Quarterly report pursuant to Section 13 or 15(d)

Fair Value of Financial Instruments

v3.23.3
Fair Value of Financial Instruments
 9 Months Ended
Sep. 30, 2023
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments

(6) Fair Value of Financial Instruments

The Company follows a three-level fair value hierarchy for fair value measurement recognition and disclosure purposes for its financial assets and financial liabilities that are remeasured and reported at fair value each reporting period. The Company measures certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents, warrants, and contingent consideration. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of financial assets and financial liabilities and their placement within the fair value hierarchy. Categorization is based on a three-tier valuation hierarchy, which prioritizes the inputs used in measuring fair value, as follows:

 

•
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities;
•
Level 2: Inputs that are other than quoted prices in active markets for identical assets and liabilities, inputs that are quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are either directly or indirectly observable; and
•
Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company has classified assets and liabilities measured at fair value on a recurring basis as follows:

 

 

 

Fair value measurements at reporting date using

 

 

 

Quoted prices
in active
markets for
identical
assets
(Level 1)

 

 

Significant
other
observable
inputs
(Level 2)

 

 

Significant
unobservable
inputs
(Level 3)

 

At September 30, 2023:

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

Cash equivalents (See Note 7)

 

 

 

 

 

 

 

 

 

Money market mutual funds

 

$

53

 

 

$

—

 

 

$

—

 

Total cash equivalents

 

$

53

 

 

$

—

 

 

$

—

 

Liabilities:

 

 

 

 

 

 

 

 

 

Derivative liability

 

$

—

 

 

$

—

 

 

$

1,659

 

Contingent consideration (See Note 5)

 

 

—

 

 

 

—

 

 

 

83

 

 

$

—

 

 

$

—

 

 

$

1,742

 

 

 

 

 

 

 

 

 

 

At December 31, 2022:

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

Cash equivalents (See Note 7)

 

 

 

 

 

 

 

 

 

Money market mutual funds

 

$

2,241

 

 

$

—

 

 

$

—

 

Total cash equivalents

 

$

2,241

 

 

$

—

 

 

$

—

 

 

As of September 30, 2023, the financial assets and liabilities recorded on the Consolidated Balance Sheets that are not measured at fair value on a recurring basis include accounts payable and accrued expenses, which approximate fair value due to the short-term nature of these instruments. The fair value of debt, where a quoted market price is not available, is evaluated based on, among other factors, interest rates currently available to the Company for debt with similar terms, remaining payments and considerations of the Company’s creditworthiness. The Company determined that the recorded book value of debt approximated fair value at September 30, 2023 due to the fact that the debt arrangements reflect market terms from recent transactions.

The reconciliation of liabilities measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows:

 

 

Contingent
Consideration and Derivative Liability

 

Balance at December 31, 2022

 

$

—

 

Acquisition of contingent consideration and derivative liability

 

 

2,494

 

Remeasurement

 

 

(752

)

Total at September 30, 2023

 

$

1,742

 

 

 

 

Current portion as of September 30, 2023

 

$

1,742

 

Long-term portion as of September 30, 2023

 

 

—

 

See Note 5 for discussion on contingent consideration.