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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2023
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Note 3 – Fair Value Measurements The FASB Codification defines fair value and establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy under the FASB Codification are: Level 1 – valuations that are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date; Level 2 – valuations that are based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly; and Level 3 – valuations that require inputs that are both significant to the fair value measurement and unobservable. Cash and cash equivalents, which primarily include money market mutual funds were $5.7 million and $11.7 million as of September 30, 2023 and December 31, 2022, respectively. Marketable securities, which primarily include U.S. Treasuries and corporate bonds, were $21.8 million and $17.2 million as of September 30, 2023 and December 31, 2022, respectively. Our assets and liabilities that are measured at fair value on a recurring basis included the following (in thousands):
|  | Fair Value Measurement at September 30, 2023 Using: |
|  | Quoted Prices in Active Markets for Identical Assets |  |  | Significant Other Observable Inputs |  |  | Significant Unobservable Inputs |  |  | Total |
|  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Money market funds (included in cash and cash equivalents) |  | $ | 3,904 |  |  | $ | — |  |  | $ | — |  |  | $ | 3,904 |
Marketable securities |  |  | 21,839 |  |  |  | — |  |  |  | — |  |  |  | 21,839 |
Note receivable |  |  | - |  |  |  | — |  |  |  | 2,695 |  |  |  | 2,695 |
Total assets |  | $ | 25,743 |  |  | $ | — |  |  | $ | 2,695 |  |  | $ | 28,438 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Contingent acquisition payment |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Total liabilities |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
|  | Fair Value Measurement at December 31, 2022 Using: |
|  | Quoted Prices in Active Markets for Identical Assets |  |  | Significant Other Observable Inputs |  |  | Significant Unobservable Inputs |  |  | Total |
|  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Money market funds (included in cash and cash equivalents) |  | $ | 10,967 |  |  | $ | — |  |  | $ | — |  |  | $ | 10,967 |
Marketable securities |  |  | 17,229 |  |  |  | — |  |  |  | — |  |  |  | 17,229 |
Note receivable |  |  | — |  |  |  | — |  |  |  | 2,601 |  |  |  | 2,601 |
Total assets |  | $ | 28,196 |  |  | $ | — |  |  | $ | 2,601 |  |  | $ | 30,797 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Contingent acquisition payment |  | $ | — |  |  | $ | — |  |  | $ | 812 |  |  | $ | 812 |
Total liabilities |  | $ | — |  |  | $ | — |  |  | $ | 812 |  |  | $ | 812 |
Our investments in marketable securities are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses, net of tax, reported as a component of accumulated other comprehensive income (loss) in stockholders' equity. Marketable securities by security type consisted of the following (in thousands):
|  | September 30, 2023: |
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
U.S. Treasury notes and bonds |  | $ | 16,501 |  |  | $ | 80 |  |  | $ | (106 | ) |  | $ | 16,475 |
Corporate bonds |  |  | 5,386 |  |  |  | 4 |  |  |  | (26 | ) |  |  | 5,364 |
|  | $ | 21,887 |  |  | $ | 84 |  |  | $ | (132 | ) |  | $ | 21,839 |
|  | December 31, 2022: |
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
U.S. Treasury notes and bonds |  | $ | 13,389 |  |  | $ | 24 |  |  | $ | (100 | ) |  | $ | 13,313 |
Corporate bonds |  |  | 3,950 |  |  |  | — |  |  |  | (34 | ) |  |  | 3,916 |
|  | $ | 17,339 |  |  | $ | 24 |  |  | $ | (134 | ) |  | $ | 17,229 |
The investment in the Note Receivable ("Note") with Omlis Limited ("Omlis"), a limited company incorporated and registered in England and Wales and the parent of MIRCAL Technologies Limited ("MIRACL"), and the total carrying value of the investment of $2.7 million and $2.6 million is representative of the fair value of the investment as of September 30, 2023 and December 31, 2022, respectively. During the three and nine months ended September 30, 2023 and for the year ended December, 31, 2022, there were no changes in the underlying assumptions of the Note. The change in fair value during the three and nine months ended September 30, 2023 and for the year ended December 31, 2022 was the result of accrued interest. In connection with the sale of the Note, Omlis granted us a right of first refusal for 18 months with respect to any proposed sale by Omlis of equity securities constituting 20% or more of the outstanding voting power of Omlis or all or substantially all of the assets of Omlis or any of its material subsidiaries. Also, in connection with the sale of the Note, Omlis issued the Company a warrant, which allowed us to purchase up to 8% of the total equity shares in Omlis at a price per share of $33.91. Both the right of first refusal and warrant expired as of September 11, 2023 with no action taken. In December 2021, we acquired 100% of the outstanding shares and acquired all of the assets and liabilities of FortressID for a purchase price of $3.4 million, which consisted of $2.5 million of cash consideration and contingent acquisition payments which were fair valued at $0.9 million at the acquisition date. The maximum contingent acquisition payments at the time of the acquisition was $4.0 million and required cash payments of up to $2.0 million for set revenue targets in 2022 and another $2.0 million for set revenue targets in 2023. No revenue targets were achieved in 2022. The maximum contingent acquisition payment as of September 30, 2023 was $2.0 million. We determined that as of September 30, 2023 the fair value of the contingent acquisition payment was $0 and recorded a $0.8 million gain in the quarter ended September 30, 2023. We determined a remote probability of reaching the revenue targets in 2023 and therefore determined the contingent acquisition payment to have $0 value at September 30, 2023. Changes in the Note receivable balance consisted of the following (in thousands):
|  | Nine Months Ended |
|  | September 30, 2023 |
Balance as of December 31, 2022 |  | $ | 2,601 |
Accrued interest |  |  | 94 |
Balance as of September 30, 2023 |  | $ | 2,695 |

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- 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 -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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