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Note 4 - Fair Value

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Fair Value Disclosures [Text Block]

4.	Fair Value

The following are categories of assets and liabilities measured at fair value on a recurring basis using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

		June 30, 2023
		(in thousands)

Description		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
Assets measured at fair value
Cash and cash equivalents⁽¹⁾		$	7,675			$	-			$	-			$	7,675
Restricted cash			1,354				-				-				1,354
Short-term investments			-				32,297				-				32,297
Total assets measured at fair value		$	9,029			$	32,297			$	-			$	41,326
Liabilities measured at fair value
Contingent consideration		$	-			$	-			$	1,564			$	1,564
Total liabilities measured at fair value		$	-			$	-			$	1,564			$	1,564

⁽¹⁾Includes investments that are readily convertible to cash with original maturities of 90 days or less.

		December 31, 2022
		(in thousands)

Description		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total
Assets measured at fair value
Cash and cash equivalents⁽¹⁾		$	6,329			$	-			$	-			$	6,329
Restricted cash			1,141				-				-				1,141
Short-term investments			-				64,195				-				64,195
Long-term investments			-				3,865				-				3,865
Total assets measured at fair value		$	7,470			$	68,060			$	-			$	75,530
Liabilities measured at fair value
Contingent consideration		$	-			$	-			$	1,256			$	1,256
Total liabilities measured at fair value		$	-			$	-			$	1,256			$	1,256

⁽¹⁾Includes investments that are readily convertible to cash with original maturities of 90 days or less.

The carrying values of accounts receivable, prepaid expenses, employee retention tax credit receivable, other current assets, accounts payable, accrued employee compensation and benefits, accrued expenses and other current liabilities, and deferred revenue as of June 30, 2023, and December 31, 2022, approximate their fair values due to the short-term nature of these items.

The Company’s financial liabilities measured at fair value on a recurring basis consisted of contingent consideration payable to Three Heads Investment S.r.l., related to the Company’s 2015 acquisition of the Senhance System from an assignor to Three Heads Investment S.r.l. (the “Senhance Acquisition”). Adjustments associated with the change in fair value of contingent consideration are included in the Company’s condensed consolidated statements of operations and comprehensive loss.

The following table presents quantitative information about the inputs and valuation methodologies used for the Company’s fair value measurements for contingent consideration utilizing a Monte-Carlo simulation as of June 30, 2023 and December 31, 2022:

	Valuation Methodology		Significant Unobservable Input		June 30, 2023				December 31, 2022

Contingent consideration	Probability weighted income approach		Milestone dates		2032				2032
			Discount rate			15.0%				16.5%
			Revenue volatility			45.0%				45.0%
			EUR-to-USD exchange rate			1.09				1.07

The following table presents the current and long-term portion of the contingent consideration as of June 30, 2023 and summarizes the change in fair value, as determined by Level 3 inputs for the contingent consideration for the six months ended June 30, 2023:

		Fair Value Measurement at Reporting Date (Level 3)
		(in thousands)
		Contingent consideration
Balance at December 31, 2022		$	1,256
Change in fair value			308
Balance at June 30, 2023		$	1,564

Reported as:
Current portion		$	-
Long-term portion			1,564
Balance at June 30, 2023		$	1,564

During the six months ended June 30, 2023, there were no transfers of assets or liabilities between Level 1, Level 2, or Level 3 of fair value categories.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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