FENNEC PHARMACEUTICALS INC. Fair Value Disclosure
5. Fair Value Measurements
The Company has adopted ASC 820 Fair Value Measurements and Disclosure Topic of the FASB. This Topic applies to certain assets and liabilities that are being measured and reported on a fair value basis. The Fair Value Measurements Topic defines fair value, establishes a framework for measuring fair value in accordance with US GAAP, and expands disclosure about fair value measurements. This Topic enables the reader of the financial statements to assess the inputs
used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The Topic requires that financial assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:
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.
Financial assets and liabilities are classified in their entirety within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The Company measures the fair value of the Processa Pharmaceuticals Inc. (“Processa”) common shares held by the Company by taking into consideration valuations obtained from public financial markets. The Company uses Yahoo Finance to obtain share price data and Oanda for foreign currency pricing services to estimate fair value. These inputs include reported trades of and broker- dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs.
As of December 31, 2025, the Company had financial assets valued based on Level 1 inputs consisting of cash and cash equivalents and Processa common shares. The Company also had financial assets based on Level 2 inputs consisting of money market funds. During the year ended December 31, 2025, the Company did not have any transfers of financial assets between Levels 1 and 2.
Assets/Liabilities Measured at Fair Value on a Recurring Basis
Fair Value Measurement at December 31, 2025 and December 31, 2024 | ||||||||||||||||
(in thousands) | | |||||||||||||||
Quoted Price in Active | ||||||||||||||||
Market for Identical | Significant Other | Significant | ||||||||||||||
Instruments | Observable Inputs | Unobservable Inputs | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| 2025 | | 2024 | | 2025 | | 2024 | | 2025 | | 2024 | | 2025 | | 2024 | |
Assets | | | | | | | | | ||||||||
Cash and cash equivalents | $ | 3,072 | (1) | $2,020 | (1) | $33,716 | $24,614 | — | — | $36,788 | $26,634 | |||||
Processa common shares |
| 2 | (2) | 2 |
| — | — | — |
| — |
| 2 |
| 2 | ||
| (1) | The Company held approximately, $3,072 in cash as of December 31, 2025, of which approximately $154 was in Canadian funds and $327 in Euro (both translated into U.S. dollars). As of December 31, 2024, the Company held approximately $2,020 in cash, of which approximately $110 was in Canadian funds and $245 in Euro (both translated into U.S. dollars). |
| (2) | The Company has 51 unrestricted common shares of Processa (Nasdaq: PCSA). |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 27, 2026 | Showing above |
| 2024 | Mar 26, 2025 | |
| 2023 | Mar 29, 2024 | |
| 2022 | Mar 29, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 30, 2021 | |
| 2019 | Feb 14, 2020 | |
| 2018 | Mar 15, 2019 | |
| 2017 | Mar 28, 2018 | |
| 2016 | Mar 29, 2017 | |
| 2015 | Mar 28, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.