Quarterly report pursuant to Section 13 or 15(d)

Fair Value of Financial Instruments

v3.20.1
Fair Value of Financial Instruments
3 Months Ended
Mar. 31, 2020
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments

13. FAIR VALUE OF FINANCIAL INSTRUMENTS

 

As of March 31, 2020, and December 31, 2019, the carrying amounts of accounts receivable, accounts payable and accrued expenses approximated their estimated fair values because of the short-term nature of these financial instruments.

 

Fair value measurements-Level 2

 

Our notes payable are carried at cost and approximate fair value since the interest rates being charged approximate market rates. As a result, the Company categorizes these borrowings as Level 2 in the fair value hierarchy.

 

Contingent Consideration

 

The Company’s contingent consideration of approximately $1 million and $307,000 as of March 31, 2020 and 2019, respectively, is a Level 3 liability. The fair value of the contingent consideration at March 31, 2019 and 2018 were primarily driven by changes in revenue estimates related to the Company’s acquisitions, the passage of time and the associated discount rate. Due to the number of factors used to determine contingent consideration, it is not possible to determine a range of outcomes.

 

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):

 

    Fair Value Measurement at Reporting Date Using Significant Unobservable Inputs, Level 3  
    Three Months Ended March 31,  
    2020     2019  
Balance - January 1,   $ -     $ 526,432  
Acquisition     1,050,000       -  
Change in fair value     -       (64,203 )
Payments     -       (154,844 )
Balance - March 31,   $ 1,050,000     $ 307,385