Fair Value Measurements
|9 Months Ended
Sep. 30, 2022
|Fair Value Disclosures [Abstract]
|Fair Value Measurements
Note 5 – Fair Value Measurements
The Company measures and records certain financial assets at fair value on a recurring basis. Fair value is based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The Company’s financial instruments that are measured at fair value on a recurring basis consist of money market funds. The following three levels of inputs are used to measure the fair value of financial instruments:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
The following table summarizes the assets measured at fair value on a recurring basis as of September 30, 2022, and December 31, 2021, by level within the fair value hierarchy:
The Company’s financial instruments that are measured at fair value on a recurring basis consist of certificates of deposit and U.S treasury bills as of December 31, 2021 and September 30, 2022, respectively.
The changes for Level 3 items measured at fair value on a recurring basis are as follows:
The fair value of the contingent consideration is based on the fair value of the contingent consideration-common stock and contingent consideration-warrants. The fair value of the contingent consideration-common stock is equal to the probability-adjusted value of the Company’s common stock as of September 30, 2022. The fair value of the contingent consideration-warrants is equal to the probability adjusted value of a call option with terms consistent with the terms of the warrants as of September 30, 2022. Prior to the probability adjustments, the warrants were valued based on the following inputs: