Annual report pursuant to Section 13 and 15(d)

Investments and Fair Value of Financial Instruments

Investments and Fair Value of Financial Instruments
12 Months Ended
Dec. 31, 2020
Fair Value Disclosures [Abstract]  
Investments and Fair Value of Financial Instruments



Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or developed by the Company. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:


Level 1 - Valued based on quoted prices at the measurement date for identical assets or liabilities trading in active markets. Financial instruments in this category generally include actively traded equity securities.


Level 2 - Valued based on (a) quoted prices for similar assets or liabilities in active markets; (b) quoted prices for identical or similar assets or liabilities in markets that are not active; (c) inputs other than quoted prices that are observable for the asset or liability; or (d) from market corroborated inputs. Financial instruments in this category include certain corporate equities that are not actively traded or are otherwise restricted.

Level 3 - Valued based on valuation techniques in which one or more significant inputs is not readily observable. Included in this category are certain corporate debt instruments, certain private equity investments, and certain commitments and guarantees.


Investments at Fair Value:


As of December 31, 2020   Level 1     Level 2     Level 3     Total  
Warrants - Affiliates   $ -     $ -     $ 457     $ 457  
Government Bond     53,066       -       -       53,066  


As of December 31, 2019   Level 1     Level 2     Level 3     Total  
Warrants - Affiliates   $ -     $ -     $ 3,470     $ 3,470  
Government Bond     74,485       -       -       74,485  


A reconciliation of Level 3 assets is as follows:


    Warrants - Affiliates  
Balance - January 1, 2019   $ 7,840  
Unrealized loss     (4,370 )
Balance - December 31, 2019     3,470  
Unrealized loss     (3,013 )
Balance - December 31, 2020   $ 457  


Investment at December 31, 2020 consists of the Company’s investment in an Argentine government bond, purchased by the Company on December 3, 2019. The bond had an effective interest of 48% per annum and matures on December 31, 2020. There were no material unrealized gains or losses related to the Argentine government bond during the year ended December 31, 2020. The bond was purchased to settle specific Argentine taxes with interest and penalties, of which majority of the amount was used on the date of purchase. As of December 31, 2020, the Company issued a legal claim with the government to seek a resolution to apply the remaining amount to another debt or to receive a refund.


Investment – related parties at December 31, 2020, consisted of retained certain affiliate warrants which are marked to market at each reporting date using the Black-Scholes option pricing model. The Company recorded unrealized losses on the affiliate warrants of $3,013 and $4,370 during the twelve months ended December 31, 2020 and 2019, respectively, which are included in revenues on the accompanying consolidated statements of operations.


The Company’s other short-term financial instruments include cash, accounts receivable, advances and loans to employees, accounts payable, accrued expenses, other liabilities, loans payable and debt obligations. The carrying values of these instruments approximate fair value, as they bear terms and conditions comparable to market, for obligations with similar terms and maturities.