MARKETABLE SECURITIES AND INVESTMENT OTHER SECURITIES

9 Months Ended

Jun. 30, 2021

MARKETABLE SECURITIES AND INVESTMENT OTHER SECURITIES

Note - 2 MARKETABLE SECURITIES AND INVESTMENT OTHER SECURITIES

NOTE 2 – MARKETABLE SECURITIES AND INVESTMENT OTHER SECURITIES

The Company has, from time to time, entered into contracts where a portion of the consideration provided by the customer in exchange for the Company’s services was common stock, options or warrants (an equity position). In these situations, upon invoicing the customer for the stock or other instruments, the Company recorded the receivable as accounts receivable other, and used the value of the stock or other instrument upon invoicing to determine the value. If there is insufficient data to support the valuation of the security directly, the Company will value it, and the underlying revenue, on the estimated fair value of the services provided. In determining fair value of marketable securities and investment other securities, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and consider counterparty credit risk in our assessment of fair value. The Company determines the fair value fair value of marketable securities and investment other securities based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

· Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

· Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

· Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

Where an accounts receivable other is settled with the receipt of the common stock or other instrument, the common stock or other instrument was classified as an asset on the consolidated balance sheet as either an investment marketable security (when the customer is a public entity) or as an investment other security (when the customer is a privately held entity).

For the three months ended June 30, 2021 and June 30, 2020 the Company recorded $(18,623) and $(30,849), respectively and for the nine months ended June 30, 2021 and June 30, 2020 the Company recorded $526,940 and $(906,011), respectively of realized and unrealized gain (loss) on marketable and other securities, including impairments. The realized gain was driven by the sale of our investment in Formula Four Beverages, Inc. that was previously written to zero based on prior information related to the company’s performance and COVID-19 impacts, while the loss in the prior year was driven by the impairment from its investment in Formula Four Beverages, Inc. and Kure Corp.

On December 30, 2017, the Company entered into an agreement with Isodiol International, Inc., whereby the Company provided pharmaceutical grade phytochemical compound development services. As payment for these services, the Company has received 1,226,435 shares of Isodiol’s common stock between December 31, 2017 and January 2019. The Company also received 38,095 shares of Isodiol’s common stock upon Isodiol’s acquisition of Kure Corp., giving the Company a total of 1,264,530 shares. At June 30, 2021, the Company had 1,042,193 shares valued at $13,412.

In September 2020, the Company purchased a membership interest in Adara Sponsor LLC for $250,000, which along with proceeds from other investors was utilized as an investment in Adara Acquisition Corporation (“Adara”), a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination (a “SPAC”). On January 13, 2021, the Company executed second tranche subscriptions agreements and funded the remaining $750,000 commitment into Adara Sponsor, LLC. On February 9, 2021, the public shares of Adara began trading on the NYSE. Commencing March 24, 2021, holders of the 11,500,000 units sold in the Adara’s initial public offering could elect to separately trade shares of the Adara Class A common stock and warrants included in the units. The shares of Class A common stock and warrants that were separated now trade on NYSE American LLC under the symbols “ADRA” and “ADRA WS”, respectively. On June 30, 2021,the Company’s implied, indirect ownership in Adara represented 4.4% (633,988 shares) and 10.1% (1 million) of the warrants. As of June 30, 2021, ADRA stock closed at $10.00 while ADRA WS closed at $0.67.

Adara’s focus of targets to pursue for the business combination are expected to be in the consumer products industry including business in the health and wellness, ecommerce, discretionary spending, information technology sectors and related channels of distribution. While Adara is currently a listed company, the Company’s investment is in Adara Sponsor, LLC and consequently the Company has classified this investment as Level 3 for fair value measurement purposes as there are no observable inputs. In valuing the investment, the Company used the value paid, which was the price offered to all third-party investors. The Company assessed the common stock and determined there was not an impairment for the period ended June 30, 2021.

The table below summarizes the assets valued at fair value as of June 30, 2021:

	In Active
	Markets for			Significant Other		Significant
	Identical Assets			Observable		Unobservable		Total Fair Value
	and Liabilities			Inputs		Inputs		at June 30,
	(Level 1)			(Level 2)		(Level 3)		2021
Marketable Securities	$	13,412		$	-	$	-	$	13,412
Investment other securities	$	-		$	-	$	1,000,000	$	1,000,000
	(Level 1)			(Level 2)		(Level 3)		2021
Balance at September 30, 2020	$	26,472		$	-	$	250,000	$	276,472
Change in value of equities		2,710			-		-		2,710
Balance at December 31, 2020		29,182			-		250,000		279,182
Change in value of equities		2,853							2,853
Additional Investment		-					750,000		750,000
Balance at March 31, 2021	$	32,035		$	-	$	1,000,000	$	1,032,035
Change in value of equities		(18,623	)						(18,623	)
Additional Investment		-					-		-
Balance at June 30, 2021	$	13,412		$	-	$	1,000,000	$	1,013,412