INVESTMENT

9 Months Ended

Sep. 30, 2022

INVESTMENT

INVESTMENT

NOTE 10 – INVESTMENT

In accordance with ASC 325-20, “Cost Method Investments,” equity securities that do not have readily determinable fair values (i.e., non-marketable equity securities) and are not required to be accounted for under the equity method are typically carried at cost (i.e., cost method investments). Investments of this nature are initially recorded at cost.

 From November 2019 to February 2020, the Company purchased Convertible Loans (“Loans”) from ReLeaf Europe B.V. (“ReLeaf”) in the amount of $0.5 million which shall bear interest at 6% per annum and shall become due and payable to the Company at the earlier of the conversion date, the date when the Loans are repaid or at the maturity date of October 31, 2021. In the event of conversion by the Company, the outstanding amount of the Loans and any unpaid accrued interest shall be converted into shares of ReLeaf (“Shares”) based on a price per share on a post money valuation of $10.9 million. As of September 30, 2022 and December 31, 2021, the Company recorded an investment in ReLeaf using the cost method of accounting and recorded accrued interest relating to these Loans as well as a reserve on the investment. As of the filing date of this Quarterly Report, the Company has agreed to convert the Loans and receive Shares as per the Loan terms. The issuance of such shares to the Company is currently pending.

Our investment, at cost, consisted of the following (in thousands):

	September 30, 2022			December 31, 2021
Investment in ReLeaf Europe B.V.	$	566		$	566
Valuation reserve		(350	)		(350	)
Investment, net	$	216		$	216

As of September 30, 2022 and December 31, 2021, the net investment is based on management’s best estimate of net realizable value, which resulted in a valuation reserve amount of $0.4 million and $0.4 million, respectively.