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INVESTMENTS MEASURED AT FAIR VALUE
 9 Months Ended
Sep. 30, 2021
Investments, All Other Investments [Abstract]  
INVESTMENTS MEASURED AT FAIR VALUE

15. INVESTMENTS MEASURED AT FAIR VALUE

 

Financial assets measured at fair value on a recurring basis are summarized below and disclosed on the consolidated balance sheet as of September 30, 2021 and December 31, 2020:

  

   Amount at   Fair Value Measurement Using   Amount at 
   Cost   Level 1   Level 2   Level 3   Fair Value 
September 30, 2021                         
Assets                         
Investment Securities- Fair Value  $58,291,320   $37,630,181   $-   $-   $37,630,181 
Investment Securities- Trading   252,038    254,055    -    -    254,055 
Convertible Note Receivable   138,599    -    -    98,608    98,608 
Warrants - American Premium Water   754,606    -    -    1,804,558    1,804,558 
Warrants - AMRE   -    -    -    -    - 
                          
Total Investment in securities at Fair Value  $59,364,563   $37,884,236   $-   $1,903,166   $39,787,402 

 

   Amount at   Fair Value Measurement Using   Amount at 
   Cost   Level 1   Level 2   Level 3   Fair Value 
December 31, 2020                         
Assets                         
Investment securities- Fair Value Option  $7,404,911   $10,549,102   $-   $-   $10,549,102 
Investment securities- Trading   17,650    18,654    -    -    18,654 
Convertible preferred stock   42,889,000    -    -    37,675,000    37,675,000 
Convertible note receivable   50,000    -    -    66,978    66,978 
Warrants - American Premium Water   860,342    -    -    862,723    862,723 
Warrants - AMRE   -    -    -    -    - 
Stock Options - Vivacitas   -    -    -    -    - 
Total Investment in securities at Fair Value  $51,221,903   $10,567,756   $-   $38,604,701   $49,172,457 

 

Realized loss on investment securities for the nine months ended September 30, 2021 was $2,218,988 and realized gain on investment securities for the nine months ended September 30, 2020 was $444,508. Unrealized loss on securities investment was $35,972,445 and $10,883,149 in the nine months ended September 30, 2021 and 2020, respectively. These gains and losses were recorded directly to net income (loss). The change in fair value of the convertible note receivable in the nine months ended September 30, 2021 and 2020 was $56,969 and $29,636, respectively, and was recorded in consolidated statements of stockholders’ equity.

 

 

For U.S. trading stocks, we use Bloomberg Market stock prices as the share prices to calculate fair value. For overseas stock, we use the stock price from local stock exchange to calculate fair value. The following chart shows details of the fair value of equity security investment at September 30, 2021 and December 31, 2020, respectively.

 SCHEDULE OF FAIR VALUE OF EQUITY SECURITY INVESTMENT

   Share price       Market Value    
   9/30/2021   Shares   9/30/2021   Valuation
                
DSS (Related Party)  $1.290    19,888,262*  $25,655,858   Investment in Securities at Fair Value
                   
AMBS (Related Party)  $0.011    20,000,000   $220,000   Investment in Securities at Fair Value
                   
Holista (Related Party)  $0.043    43,626,621   $1,856,184   Investment in Securities at Fair Value
                   
American Premium Water (Related Party)  $0.004    272,039,000   $979,340   Investment in Securities at Fair Value
                   
True Partner  $0.127    62,122,908   $7,898,298   Investment in Securities at Fair Value
                   
Value Exchange  $0.157    6,500,000   $1,020,500   Investment in Securities at Fair Value
                   
Trading Stocks            $254,057   Investment in Securities at Fair Value
                   
    Total Level 1 Equity
Securities 		   $37,884,238    
                   
Nervotech   N/A    1,666   $36,833   Investment in Securities at Cost
HWH World Co.   N/A    20,000   $42,562   Investment in Securities at Cost
K Beauty   N/A    3,600   $18,809   Investment in Securities at Cost
    Total Equity Securities   $37,982,442    

 

   Share price       Market Value    
   12/31/2020   Shares   12/31/2020   Valuation
                
DSS (Related Party)  $6.240    1,162,501*  $7,254,006   Investment in Securities at Fair Value
                   
AMBS (Related Party)  $0.008    20,000,000   $160,000   Investment in Securities at Fair Value
                   
Holista (Related Party)  $0.055    46,226,673   $2,565,469   Investment in Securities at Fair Value
                   
American Premium Water (Related Party)  $0.002    122,039,000   $256,284   Investment in Securities at Fair Value
                   
