FENNEC PHARMACEUTICALS INC. 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk . Money Market Investments We maintain an investment portfolio consisting of U.S. or Canadian obligations and bank securities and money market investments in compliance with our investment policy. Securities must have a minimum Dun & Bradstreet rating of A for bonds or R1 low for commercial paper. The policy also provides for investment limits on concentrations of securities by issuer and a maximum-weighted average time to maturity of twelve months. This policy applies to all of our financial resources. 23 Table of Contents At September 30, 2022, we had $29,314 in money market investments and savings accounts as compared to $21,018 at December 31, 2021; these investments typically have minimal risk. While we have never experienced any loss or write down of our money market investments since our inception, the amounts we hold in money market accounts are substantially above the $250 amount insured by the FDIC and may lose value. Variable Interest Rate Risk We are subject to interest rate fluctuation exposure through our borrowings under the SPA and our investment in money market accounts, both of which bear a variable interest rate. Borrowings under the SPA bear an interest rate of prime plus 4.5%. Payment-in-kind interest is also variable and accrues at a rate of prime plus 3.5%. Increases in interest rates may adversely affect our ability to meet our obligations. Foreign Currency Exposure We are subject to foreign currency risks as we purchase goods and services which are denominated in Euro, Great British Pounds and Canadian dollars. To date, we have not employed the use of derivative instruments; however, we do hold Canadian dollars which we use to pay vendors in Canada and other corporate obligations. At September 30, 2022, we held approximately $45 Canadian dollars ($33 as presented to U.S. dollars). At December 31, 2021, we held approximately $43 Canadian dollars ($34 as presented into U.S. dollars).