Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 04, 2020 | |
Details | ||
Registrant CIK | 0001599117 | |
Fiscal Year End | --12-31 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 000-55323 | |
Entity Registrant Name | Mentor Capital, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 77-0395098 | |
Entity Address, Address Line One | 511 Fourteenth Street, Suite A-2, A-4, A-6 | |
Entity Address, City or Town | Ramona | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92065 | |
Entity Address, Address Description | Address of principal executive offices | |
Phone Fax Number Description | Registrant’s telephone number, including area code | |
City Area Code | 760 | |
Local Phone Number | 788-4700 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 22,850,947 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 | |
Current assets | |||
Cash and cash equivalents | $ 938,764 | $ 686,611 | |
Investment in securities, at fair value | 37,365 | 0 | |
Accounts receivable, net | 501,803 | 521,605 | |
Net finance leases receivable, current portion | 65,508 | 62,145 | |
Net finance leases receivable-non-performing, current portion | 0 | 269,000 | |
Investment in accounts receivable, current portion, net of discount | 117,000 | 4,000 | |
Convertible notes receivable, current portion | 54,233 | 52,930 | |
Prepaid expenses and other current assets | 30,262 | 59,065 | |
Employee advances and other receivable | 2,525 | 4,421 | |
Total current assets | 1,747,460 | 1,659,777 | |
Property and equipment | |||
Property and equipment | 169,756 | 153,163 | |
Accumulated depreciation and amortization | (125,580) | (121,542) | |
Property and equipment, net | 44,176 | 31,621 | |
Other assets | |||
Operating lease right-of-use assets | 219,334 | 324,408 | |
Finance lease right-of-use assets | 228,649 | 169,692 | |
Investment in account receivable, net of discount and current portion | 302,729 | 381,512 | |
Net finance leases receivable, net of current portion | 345,627 | 382,727 | |
Convertible notes receivable, net of current portion | 25,812 | 25,191 | |
Contractual interest in legal recovery | 381,529 | 346,195 | |
Deposits | 9,575 | 9,575 | |
Long term investments | 204,528 | 209,697 | |
Goodwill | 1,426,182 | 1,426,182 | |
Total other assets | 3,143,965 | 3,275,179 | |
Total assets | 4,935,601 | 4,966,577 | |
Current liabilities | |||
Accounts payable | 29,304 | 74,120 | |
Accrued expenses | 247,293 | 217,764 | |
Related party payable | 0 | 27,472 | |
Deferred revenue | 19,436 | 22,653 | |
Paycheck protection program loans, current portion | 181,530 | 0 | |
Finance lease liability, current portion | 58,942 | 41,675 | |
Operating lease liability, current portion | 161,441 | 184,436 | |
Term loan | 11,151 | 24,017 | |
Total current liabilities | 709,097 | 592,137 | |
Long-term liabilities | |||
Accrued salary, retirement, and incentive fee - related party | 1,127,043 | 1,108,438 | |
Paycheck protection program loans, net of current portion | 279,017 | 0 | |
Finance lease liability, net of current portion | 150,800 | 112,418 | |
Operating lease liability, net of current portion | 65,367 | 140,900 | |
Total long-term liabilities | 1,622,227 | 1,361,756 | |
Total liabilities | 2,331,324 | 1,953,893 | |
Commitments and Contingencies | 0 | 0 | |
Shareholders' equity | |||
Preferred Stock, Value, Issued | [1] | 0 | 0 |
Common Stock, Value, Issued | 2,285 | 2,285 | |
Additional paid in capital | 13,071,655 | 13,071,655 | |
Accumulated deficit | (10,307,161) | (9,875,206) | |
Non-controlling interest | (162,502) | (186,050) | |
Total shareholders' equity | 2,604,277 | 3,012,684 | |
Total liabilities and shareholders' equity | $ 4,935,601 | $ 4,966,577 | |
[1] | Par value is less than $0.01. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) - Parenthetical - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 | |
Details | |||
Preferred Stock, Par or Stated Value Per Share | [1] | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | [1] | 5,000,000 | 5,000,000 |
Preferred Stock, Shares Issued | [1] | 11 | 11 |
Preferred Stock, Shares Outstanding | [1] | 11 | 11 |
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | |
Common Stock, Shares Authorized | 75,000,000 | 75,000,000 | |
Common Stock, Shares, Issued | 22,850,947 | 22,850,947 | |
Common Stock, Shares, Outstanding | 22,850,947 | 22,850,947 | |
[1] | Par value is less than $0.01. |
Condensed Consolidated Income S
Condensed Consolidated Income Statements (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | ||
Revenue | |||||
Service fees | $ 1,146,839 | $ 1,017,587 | $ 2,283,763 | $ 1,973,493 | |
Lease equipment sales | 0 | 0 | 0 | 74,889 | |
Finance lease revenue | 12,028 | 12,162 | 24,567 | 49,053 | |
Consulting revenue | 0 | 0 | 0 | 8,310 | |
Total revenue | 1,158,867 | 1,029,749 | 2,308,330 | 2,105,745 | |
Cost of sales | 790,670 | 728,590 | 1,563,407 | 1,445,866 | |
Gross profit | 368,197 | 301,159 | 744,923 | 659,879 | |
Selling, general and administrative expenses | 573,072 | 587,497 | 1,186,522 | 1,802,459 | |
Operating income (loss) | (204,875) | (286,338) | (441,599) | (1,142,580) | |
Other income and (expense) | |||||
Gain (loss) on investments | 4,288 | (132,088) | (5,919) | (1,701,969) | |
Interest income | 21,133 | 22,884 | 40,537 | 65,464 | |
Interest expense | (6,846) | (5,851) | (14,184) | (10,375) | |
Gain on equipment disposal | 0 | 1,500 | 0 | 1,500 | |
Economic Injury Disaster Loan advance | 10,000 | 0 | 10,000 | 0 | |
Other income (expense) | 4,272 | 11,340 | 16,358 | 11,340 | |
Total other income and (expense) | 32,847 | (102,215) | 46,792 | (1,634,040) | |
Income (loss) before provision for income taxes | (172,028) | (388,553) | (394,807) | (2,776,620) | |
Provision for income taxes | 2,422 | 850 | 13,600 | 17,650 | |
Net income (loss) | (174,450) | (389,403) | (408,407) | (2,794,270) | |
Gain (loss) attributable to non-controlling interest | 9,735 | 18,872 | 23,548 | 20,600 | |
Net Income (Loss) | $ (184,185) | $ (408,275) | $ (431,955) | $ (2,814,870) | |
Basic and diluted net income (loss) per Mentor common share: | |||||
Earnings Per Share, Basic and Diluted | $ (0.008) | $ (0.018) | $ (0.019) | $ (0.122) | |
Weighted average number of shares of Mentor common stock outstanding: | |||||
Weighted Average Number of Shares Outstanding, Basic and Diluted | [1] | 22,850,947 | 23,139,837 | 22,850,947 | 23,139,837 |
[1] | The company recorded an operating loss; therefore the diluted EPS will not be calculated as the diluted EPS effect is anti-dilutive. |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Shareholders' Equity (Unaudited) - USD ($) | Preferred Stock | [1] | Common Stock | Additional Paid-in Capital | Retained Earnings | Parent | Noncontrolling Interest | Total |
Equity Balance, Starting at Dec. 31, 2018 | $ 0 | $ 2,314 | $ 13,071,626 | $ (6,438,316) | $ 6,635,624 | $ (201,784) | $ 6,433,840 | |
Shares Outstanding, Starting at Dec. 31, 2018 | 11 | 23,139,837 | ||||||
Distribution | $ 0 | $ 0 | 0 | 0 | 0 | (2,524) | (2,524) | |
Net Income (Loss) | $ 0 | $ 0 | 0 | (2,814,870) | (2,814,870) | 20,600 | (2,794,270) | |
Shares Outstanding, Ending at Jun. 30, 2019 | 11 | 23,139,837 | ||||||
Equity Balance, Ending at Jun. 30, 2019 | $ 0 | $ 2,314 | 13,071,626 | (9,253,186) | 3,820,754 | (183,708) | 3,637,046 | |
Equity Balance, Starting at Mar. 31, 2019 | $ 0 | $ 2,314 | 13,071,626 | (8,844,911) | 4,229,029 | (202,580) | 4,026,449 | |
Shares Outstanding, Starting at Mar. 31, 2019 | 11 | 23,139,837 | ||||||
Net Income (Loss) | $ 0 | $ 0 | 0 | (408,275) | (408,275) | 18,872 | (389,403) | |
Shares Outstanding, Ending at Jun. 30, 2019 | 11 | 23,139,837 | ||||||
Equity Balance, Ending at Jun. 30, 2019 | $ 0 | $ 2,314 | 13,071,626 | (9,253,186) | 3,820,754 | (183,708) | 3,637,046 | |
Equity Balance, Starting at Dec. 31, 2019 | $ 0 | $ 2,285 | 13,071,655 | (9,875,206) | 3,198,734 | (186,050) | 3,012,684 | |
Shares Outstanding, Starting at Dec. 31, 2019 | 11 | 22,850,947 | ||||||
Net Income (Loss) | $ 0 | $ 0 | 0 | (431,955) | (431,955) | 23,548 | (408,407) | |
Shares Outstanding, Ending at Jun. 30, 2020 | 11 | 22,850,947 | ||||||
Equity Balance, Ending at Jun. 30, 2020 | $ 0 | $ 2,285 | 13,071,655 | (10,307,161) | 2,766,779 | (162,502) | 2,604,277 | |
Equity Balance, Starting at Mar. 31, 2020 | $ 0 | $ 2,285 | 13,071,655 | (10,122,976) | 2,950,964 | (172,237) | 2,778,727 | |
Shares Outstanding, Starting at Mar. 31, 2020 | 11 | 22,850,947 | ||||||
Net Income (Loss) | $ 0 | $ 0 | 0 | (184,185) | (184,185) | 9,735 | (174,450) | |
Shares Outstanding, Ending at Jun. 30, 2020 | 11 | 22,850,947 | ||||||
Equity Balance, Ending at Jun. 30, 2020 | $ 0 | $ 2,285 | $ 13,071,655 | $ (10,307,161) | $ 2,766,779 | $ (162,502) | $ 2,604,277 | |
[1] | Par value of series Q preferred shares is less than $1. |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ (408,407) | $ (2,794,270) |
Adjustments to reconcile net income (loss) to net cash provided by (used by) operating activities: | ||
Depreciation and amortization | 8,939 | 11,170 |
Non-cash amortization of right of use asset | 37,973 | 14,624 |
(Gain) loss on equipment disposal | 0 | (1,500) |
Bad debt expense | 29,893 | 740,484 |
Amortization of discount on investment in account receivable | (38,217) | (39,997) |
Increase in accrued investment interest income | (1,924) | (8,579) |
(Gain) loss on investment in securities, at fair value | 750 | 10,890 |
Gain on long-term investments | 5,169 | 0 |
Impairment on G Farma notes receivable and investments | 0 | 1,688,825 |
Decrease (increase) in operating assets | ||
Accounts receivable - trade | 9,428 | (22,914) |
Prepaid expenses and other current assets | 28,803 | 20,077 |
Employee advances | 1,896 | (6,299) |
Increase (decrease) in operating liabilities | ||
Accounts payable | (44,816) | (32,610) |
Accrued expenses | 29,529 | (107,529) |
Deferred revenue | (3,217) | 0 |
Accrued salary, retirement, and benefits - related party | 18,605 | 30,528 |
Net cash provided by (used by) operating activities | (325,596) | (497,100) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of investment securities | (38,115) | |
Proceeds from sale of investment securities | 0 | 249,222 |
Cash advanced on notes receivable | 0 | (31,000) |
Proceeds from notes receivable | 0 | 7,298 |
Deposits on equipment to be leased | 0 | (18,153) |
Investment in direct financing leases | 0 | (94,786) |
Proceeds from finance lease receivable | 283,218 | 78,420 |
Purchase contractual interest in legal recovery | (35,334) | (100,000) |
Purchases of property and equipment | (21,754) | (8,158) |
Proceeds from sale of property and equipment | 260 | 1,500 |
Down payments on right of use assets | (9,604) | (16,768) |
Proceeds from investment in receivable | 4,000 | 117,000 |
Net cash provided by (used by) investing activities | 182,671 | 184,575 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from paycheck protection program loans | 460,547 | 0 |
Payments on related party payable | (27,472) | (5,963) |
Payments on long-term debt | (12,866) | (29,561) |
Payments on finance lease liabilities | (25,131) | (10,143) |
Non-controlling interest distribution | 0 | (2,524) |
Net cash provided by (used by) financing activities | 395,078 | (48,191) |
Net change in cash | 252,153 | (360,716) |
Beginning cash | 686,611 | 1,470,574 |
Ending cash | 938,764 | 1,109,858 |
SUPPLEMENTARY INFORMATION: | ||
Cash paid for interest | 14,184 | 10,440 |
Cash paid for income taxes | 7,680 | 15,070 |
NON-CASH INVESTING AND FINANCING TRANSACTIONS: | ||
Right of use assets acquired through operating lease liability | 0 | 483,937 |
Right of use assets acquired through finance lease liability | $ 80,779 | $ 144,516 |
Note 1 - Nature of operations
Note 1 - Nature of operations | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 1 - Nature of operations | Note 1 - Nature of operations Corporate Structure Overview Mentor Capital, Inc. (Mentor or the Company), reincorporated under the laws of the State of Delaware in September 2015. The entity was originally founded as an investment partnership in Silicon Valley, California, by the current CEO in 1985 and subsequently incorporated under the laws of the State of California on July 29, 1994. On September 12, 1996, the Companys offering statement was qualified pursuant to Regulation A of the Securities Act, and the Company began to trade its shares publicly. On August 21, 1998, the Company filed for voluntary reorganization, and on January 11, 2000, the Company emerged from Chapter 11 reorganization. The Company relocated to San Diego, California, and contracted to provide financial assistance and investment into small businesses. On May 22, 2015, a corporation named Mentor Capital, Inc. (Mentor Delaware) was incorporated under the laws of the State of Delaware. A shareholder-approved merger between Mentor and Mentor Delaware was approved by the California and Delaware Secretaries of State, and became effective September 24, 2015, thereby establishing Mentor as a Delaware corporation. Beginning September 2008, after the name change back to Mentor Capital, Inc., the Companys common stock traded publicly under the trading symbol OTC Markets: MNTR and after February 9, 2015, as OTCQB: MNTR and after August 6, 2018, under the trading symbol OTCQX: MNTR and after May 1, 2020 under the trading symbol OTCQB: MNTR. In 2009, the Company began focusing its investing activities in leading-edge cancer companies. In 2012, in response to government limitations on reimbursement for certain highly technical and expensive cancer treatments and a resulting business decline in the cancer immunotherapy sector, the Company decided to exit that space. In the summer of 2013, the Company was asked to consider investing in a cancer-related project with a medical marijuana focus. On August 29, 2013, the Company decided to divest of its cancer assets and focus its next round of investments in the medical marijuana and cannabis sector. In late 2019, the Company expanded its target industry focus to potentially include energy, mining and minerals, technology, consumer products, management services, and manufacturing sectors with the goal of ensuring investment diversification. Mentor has a 51% interest in Waste Consolidators, Inc. (WCI). WCI was incorporated in Colorado in 1999 and operates in Arizona and Texas. It is a long standing investment that was first invested into in 2003. On April 18, 2016, the Company formed Mentor IP, LLC (MCIP), a South Dakota limited liability company and wholly owned subsidiary of Mentor. MCIP was formed to hold interests related to patent rights obtained on April 4, 2016, when Mentor Capital, Inc. entered into that certain "Larson - Mentor Capital, Inc. Patent and License Fee Facility with Agreement Provisions for an -- 80% / 20% Domestic Economic Interest -- 50% / 50% Foreign Economic Interest" with R. L. Larson and Larson Capital, LLC (MCIP Agreement). Pursuant to the MCIP Agreement, MCIP obtained rights to an international patent application for foreign THC and CBD cannabis vape pens under the provisions of the Patent Cooperation Treaty of 1970, as amended. R. L. Larson continues its efforts to obtain exclusive licensing rights in the United States for THC and CBD cannabis vape pens for various THC and CBD percentage ranges and concentrations. Patent application national phase maintenance fees were expensed when paid and there were no assets related to MCIP on the consolidated financial statements at June 30, 2020 and December 31, 2019. On January 21, 2020, the United States Patent and Trademark Office granted a Notice of Allowance for the United States patent application and on May 5, 2020, the United States patent was issued. On March 23, 2020, MCIP applied for expedited prosecution with the Canadian Intellectual Property Office under the Patent Cooperation Treaty Patent Prosecution Highway Program based on the claims allowed in the corresponding United States patent application. On June 29, 2020, the Canadian Intellectual Property Office granted a Notice of Allowance for the Canada patent. On April 13, 2017, Mentor entered into an agreement to provide $40,000 of funding to offset costs of the application of cannabis oil in a glaucoma study conducted by and otherwise paid for by Dr. Robert M. Mandelkorn, MD. Mentor, doing business as GlauCanna, will hold an 80% interest in any commercial opportunities that result from the study. Dr. Mandelkorn will hold the remaining 20%. The Company has a membership equity interest in Electrum Partners, LLC (Electrum) which is carried at cost of $194,028 and $194,028 at June 30, 2020 and December 31, 2019. On January 28, 2019, as part of a Second Capital Agreement between Mentor and Electrum (described in Note 10), Mentor was granted an option to convert its 6,198 membership interests in Electrum into a cash payment of $194,028 plus an additional 19.4% of anything of value received by Electrum as a result of the pending litigation in British Columbia (see below). On September 19, 2017, the Company formed Mentor Partner I, LLC (Partner I), a California limited liability company as a wholly owned subsidiary of Mentor. In 2018, Mentor contributed $996,000 of capital to Partner I to facilitate the purchase of manufacturing equipment to be leased from Partner I by G FarmaLabs Limited (G Farma) under a Master Equipment Lease Agreement dated January 16, 2018, as amended. Amendments expanded the Lessee under the agreement to include G FarmaLabs Limited, and G FarmaLabs DHS, LLC, (collectively referred to as G Farma Lease Entities). The finance leases resulting from this investment have been impaired by $784,520 and $765,001 at June 30, 2020 and December 31, 2019, respectively, due to circumstances further described in Note 9. On February 1, 2018, the Company formed Mentor Partner II, LLC (Partner II), a California limited liability company as a wholly owned subsidiary of Mentor. On February 8, 2018, Mentor contributed $400,000 to Partner II to facilitate the purchase of manufacturing equipment to be leased from Partner II by Pueblo West Organics, LLC, a Colorado limited liability company (Pueblo West) under a Master Equipment Lease Agreement dated February 11, 2018. On March 12, 2019, Mentor agreed to use Partner II earnings of $61,368 to facilitate the purchase of additional manufacturing equipment to Pueblo West under a Second Amendment to the lease, see Note 9. On February 20, 2018, the Company formed Mentor Partner III, LLC (Partner III), a California limited liability company, as a wholly owned subsidiary of Mentor for the purpose of acquisition and investing. Partner III has had no activity since its inception. On February 28, 2018, the Company formed Mentor Partner IV, LLC (Partner IV), a California limited liability company, as a wholly owned subsidiary of Mentor for the purpose of acquisition and investing. Partner IV has had no activity since its inception. On September 6, 2018, the Company entered into an Equity Purchase and Issuance Agreement with G FarmaLabs Limited, G FarmaLabs DHS, LLC, GFBrands, Inc., Finka Distribution, Inc., and G FarmaLabs, WA, LLC under which Mentor was supposed to receive equity interests in the G Farma Equity Entities and their affiliates (together the G Farma Equity Entities) equal to 3.75% of the G Farma Equity Entities interests (See Note 8). On March 4, 2019, Addendum VIII increased the G Farma Equity Entities equity interest to which Mentor is immediately entitled to 3.843%, and added Goya Ventures, LLC as a G Farma Equity Entity. We are now in litigation with these entities. See Note 20. On October 30, 2018, the Company entered into a Recovery Purchase Agreement with Electrum. Electrum is the plaintiff in an ongoing legal action pending in the Supreme Court of British Columbia (Litigation). As described further in Note 10, Mentor provided capital for payment of Litigation costs in the amount of $181,529 and $146,195 as of June 30, 2020 and December 31, 2019, respectively. On April 30, 2020, $15,383 of Mentors funds were returned to Mentor from the attorney representing Electrum. After repayment to Mentor of all funds invested for payment of Litigation costs, Mentor will receive 18% of anything of value received by Electrum as a result of the Litigation (Recovery), after first receiving reimbursement of the Litigation costs. On October 31, 2018, Mentor entered into a secured Capital Agreement with Electrum and invested an additional $100,000 of capital in Electrum. Under the Capital Agreement, on the payment date, Electrum will pay to Mentor the sum of (i) $100,000, (ii) ten percent (10%) of the Recovery, and (iii) 0.083334% of the Recovery for each full month from October 31, 2018 to the payment date for each full month that $833 is not paid to Mentor. The payment date is the earlier of November 1, 2021, or the final resolution of the Litigation. On January 28, 2019, the Company entered into a second secured Capital Agreement with Electrum and invested an additional $100,000 of capital in Electrum with payment terms similar to the October 31, 2018 Capital Agreement. As part of the January 28, 2019 Capital Agreement Mentor was granted an option to convert its 6,198 membership interests in Electrum into a cash payment of $194,027 plus an additional 19.4% of the Recovery. On December 21, 2018, Mentor paid $10,000 to purchase 500,000 shares of NeuCourt, Inc. common stock, representing approximately 6.2% of NeuCourts issued and outstanding common stock. On March 14, 2019, the Company was notified by G Farma that, on February 22, 2019, the City of Corona Building Department closed access to G Farmas corporate location and posted a notice preventing entry to the facility. The notice cited unpermitted modifications to electrical, mechanical, and plumbing, including all undetermined building modifications, as the reason for closure. On April 24, 2019, the Company was informed that certain G Farma assets at G Farmas corporate location, including equipment leased to G Farma by Mentor Partner I valued at approximately $427,804, were impounded by the City of Corona on or around February 22, 2019. This event significantly impacted G Farmas financial position and its ability to make payments under the finance leases receivable and notes receivable due the Company. See Notes 8, 9, and 10. In March 2020, we discovered that an additional component valued at $36,594 was missing from the equipment we recovered but we are uncertain whether this was taken by the Corona Police. G Farma has not made scheduled payments on the finance lease receivable or the notes receivable since February 19, 2019 and Company management feels it is unlikely we will recover amounts due us. Based on our analysis of current conditions, we recorded a bad debt allowance of $765,001 on the finance lease receivable, as of December 31, 2019, and increased the allowance by $19,519 for the six months ended June 30, 2020, see Note 9. In January 2020, the Company repossessed leased equipment under G Farmas control and in March 2020, the Company sold equipment with a cost of $495,967 to the highest offeror for $240,000, however, because a component of the equipment was reported missing, the Company refunded $17,969 to the purchasing party. In June 2020, all remaining equipment repossessed from G Farma, with an original cost of $126,703, was sold for net proceeds of $27,459, after shipping and delivery costs. At December 31, 2019, we fully impaired G Farma notes receivable of $1,045,051, accrued interest of $28,680, and our investment in the G Farma contractual interest in legal recovery of $600,002. The Companys equity investment in G Farma Entities, previously valued at $41,600, was also impaired and reduced to $0, at December 31, 2019, see Notes 8 and 10. The Companys sale of 288,890 shares of its Common Stock to G Farma in exchange for investment in the G Farma contractual interest in legal recovery was rescinded on October 3, 2019 due to a complete failure of consideration. The Company recognized the rescission of the Common Stock at par value on December 31, 2019. On March 6, 2020, the 288,890 shares of Common Stock were cancelled and returned to unissued shares by the Companys stock transfer agent. On May 28, 2019, Mentor Capital, Inc. and Mentor Partner I, LLC filed a complaint against the G Farma Entities and three guarantors to the G Farma agreements, described herein and in Notes 8, 9, and 10, in the Superior Court of California in the