FAIR VALUE MEASUREMENT

12 Months Ended

Dec. 31, 2020

FAIR VALUE MEASUREMENT

FAIR VALUE MEASUREMENT

NOTE 11 - FAIR VALUE MEASUREMENT

The Company discloses fair value measurements for financial assets and liabilities. Fair value is based on the price that would be received from the sale of an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.

The accounting standard establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value.

The fair value of the financial instruments included in the working capital of the Company is usually identical or close to their carrying value.

The fair value of the outstanding $57.9 million 2021 Notes as of December 31, 2020 is approximately $58.7 million based on a level 3 measurement.

The Company prepared a valuation of the fair value of the 2021 Notes (a Level 3 valuation) as of December 31, 2020. The value of these notes were estimated by implementing the binomial model. The liability component was valued based on the Income Approach. The following parameters were used:

	2021 Notes
Stock price (USD)	3.63
Expected term	0.87
Risk free rate	0.10	%
Volatility	75.84	%
Yield	10.44	%