Contingent Consideration

3 Months Ended

Mar. 31, 2019

6.	Contingent Consideration

Acquisitions may include contingent consideration payments based on future financial measures of an acquired company. Under ASC 805, Business Combinations, contingent consideration is required to be recognized at fair value as of the acquisition date. We estimate the fair value of these liabilities based on financial projections of the acquired companies and estimated probabilities of achievement. At each reporting date, the contingent consideration obligation is revalued to estimated fair value and changes in fair value subsequent to the acquisition are reflected in income or expense in the consolidated statements of operations, and could cause a material impact to our operating results. Changes in the fair value of contingent consideration obligations may result from changes in discount periods and rates, changes in the timing and amount of revenue and/or earnings estimates and changes in probability assumptions with respect to the likelihood of achieving the various earn-out criteria.

Upon the acquisition of DP Engineering on February 15, 2019, the Company recognized the estimated fair value of contingent consideration for $1.2 million. At March 31, 2019, due to a triggering event as depicted in Note 9, an impairment test was conducted on DP Engineering's goodwill and definite-lived intangible assets and determined $1.2 million of fair value of contingent consideration recognized upon acquisition of DP Engineering has reduced to zero due to the triggering event as depicted in Note 9. There was no contingent liability outstanding as of March 31, 2019.

During the three months ended March 31, 2018, the Company made payment of $1.7 million to pay off the remaining contingent consideration, related to the acquisition of Hyperspring in 2014. There was no contingent liability as of March 31, 2018.