|9 Months Ended|
Sep. 30, 2021
|Schedule of Investments [Abstract]|
NOTE 4 – INVESTMENTS
At September 30, 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 transaction, each shareholder of Terrace received of a share in Flowr for each Terrace share held.
This investment is carried at fair value. During the nine months ended September 30, 2021 and 2020, the decrease in fair value of this investment of approximately $937,000 and $446,000, 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 nine months ended September 30, 2020, the investment was accounted for under the equity method. Based on the Company’s equity in MRSVP’s net loss during such period, the Company recorded earnings for the three months and nine month ended September 30, 2020 of approximately $52,000 and $19,000, respectively. Such earnings comprised the balance of Equity in Earnings of Investments on the statement of operations for such periods.
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 discontinued accounting for this investment under the equity method as of January 1, 2021. The Company’s share of MRSVP’s net losses recorded under the equity method prior to January 1, 2020 of approximately $50,000 remained part of the carrying amount of the investment.
In September 2021, MRSVP sold substantially all of its assets pursuant to an asset purchase agreement dated as of August 31, 2021, and entered into several related agreements. In furtherance of the transaction, the Company received cash proceeds of $1,475,000, representing the Company’s pro rata share of the cash consideration received by MRSVP upon the closing of the transaction. As an ongoing member of MRSVP, the Company will receive its pro rata share of any additional consideration received by MRSVP pursuant to the asset purchase agreement, which may include securities or other forms of non-cash or in-kind consideration and holdback amounts, if and when it is received and distributed by MRSVP.
As of September 30, 2021, the Company had received the cash consideration, and accordingly, reduced the investment balance to zero and recorded a gain of approximately $309,000 which was reflected in Other non-operating expenses on the statement of operations. The Company had not received any of the non-cash consideration as of the report date.
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