Kiora Pharmaceuticals, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Fair Value

Fair Value

12 Months Ended

Dec. 31, 2021

4. Fair Value

There were no assets measured at fair value on a recurring basis and there were no liabilities valued at fair value using Level 1 or 2 inputs. The following table provides information for liabilities measured at fair value on a recurring basis using Level 3 inputs:


	December 31, 2021		December 31, 2020
Contingent Consideration:
Current		—		—
Noncurrent		3,048,955		2,547,074
Total Contingent Consideration	$	3,048,955	$	2,547,074

The Company initially values contingent consideration related to business combinations using a probability-weighted calculation of potential payment scenarios discounted at rates reflective of the risks associated with the expected future cash flows for certain milestones. Key assumptions used to estimate the fair value of contingent consideration include projected financial information, market data and the probability and timing of achieving the specific targets as discussed in Note 16. Acquisitions. After the initial valuation, the Company generally uses its best estimate to measure contingent consideration at each subsequent reporting period using the following unobservable Level 3 inputs:


	Valuation Technique	Unobservable Inputs	2021 Range		2020 Range
	Discounted cash flow	Payment discount rate	13.1	%	12.6	%
Bayon		Payment period	2023 - 2028		—
Panoptes		Payment period	2024 - 2028		2023 - 2025
Jade		Payment period	2026		2026

Bayon		Probability of Success for payment	12% - 72%		—
Panoptes		Probability of Success for payment	17% - 36%		20% - 45%
Jade		Probability of Success for payment	47	%	45	%

Significant changes in these assumptions could result in a significantly higher or lower fair value. The contingent consideration reported in the above table resulted is adjusted quarterly based upon the passage of time or the anticipated success or failure of achieving certain milestones. The changes in contingent consideration of $0.502 million as of December 31, 2021, was primarily driven by probability of success and timing of milestone payments and was recorded as a change in fair value of contingent consideration within the consolidated statements of operation and comprehensive loss.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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