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8. INVESTMENT IN EQUITY SECURITIES
 3 Months Ended
Mar. 31, 2021
Schedule of Investments [Abstract]  
INVESTMENT IN EQUITY SECURITIES

The Company’s equity investments consist of non-marketable equity securities in privately held companies without readily determinable fair values, and are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer.

 

The Company made a $500,000 long-term investment in July 2020 to purchase certain non-marketable securities consisting of 7,142,857 Series B-2 Preferred Shares of Direct Dermatology Inc. (“DirectDerm”), representing 2.9% ownership of DirectDerm at that time. Through this investment, the Company received exclusive rights to utilize DirectDerm’s technology in all acute and post-acute care settings such as skilled nursing facilities, home health, and wound clinics. The Company does not have the ability to exercise significant influence over DirectDerm’s operating and financial activities.

 

On November 9, 2020, the Company entered into agreements to purchase certain non-marketable securities consisting of 150,000 shares of Series A Convertible Preferred Stock (the “Series A Stock”) of Precision Healing Inc. (“Precision Healing”) for an aggregate purchase price of $600,000. The Series A Stock is convertible into 150,000 shares of common stock of Precision Healing and has a senior liquidation preference relative to the common shareholders. This initial investment represented 12.6% ownership of Precision Healing’s outstanding voting securities.

 

In February 2021, the Company invested $600,000 for 150,000 additional shares of Series A Stock which is convertible into 150,000 shares of common stock of Precision Healing. This resulted in ownership of 22.4% of Precision Healing’s outstanding voting securities. With this level of significant influence, the Company transitioned to the equity method of accounting for this investment. For the three months ended March 31, 2021, the Company recorded $99,135 as its share of the loss from equity method investment.

 

The following summarizes the Company’s investments:

 

    March 31, 2021     December 31, 2020  
    Carrying Amount     Economic Interest     Carrying Amount     Economic Interest  
Equity Method Investment                        
Precision Healing Inc.   $ 1,100,865       22.4 %   $ -        
                               
Cost Method Investments                              
Direct Dermatology, Inc.     500,000       2.9 %     500,000       2.9 %
Precision Healing Inc.     -               600,000       12.6 %
Total Cost Method Investments     500,000               1,100,000          
      -                          
Total Investments   $ 1,600,865             $ 1,100,000          

 

The following summarizes the loss from the equity method investment reflected in the consolidated statements of operations:

 

    Three Months Ended March 31,  
    2021     2020  
Investment            
Precision Healing Inc.   $ (99,135 )   $ -  
                 
Total   $ (99,135 )   $ -