Note 13 - Concentration of credit risk

The Company has a significant portion of its assets invested in G Farma entities. These investments include the notes receivable and 3.843% equity in G Farma Equity Entities described in Note 9, the finance leases receivable described in Note 10, and the contractual interest in legal recovery described in Note 12. At March 31, 2019, after the bad debt reserve described in Note 10 and the asset impairments described in Notes 9, 10 and 12, these assets represent 6% of the consolidated total assets of the Company. At December 31, 2018, these assets represented 27% of the consolidated total assets of the Company.

The Company closely monitors each investment based on known and inherent risks in our investments which include financial results, satisfying scheduled payments and compliance with financial covenants, adverse situations that may affect the borrower’s ability to repay, estimated value of underlying collateral and current economic conditions. During the quarter ended March 31, 2019, events described in Notes 1, 9, 10 and 12, led the Company to record a $668,958 bad debt reserve against finance leases receivable, which is included in Selling, general and administrative expenses in the condensed consolidated income statement for the three months ended March 31, 2019. These same events, led the Company to impair G Farma notes receivable by $997,956, fully impair the $600,002 contractual interest in G Farma’s legal recovery, and fully impair the Company’s 3.843% equity interest in G Farma Equity Entities, formerly valued at $41,600. Total impairments related to the G Farma investments, recorded at March 31, 2019, are $1,639,558 and are included in Gain (loss) in investments on the condensed consolidated income statements for the three months ended March 31, 2019. No impairments or reserves were recorded at December 31, 2018.