Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements (Notes)

v3.24.1
Fair Value Measurements (Notes)
 12 Months Ended
Dec. 31, 2023
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
The fair value topic of the FASB Accounting Standards Codification defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting guidance also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities. We currently do not have any Level 1 financial assets or liabilities.
 Level 2 - Observable inputs other than quoted prices included in Level 1. Level 2 inputs include quoted prices for identical assets or liabilities in non-active markets, quoted prices for similar assets or liabilities in active markets and inputs other than quoted prices that are observable for substantially the full term of the asset or liability.
Level 3 - Unobservable inputs reflecting management’s own assumptions about the input used in pricing the asset or liability.
The following table presents the asset reported in the consolidated balance sheet measured at its fair value on a recurring basis as of December 31, 2023 and 2022 by level within the fair value hierarchy:
Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs
Total Level 1 Level 2 Level 3 Unrealized gain (loss)
December 31, 2023
Recurring fair value measurements
     Available-for-sale equity securities
          EuroSite Power Inc. $ 93,744  $ —  $ 93,744  $ —  $ — 
Total recurring fair value measurements $ 93,744  $ —  $ 93,744  $ —  $ — 
December 31, 2022
Recurring fair value measurements
     Available-for-sale equity securities
          EuroSite Power Inc. $ 93,744  $ —  $ 93,744  $ —  $ 18,749 
Total recurring fair value measurements $ 93,744  $ —  $ 93,744  $ —  $ 18,749 
We utilize a Level 2 category fair value measurement to value our investment in EuroSite Power Inc. as an available-for-sale security at period end. That measurement is equal to the quoted market closing price at period end. Since this security is not actively traded we are classifying as Level 2.
The following table summarizes changes in Level 2 assets which are comprised of marketable equity securities for the years ended December 31, 2023 and 2022:

Fair value at December 31, 2021 $ 74,995 
Unrealized gain 18,749 
Fair value at December 31, 2022 $ 93,744 
Fair value at December 31, 2022 $ 93,744 
Unrealized gain — 
Fair value at December 31, 2023 $ 93,744 

The following table presents the liability reported in the consolidated balance sheet measured at its fair value on a recurring basis as of December 31, 2023 and 2022 by level within the fair value hierarchy:
Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs
Total Level 1 Level 2 Level 3 Total gains (losses)
December 31, 2023
Recurring fair value measurements
Contingent contract consideration
Current $ 200,639  $ —  $ —  $ 200,639  $ — 
Long-term 994,743  —  —  994,743  — 
Total recurring fair value measurements $ 1,195,382  $ —  $ —  $ 1,195,382  $ — 
We utilize a Level 3 category fair value measurement to value the contingent consideration liability at period end since there are no quoted prices for this liabilities in non-active markets, there are no quoted prices for similar liabilities in active markets and there are no inputs that are observable for substantially the full term of the the liability. The contingent consideration calculation requires management to make estimates and assumptions that affect the reported amount of the liability.The contingent consideration is payable each calendar quarter through the earlier of the expiration or termination of the relevant maintenance agreements, or the seventh (7th) anniversary of the acquisition date. The consideration is equal to the product of the revenues collected in a calendar quarter multiplied by an applicable percentage. The agreement stipulates quarterly aggregate revenue targets and an applicable percentage, and provides for a higher applicable percentage if revenues exceed the target revenues. The applicable percentage ranges from 5% to 10% over the agreement term. On the date of acquisition, the fair value of the contingent consideration was calculated using a weighted average cost of capital of 15%, discounting the future cash flows to present value.