OptimumBank (Related Party)  $3.370    92,980   $313,343   Investment in Securities at Fair Value
                   
Trading Stocks            $18,654   Investment in Securities at Fair Value
                   
    Total Level 1 Equity
Securities 		   $10,567,756    
Vivacitas (Related Party)   N/A    2,480,000   $200,128   Investment in Securities at Cost
Nervotech   N/A    1,666   $37,826   Investment in Securities at Cost
HWH World Co.   N/A    20,000   $42,562   Investment in Securities at Cost
                   
    Total Equity Securities   $10,848,272    

 

* Ratio of 1-for-30 (the “Reverse Split”) was effective at 5:01 p.m. Eastern Time on May 7, 2020 (the “Effective Time”)

 

 

DSS convertible preferred stock

 

During the nine months ended September 30, 2021, Global BioMedical Pte Ltd. converted 42,575 preferred stock of DSS into 6,570,170 common shares of DSS.

 

Sharing Services Convertible Note

 

The fair value of the Sharing Services Convertible Note under level 3 category as of September 30, 2021 and December 31, 2020 was calculated using a Black-Scholes valuation model valued with the following weighted average assumptions:

 

  

September 30,

2021

  

December 31,

2020

 
         
Dividend yield   0.00%   0.00%
Expected volatility   113.63%   210.07%
Risk free interest rate   3.25%   0.13%
Contractual term (in years)   1.02    11.76 
Exercise price  $0.15   $0.15 

 

We assumed dividend yield rate is 0.00% in Sharing Services. The volatility is based on the historical volatility of the Sharing Services’ common stock. Risk-free interest rates were obtained from U.S. Treasury rates for the applicable periods.

 

Changes in the observable input values would likely cause material changes in the fair value of the Company’s Level 3 financial instruments. A significant increase (decrease) in this likelihood would result in a higher (lower) fair value measurement.

 

The table below provides a summary of the changes in fair value which are recorded as other comprehensive income (loss), including net transfers in and/or out of all financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three and nine months ended September 30, 2021 and 2020:

 

   Total 
Balance at January 1, 2021  $66,978 
Total losses   (1,987)
Balance at March 31, 2021  $64,991 
Total losses   (35,922)
Balance at June 30, 2021  $29,069 
Total losses   (19,060)
Balance at September 30, 2021  $10,009 

 

   Total 
Balance at January 1, 2020  $26,209 
Total losses   (12,599)
Balance at March 31, 2020  $13,610 
Total gain   13,115 
Balance at June 30, 2020  $26,725 
Gain during deconsolidation   21,628 
Total losses   (8,955,246)
Acquisition of DSS Preferred Stock   63,849,002 
Balance at September 30, 2020  $54,942,109 

 

 

Vector Com Convertible Bond

 

On February 26, 2021, the Company invested approximately $88,599 in the convertible bond of Vector Com Co., Ltd (“Vector Com”), a private company in South Korea. The interest rate is 2% per annum and maturity is two years. The conversion price is approximately $21.26, per common share of Vector Com. As of September 30, 2021, the management estimated that the fair value of this note remained unchanged from its initial purchase price.

 

Warrants

 

On March 2, 2020, the Company received warrants to purchase shares of AMRE, a related party private startup company, in conjunction with the Company lending a $200,000 promissory note. For further details on this transaction, refer to Note 10 Related Party Transactions, Note Receivable from a Related Party Company. As of September 30, 2021 and December 31, 2020, AMRE was a private company. Based the management’s analysis, the fair value of the warrants was $0 as of September 30, 2021 and December 31, 2020.

 

On July 17, 2020, the Company purchased 122,039,000 shares, approximately 9.99% ownership, and 1,220,390,000 warrants with an exercise price of $0.0001 per share, from APW, for an aggregated purchase price of $122,039. In July and August 2021, the Company exercised 150,000,000 of the warrants to purchase 150,000,000 shares of APW for the total consideration of $150,000, leaving the balance of outstanding warrants of 1,070,390,000 at September 30, 2021. We value APW warrants under level 3 category through a Black-Scholes option pricing model and the fair value of the warrants from APW were $862,723 as of December 31, 2020 and $1,804,558 as of September 30, 2021.

 

The fair value of the APW warrants under level 3 category as of September 30, 2021 and December 31, 2020 was calculated using a Black-Scholes valuation model valued with the following weighted average assumptions:

 

   September 30, 2021   December 31, 2020 
         
Stock Price  $0.0036   $0.0021 
Exercise price   0.001    0.001 
Risk free interest rate   1.41%   0.88%
Annualized volatility   91.48%   178.86%
Year to maturity   8.82    9.58