Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUE MEASUREMENTS

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FAIR VALUE MEASUREMENTS
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS

6. FAIR VALUE MEASUREMENTS

 

Cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their relative short-term nature. The Company’s financial liabilities reflected at fair value in the condensed consolidated financial statements include contingent consideration, warrant liability and note payable. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based upon observable inputs used in the valuation techniques, the Company is required to provide information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values into three broad levels as follows:

 

  Level 1: Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities.
     
  Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.
     
  Level 3: Valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

 

 

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The valuation methodologies used for the Company’s financial instruments measured on a recurring basis at fair value, including the general classification of such instruments pursuant to the valuation hierarchy, is set forth in the tables below:

 

    As of September 30, 2024     Fair Value Measurements  
          Fair     As of September 30, 2024  
    Amount     Value     Level 1     Level 2     Level 3  
                               
Liabilities:                                        
Contingent consideration:                                        
Asuragen (1)   $ -     $ -     $ -     $ -     $ -  
Note payable:                                        
BroadOak loan     5,900       5,688       -       -       5,688  
    $ 5,900     $ 5,688     $ -     $ -     $ 5,688  

 

(1) See Note 9, Other Accrued Expenses

 

    As of December 31, 2023     Fair Value Measurements  
    Carrying     Fair     As of December 31, 2023  
    Amount     Value     Level 1     Level 2     Level 3  
Liabilities:                              
Contingent consideration:                                        
Asuragen (1)   $ 453     $ 453     $ -     $ -     $ 453  
Note payable:                                        
BroadOak loan     10,000       9,343       -       -       9,343  
    $ 10,453     $ 9,796     $ -     $ -     $ 9,796  

 

(1) See Note 9, Other Accrued Expenses

 

In connection with the acquisition of certain assets from Asuragen, Inc., the Company recorded contingent consideration related to contingent payments and other revenue-based payments. The Company determined the fair value of the contingent consideration based on a probability-weighted income approach derived from revenue estimates. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement.

 

In connection with the Term Loan, the Company records the loan at fair value. The fair value of the loan is determined by a probability-weighted approach regarding the loan’s change in control feature. See Note 13, Notes Payable, for more details. The fair value measurement is based on the estimated probability of a change in control and thus represents a Level 3 measurement.

 

 

A roll forward of the carrying value of the Contingent Consideration Liability and BroadOak Loan to September 30, 2024 is as follows:

 

                            Adjustment        
                            to Fair        
    December 31, 2023     Payments     Transferred to Accrued Expenses     Accretion/Interest Accrued    

Value/

Mark to Market

     September 30, 2024  
                                     
Asuragen   $                   453     $ -     $ (487 )   $ 34     $ -     $                         -  
                                                 
BroadOak loans     9,343       (4,100 )     -       -       445       5,688  
                                                 
    $ 9,796     $ (4,100 )   $ (487 )   $ 34     $ 445     $ 5,688  

 

Certain of the Company’s non-financial assets, such as intangible assets are measured at fair value on a nonrecurring basis when there is an indicator of impairment and recorded at fair value only when an impairment charge is recognized.