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INVESTMENTS MEASURED AT FAIR VALUE
 12 Months Ended
Dec. 31, 2023
Investments, All Other Investments [Abstract]  
INVESTMENTS MEASURED AT FAIR VALUE

13. INVESTMENTS MEASURED AT FAIR VALUE

 

Financial assets measured at fair value on a recurring basis are summarized below and disclosed on the consolidated balance sheets as of December 31, 2023 and 2022:

 

   Fair Value Measurement Using     
   Level 1   Level 2   Level 3   Amount at Fair Value 
December 31, 2023                    
Assets                    
Investment Securities- Fair Value Option  $7,537,472   $2,100,720   $-   $9,638,192 
Investment Securities- Trading   35,036    1,779,601    -    1,814,637 
Warrants - NECV   -    -    430    430 
Convertible Note Receivable   -    -    77,307    77,307 
Warrants - VEII   -    2,487,854    -    2,487,854 
Total Investment in Securities at Fair Value  $7,572,508   $6,368,175   $77,737   $14,018,420 

 

 

   Fair Value Measurement Using     
   Level 1   Level 2   Level 3   Amount at Fair Value 
December 31, 2022                    
Assets                    
Investment Securities- Fair Value Option  $13,749,957   $   -   $-   $13,749,957 
Investment Securities- Trading   5,315,204    -    -    5,315,204 
Convertible Note Receivable   -    -    88,599    88,599 
Warrants - NECV   -    -    327,565    327,565 
Warrants - AMRE   -    -    -    - 
Total Investment in Securities at Fair Value  $19,065,161   $-   $416,164   $19,481,325 

 

Realized loss on investment securities for the year ended December 31, 2023 and 2022 was $11,375,747 and $7,308,580, respectively. Unrealized loss on securities investment was $2,899,286 and $31,350,358 in the years ended December 31, 2023 and 2022, respectively. These losses were recorded directly to net loss. The change in fair value of the convertible note receivable in the years ended December 31, 2023 and 2022 was $0 and $40,201 gain, 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 investments at December 31, 2023 and 2022, respectively.

 

   Share price       Market Value    
   12/31/2023   Shares   12/31/2023   Valuation
                
DSS (Related Party)  $0.120    62,812,264   $7,537,472   Investment in Securities at Fair Value
                   
Trading Stock           

$

35,036   Investment in Securities at Fair Value
                   
    Total Level 1 Equity Securities   $7,572,508    
                   
Holista  $0.007    36,159,845   $246,556   Investment in Securities at Fair Value
                   
New Electric CV (Related Party)  $0.000    354,039,000   $0   Investment in Securities at Fair Value
                   
AMBS  $0.001    20,000,000   $10,000   Investment in Securities at Fair Value
                   
Value Exchange (related Party)  $0.067    21,179,275   $1,429,602   Investment in Securities at Fair Value
                   
Sharing Services (Related Party)  $0.003    125,624,528   $414,562   Investment in Securities at Fair Value
                   

Trading Stock

             

$

1,779,601   

Investment in Securities at Fair Value

                   
    Total Level 2 Equity Securities   $3,880,321    
Nervotech   N/A    1,666   $37,876   Investment in Securities at Cost
K Beauty   N/A    3,600   $16,636   Investment in Securities at Cost
                   
    Total Equity Securities    $11,507,341    

 

 

   Share price       Market Value    
   12/31/2022   Shares   12/31/2022   Valuation
                
DSS (Related Party)  $0.164    62,812,264   $10,301,211   Investment in Securities at Fair Value
                   
AMBS (Related Party)  $0.002    20,000,000   $34,000   Investment in Securities at Fair Value
                   
Holista (Related Party)  $0.20    42,999,621   $850,432   Investment in Securities at Fair Value
                   
New Electric CV (Related Party)  $0.001    354,039,000   $212,423   Investment in Securities at Fair Value
                   
Value Exchange (Related Party)  $0.170    13,834,643   $2,351,889   Investment in Securities at Fair Value
                   
Trading Stock            $5,315,204   Investment in Securities at Fair Value
                   
    Total Level 1 Equity Securities   $19,065,161    
Nervotech   N/A    1,666   $35,958   Investment in Securities at Cost
HWH World Co.   N/A    3,800   $42,562   Investment in Securities at Cost
K Beauty   N/A    3,600   $19,609   Investment in Securities at Cost
                   
    Total Equity Securities    $19,163,290    

 

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 through other 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 years ended December 31, 2023 and 2022:

 

   Total 
Balance at January 1, 2022  $1,108,252 
Net gain   (692,088)
Balance at December 31, 2022  $416,164 
Net gain   (338,427)
Balance at December 31, 2023  $77,737 

 

Sharing Services Convertible Note

 

The fair value of the Sharing Services Convertible Note under level 3 category was calculated using a Black-Scholes valuation model.

 

We assumed dividend yield rate of 0.00% in Sharing Services. The volatility was 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.

 

The Sharing Services Convertible Note was redeemed in July 2022.

 

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 December 31, 2022 and 2023, the Management estimated the fair value of the note to be $88,599 and $77,307, respectively.

 

Warrants

 

AMRE

 

On March 2, 2020 and October 29, 2021, the Company received warrants to purchase shares of AMRE, a related party private company, in conjunction with the Company lending two $200,000 promissory notes. For further details on this transaction, refer to Note 8 - Related Party Transactions, Note Receivable from a Related Party Company. As of December 31, 2023 and 2022, AMRE was a private company. Based the management’s analysis, the fair value of the warrants was $0 as of December 31, 2021. All warrants were converted into common shares in March 2022.

 

NECV

 

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 NECV, for an aggregated purchase price of $122,039. During 2021, the Company exercised 232,000,000 of the warrants to purchase 232,000,000 shares of NECV for the total consideration of $232,000, leaving the balance of outstanding warrants of 988,390,000 at December 31, 2021. The Company did not exercise any warrants during years ended December 31, 2023 and 2022. We value NECV warrants under level 3 category through a Black Scholes option pricing model and the fair value of the warrants from NECV was $430 as of December 31, 2023 and $327,565 as of December 31, 2022.

 

The fair value of the NECV warrants under level 3 category as of December 31, 2023 and 2022 was calculated using a Black-Scholes valuation model valued with the following weighted average assumptions:

 

   December 31, 2023   December 31, 2022 
Stock Price  $0.0001   $0.0006 
Exercise Price  $0.001   $0.001 
Risk-free Interest Rate   4.62%   3.95%
Annualized volatility   869.4%   186.1%
Dividend Yield   0.00    0.00 
Year to Maturity   6.56    7.56 

 

 

VEII

 

On September 6, 2023, the Company received warrants to purchase shares of VEII, a related party listed company. For further details on this transaction, refer to Note 8 - Related Party Transactions, Note Receivable from a Related Party Company. As of December 31, 2023, the fair value of the warrants was $2,487,854. The Company did not exercise any warrants during the year ended December 31, 2023. The Company values VEII warrants under level 3 category through a Black Scholes option pricing model.

 

The fair value of the VEII warrants under level 3 category as of September 6, 2023, and December 31, 2023 was calculated using a Black-Scholes valuation model valued with the following weighted average assumptions:

  

   December 31, 2023   September 6, 2023 
Stock Price  $0.0677   $0.1770 
Exercise Price  $0.1770   $0.1770 
Risk-free Interest Rate   8.50%   8.50%
Annualized volatility   275.85%   273.79%
Dividend Yield   0.00    0.00 
Year to Maturity   4.68    5.00 

 

The following table presents summarized unaudited financial information for our investments that we elected the fair value option that would otherwise be accounted for under the equity method of accounting.

 

   Summarized Financial Information 
   Assets   Liabilities   Net Income (Loss) 
December 31, 2023               
NECV*  $872,366   $2,726,168   $(594,014)
Holista  $3,893,309   $4,737,129   $(2,376,748)
DSS*  $196,551,000   $68,804,000   $(70,719,000)
VEII*  $7,236,206   $4,913,744   $(1,495,625)
SHRG  $7,821,341   $8,641,133   $(11,695,044)
                
December 31, 2022               
NECV  $1,418,000   $2,678,000   $(94,000)
Holista  $5,473,040   $3,916,466   $(1,522,130)
DSS  $248,916,000   $92,235,000   $(69,662,000)
VEII  $5,739,861   $3,485,118   $3,366 

 

* Data derived from Financial Statement as of September 30, 2023 which was the latest available date source we could reach. 12-month Net Income (Loss) was estimated by adding one-third of 9-month Net Loss.