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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2022
Fair Value Measurements |
Fair Value Measurements |
4. | Fair Value Measurements
The following tables present information about the Company's liabilities measured at fair value on a recurring basis in the condensed consolidated balance sheets:
|  |  |  |  | Quoted Prices in |  |  | Significant Other |  |  | Unobservable |
|  | SEPTEMBER 30, |  |  | Active Markets |  |  | Observable Inputs |  |  | Inputs |
Description |  | 2022 |  |  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |
Liabilities: |  | (Unaudited) |
Contingent consideration - cash settled |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Contingent consideration - warrants |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Contingent consideration - cash settled, net of current portion |  |  | 356,000 |  |  |  | - |  |  |  | - |  |  |  | 356,000 |
Contingent consideration - warrants, net of current portion |  |  | 31,000 |  |  |  | - |  |  |  | - |  |  |  | 31,000 |
Total liabilities measured and recorded at fair value |  | $ | 387,000 |  |  | $ | - |  |  | $ | - |  |  | $ | 387,000 |
|  |  |  |  | Quoted Prices in |  |  | Significant Other |  |  | Unobservable |
|  | DECEMBER 31, |  |  | Active Markets |  |  | Observable Inputs |  |  | Inputs |
Description |  | 2021 |  |  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration - cash settled |  | $ | 250,000 |  |  | $ | - |  |  | $ | - |  |  | $ | 250,000 |
Contingent consideration - warrants |  |  | 108,000 |  |  |  | - |  |  |  | - |  |  |  | 108,000 |
Contingent consideration - cash settled, net of current portion |  |  | 1,095,000 |  |  |  | - |  |  |  | - |  |  |  | 1,095,000 |
Contingent consideration - warrants, net of current portion |  |  | 252,000 |  |  |  | - |  |  |  | - |  |  |  | 252,000 |
Total liabilities measured and recorded at fair value |  | $ | 1,705,000 |  |  | $ | - |  |  | $ | - |  |  | $ | 1,705,000 |
The Company’s contingent consideration is categorized as Level 3 within the fair value hierarchy. The contingent consideration has been recorded at their fair value using a Monte Carlo simulation model. This model incorporates probability of achievement of certain milestones, risk-free rates and volatility. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management with the assistance of a third-party valuation specialist. Management estimates the fair value of the contingent consideration liability based on financial projections of ITA’s business and forecasted results, including revenue growth rates, costs and expenses, volatility, and discount rates. The Company evaluates, on a routine, periodic basis, the estimated fair value of the contingent consideration and quarterly changes in estimated fair value are reflected in other income in the consolidated statements of operations. Changes in the fair value of contingent consideration obligations may result from changes in changes of any of the key assumptions that are used. Changes in the estimated fair value of contingent consideration liability may have a material impact on the Company’s operating results. The following table presents a reconciliation of the change in fair value of contingent consideration for the three and nine months ended September 30, 2022:
Contingent consideration, December 31, 2021 |  | $ | 1,705,000 |
Change in fair value (gain) reported in the consolidated statement of operations |  |  | (301,000 | )
Contingent consideration settled - cash |  |  | (171,000 | )
Contingent consideration settled - warrants |  |  | (108,000 | )
Contingent consideration, March 31, 2022 |  |  | 1,125,000 |
Change in fair value (gain) reported in the consolidated statement of operations |  |  | (666,000 | )
Contingent consideration settled - cash |  |  | (79,000 | )
Contingent consideration, June 30, 2022 |  |  | 380,000 |
Change in fair value (loss) reported in the consolidated statement of operations |  |  | 7,000 |
Contingent consideration, September 30, 2022 |  | $ | 387,000 |

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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 -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
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