Note 3 - Fair Value Measurement

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Fair Value Disclosures [Text Block]

3 . Fair Value Measurement

In accordance with FASB ASC Topic

820,

“Fair Value Measurements and Disclosures,” (“ASC Topic

820”

), the Company measures its cash and cash equivalents and investments at fair value on a recurring basis. The company also measures certain assets and liabilities at fair value on a non-recurring basis when applying acquisition accounting. ASC Topic

820

clarifies that fair value is 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. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC Topic

820

establishes a

three

-tier value fair hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level

1

– Observable inputs that reflect quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level

2

– Observable inputs other than quoted prices included in Level

1

for similar assets or liabilities, quoted prices in markets that are

not

active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

Level

3

– Unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

As of

December 31, 2019,

the Company valued the Astero and CBS contingent consideration and warrant liabilities at fair value. As of

December 31, 2018,

the Company valued warrant liabilities at fair value.

There were

no

remeasurements to fair value during the year ended

December 31, 2019

of financial assets and liabilities that are

not

measured at fair value on a recurring basis.

The following tables set forth the Company’s financial assets and liabilities measured at fair value on a recurring basis as of

December 31, 2019

and

December 31, 2018,

based on the

three

-tier fair value hierarchy:

(In thousands) 

 

As of December 31, 2019	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	6,448	$	—	$	—	$	6,448
Convertible debt held at fair value		—		—		1,000		1,000
Total		6,448		—		1,000		7,448
Liabilities:
Contingent consideration - business combinations		—		—		1,914		1,914
Warrant liability	$	—	$	—	$	39,602	$	39,602
Total		—		—		41,516		41,516

As of December 31, 2018	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	30,657	$	—	$	—	$	30,657
Liabilities:
Warrant liability (restated)	$	—	$	—	$	28,516	$	28,516

The fair values of money market funds classified as Level

1

were derived from quoted market prices as active markets for these instruments exist. The fair values of investments and contingent consideration classified as Level

3

were derived from management assumptions (see Note

1

– “

Organization and Significant Accounting Policies.

”) There have been

no

transfers of assets or liabilities between the fair value measurement levels. The following table presents the changes in investments held at fair value which are measured using Level

3

inputs:

	Year ended December 31,
(In thousands)	2019
Beginning balance	$	—
Purchases		1,000
Change in fair value recognized in net income		—
Total	$	1,000

The following table presents the changes in fair value of contingent consideration liabilities which are measured using Level

3

inputs:

	Year ended December 31,
(In thousands)	2019
Beginning balance	$	—
Additions		2,347
Change in fair value recognized in net income		50
Payments earned, reclassified to accrued liabilities		(483	)
Total	$	1,914

The following table presents the changes in fair value of warrant liabilities which are measured using Level

3

inputs:

(In thousands)	Year ended December 31, 2019			Year ended December 31, 2018 (restated)
Beginning balance (as restated)	$	28,516		$	19,623
Exercised warrants		(1,749	)		(19,378	)
Change in fair value recognized in net income		12,835			28,271
Ending balance	$	39,602		$	28,516