Note 12 - Concentration of credit risk
|12 Months Ended|
Dec. 31, 2019
|Note 12 - Concentration of credit risk||
Note 12 Concentration of credit risk
The Company had a significant portion of its assets invested in G Farma entities, which assets have now been impaired. These investments included the notes receivable and the intended 3.843% equity in G Farma Equity Entities described in Note 8, and the finance leases receivable described in Note 9. At December 31, 2019, after the bad debt reserve described in Note 9 and the asset impairments described in Notes 8, 9, and 11, these assets represent 5% 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 borrowers ability to repay, estimated value of underlying collateral and current economic conditions.
The events described in Notes 1, 8, 9, and 11, led the Company to record a bad debt reserve against finance leases receivable of $786,680 at December 31, 2019. There was no bad debt reserve against finance leases receivable at December 31, 2018. Bad debt expense related to the finance leases receivable of $765,001 and $0, respectively, is included in selling, general and administrative expenses in the consolidated income statements for the years ended December 31, 2019 and 2018, respectively. The receivable and bad debt reserve at December 31, 2019 includes an additional $21,679 which is unlikely of collections and therefore was not recognized as revenue or as bad debt expense.
These same events, led the Company to fully impair G Farma notes receivable of $1,045,051, fully impair the $600,002 contractual interest in G Farmas legal recovery, and fully impair the Companys 3.843% equity interest in G Farma Equity Entities, formerly valued at $41,600 as of December 31, 2019. On October 3, 2019, the Company rescinded the sale of an aggregate of 288,890 shares of its Common Stock to G Farma, due to complete failure of consideration, see Note 11. Impairments related to the G Farma investments of $1,688,825 and $0 are included in Gain (loss) in investments in the consolidated income statements for the years ended December 31, 2019 and 2018, respectively.
Disclosure of accounting policy for credit risk.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef