Quarterly report pursuant to Section 13 or 15(d)

Fair Value of Financial Instruments

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Fair Value of Financial Instruments
9 Months Ended
Sep. 30, 2016
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments

16. FAIR VALUE OF FINANCIAL INSTRUMENTS

 

As of September 30, 2016 and December 31, 2015, the carrying amounts of cash, receivables and accounts payable and accrued expenses approximated their estimated fair values because of the short term nature of these financial instruments. Our notes payable, line of credit and term loans are carried at cost and approximate fair value since the interest rates being charged approximates market rates.

 

Contingent Consideration

 

The Company’s contingent consideration of $1,089,099 and $1,172,508 as of September 30, 2016 and December 31, 2015, respectively, are Level 3 liabilities. The fair value of the contingent consideration at September 30, 2016 and December 31, 2015 was primarily driven by estimates of revenue recognized and collected payments from acquired customers, the passage of time, the associated discount rate and for one acquisition, the price of the Company’s common stock on the NASDAQ Capital Market.

 

The following table provides a reconciliation of the beginning and ending balances for the contingent consideration measured at fair value using significant unobservable inputs (Level 3):

 

Financial instruments measured at fair value on a recurring basis:

 

    Fair Value Measurement at Reporting
Date Using Significant Unobservable
Inputs, Level 3
 
    Nine Months Ended  
    2016     2015  
Balance - January 1,   $ 1,172,508     $ 2,626,323  
Acquisitions     678,368       1,002,444  
Change in fair value     (607,978 )     (1,150,415 )
Payments     (153,799 )     -  
Balance - September 30,   $ 1,089,099     $ 2,478,352