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Investments Measured At Fair Value | 3 Months Ended
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Mar. 31, 2021
Investments, All Other Investments [Abstract] |
Investments Measured At Fair Value |
| 12. | 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 March 31, 2021 and December 31, 2020:
|  | Amount at |  |  | Fair Value Measurement Using |  |  | Amount at |
|  | Cost |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Fair Value |
March 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment Securities- Fair Value |  | $ | 14,134,540 |  |  | $ | 17,923,989 |  |  | $ | - |  |  | $ | - |  |  | $ | 17,923,989 |
Investment Securities- Trading |  |  | 2,457,162 |  |  |  | 2,468,809 |  |  |  | - |  |  |  | - |  |  |  | 2,468,809 |
Convertible Preferred Stock |  |  | 42,889,000 |  |  |  | - |  |  |  | - |  |  |  | 29,430,000 |  |  |  | 29,430,000 |
Convertible Note Receivable |  |  | 138,599 |  |  |  | - |  |  |  | - |  |  |  | 153,590 |  |  |  | 153,590 |
Warrants - American Premium Water |  |  | 860,342 |  |  |  | - |  |  |  | - |  |  |  | 2,188,264 |  |  |  | 2,188,264 |
Warrants - AMRE |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total Investment in securities at Fair Value |  | $ | 60,479,643 |  |  | $ | 20,392,798 |  |  | $ | - |  |  | $ | 31,771,854 |  |  | $ | 52,164,652 |
|  | 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 |
Unrealized loss on investment securities for the three months ended March 31, 2021 and 2020 was $1,987 and $12,599, respectively. These losses were recorded directly to net income (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 local stock exchange to calculate fair value. The following chart shows details of the fair value of equity security investment at March 31, 2021 and December 31, 2020, respectively.
|  | Share price |  |  |  |  |  | Market Value |  |  |
|  | 3/31/2021 |  |  | Shares |  |  | 3/31/2021 |  |  | Valuation
DSS (Related Party) |  | $ | 3.610 |  |  |  | 1162501 | * |  | $ | 4,196,629 |  |  | Investment in Securities at Fair Value
AMBS (Related Party) |  | $ | 0.011 |  |  |  | 20,000,000 |  |  | $ | 228,000 |  |  | Investment in Securities at Fair Value
Holista (Related Party) |  | $ | 0.049 |  |  |  | 46,226,673 |  |  | $ | 2,285,838 |  |  | Investment in Securities at Fair Value
American Premium Water (Related Party) |  | $ | 0.008 |  |  |  | 122,039,000 |  |  | $ | 1,025,128 |  |  | Investment in Securities at Fair Value
OptimumBank (Related Party) |  | $ | 3.870 |  |  |  | 92,980 |  |  | $ | 359,833 |  |  | Investment in Securities at Fair Value
True Partners |  | $ | 0.158 |  |  |  | 62,122,908 |  |  | $ | 9,828,563 |  |  | Investment in Securities at Fair Value
Trading Stocks |  |  |  |  |  |  |  |  |  | $ | 2,468,809 |  |  | Investment in Securities at Fair Value
|  |  | Total Level 1 Equity Securities |  | $ | 20,392,798 |  |  |
Nervotech |  |  | N/A |  |  |  | 1,666 |  |  | $ | 37,826 |  |  | Investment in Securities at Cost
Hyten Global |  |  | N/A |  |  |  | 20,000 |  |  | $ | 42,562 |  |  | Investment in Securities at Cost
K Beauty |  |  | N/A |  |  |  | 3,600 |  |  | $ | 19,609 |  |  | Investment in Securities at Cost
|  |  | Total Equity Securities |  |  | $ | 20,492,795 |  |  |
|  | 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
Hyten Global |  |  | 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 The DSS convertible preferred stock under level 3 category was valued on Option Pricing Method (OPM) in determining the fair value. As of March 31, 2021, the Company held 42,575 shares of DSS convertible preferred stock, which could convert to 6,570,216 common shares, with fair market value of $29,430,000. As of December 31, 2020, the Company held 42,575 shares of DSS convertible preferred stock, which could convert to 6,570,216 common shares, with fair market value $37,675,000. The following table shows the parameters adopted in the valuation at the valuation dates.
|  | As of March 31, |  |  | As of December 31, |
|  | 2021 |  |  | 2020 |
Stock price |  | $ | 4.22 |  |  | $ | 6.24 |
Risk-free rate |  |  | 1.64 | % |  |  | 0.93 | %
Volatility |  |  | 109.67 | % |  |  | 113.69 | %
Expected Exit Date |  |  | March 24, 2023 |  |  |  | December 31, 2023 |
Dividend Yield |  |  | 0.00 |  |  |  | 0.00 |
The selected stock prices represent the close market bid price of DSS on the valuation date. Risk-free interest rates were obtained from Bloomberg. The volatility is based on the historical volatility of the DSS common stock. We assumed a three-year life for the preferred stock and assumed that after three-years the Company would desire to begin receiving a return on this investment – either through a conversion or liquidation. Given the Beneficial Ownership limited on the exercise of the Series A Preferred Shares, we have assumed that Alset International will sell their common stocks in the Target Company such that their shareholding does not exceed 19.99% prior to conversion. We have assessed the Discount for Lack of Marketability (DLOM) of this interest using a put option method and adopted Black-Scholes Option Pricing Model to estimate the DLOM. Sharing Services Convertible Note The fair value of the Sharing Services Convertible Note under level 3 category as of March 31, 2021 and December 31, 2020 was calculated using a Black-Scholes valuation model valued with the following weighted average assumptions:
|  | March 31, 2021 |  |  | December 31, 2020 |
Dividend yield |  |  | 0.00 | % |  |  | 0.00 | %
Expected volatility |  |  | 210.07 | % |  |  | 210.07 | %
Risk free interest rate |  |  | 3.25 | % |  |  | 0.13 | %
Contractual term (in years) |  |  | 1.51 |  |  |  | 1.76 |
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, 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 months ended March 31, 2021 and 2020:
|  | Total |
Balance at January 1, 2021 |  | $ | 66,978 |
Total losses |  |  | (1,987 | )
Balance at March 31, 2021 |  | $ | 64,991 |
|  | Total |
Balance at January 1, 2020 |  | $ | 26,209 |
Total losses |  |  | (12,599 | )
Balance at March 31, 2020 |  | $ | 13,610 |
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 March 31, 2021, the Management estimated that the fair value of the note to be $88,599, the initial transaction 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 9 Related Party Transactions, Note Receivable from a Related Party Company. As of March 31, 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 March 31, 2021 and December 31, 2020. On July 17, 2020, the Company purchased 122,039,000 shares, approximately 9.99% ownership, and 122,039,000 warrants with an exercise price of $0.0001 per share, from APW, for an aggregated purchase price of $122,039. 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 $2,188,264 as of March 31, 2021. The fair value of the APW warrants under level 3 category as of March 31, 2021 and July 17, 2020 was calculated using a Black-Scholes valuation model valued with the following weighted average assumptions:
|  | March 31, 2021 |  |  | December 31, 2020 |
Stock Price |  | $ | 0.0084 |  |  | $ | 0.0021 |
Exercise price |  |  | 0.001 |  |  |  | 0.001 |
Risk free interest rate |  |  | 1.74 | % |  |  | 0.88 | %
Annualized volatility |  |  | 232.10 | % |  |  | 178.86 | %
Year to maturity |  |  | 9.32 |  |  |  | 9.58 |

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