Fair Value Measurements |
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| Fair Value Measurements | 4. Fair Value Measurements The following tables present the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis (in thousands):
Money Market Funds Money market funds were valued by the Company based on quoted market prices, which represent a Level 1 measurement within the fair value hierarchy. There were no transfers between Level 1, Level 2 or Level 3 during the six months ended June 30, 2026 or 2025. Marketable Securities U.S. Treasury securities and agency bond were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 2 measurement within the fair value hierarchy. Contingent Consideration The Company recognizes acquisition-related contingent consideration which represents the estimated fair value of future payments or issuance of the Company’s common stock to the former owners of an acquired entity as part of certain transactions. Acquisition-related contingent consideration is measured and reported at fair value using the present value technique, the Monte Carlo simulation method or probability weighted scenario based on the unobservable inputs, which are significant to the fair value and classified with Level 3 of the fair value hierarchy. For the acquisition of NIRLAB in May 2026, the amount of contingent consideration to be issued is based on the satisfaction of certain performance milestones and the execution of specified contracts. Under the revenue milestone, the amount of revenue the Company generates from the sale of certain NIRLAB products and services during the one-year period from January 1, 2027 through December 31, 2027 determines the amount of contingent consideration to be issued. Under the contractual milestone, the execution of specified contracts and recurring revenue from such contracts for the fiscal year 2026 and 2027 determines the amount of contingent consideration to be issued. As of the acquisition date of NIRLAB, the fair value of the contingent consideration was estimated using a Monte Carlo simulation, utilizing the closing price of the Company’s common stock on the Nasdaq Global Market of $6.55 per share, revenue projections, probabilities of executing specified contracts, an equity volatility rate of the Company of 95%, a revenue volatility rate of 21.8% and a discount rate of 33.0%. As of June 30, 2026, the fair value of the contingent consideration related to the acquisition of NIRLAB was estimated utilizing the closing price of the Company’s common stock on the Nasdaq Global Market of $8.70 per share, revenue projections, updates on probabilities of executing specified contracts, an equity volatility rate of the Company of 100%, a revenue volatility rate of 23.3% and a discount rate of 32.3%. The fair value of contingent consideration increased by $0.9 million during the three months ended June 30, 2026, primarily due to the change in the Company’s stock price and the projections over the certain contractual milestones. For the acquisition of RedWave in April 2024, the amount of contingent consideration to be issued was based on the amount of revenue the Company generated from the sale of certain RedWave products and services during the two-year period from May 1, 2024 through April 30, 2026 and included certain qualified bookings credit. As of April 30, 2026, per the terms of the Equity Purchase Agreement (the “RedWave Purchase Agreement”), dated as of April 29, 2024, by and among the Company, RedWave, CAM3 HoldCo, LLC, the beneficial sellers named therein (the “Beneficial Sellers”) and the indirect beneficial seller named therein the Company was required to notify the Seller Entity (as defined in the RedWave Purchase Agreement) within ninety (90) days of its specific calculation of Earnout Revenue (as defined in the RedWave Purchase Agreement) and of the amount of the Earnout Consideration (as defined in the RedWave Purchase Agreement), if any. As of June 30, 2026, the fair value of the contingent consideration related to the acquisition of RedWave was estimated utilizing the closing price of the Company’s common stock on the Nasdaq Global Market of $8.70 per share and 3,213,583 shares of common stock determined to be issuable per the terms of the RedWave Purchase Agreement. On July 8, 2026, the Company issued 3,213,583 shares of common stock in satisfaction of its obligations per the RedWave Purchase Agreement. The following table provides a roll-forward of the fair value of the Company’s contingent consideration, for which fair value is determined using Level 3 inputs (in thousands):
The change in the fair value of contingent consideration liability is included in loss from continuing operations. |
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