Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v3.22.1
Fair Value Measurements
3 Months Ended
Mar. 31, 2022
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 5. Fair Value Measurements

In October 2018, upon the acquisition of certain technology, referred to as HunchLab, from Azavea, Inc., the Company recognized a contingent consideration liability classified within Level III of the fair value hierarchy because some of the inputs used in its measurement were neither directly nor indirectly observable. In February 2021, based on the relevant revenues earned during the three-year contingent consideration period, the Company paid $0.4 million, resulting in a reduction of the contingent consideration liability.

In November 2020, using a Monte Carlo Simulation approach, the Company estimated the fair value of the contingent consideration at the acquisition date of LEEDS to be $0.2 million. During the fourth quarter of fiscal 2021, the fair value of the contingent consideration was increased by $1.3 million based upon estimated 2022 revenue targets, representing an adjustment to the most likely outcome expected for the liability. There have been no changes in the assumptions or fair value of the LEEDS contingent consideration liability during the three months ended March 31, 2022.

 

In January 2022, using a Monte Carlo Simulation approach, the Company estimated the fair value of the contingent consideration liability classified within Level III of the fair value hierarchy at the acquisition of Forensic Logic to be $12.4 million.

The changes in the fair value of contingent consideration liability for the three months ended March 31, 2022 and 2021 are as follows (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Beginning balance

 

$

1,500

 

 

$

573

 

Payment of contingent consideration liability

 

 

 

 

 

(403

)

Change in fair value of contingent consideration

 

 

 

 

 

 

Contingent consideration - Forensic Logic ( Note 4 - Business Acquisitions)

 

 

12,400

 

 

 

 

Ending balance

 

$

13,900

 

 

$

170

 

 

There were no transfers into or out of Level III during the three months ended March 31, 2022 and 2021. As of March 31, 2022, contingent consideration of $6.7 million is included in Accrued expenses and other current liabilities in the condensed consolidated balance sheet as it is forecasted that the achievement of milestones will occur within the next 12 months, and $7.2 million is included in Other liabilities in the condensed consolidated balance sheet.