Annual report [Section 13 and 15(d), not S-K Item 405]

FAIR VALUE MEASUREMENTS

v3.25.0.1
FAIR VALUE MEASUREMENTS
 12 Months Ended
Dec. 31, 2024
FAIR VALUE MEASUREMENTS  
FAIR VALUE MEASUREMENTS

NOTE 11. 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 which 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 December 31, 2024 and 2023 were as follows:

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​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2024

​

    

Level 1

    

Level 2

    

Level 3

    

Total

​

​

​

​

​

​

​

​

​

​

​

​

​

Assets

​

​

​

​

​

​

​

​

​

​

​

​

Designated forward exchange contracts

​

$

-

​

$

600

​

$

-

​

$

600

​

​

$

-

​

$

600

​

$

-

​

$

600

​

​

​

​

​

​

​

​

​

​

​

​

​

Liabilities

​

​

​

​

​

​

​

​

​

​

​

​

Contingent consideration liabilities

​

$

-

​

$

-

​

$

609

​

$

609

​

​

$

-

​

$

-

​

$

609

​

$

609

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2023

​

    

Level 1

    

Level 2

    

Level 3

    

Total

​

​

​

​

​

​

​

​

​

​

​

​

​

Assets

​

​

​

​

​

​

​

​

​

​

​

​

Designated forward exchange contracts

​

$

-

​

$

-

​

$

-

​

$

-

​

​

$

-

​

$

-

​

$

-

​

$

-

​

​

​

​

​

​

​

​

​

​

​

​

​

Liabilities

​

​

​

​

​

​

​

​

​

​

​

​

Designated forward exchange contracts

​

$

-

​

$

256

​

$

-

​

$

256

Contingent consideration liabilities

​

$

-

​

$

-

​

$

129

​

$

129

​

​

$

-

​

$

256

​

$

129

​

$

385

​

Derivative financial instruments are recorded at fair value based on current market pricing models.

The Company estimated the initial fair value of the contingent consideration liabilities primarily using the Monte-Carlo pricing model. Significant unobservable inputs used in the valuations of contingent consideration liabilities related to the acquisitions of RockyMounts and TRED included discount rates of 13.0% and 11.5%, respectively. 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) expense in the accompanying consolidated statements of comprehensive loss 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 net sales threshold required for the payment of the MAXTRAX Contingent Consideration was not met during the measurement period ended June 30, 2023.

The following table summarizes the changes in contingent consideration liabilities:

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​

​

​

​

​

​

​

​

​

​

​

​

​

RockyMounts

​

TRED

​

MAXTRAX

​

Total

​

​

​

​

​

​

​

​

​

​

​

​

Balance at December 31, 2022

$

-

​

$

-

​

$

1,595

​

$

1,595

​

​

​

​

​

​

​

​

​

​

​

​

Increase due to acquisition of TRED

​

-

​

​

121

​

​

-

​

​

121

Fair value adjustments

​

-

​

​

-

​

​

(1,565)

​

​

(1,565)

Impact of foreign currency exchange rates

​

-

​

​

8

​

​

(30)

​

​

(22)

​

​

​

​

​

​

​

​

​

​

​

​

Balance at December 31, 2023

$

-

​

$

129

​

$

-

​

$

129

​

​

​

​

​

​

​

​

​

​

​

​

Increase due to acquisition of RockyMounts

​

609

​

​

-

​

​

-

​

​

609

Fair value adjustments

​

-

​

​

(125)

​

​

-

​

​

(125)

Impact of foreign currency exchange rates

​

-

​

​

(4)

​

​

-

​

​

(4)

​

​

​

​

​

​

​

​

​

​

​

​

Balance at December 31, 2024

$

609

​

$

-

​

$

-

​

$

609

​

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 December 31, 2024, the net sales threshold required for the payment of the TRED Contingent Consideration is not expected to be met.

Items Measured at Fair Value on a Non-Recurring Basis

In assessing the recoverability of goodwill and indefinite-lived intangible assets, management estimates the fair value of each reporting unit using Level 3 inputs through a combination of the income approach based upon projected discounted cash flows of the reporting unit and the market approach. The fair value of indefinite-lived intangible assets is estimated using Level 3 inputs through the income approach, specifically the relief-from-royalty method. The fair values are based on revenue and cash flow projections, royalty rates, and discount rates. Impairment of goodwill was $36,264, $0, and $52,071 during the years ended December 31, 2024, 2023, and 2022, respectively. Impairment of indefinite-lived intangible assets was $8,545, $0, and $40,240 during the years ended December 31, 2024, 2023, and 2022, respectively. See Note 6 for additional information.