Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2018

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

10.  Fair Value of Financial Instruments

ASC 820, Fair Value Measurement (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principle or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The levels of the fair value hierarchy established by ASC 820 are:

Level 1: inputs are 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: inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. A Level 2 input must be observable for substantially the full term of the asset or liability. The Monte Carlo model was used to calculate the fair value of level 2 instruments. The inputs used are current stock price, expected term, risk-free rate, number of trials, volatility and interest rates.

Level 3: inputs are unobservable and reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. The contingent consideration was based on EBITDA.

The Company considers the recorded value of certain of its financial assets and liabilities, which consist primarily of cash equivalents, accounts receivable and accounts payable, to approximate the fair value of the respective assets and liabilities at December 31, 2018 and 2017 based upon the short-term nature of the assets and liabilities.

The Company had $1.0 million and $2.3 million deposited in unrestricted money market accounts on December 31, 2018 and 2017, respectively.

As of December 31, 2018, the Company had five standby letters of credit totaling $2.3 million which represent performance bonds on three contracts.

The following table presents assets and liabilities measured at fair value at December 31, 2018:

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
(in thousands)	(Level 1)		(Level 2)			(Level 3)		Total
Money market funds	$	824	$	-		$	-	$	824
Foreign exchange contracts		-		43			-		43
Total assets	$	824	$	43		$	-	$	867
Liability awards		-		(118	)		-		(118	)
Interest rate swap contract		-		(103	)		-		(103	)
Total liabilities	$	-	$	(221	)	$	-	$	(221	)

The following table presents assets and liabilities measured at fair value at December 31, 2017:

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
(in thousands)	(Level 1)		(Level 2)			(Level 3)			Total
Money market funds	$	3,240	$	-		$	-		$	3,240
Foreign exchange contracts		-		201			-			201
Total assets	$	3,240	$	201		$	-		$	3,441
Liability awards	$	-	$	(242	)	$	-		$	(242	)
Contingent consideration liability		-		-			(1,701	)		(1,701	)
Total liabilities	$	-	$	(242	)	$	(1,701	)	$	(1,943	)

During the years ended December 31, 2018 and 2017, the Company did not have any transfers into or out of Level 3.

The following table provides a roll-forward of the fair value of the contingent consideration categorized as Level 3 for the year ended December 31, 2018:

(in thousands)

Balance, January 1, 2018	$	1,701
Payments made on contingent liabilities		(1,701	)
Change in fair value		-
Balance, December 31, 2018	$	-

The Company made the last payment of the contingent consideration in January 2018.