OCULAR THERAPEUTIX, INC Fair Value Disclosure
3. Fair Value of Financial Assets and Liabilities
The following tables present information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2021 and 2020 and indicate the level of the fair value hierarchy utilized to determine such fair value:
Fair Value Measurements as of | ||||||||||||
December 31, 2021 Using: | ||||||||||||
| Level 1 |
| Level 2 |
| Level 3 |
| Total | |||||
Assets: |
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Cash equivalents: |
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Money market funds | $ | 62,392 | $ | — | $ | — | $ | 62,392 | ||||
Liability: | ||||||||||||
Derivative liability (Note 4) | $ | — | $ | — | $ | 20,192 | $ | 20,192 | ||||
Fair Value Measurements as of | ||||||||||||
December 31, 2020 Using: | ||||||||||||
| Level 1 |
| Level 2 |
| Level 3 |
| Total | |||||
Assets: |
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Cash equivalents: |
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Money market funds | $ | 213,372 | $ | — | $ | — | $ | 213,372 | ||||
Liability: |
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Derivative liability (Note 4) | $ | — | $ | — | $ | 98,313 | $ | 98,313 | ||||
During the year ended December 31, 2021 and 2020, there were no transfers between Level 1 and 2.
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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.