XML 21 R10.htm IDEA: XBRL DOCUMENT
v3.23.2

FAIR VALUE OF FINANCIAL INSTRUMENTS | 6 Months Ended
--- | ---
Jun. 30, 2023
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] |
FAIR VALUE OF FINANCIAL INSTRUMENTS |
4) | FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between willing market participants. A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:
| ● | Level 1 Inputs – Valued based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
| ● | Level 2 Inputs – Valued based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.
| ● | Level 3 Inputs – Valued based on inputs for which there is little or no market value, which require the reporting entity to develop its own assumptions.
The carrying amounts reported on the balance sheet for cash and cash equivalents, other receivable, prepaid assets and other current assets, accounts payable and accrued expenses, other current liabilities and other liabilities approximate fair value based due to their short maturities. The following tables summarize the liabilities that are measured at fair value as of June 30, 2023 and December 31, 2022 (in thousands):
Description |  | Level |  |  | June 30, 2023 |  |  | December 31, 2022 |
Liabilities: |  |  |  |  |  |  |  |  |
Warrant liabilities - Common Warrants |  |  | 3 |  |  | $ | 185 |  |  | $ | 331 |
Market Cap Contingent Consideration |  |  | 3 |  |  | $ | 107 |  |  | $ | - |
The Company has Common Warrants related to the March PIPE, as defined and discussed in Note 12, that are recognized as liabilities. The Company uses a Black-Scholes option pricing model to estimate the fair value of the Common Warrants, which is considered a Level 3 fair value measurement. The Company also has contingent consideration liabilities related to the Exacis Acquisition, as discussed in Note 3. The Market Cap Contingent Consideration is indexed to or settled in the Company’s own shares. As a result, the Company classified the Market Cap Contingent Consideration as a liability measured at fair value because the financial instrument embodies a conditional obligation (the Company would only issue the shares on the condition that the market capitalization thresholds are met), and at inception, the monetary value of the obligation is based solely on a fixed monetary amount ($2.0 million of shares for each target), which will be settleable with a variable number of the Company’s shares. The Company uses a Monte Carlo simulation model to estimate the fair value of the Market Cap Contingent Consideration, which is considered a Level 3 fair value measurement. As of the acquisition date, the fair value of the Market Cap Contingent Consideration was approximately $0.2 million. The Company remeasured the fair value of the Market Cap Contingent Consideration as of June 30, 2023, which resulted in a decrease of $0.1 million to approximately $0.1 million. The following assumptions were used in the fair valuation calculation as of the acquisition date and June 30, 2023:
|  | Acquisition Date |  |  | June 30, 2023 |
Stock price |  | $ | 3.00 |  |  | $ | 2.26 |
Risk-free rate |  |  | 3.58 | % |  |  | 4.46 | %
Volatility |  |  | 100 | % |  |  | 90 | %
Dividend yield |  |  | 0 | % |  |  | 0 | %
Expected term |  | 3.0 years |  |  | 2.82 years |
The License Contingent Consideration is to be settled in cash and is generally recognized when the liability is probable and estimable. As of the acquisition date and as of June 30, 2023, the Company concluded that paying the License Contingent Consideration was not probable or estimable. Therefore, there was no applicable contingent consideration liability recognized. Certain inputs used in this Black-Scholes and Monte Carlo pricing models may fluctuate in future periods based upon factors that are outside of the Company’s control. A significant change in one or more of these inputs used in the calculation of the fair value may cause a significant change to the fair value of the Company’s warrant liabilities or contingent consideration liabilities, which could also result in material non-cash gains or losses being reported in the Company’s consolidated statement of operations. The following table presents the changes in the warrant liabilities from January 1, 2023 through June 30, 2023, as well as the initial measurement of the Market Cap Contingent Consideration as of the acquisition date of the Exacis Assets and the changes in such contingent consideration as of June 30, 2023 (in thousands):
|  | Warrant Liabilities |  |  | Contingent Consideration |
Fair value at January 1, 2023 |  | $ | 331 |  |  | $ | - |
Initial measurement of Market Cap Contingent Consideration |  |  | - |  |  |  | 225 |
Change in fair value |  |  | (146 | ) |  |  | (118 | )
Fair value at June 30, 2023 |  | $ | 185 |  |  | $ | 107 |

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 -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
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration