v3.25.1
Fair Value Measurements
 3 Months Ended
Mar. 31, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.
The fair value hierarchy defines a three-level valuation hierarchy for disclosure of fair value measurements as
follows:
•Level I    Unadjusted quoted prices in active markets for identical assets or liabilities;
•Level II    Inputs other than quoted prices included within Level I that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and
•Level III     Unobservable inputs that are supported by little or no market activity for the related assets or liabilities.
The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy at March 31, 2025:
 
Fair Value Measurements at March 31, 2025
 TotalLevel 1Level 2Level 3
(in thousands)
Liabilities
Acquisition-related contingent consideration182 — — 182 
$182 $— $— $182 
 
Fair Value Measurements at December 31, 2024
 TotalLevel 1Level 2Level 3
(in thousands)
Liabilities
Acquisition-related contingent consideration973 — — 973 
$973 $— $— $973 
The fair value measurement of contingent consideration related to the business acquisition completed in fiscal 2024 represents the contingent consideration arrangement from the Company’s acquisition of Motiva Benelux BV, a distribution company in Belgium, and Motiva NL B.V., a distribution company in Netherlands, on October 1, 2024. Under this contingent consideration arrangement, the Company is required to pay the former owners an amount equal to the total revenue for fiscal year 2024 and 2025 multiplied by a multiple based on the relevant revenue growth rate realized in that particular fiscal year versus the prior year (ratio ranges from 0.5 to 0.9). The potential undiscounted amount of all future contingent payments that the Company could be required to make is not capped and will be decreased if the operational expense targets for 2025 are not met.
The fair value of the contingent consideration arrangement of $0.2 million as of March 31, 2025 was estimated by applying the income approach which used significant inputs that are not observable in the market and thus represents a Level 3 measurement. Key assumptions included (a) a discount rate of 12.5 percent, (b) 2024 revenue of approximately $6.0 million (actual, assumed to be reliably forecasted as of the date of valuation); c) 2025 revenue forecasted using a normal distribution with approximately $6.4 million as the base case and a range determined based on volatility of 10%, and d) an assumption that operating expense targets will be met. The Company retains the option to settle the outstanding payments either in cash or in the Company’s common shares.
The estimates are based, in part, on subjective assumptions and could differ materially in the future. During the
periods presented, the Company has not changed the manner in which it values liabilities that are measured at fair value using Level 3 inputs. The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers within the hierarchy during the three months ended March 31, 2025 or during the year ended December 31, 2024.
The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial instruments as follows:
Acquisition-related Contingent Consideration
(in thousands)
Balance at December 31, 2024
$973 
Reclassification
(787)
Change in fair value$(4)
Balance at March 31, 2025
$182 
During the three months ended March 31, 2025, part of the contingent consideration recorded as of December 31, 2024 became not contingent and is included in “Other Liabilities, short-term”. The change in fair value is related to the foreign currency fluctuations.