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INVESTMENT IN EQUITY SECURITIES | 9 Months Ended
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Sep. 30, 2021
INVESTMENT IN EQUITY SECURITIES |
NOTE 8 - INVESTMENT IN EQUITY SECURITIES | NOTE 8 – 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 7,142,857Series 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 to purchase 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. On June 17, 2021, the Company invested $500,000 for 125,000 additional shares of Series A Stock which increased the Company’s ownership of Precision Healing’s outstanding voting securities to 29.0%. For the three and nine months ended September 30, 2021, the Company recorded $193,843 and $472,747 as its share of the losses from this equity method investment. On June 3, 2021, the Company invested $2,084,278 to purchase 278,587 Class A Preferred Shares (the “Shares”) of Pixalere Healthcare, Inc. (“Pixalere”). The Shares are convertible into 28.6% of the outstanding equity of Pixalere. Pixalere provides a cloud-based wound care software tool that empowers nurses, specialists and administrators to deliver better care for patients. In connection with the Company’s purchase of the Shares, Pixalere granted Pixalere Healthcare USA, LLC (“Pixalere USA”), a subsidiary of the Company, a royalty-free exclusive license to use the Pixalere software and platform in the United States. In conjunction with the grant of the license, the Company issued Pixalere a 27.3% equity ownership interest in Pixalere USA valued at $93,879. The Company has reviewed the characteristics of the Shares in accordance with ASC Topic 323, Investments – Equity Method and Joint Ventures. Due to the substantive liquidation preferences of the Shares over Pixalere’s common stock, the Shares are not “in-substance” common stock, and therefore, the Company will not utilize the equity method of accounting for this investment. In accordance with ASC Topic 321, Investments - Equity Securities, this investment was reported at cost as of September 30, 2021. The following summarizes the Company’s investments:
|  | September 30, 2021 |  |  | December 31, 2020 |  |  |  |
|  | Carrying Amount |  |  | Economic Interest |  |  | Carrying Amount |  |  | Economic Interest |
Equity Method Investment |  |  |  |  |  |  |  |  |  |  |  |
Precision Healing Inc. |  | $ | 1,227,253 |  |  |  | 29.0 | % |  | $ | - |  |  |  |
Cost Method Investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Direct Dermatology, Inc. |  |  | 500,000 |  |  |  |  |  |  |  | 500,000 |  |  |  |
Precision Healing Inc. |  |  | - |  |  |  |  |  |  |  | 600,000 |  |  |  |
Pixalere Healthcare, Inc. |  |  | 2,084,278 |  |  |  |  |  |  |  | - |  |  |  |
Total Cost Method Investments |  |  | 2,584,278 |  |  |  |  |  |  |  | 1,100,000 |  |  |  |
Total Investments |  | $ | 3,811,531 |  |  |  |  |  |  | $ | 1,100,000 |  |  |  |
The following summarizes the loss from the equity method investment reflected in the consolidated statements of operations:
|  | Three Months ended September 30, |  |  | Nine Months Ended September 30, |
Investment |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Precision Healing Inc. |  | $ | (193,843 | ) |  | $ | - |  |  | $ | (472,747 | ) |  | $ | - |
Total |  | $ | (193,843 | ) |  | $ | - |  |  | $ | (472,747 | ) |  | $ | - |

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