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ASSETS MEASURED AT FAIR VALUE
 9 Months Ended
Sep. 30, 2024
Assets Measured At Fair Value  
ASSETS MEASURED AT FAIR VALUE

12. ASSETS MEASURED AT FAIR VALUE

 

Financial assets measured at fair value on a recurring basis are summarized below and disclosed on the condensed consolidated balance sheet as of September 30, 2024 and December 31, 2023:

 

   Fair Value Measurement Using   Amount at 
   Level 1   Level 2   Level 3   Fair Value 
September 30, 2024                    
Assets                    
Investment Securities- Fair Value Option  $13,124,908   $966,175   $-   $14,091,083 
Investment Securities- Trading   4,676,413    1,864,017    -    6,540,430 
Warrants – NECV   -    -    973    973 
Warrants - VEII   -    1,655,829    -    1,655,829 
Warrants - SHRG   -    3,891    -    3,891 
Convertible Loan Receivable - VEII   -    604,221    -    604,221 
Convertible Loan Receivable - SHRG   -    1,007,243    -    1,007,243 
                     
Total Assets at Fair Value  $17,801,321   $6,101,376   $973   $23,903,670 

 

   Fair Value Measurement Using   Amount at 
   Level 1   Level 2   Level 3   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 
Convertible Note Receivable   -    -    77,307    77,307 
Warrants - NECV   -    -    430    430 
Warrants- VEII   -    2,487,854    -    2,487,854 
Convertible Loan Receivable - VEII   -    1,207,627    -    1,207,627 
                     
Total Assets at Fair Value  $7,572,508   $7,575,802   $77,737   $15,226,047 

 

Realized loss on investment securities for the three months ended September 30, 2024 was $334,531 and realized loss on investment securities for the three months ended September 30, 2023 was $602,624. Realized loss on investment securities for the nine months ended September 30, 2024 was $679,204 and realized loss on investment securities for the nine months ended September 30, 2023 was $11,291,166. Unrealized gain on securities investment was $7,034,492 and unrealized loss was $10,742,675 in the three months ended September 30, 2024 and 2023, respectively. Unrealized gain on securities investment was $3,445,386 and $6,910,205 in the nine months ended September 30, 2024 and 2023, respectively. These gains and losses were recorded directly to net loss.

 

 

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 the local stock exchange to calculate fair value. The following chart shows details of the fair value of equity security investment at September 30, 2024 and December 31, 2023, respectively.

 

    Share price           Market Value      
    9/30/2024     Shares     9/30/2024     Valuation
                       
DSS (Related Party)   $ 1.270       3,140,613     $ 3,988,579     Investment in Securities at Fair Value – Related Party
                             
Impact BioMedical (Related Party)   $ 2.000       4,568,165     $ 9,136,329     Investment in Securities at Fair Value – Related Party
                             
Trading Stocks                   $ 4,676,413     Investment in Securities at Fair Value
                             
      Total Level 1 Equity Securities     $ 17,801,321      
                             
AMBS   $ 0.000       20,000,000     $ 2,000     Investment in Securities at Fair Value
                             
Holista   $ 0.017       1,000     $ 17     Investment in Securities at Fair Value
                             
Value Exchange (Related Party)   $ 0.045       21,179,275     $ 955,185     Investment in Securities at Fair Value – Related Party
                             
New Electric CV (Related Party)   $ 0.000       354,039,000     $ -     Investment in Securities at Fair Value – Related Party
                             
Sharing Services (Related Party)   $ 0.100       89,732  *   $ 8,973     Investment in Securities at Fair Value – Related Party
                             
Trading Stocks                   $ 1,864,017     Investment in Securities at Fair Value
                             
      Total Level 2 Equity Securities     $ 2,830,192      
                             
Nervotec     N/A       1,666     $ 624     Investment in Securities at Cost
UBeauty     N/A       3,600     $ 16,714     Investment in Securities at Cost
Ideal Food and Beverages     N/A       19,000     $ 14,829     Investment in Securities at Cost
HapiTravel Holding     N/A       19,000     $ 148     Investment in Securities at Cost
      Total Equity Securities     $ 20,663,828      

 

 

    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 – Related Party
                             
Trading Stocks                   $ 35,036     Investment in Securities at Fair Value
                             
      Total Level 1 Equity Securities     $ 7,572,508      
                             
AMBS   $ 0.001       20,000,000     $ 10,000     Investment in Securities at Fair Value
                             
Holista   $ 0.007       36,159,845     $ 246,556     Investment in Securities at Fair Value
                             
Value Exchange (Related Party)   $ 0.067       21,179,275     $ 1,429,602     Investment in Securities at Fair Value – Related Party
                             
Sharing Services (Related Party)   $ 0.003       125,624,528     $ 414,562     Investment in Securities at Fair Value – Related Party
                             
New Electric CV (Related Party)   $ 0.000       354,039,000     $ -     Investment in Securities at Fair Value – Related Party
                             
Trading Stocks                   $ 1,779,601     Investment in Securities at Fair Value
                             
      Total Level 2 Equity Securities     $ 3,880,321      
                             
Nervotec     N/A       1,666     $ 37,876     Investment in Securities at Cost
UBeauty     N/A       3,600     $ 16,636     Investment in Securities at Cost
      Total Equity Securities     $ 11,507,341      

 

* Ratio of 1-for-1,400 (the “Reverse Split”) was effective on September 13, 2024.

 

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 nine months ended September 30, 2024 and 2023:

 

   Total 
Balance at January 1, 2024  $77,737 
Impairment   (77,307)
Total Gains   543 
Balance at March 31, 2024  $973 
Total Gains   - 
Balance at June 30, 2024  $973 
Total Gains   - 
Balance at September 30, 2024  $973 

 

 

   Total 
Balance at January 1, 2023  $416,164 
Total Gains   62,348 
Balance at March 31, 2023  $478,512 
Total Losses   (342,798)
Balance at June 30, 2023  $135,714 
Total Losses   (46,685)
Balance at September 30, 2023  $89,029 

 

Vector Com Convertible Bond

 

On February 26, 2021, the Company invested approximately $88,599 in the convertible note of Vector Com Co., Ltd (“Vector Com”), a private company in South Korea. The interest rate is 2% per annum. The conversion price is approximately $21.26 per common share of Vector Com. As of December 31, 2023, the Management estimated the fair value of the note to be $88,599. The Company wrote off this loan at March 31, 2024

 

Warrants

 

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, 2022. The Company did not exercise any warrants during nine months ended September 30, 2024 and the year ended December 31, 2023. 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 $973 as of September 30, 2024 and $430 as of December 31, 2023.

 

The fair value of the NECV warrants under level 3 category as of September 30, 2024 and December 31, 2023 was calculated using a Black-Scholes valuation model valued with the following weighted average assumptions:

 

   September 30, 2024   December 31, 2023 
         
Stock Price  $0.0001   $0.0001 
Exercise price  $0.001   $0.001 
Risk free interest rate   4.62%   4.62%
Annualized volatility   869.4%   869.4%
Dividend Yield  $0.00   $0.00 
Year to maturity   5.81    6.56 

 

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 7 - Related Party Transactions, Note Receivable from a Related Party Company. As of September 30, 2024 and December 31, 2023, the fair value of the warrants was $1,655,981 and $2,487,854, respectively. The Company did not exercise any warrants during the nine months September 30, 2024 and the year ended December 31, 2023.

 

 

The fair value of the VEII warrants under level 2 category as of September 30, 2024, and December 31, 2023 was calculated using a Black-Scholes valuation model valued with the following weighted average assumptions:

 

   September 30, 2024   December 31, 2023 
         
Stock price  $0.0451   $0.0677 
Exercise price  $0.1770   $0.1770 
Risk free interest rate   8.00%   8.50%
Annualized volatility   384.22%   275.85%
Dividend Yield  $0.00   $0.00 
Year to maturity   3.93    4.68 

 

SHRG

 

On March 20, 2024, HWH International Inc., entered into a securities purchase agreement with SHRG, pursuant to which HWH purchased from SHRG a (i) Convertible Promissory Note in the amount of $250,000, convertible into 148,810 shares of SHRG’s common stock at the option of HWH, and (ii) certain warrants exercisable into 148,810 shares of SHRG’s common stock at an exercise price of $1.68 per share, the exercise period of the warrant being five (5) years from the date of the securities purchase agreement, for an aggregate purchase price of $250,000. At the time of this filing, HWH has not converted any of the debt contemplated by the Convertible Note nor exercised any of the warrants. As of September 30, 2024, the fair value of the warrants was $3,891.

 

The fair value of the SHRG warrants under level 2 category as of September 30, 2024, was calculated using binomial option pricing model valued with the following weighted average assumptions:

 

   September 30, 2024 
     
Stock price  $0.0100 
Exercise price  $1.68 
Risk free interest rate   3.56%
Annualized volatility   167.12%
Dividend Yield  $0.00 
Year to maturity   4.46 

 

Convertible Loan Receivables

 

The Company has elected to recognize the convertible loan receivables at fair value and therefore there was no further evaluation of embedded features for bifurcation. The Company engaged third party valuation firm to perform the valuation of convertible loans. The fair value of the convertible loans is calculated using the binomial tree model based on probability of remaining as straight debt using discounted cash flow.