The Company’s money market funds are categorized as Level 1 within the fair value hierarchy. As June 30, 2024 and 2023, the Company’s cash and cash equivalents were as follows:

As of June 30, 2024 and 2023, the Company’s contingent consideration liabilities related to acquisitions are categorized as Level 3 within the fair value hierarchy. Contingent consideration was valued at June 30, 2024 using unobservable inputs, primarily internal revenue forecasts. Contingent consideration was valued at the time of acquisitions and at June 30, 2023 using unobservable inputs and have included using the Monte Carlo simulation model. This model incorporates revenue volatility, internal rate of return, and a risk-free rate. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management with the assistance, at times, of a third-party valuation specialist.

As of June 30, 2024, the Company’s contingent consideration liabilities current and non-current balances were as follows:

S5D has significantly underperformed revenue expectations that were employed to determine fair value at acquisition. The possibility of achieving any remaining revenue targets to trigger additional consideration is remote and all earned consideration has been paid. Accordingly, there is no future contingent consideration recorded related to the S5D acquisition as of June 30, 2024. The range of potential additional contingent consideration related to S5D in excess of the amounts reflected on the balance sheet at June 30, 2024 is zero to $10.0 million (which is considered remote and no provision is made for it) in the form of Company common stock (with share conversion at a $7.00 per share floor price). The contingent consideration payout period ends January 2025.

Revenue projections for BLI are expected to trigger potential additional gross consideration of $3.0 million payable in cash over the remainder of the contingent consideration payout period, ending in July 2025. The possibility of achieving any remaining revenue targets to trigger additional consideration is remote. Accordingly, contingent consideration remaining for the BLI acquisition at June 30, 2024 is calculated at the present value of the estimated remaining $3.0 million cash discounted at risk-free interest rates from the estimated payment dates. The range of potential additional contingent consideration related to BLI in excess of the amounts reflected on the balance sheet at June 30, 2024 is zero to $15.0 million (which is considered remote and no provision is made for it), of which up to $7.5 million in cash and the remainder in the form of Company common stock (with share conversion at a $7.00 per share floor price).

The change in fair value of contingent consideration for S5D and BLI for the year ended June 30, 2024 was a non-cash gain of approximately $2.35 million and $1.87 million, respectively, included as change in fair value of acquisition contingent consideration in the consolidated statements of operations. This was primarily driven by the decrease in the Company’s common stock price between the measurement dates and reduced revenue projections. In addition, a payment was made to the sellers of S5D for consideration in March 2024 in the form of Company common stock, fair valued at $0.81 million; and a $1.49 million cash payment was made to the sellers of BLI for consideration in May 2024.

The change in fair value of contingent consideration for XR Terra, LLC (“XRT”) for the year ended June 30, 2024 reflects payouts to the sellers of XRT for consideration recorded as of June 30, 2023. These payouts were made in September 2023 and January 2024 in the form of Company common stock, fair valued at $0.17 million. In addition, the change reflects non-cash gains of zero and approximately $0.08 million, respectively, for the year ended June 30, 2024 included as change in fair value of acquisition contingent consideration in the consolidated statements of operations reflecting a decrease in the Company’s common stock price between the measurement dates. Lastly, the change reflects an accrual for anticipated achievement of an additional revenue threshold though the end of the contingent consideration period September 2024. This is included as change in fair value of acquisition contingent consideration in the consolidated statements of operations for the year ended June 30, 2024, fair valued at $0.04 million and payable in the form of Company common stock (with share conversion at a $7.00 per share floor price). The range of potential additional contingent consideration related to XRT in excess of the amounts reflected on the balance sheet at June 30, 2024 is zero to $0.75 million (which is considered remote and no provision is made for it) payable in the form of Company common stock (with share conversion at a $7.00 per share floor price).

The range of potential contingent consideration related to the previous divestiture of AUGGD assets at June 30, 2024 is zero to $0.40 million (which is considered remote and no provision is made for it) payable in the form of Company common stock (with share conversion at a $7.00 per share floor price). The contingent consideration payout period ends December 2024.

