HENNESSY ADVISORS INC Fair Value Disclosure

(2)	Fair Value Measurements

 

The Company applies Accounting Standards Codification 820 — Fair Value Measurement for all financial assets and liabilities, which establishes a framework for measuring fair value and expands disclosures about fair value measurements. The standard defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” It also establishes a fair value hierarchy consisting of the following three levels that prioritize the inputs to the valuation techniques used to measure fair value:

 

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Level 1 – Unadjusted, quoted prices in active markets for identical assets or liabilities that an entity has the ability to access at the measurement date;

 

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Level 2 – Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, and model‑derived valuations in which all significant inputs and significant value drivers are observable in active markets); and

 

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Level 3 – Significant unobservable inputs (including the entity’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when observable inputs are not available.

 

Based on the definitions, the following table represents the Company’s assets categorized in the Level 1 to Level 3 hierarchies:

 

		September 30, 2025
		Level 1				Level 2				Level 3				Total
		(In thousands)
Money market fund deposits		$	66,739			$	-			$	-			$	66,739
Mutual fund investments			12				-				-				12
Total		$	66,751			$	-			$	-			$	66,751
Amounts included in
Cash and cash equivalents		$	66,739			$	-			$	-			$	66,739
Investments in marketable securities			12				-				-				12
Total		$	66,751			$	-			$	-			$	66,751

 

		September 30, 2024
		Level 1				Level 2				Level 3				Total
		(In thousands)
Money market fund deposits		$	60,946			$	-			$	-			$	60,946
Mutual fund investments			11				-				-				11
Total		$	60,957			$	-			$	-			$	60,957
Amounts included in
Cash and cash equivalents		$	60,946			$	-			$	-			$	60,946
Investments in marketable securities			11				-				-				11
Total		$	60,957			$	-			$	-			$	60,957

 

There were no transfers between levels during fiscal years 2025 or 2024.

 

The fair values of receivables, payables, and accrued liabilities approximate their book values given the short-term nature of those instruments.

 

The fair value of the 2026 Notes (see Note 9 in this Item 8, “Financial Statements and Supplementary Data”) was approximately $40.1 million as of September 30, 2025, based on the last trading price of the notes on that date (Level 1). The Company did not elect to apply the fair value option to the carrying value of the 2026 Notes under Accounting Standards Codification 825 — Financial Instruments.