Fair Value Measurements

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 3 – Fair Value Measurements

The FASB Codification defines fair value and establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy under the FASB Codification are: Level 1 – valuations that are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date; Level 2 – valuations that are based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly; and Level 3 – valuations that require inputs that are both significant to the fair value measurement and unobservable.

Cash and cash equivalents, which primarily include money market mutual funds were $3.3 million and $11.7 million as of June 30, 2023 and December 31, 2022, respectively. Marketable securities, which primarily include U.S. Treasuries and corporate bonds, were $21.7 million and $17.2 million as of June 30, 2023 and December 31, 2022, respectively. Our assets and liabilities that are measured at fair value on a recurring basis included the following (in thousands):

	Fair Value Measurement at June 30, 2023 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
	(Level 1)		(Level 2)		(Level 3)
Assets
Money market funds (included in    cash and cash equivalents)	$	2,692	$	—	$	—	$	2,692
Marketable securities		21,748		—		—		21,748
Note receivable		-		—		2,663		2,663
Total assets	$	24,440	$	—	$	2,663	$	27,103
Liabilities
Contingent acquisition payment	$	—	$	—	$	812	$	812
Total liabilities	$	—	$	—	$	812	$	812

	Fair Value Measurement at December 31, 2022 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
	(Level 1)		(Level 2)		(Level 3)
Assets
Money market funds (included in    cash and cash equivalents)	$	10,967	$	—	$	—	$	10,967
Marketable securities		17,229		—		—		17,229
Note receivable		—		—		2,601		2,601
Total assets	$	28,196	$	—	$	2,601	$	30,797
Liabilities
Contingent acquisition payment	$	—	$	—	$	812	$	812
Total liabilities	$	—	$	—	$	812	$	812

Our investments in marketable securities are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses, net of tax, reported as a component of accumulated other comprehensive loss in stockholders' equity.

Marketable securities by security type consisted of the following (in thousands):

	June 30, 2023:
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury notes and bonds	$	16,453	$	58	$	(106	)	$	16,405
Corporate bonds		5,386		—		(43	)		5,343
	$	21,839	$	58	$	(149	)	$	21,748

	December 31, 2022:
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury notes and bonds	$	13,389	$	24	$	(100	)	$	13,313
Corporate bonds		3,950		—		(34	)		3,916
	$	17,339	$	24	$	(134	)	$	17,229

The investment in the Note Receivable ("Note") with Omlis Limited ("Omlis"), a limited company incorporated and registered in England and Wales and the parent of MIRCAL Technologies Limited ("MIRACL"), and the total carrying value of the investment of $2.7 million and $2.6 million is representative of the fair value of the investment as of June 30, 2023 and December 31, 2022, respectively. During the three and six months ended June 30, 2023 and for the year ended December, 31, 2022, there were no changes in the underlying assumptions of the Note. The change in fair value during the three and six months ended June 30 2023 and for the year ended December 31, 2022 was the result of accrued interest.

In December 2021, we acquired 100% of the outstanding shares and acquired all of the assets and liabilities of FortressID for a purchase price of $3.4 million, which consisted of $2.5 million of cash consideration and contingent acquisition payments which were fair valued at $0.9 million at the acquisition date. The maximum contingent acquisition payments at the time of the acquisition was $4.0 million and required cash payments of up to $2.0 million for set revenue targets in 2022 and another $2.0 million for set revenue targets in 2023. No revenue targets were achieved in 2022 and the maximum contingent acquisition payment as of June 30, 2023 is $2.0 million. The fair value of our contingent acquisition payment was

determined using a Monte Carlo simulation and there was no material change in fair value from December 31, 2022 to June 30, 2023 due to no change in forecasted revenue and a de minimis impact from the present value factor.

Changes in the Note receivable balance consisted of the following (in thousands):

	Six Months Ended
	June 30, 2023
Balance as of December 31, 2022	$	2,601
Accrued interest		62
Balance as of June 30, 2023	$	2,663