NOTE 5 – EQUITY METHOD INVESTMENT

During November 2018, the Company invested $50,000 for a 19.9% Class B limited liability membership interest in EPH and recorded this transaction as an equity method investment due to the Company’s ability to exercise significant influence over EPH. The carrying value of the investment in EPH was reduced to zero after recording the proportionate share of the investee’s net loss for the year. In January 2019, the Company committed an additional $21,588 through a subscription payable to maintain its 19.9% Class B limited liability interests in EPH, after additional Class A units were sold to investors. The $21,588 remains due at March 31, 2019 and is included in accounts payable and accrued expenses on the consolidated balance sheets. The carrying value of the investment remains at zero at March 31, 2019. The loss in equity investment has been presented on the consolidated statement of operations for the three months ended March 31, 2019. There were no distributions received from the equity method investment through the first quarter of 2019.

For the three months ended March 31, 2019, EPH generated revenue of $2,642,935 and recorded a net loss of $531,894. The net loss was due in material part from fees paid to the Company under its Management Agreement, as well as expenses incurred in connection with the OBG closing on January 18, 2019, and related funding activities.

See Note 6 for transactions with our equity method investment during the three-month period ended March 31, 2019.