INVESTMENTS

9 Months Ended

Sep. 30, 2024

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENTS

9. INVESTMENTS

(a) The Company previously held a 50% ownership interest in ENP Peru, split between NanoChem (41.67%) and ENP Investments (8.33%), which was acquired in fiscal 2016. ENP Peru is located in Illinois and leases warehouse space to other entities in the Company. In June 2022, NanoChem acquired an additional 50% ownership interest at a cost of $506,659 paid through a new cash payment was $247,659, mortgage was $259,000. The 35% non-controlling interest of the 8.33% owned by ENP Investments is included in non-controlling interest in these consolidated financial statements. The Company’s investment in ENP Peru was previously accounted for using the equity method, however, it is now consolidated into the consolidated financial statements from the date control was obtained. In June 2023, NanoChem purchased the remaining 8.33% of ENP Peru from ENP Investments to become full owner.

It was determined that ENP Peru 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 Peru as of the acquisition date. The gain on acquisition of ENP Peru represents a gain on remeasurement of the Company’s equity method investment immediately prior to the acquisition date.

Purchase consideration	$	506,659
Assets acquired:
Cash		7,330
Building		3,750,000
Land		150,000
Liabilities assumed:
Deferred tax liability		(174,582	)
Long term debt		(2,849,500	)
Total identifiable net assets:		883,248
Excess of assets acquired over consideration		376,589
Less investment eliminated upon consolidation		(41,538	)
Gain on acquisition of ENP Peru	$	335,051

A summary of the Company’s investment follows:

Balance, December 31, 2022		22,642
Return of equity		(8,750	)
Gain in equity method investment		27,646
Investment eliminated upon consolidation		(41,538	)
Balance, December 31, 2023 and September 30, 2024	$	-

(b) In December 2018, the Company invested $200,000 in Applied Holding Corp. (“Applied”). Applied is a captive insurance company and the Company received a non-convertible promissory note for its investment which becomes due in 2021 but may be extended with notice for a maximum of two years. During the year ended December 31, 2021, the Company entered an agreement with Applied to extend the maturity date of this promissory note to December 2023. In October 2023, the Company received the payment of $200,000 to settle the promissory note and the balance of this investment at September 30, 2024 is $nil (December 31, 2023 - $nil).

(c) In December 2018, the Company invested $500,000 in Trio Opportunity Corp. (“Trio”), a privately held entity and a further $470,000 was invested in April 2023. Trio is a real estate investment vehicle and the Company received 97,000 non-voting Class B shares at $10.00/share. In accordance with ASC 321, the Company has elected to account for this investment at cost.

(d) In January 2019, the Company invested 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 had a 50% interest in the profit and loss of the Florida based LLC but does not have control. In August 2024, the Company sold a 30.1% interest in the Florida based LLC to an unrelated party for consideration of $2,000,000. The Company has entered into a subsequent agreement for the sale of its remaining 19.9% interest over the next five years for a further $4,000,000. The Company will sell a further 3.98% per year upon receipt of that years $800,000 payment. The Company continues to account for this investment using the equity investment as it exercises significant influence.

A summary of the Company’s investment follows:

Balance, December 31, 2022	$	3,758,895
Gain in equity method investment		505,065
Return of equity		(200,000	)
Balance, December 31, 2023		4,063,960
Gain in equity method investment		329,976
Return of equity		(430,402	)
Sale of 30.1% of interest		(2,385,123	)
Balance, September 30, 2024	$	1,578,411

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

	Nine months ended September 30, 2024		Nine months ended September 30, 2023
Net sales	$	10,164,078	$	8,231,298
Gross profit		2,881,438		2,435,858
Net income	$	674,885	$	653,407

During the nine months ended September 30, 2024, the Company had sales of $6,606,882 (2023 - $7,116,232) to the Florida based LLC, of which $1,434,835 is included within Accounts Receivable as at September 30, 2024 (December 31, 2023 - $2,073,813).

(e) In December 2020, the Company invested $500,000 in Lygos Inc. (“Lygos”), a privately held entity, under a Simple Agreement for Future Equity (“SAFE”) agreement. Lygos is a company developing a sustainable aspartic acid microbe strain. In 2021, the Company made a second SAFE investment of $500,000 for a total of $1,000,000. In accordance with ASC 321, the Company has elected to account for this investment at cost.