Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v3.23.1
Fair Value Measurements
 3 Months Ended
Mar. 31, 2023
Fair Value Measurements [Abstract]  
Fair Value Measurements NOTE 9. FAIR VALUE MEASUREMENTS

We measure certain financial assets and liabilities at fair value on a recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, under a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

Level 1 - inputs to the valuation methodology are quoted market prices for identical assets or liabilities in active markets.

Level 2 - inputs to the valuation methodology include quoted prices in markets that are not active or model inputs that are

observable either directly or indirectly for substantially the full term of the asset or liability.

Level 3 - inputs to the valuation methodology are based on prices or valuation techniques that are unobservable.

Items Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis at March 31, 2023 and December 31, 2022 were as follows:

March 31, 2023

Level 1

Level 2

Level 3

Total

Assets

Designated forward exchange contracts

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

Liabilities

Designated forward exchange contracts

$

-

$

207

$

-

$

207

$

-

$

207

$

-

$

207

December 31, 2022

Level 1

Level 2

Level 3

Total

Assets

Designated forward exchange contracts

$

-

$

357

$

-

$

357

$

-

$

357

$

-

$

357

Liabilities

Designated forward exchange contracts

$

-

$

6

$

-

$

6

Contingent consideration liabilities

$

-

$

-

$

1,595

$

1,595

$

-

$

6

$

1,595

$

1,601

Derivative financial instruments are recorded at fair value based on current market pricing models. No nonrecurring fair value measurements existed at March 31, 2023 and December 31, 2022.  

The Company estimated the initial fair value of the contingent consideration liabilities primarily using a series of call options. Significant unobservable inputs used in the valuation included discount rates ranging from 4.8% to 8.0%. Contingent consideration liabilities are subsequently remeasured at the estimated fair value at the end of each reporting period using financial projections of the acquired company, such as sales-based milestones and estimated probabilities of achievement, with the change in fair value recognized in contingent consideration benefit in the accompanying consolidated statements of comprehensive income for such period. We measure the initial liability and remeasure the liability on a recurring basis using Level 3 inputs as defined under authoritative guidance for fair value measurements.

The following table summarizes the changes in contingent consideration liabilities:

MAXTRAX

Balance at December 31, 2022

$

1,595

Fair value adjustments

(1,565)

Contingent consideration payments

-

Impact of foreign currency exchange rates

(30)

Balance at March 31, 2023

$

-

As the contingent consideration liabilities are remeasured to fair value each reporting period, significant increases or decreases in projected sales, discount rates or the time until payment is made could have resulted in a significantly lower or higher fair value measurement. Our determination of fair value of the contingent consideration liabilities could change in future periods based on our ongoing evaluation of these significant unobservable inputs. As of March 31, 2023, the net sales threshold required for the payment of the MAXTRAX contingent consideration is not expected to be met during the measurement period ended June 30, 2023.