Note Receivable

12 Months Ended

Dec. 31, 2020

5.	NOTE RECEIVABLE

On October 16, 2018, the Company executed a promissory note to an unrelated third party. The value of the note was secured by warrants of the third party which expire in January 2021. The maturity date of the note was tied directly to the expiration date of the warrants, both being January 2021. The initial fair value upon execution of the note was $11,630,867. The fair value as of December 31, 2020, 2019 and 2018 was $0, $815,937, and $7,424,727 respectively. For the years ended December 31, 2020, 2019 and 2018, the Company recorded adjustments to the fair value of the note of ($815,937), ($6,608,790), and $(4,206,141), respectively, in other income (expense) on the consolidated statement of operations.

The note receivable was categorized as a financial instrument measured at fair value. As the note was determined to have no value as of December 31, 2020, due to the significant decline in the value of the underlying

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, it was written off and thus no valuation was performed. For the year ended December 31, 2019, the Company used the Black Scholes option pricing model to estimate the fair value of the note receivable. The following represents the significant assumptions used in that valuation:


		2019
Risk-free Rate		1.90%
Exercise Price of Underlying Securities		$1.998
Share Price of Underlying Security		1.90
Volatility		71.50%
Remaining Life (in years)		1.0

At each reporting date, the Company applies its judgment to evaluate the collectability of the note receivable and makes a provision based on the assessed amount of expected credit loss. This judgment is based on parameters such as interest rates, specific country risk factors, and creditworthiness of the creditor.