Medicus Pharma Ltd. Fair Value Disclosure
12. Fair value measurements
The accounting guidance for fair value establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly; and
Level 3: Unobservable inputs in which there is little or no market data, or which require the reporting entity to develop its own assumptions.
The Company's cash and cash equivalents are classified as Level 1. The fair value of the Company's cash and cash equivalents is determined based on market pricing that is both objective and publicly available. As of December 31, 2025, and 2024, the fair value of the Company's cash and cash equivalents was $8,705,218 and $4,164,323, respectively. As of December 31, 2025, and 2024, the Company's cash equivalents are invested in money market funds.
| December 31, 2025 | ||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 8,705,218 | $ | - | $ | - | $ | 8,705,218 | ||||
| Total assets measured at fair value | $ | 8,705,218 | $ | - | $ | - | $ | 8,705,218 | ||||
| December 31, 2024 | ||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 4,164,323 | $ | - | $ | - | $ | 4,164,323 | ||||
| Total assets measured at fair value | $ | 4,164,323 | $ | - | $ | - | $ | 4,164,323 | ||||
The Company did not reclassify any investments between levels in the fair value hierarchy during the periods presented.
The carrying value of the debenture approximates the fair value since the financial instrument is short-term with a maturity date of September 17, 2026. As of December 31, 2025, and 2024, the carrying amounts of the Company's other financial instruments, which include cash and cash equivalents, accounts payable and accrued expenses approximate fair values because of their short-term maturities.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 25, 2026 | Showing above |
| 2024 | Mar 28, 2025 | |
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.