Available-for-Sale Security

6 Months Ended

Jun. 30, 2021

Available-for-Sale Security

Available-for-Sale Security

Note 5.Available-for-Sale Security

On January 28, 2021, the Company invested $15.0 million in Silk EV via a convertible promissory note. Silk is an Italian engineering and design services company that has recently partnered with FAW to form a new company (“Silk-FAW”) to produce fully electric, luxury vehicles for the Chinese and global auto markets.

The terms of the convertible promissory note are as follows:

● The principal amount is $15.0 million;

● The interest rate is 6%;

● The maturity date is January 28, 2022;

● Upon a qualified equity financing, as defined, the outstanding principal and accrued interest shall convert into equity securities sold in the qualified equity financing at a conversion price equal to the cash price for the equity securities times 0.80;

● The events of default are as follows:

° SILK EV fails to pay timely the principal and accrued interest due under this note;

° SILK EV files any petition for relief under bankruptcy, reorganization, insolvency or similar other law; or

° An involuntary petition is filed against SIK EV under bankruptcy or similar statute.

The Company accounts for the Silk EV note as an available-for-sale security at its fair value, with changes in fair value, if any, recorded in other comprehensive income. The Company recorded a reduction of the note’s fair value of $20,000 in the three months ended June 30, 2021.