FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 8 – FAIR VALUE MEASUREMENTS

Accounting guidance on fair value measurements requires that financial assets and liabilities be classified and disclosed in one of the following categories of the fair value hierarchy:

Level 1 – Based on unadjusted quoted prices for identical assets or liabilities in an active market.

Level 2 – Based on observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3– Based on unobservable inputs that reflect the entity’s own assumptions about the assumptions that a market participant would use in pricing the asset or liability.

We did not have any transfers between levels during the periods presented.

The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of September 30, 2023 and December 31, 2022:

	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
	As of September 30, 2023
Assets
Money market funds	$	27,064	$	27,064	$	27,064	$	—	$	—
Total assets	$	27,064	$	27,064	$	27,064	$	—	$	—
Liabilities
Contingent consideration	$	18,375,672	$	18,375,672	$	3,719,999	$	—	$	14,655,673
Warrant liability		7,863		7,863		—		—		7,863
Total liabilities	$	18,383,535	$	18,383,535	$	3,719,999	$	—	$	14,663,536
		As of December 31, 2022
Assets
Money market funds	$	26,828	$	26,828	$	26,828	$	—	$	—
Total assets	$	26,828	$	26,828	$	26,828	$	—	$	—
Liabilities
Warrant liability		9,987		9,987		—		—		9,987
Total liabilities	$	9,987	$	9,987	$	—	$	—	$	9,987

The carrying amounts of accounts receivable, accounts payable and short-term debt approximated fair values as of September 30, 2023 and December 31, 2022 because of the relatively short maturity of these instruments. There were no other level 3 or level 1 assets or liabilities as of September 30, 2023

Money market funds – Cash equivalents of $27,064 and $26,828 as of September 30, 2023 and December 31, 2022, respectively, consisted of money market funds. Money market funds are classified as Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

Contingent consideration – The fair value of the contingent consideration related to the common stock true-up is derived through the quoted market price of our stock, which represents a Level 1 measurement within the fair value hierarchy. As a result of the merger transaction, the company assumed an Earn-out liability, which is remeasured each reporting period. Given the unobservable nature of the inputs, the fair value measurement of the deferred earn-out is deemed to use Level 3 inputs. The Earn-out liability was accounted for as a liability as of the date of the merger transaction and will be remeasured to fair value until the Earnout Triggering Events are met.

Warrant liability – The fair value of the warrant liability is derived through the Black Scholes method and is based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.

Other Fair Value Measurements

In addition to assets and liabilities that are recorded at fair value on a recurring basis, GAAP requires that, under certain circumstances, we also record assets and liabilities at fair value on a nonrecurring basis.

In connection with our acquisitions we used various valuation techniques to determine fair value, with the primary techniques being discounted cash flow analysis and the relief-from-royalty, a form of the multi-period excess earnings, which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy