|3 Months Ended|
Mar. 31, 2021
|Schedule of Investments [Abstract]|
NOTE 4 – INVESTMENTS
At March 31, 2021 and December 31, 2020, the Company’s investments were comprised of the following:
SCHEDULE OF INVESTMENTS
Flowr Corp. (formerly Terrace Inc.)
In December 2020, Terrace Inc., a Canadian cannabis entity in which the Company had an ownership interest of 8.95% (“Terrace”), was acquired by Flowr Corp. (TSX.V: FLWR; OTC: FLWPF), a Toronto-headquartered cannabis company with operations in Canada, Europe, and Australia (“Flowr”). Under the terms of the deal, each shareholder of Terrace received of a share in Flowr for each Terrace share held.
This investment is carried at it fair value. During the three months ended March 31, 2021 and 2020, the decrease in fair value of this investment of approximately $45,000 and $687,000, respectively, was reflected in Change In Fair Value Of Investments on the statement of operations.
In August 2018, the Company invested $300,000 and issued shares of its common stock, valued at approximately $915,000, in exchange for a 23% ownership in MembersRSVP LLC (“MRSVP”), an entity that has developed cannabis-specific customer relationship management software, branded under the name Sprout.
During the three months ended March 31, 2020, the investment was accounted for under the equity method. There was no change to the carrying value of the investment during this period.
In January 2021, the Company and MRSVP entered into an agreement whereby the Company assigned and transferred membership interests comprising an 11% ownership in MRSVP in exchange for a release from all further obligation by the Company to make future investments or payments and certain other non-monetary consideration. Following the interest transfer, the Company’s ownership interest in MRSVP was reduced to 12% on a fully diluted basis.
As part of the agreement, the Company relinquished its right to appoint a member to the board of MRSVP. In light of the Company no longer having the ability to exercise significant influence over MRSVP, the Company no longer accounts for this investment under the equity method. The Company’s share of MRSVP’s future earnings or losses shall not be recorded, and the earnings and losses previously recorded will remain part of the carrying amount of the investment of approximated $1,166,000.
In accordance with ASC 321, Investments – Equity Securities, the Company elected the measurement alternative to value this equity investment without a readily determinable fair value. Following the termination of equity accounting, there has been no impairment to this investment, nor any observable price changes to investments in the entity. Accordingly, this investment continued to be carried at approximately $1,166,000 at March 31, 2021.
The Company will continue to apply the alternative measurement guidance until this investment does not qualify to be so measured. The Company may subsequently elect to measure this investment at fair value, with changes in fair value recognized in net income.
The entire disclosure for investment holdings. This includes the long positions of investments for the entity. It contains investments in affiliated and unaffiliated issuers. The investments include securities and non securities (i.e. commodities and futures contracts).
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef