Equity Method Investment

9 Months Ended

Sep. 30, 2021

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investment

Note 5 – Equity Method Investment

In March 2019, the Company acquired a 50% investment in Pineapple Ventures, Inc. (“PVI”) in exchange for 2,000,000 shares of the Company’s Series A Preferred stock, which upon issuance were immediately converted into 20,000,000 shares of common stock. The investment has been accounted for under the equity method. In addition to having a direct investment, the Company also noted that common ownership with PVI represents an additional variable interest. However, it was determined that the Company does not have the power to direct the activities that most significantly impact PVI’s economic performance, and therefore, the Company is not the primary beneficiary of PVI and PVI has not been consolidated under the variable interest model.

On January 17, 2020, the Company entered into an agreement with Jaime Ortega whereby in exchange for Mr. Ortega cancelling $1,062,000 of existing loans extended to the Company by Jaime Ortega, Neu-Ventures, Inc., and Sky Island, Inc., the Company transferred to Mr. Ortega 10,000 shares of capital stock of PVI. Subsequently, on February 11, 2021, the parties entered into amended agreement pursuant to which the original number of shares sold to Mr. Ortega was reduced from 10,000 shares of capital stock of PVI to 4,827 shares of capital stock of PVI. Accordingly, the Company currently owns 45,173 shares of capital stock of PVI. This amendment was entered into to correct the original agreement and properly reflect the value of the Company’s stock at the time of the initial agreement.

The investment was recorded at cost, which was determined to be $11,000,000 based on a value of $0.55 per share of common stock. A total of 10,000,000 shares of common stock were issued as of December 31, 2020. As of September 30, 2021, and December 31, 2020, the Company has 45.17% ownership interest in PVI.

The following represents summarized financial information of PVI for the nine months ended September 30, 2021, and 2020, respectively:

	September 30, 2021			September 30, 2020
Revenue	$	111,552		$	139,022
Cost of goods sold		-			1,649
Gross margin		111,552			137,373
Operating expenses		1,862,676			1,004,953
Gain from the sale of investments		-			(430,500	)
Net loss	$	(1,751,124	)	$	(437,080	)

Based on its 45.17% equity investment, the Company has recorded a loss from equity investment of $790,126 and $199,769 for the nine months ended September 30, 2021, and 2020, respectively. The carrying value of the equity investment as of September 30, 2021, and December 31, 2020, was $8,698,490 and $9,488,616, respectively.