INVESTMENTS

9 Months Ended

Sep. 30, 2021

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENTS

10. Investments

(a) The Company has a 50% ownership interest in ENP Peru Investments LLC (“ENP Peru”), which was acquired in fiscal 2016. ENP Peru is located in Illinois and leases warehouse space. The Company accounts for this investment using the equity method of accounting. A summary of the Company’s investment follows:

Balance, December 31, 2019	$	11,387
Return of equity		(9,063	)
Gain in equity method investment		1,498
Balance, December 31, 2020		3,822
Return of equity		(3,822	)
Gain in equity method investment		-
Balance, September 30, 2021	$	-

Summarized profit and loss information related to the equity accounted investment is as follows for the full year:

	2020
Net sales	$	295,800
Net income	$	2,996

During the nine months ended September 30, 2021, the Company received $23,678 from ENP Peru. At the time of receipt of the payment, the investment balance was $nil and the payment was not recorded against the investment balance but was included in gains on investments.

(b) In fiscal 2018, ENP Investments acquired a 24% ownership interest in ENP Realty LLC (“ENP Realty”). ENP Realty is located in Illinois and leases warehouse space. During the year ended December 31, 2020, the other partners of ENP Realty withdrew from the partnership, resulting in ENP Realty becoming a wholly owned subsidiary of ENP Investments. As a result, ENP Realty was renamed ENP Mendota and is consolidated in the financial statements of the Company and a 35% non-controlling interest is recognized from the acquisition date onwards.

It was determined that ENP Mentoda did not meet the definition of a business in accordance with FASB Codification Topic 805, Business Combinations (ASC 805), and the acquisition was accounted for as an asset acquisition. The following table summarizes the final purchase price allocation of the consideration paid to the respective fair values of the assets acquired and liabilities assumed in ENP Realty as of the acquisition date.

Investment eliminated upon consolidation	$	63,165
Assets acquired:
Cash		13,419
Building		630,000
Land		85,000
Liabilities assumed:
Accounts payable		(15,797	)
Long term debt		(450,000	)
Deferred income tax liability		(66,116	)
Total identifiable net assets:		196,506
Gain on acquisition of ENP Realty	$	133,341

The income tax expense arising from the deferred income tax liability was net against gain on acquisition of ENP Realty in the consolidated statements of operations and comprehensive income for the full year ended December 31, 2020.

A summary of the Company’s investment follows:

Balance, December 31, 2019	$	63,165
Investment eliminated upon consolidation		(63,165	)
Balance, December 31, 2020 and September 30, 2021	$	-

Summarized profit and loss information related to the equity accounted investment is as follows for the full year:

	2019
Net sales	$	75,870
Net income	$	34,200

(c) In December 2018 the Company invested $200,000 in Applied Holding Corp. (“Applied”). Applied is a captive insurance company and the Company received a promissory note for its investment which becomes due in 2021 but may be extended with notice for a maximum of two years. In accordance with FASB Codification Topic 323, Investments – Equity Method and Joint Ventures (ASC 323), the Company has elected to account for this investment at cost.

(d) In December 2018 the Company invested $500,000 in Trio Opportunity Corp. (“Trio”), a privately held entity. Trio is a real estate investment vehicle and the Company received 50,000 non-voting Class B shares at $10.00/share. In accordance with ASC 323, the Company has elected to account for this investment at cost.

(e In January 2019, the Company invested $1,001,000 in a Florida based LLC that is engaged in international sales of fertilizer additives. The Company accounts for this investment using the equity method of accounting. According to the operating agreement, the Company has a 50% interest in the profit and loss of the Florida based LLC but does not have control. A summary of the Company’s investment follows:

Balance, December 31, 2019	$	1,141,033
Additional payments		2,518,684
Gain in equity method investment		809,342
Return of equity		(896,714	)
Balance, December 31, 2020		3,572,345
Gain in equity method investment		468,003
Return of equity		(225,000	)
Balance, September 30, 2021	$	3,815,348

Further to the original investment amount, the Company had placed $1,000,000 in trust, which was released upon the Florida based LLC reaching a milestone related to earnings before interest, taxes and depreciation (“EBITDA”) targets. This amount was accounted for as restricted cash on the balance sheet as at December 31, 2019. During the year ended December 31, 2020, this amount was released. The additional payments of $2,518,684 made during the year ended December 31, 2020 related to contingent consideration which was dependent on the Florida based LLC meeting certain performance millstones during the year. Summarized profit and loss information related to the equity accounted investment is as follows:

	Nine months ended September 30, 2021		Nine months ended September 30, 2020
Net sales	$	7,103,337	$	8,024,786
Gross profit		2,630,168		3,251,607
Net income	$	936,005	$	1,164,174

During the nine months ended September 30, 2021, the Company had sales of $4,428,663 (2020 - $4,773,970) to the Florida Based LLC, of which $443,169 is included within Accounts Receivable as at September 30, 2021 (2020 - $1,186,839).

f) In December 2020, the Company invested $500,000 in Lygos Inc., a privately held entity. Both companies intend to work together in pursuit of sustainable aspartic acid through synthetic biology. The Company has elected to account for this investment at cost. Upon reaching a predetermined milestone, a further payment of $500,000 was made in June 2021. A summary of the Company’s investment follows:

Balance, January 1, 2020	$	-
Acquisition		500,000
Balance, December 31, 2020		500,000
Additional payment		500,000
Balance, September 30, 2021	$	1,000,000