required by ASC Topic 805 Business Combination (“ASC805”), the change in contingent consideration was recorded as a reduction in operating expenses during the third quarter of 2022. Contingent Consideration – Lab Society The Company, in its review of actual revenue performance as compared to its originally projected revenue estimates, noted that Lab Society’s revenue trend is materially below the originally estimated revenue trends incorporated into the Company’s original fair value estimates at the time of the acquisition. As a result, the Company has reduced its fair value estimate of achievement for Lab Society’s first earn-out period. During the second quarter ended June 30, 2022, the Company reduced the estimated fair value of the contingent consideration liability associated with Lab Society’s first earn-out period by approximately $1.0 million. As required by ASC805, the change in contingent consideration was recorded as a reduction in operating expenses during the second quarter of 2022. Contingent Consideration – Precision and Cascade The earn-out period for the potential contingent consideration to be earned by the former members of Precision and Cascade concluded on December 31, 2021. The Company, during the second quarter of 2022, increased the amount of the contingent consideration earned by the former members of Precision and Cascade by approximately $121 thousand, to reflect the final contingent consideration amount due. This amount, as required by ASC805, was recorded as an increase in operating expenses during the second quarter of 2022. During the three-month period ended September 30, 2022, the Company made the final payment on the contingent consideration of approximately $5.6 million to the members of Precision and Cascade. Additional information regarding the Company’s final payment to Precision and Cascade may be found in Note 8 – Business Combination, included elsewhere in the notes to the consolidated financial statements. Warrant liabilities The estimated fair value of the Warrant Liabilities on September 30, 2022 is determined using Level 3 inputs. Inherent in a Black-Scholes option-pricing model are assumptions used in calculating the estimated fair values represent the Company’s best estimate. However, inherent uncertainties are involved. If factors or assumptions change, the estimated fair values could be materially different. The following table summarizes the Company’s assumptions used in the valuation of Warrant Liabilities for the nine months ended September 30, 2022:
Stock price at issuance |  | $ | 0.44 |
Option exercise price |  | $ | 1.23-$2.15 |
Expected term (Years) |  |  | 5.50 |
Volatility |  |  | 40.00 | %
Discount rate (Treasury yield) |  |  | 0.00%-4.06 | %
The following table sets forth a summary of the changes in the fair value of the Level 3 Warrant Liabilities for the nine months ended September 30, 2022:
(In thousands) |  | Nine Months Ended September 30, 2022 |
Warrant liabilities – beginning of period |  | $ | — |
Initial fair value of warrant liabilities |  |  | 6,657 |
Change in estimated fair value |  |  | (5,686 | )
Warrant liabilities – end of period |  | $ | 971 |

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration