Gain Therapeutics, Inc. Fair Value Disclosure
13. Fair Value Measurement
Fair value is defined 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 Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.
The carrying amounts of the Company’s cash and cash equivalents, including money market funds, restricted cash and financial liabilities are considered to be representative of their respective fair values because of the short-term nature and the contractual terms of those instruments. The fair values of money market funds are based upon the quoted prices in active markets provided by the holding financial institution, which are considered Level 1 inputs in the fair value hierarchy according to ASC 820, “Fair Value Measurement.” There have been no changes to the valuation methods utilized by the Company, nor were there transfers between levels of the fair value hierarchy.
Fair value measurement at reporting date using | |||||||||
Quoted prices in | Significant other | Significant | |||||||
| (Level 1) | | (Level 2) | | (Level 3) | ||||
December 31, 2025: | |||||||||
Assets | |||||||||
Defined benefit pension plan: | |||||||||
Pension plan asset (insurance contract) | $ | — | $ | — | $ | 1,138,422 | |||
Total defined benefit pension plan | — | — | 1,138,422 | ||||||
Cash equivalents: | |||||||||
Money market funds | 11,060,391 | — | — | ||||||
Total cash equivalents | 11,060,391 | — | — | ||||||
Total financial assets | $ | 11,060,391 | $ | — | $ | 1,138,422 | |||
December 31, 2024: | |||||||||
Assets | |||||||||
Defined benefit pension plan: | |||||||||
Pension plan asset (insurance contract) | $ | — | $ | — | $ | 898,853 | |||
Total defined benefit pension plan | — | — | 898,853 | ||||||
Cash equivalents: | |||||||||
Money market funds | 4,745,080 | — | — | ||||||
Total cash equivalents | 4,745,080 | — | — | ||||||
Total financial assets | $ | 4,745,080 | $ | — | $ | 898,853 | |||
The carrying amounts of prepaid expenses and other current assets, accounts payable, and accrued expenses approximate fair value due to their short-term maturities. Please refer to Note 11 “Pension and Other Benefit Programs” for additional details on the valuation of pension plan assets.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 26, 2026 | Showing above |
| 2024 | Mar 27, 2025 | |
| 2023 | Mar 26, 2024 | |
| 2022 | Mar 23, 2023 | |
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.