Acquisitions

Contingent Consideration

ASC Topic 805 requires that contingent consideration be recognized at fair value on the acquisition date and be re-measured each reporting period with subsequent adjustments recognized in the condensed consolidated statement of operations. We estimate the fair value of contingent consideration liabilities using an appropriate valuation methodology, typically either an income-based approach or a simulation model, such as the Monte Carlo model, depending on the structure of the contingent consideration arrangement. Contingent consideration is valued using significant inputs that are not observable in the market which are defined as Level 3 inputs pursuant to fair value measurement accounting. We believe our estimates and assumptions are reasonable; however, there is significant judgment involved. At each reporting date, the contingent consideration obligation is revalued to estimated fair value, and changes in fair value subsequent to the acquisitions are reflected in income or expense in the condensed consolidated statements of operations, and could cause a material impact to, and volatility in, our operating results. Changes in the fair value of contingent consideration obligations may result from changes in discount periods and rates and changes in the timing and amount of revenue and/or earnings projections.

Below is a summary of the potential maximum contingent consideration we may be required to pay in connection with completed acquisitions as of March 31, 2019 (dollars in thousands):



Acquisition:	Original range of potential undiscounted payments	As of March 31, 2019 Maximum contingent consideration due in
		2019		2020		Total
IC Axon	$0 - $3,500	$	3,500	$	—	$	3,500
McKinney Rogers	$0 - $18,000	—		4,000		4,000
		$	3,500	$	4,000	$	7,500

Below is a summary of the changes in the recorded amount of contingent consideration liabilities from December 31, 2018 to March 31, 2019 (dollars in thousands):



	Liability as of December 31,						Change in Fair Value of Contingent			Foreign Currency		Liability as of March 31,
Acquisition:	2018		Additions		Payments		Consideration			Translation		2019
IC Axon	$	594	$	—	$	—	$	(14	)	$	—	$	580
McKinney Rogers	83		—		—		(36		)	—		47
Total	$	677	$	—	$	—	$	(50	)	$	—	$	627

As of both March 31, 2019 and December 31, 2018, contingent consideration considered a current liability and included in accounts payable totaled $0.6 million. As of December 31, 2018 we also had accrued contingent consideration totaling $0.1 million related to acquisitions which are included in other long-term liabilities on the condensed consolidated balance sheets and represent the portion of contingent consideration estimated to be payable greater than twelve months from the balance sheet date.