As of June 30, 2023, the Company’s contingent consideration liabilities current and non-current balances were as follows:

	Contingent Consideration at Purchase Date		Consideration Paid			Changes in Fair Value			Fair Value		Contingent Consideration
	As of June 30, 2023
	Contingent Consideration at Purchase Date		Consideration Paid			Changes in Fair Value			Fair Value		Contingent Consideration
Level 3:
Contingent consideration, current - S5D	$	2,060,300	$	(1,359,001	)	$	1,207,501		$	1,908,800	$	1,908,800
Contingent consideration, current - BLI		1,264,200		-			1,693,500			2,957,700		2,957,700
Contingent consideration, current - AUGGD		-		(568,571	)		568,571			-		-
Contingent consideration, current - XRT		-		(331,786	)		586,077			254,291		254,291
Total contingent consideration, current portion	$	3,324,500	$	(2,259,358	)	$	4,055,649		$	5,120,791	$	5,120,791

Level 3:
Contingent consideration, non-current - S5D	$	7,108,900	$	(2,050,000	)	$	(3,807,200	)	$	1,251,700	$	1,251,700
Contingent consideration, non-current - BLI		6,060,700		-			(2,807,400	)		3,253,300		3,253,300
Total contingent consideration, net of current portion	$	13,169,600	$	(2,050,000	)	$	(6,614,600	)	$	4,505,000	$	4,505,000

A summary of the quantitative significant inputs used to value S5D’s contingent consideration as of June 30, 2023 was: $3.56 per share market price of the Company’s common stock, revenue projections, revenue volatility of 66.6%, weighted average cost of capital discount rate of 15.7% and risk-free rate of 5.1%.

A summary of the quantitative significant inputs used to value BLI’s contingent consideration as of June 30, 2023 was: $3.56 per share market price of the Company’s common stock, revenue projections, revenue volatility of 75.6%, weighted average cost of capital discount rate of 16.4% and risk-free rate of 4.8%.

The change in fair value of contingent consideration for S5D and BLI for the year ended June 30, 2023 was a non-cash gain of approximately $0.17 million and $1.11 million, respectively, included as change in fair value of acquisition contingent consideration in the consolidated statements of operations. This was primarily driven by changes in the Company’s common stock price between the measurement dates and revisions to revenue projections.

The change in fair value of contingent consideration also reflects the first anniversary payout to the sellers of S5D based on the achievement of certain revenue thresholds as defined in the respective purchase agreement. This payout was made in March 2023 in the form of Company common stock with a fair value of $1.36 million at date of issuance. In addition, the S5D Membership Interest Sale agreement was amended in May 2023 to remove the thresholds for releasing $2.0 million of cash escrowed at closing (recorded as Restricted cash on the consolidated balance sheet at the time) and was replaced with an immediate $1.0 million payment from the escrow account to the S5D sellers, along with an immediate issuance of Company common stock fair valued at $1.05 million at date of issuance; simultaneously, the S5D sellers released the remaining $1.0 million in escrow to the Company. These May 2023 payments to the S5D sellers were recorded as consideration paid.

As of June 30, 2023, the Company’s contingent consideration liability related to XR Terra, LLC (“XRT”) is categorized as Level 3 within the fair value hierarchy as it is based on contractual amounts pursuant to the acquisition agreement, of which certain inputs are unobservable. The change in fair value of contingent consideration for XRT for the year ended June 30, 2023 was a non-cash expense of approximately $0.59 million, included as change in fair value of acquisition contingent consideration in the consolidated statements of operations. This reflects the actual and anticipated achievement of certain revenue thresholds as defined in the respective purchase agreement. These amounts were not included in the contingent consideration balance as of June 30, 2022 as the attainment of the revenue thresholds were originally considered remote.

The change in fair value of contingent consideration for AUGGD for the year ended June 30, 2023 reflects the issuance of common stock to the sellers, net of a note repayment (see Notes 9 and 12). The range of potential additional contingent consideration through December 2024 related to the divestiture of AUGGD assets at June 30, 2023 is zero to $0.65 million in the form of Company common stock. The Company considers this occurrence as remote, and no provision is made for it.

The range of potential additional contingent consideration through April 2025 related to the PulpoAR acquisition at June 30, 2023 is zero to $13.0 million ($12.5 million in Company common stock and $0.5 million cash). The Company considers this occurrence as remote, and no provision is made for it.