County of Marin. The Company is primarily seeking monetary damages for breach of the G Farma agreements including promissory notes, leases, and other agreements, as well as actions for an injunction to recover leased property, to recover collateral under a security agreement, and to collect from guarantors on the agreements, among other things. Mentor intends to vigorously pursue this matter; however, collection is uncertain at this time. On January 22, 2020, the Court granted the Companys motion for writ of possession and preliminary injunction prohibiting defendants from retaining control of or selling leased property. On January 31, 2020, all remaining equipment leased to G Farma by Mentor Partner I which was not impounded by the Corona Police was repossessed by the Company and moved to storage under the Companys control. All repossessed equipment was sold as of June 30, 2020, see Note 9. |
Note 2 - Summary of significant
Note 2 - Summary of significant accounting policies | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 2 - Summary of significant accounting policies | Note 2 - Summary of significant accounting policies Condensed consolidated financial statements The unaudited condensed consolidated financial statements of the Company for the six month period ended June 30, 2020 and 2019 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2019 was derived from the audited financial statements included in the Company's financial statements as of and for the year ended December 31, 2019 included in the Companys Annual Report on Form 10-K filed with the Securities and Exchange Commission (the SEC) on March 25, 2020. These financial statements should be read in conjunction with that report. Basis of presentation The accompanying consolidated financial statements and related notes include the activity of subsidiaries in which a controlling financial interest is owned. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Significant intercompany balances and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform with current period presentation. As shown in the accompanying financial statements, the Company has a significant accumulated deficit of $10,307,161 as of June 30, 2020. The Company also continues to experience negative cash flows from operations. The Companys operating results in 2019 were significantly impacted by G Farmas default on the notes receivable, failure of consideration related to G Farmas purchase of shares of Common Stock, and loss of value of the equity interest in G Farma Equity Entities, described in Note 8 to the condensed consolidated financial statements, resulting in full impairment of these investments in the aggregate amount of $1,686,653. In addition, in 2019, the Company recorded a bad debt reserve on the G Farma equipment leases receivable of $765,001 and recorded an additional bad debt reserve of $19,519 for the six months ended June 30, 2020, see Note 9. The Company management believes it is more likely than not that Electrum will prevail in the legal action described in Note 10 to the consolidated financial statements, in which the Company has an interest. However, there is no surety that Electrum will prevail in its legal action or that we will be able to recover our funds and our percentage of the Litigation Recovery if Electrum does prevail. The Company will be required to raise additional capital to fund its operations and will continue to attempt to raise capital resources from both related and unrelated parties until such time as the Company is able to generate revenues sufficient to maintain itself as a viable entity. These factors have raised substantial doubt about the Company's ability to continue as a going concern. These financial statements are presented on the basis that we will continue as a going concern. The going concern concept contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. There can be no assurances that the Company will be able to raise additional capital or achieve profitability. However, the Company has approximately 6.2 million warrants outstanding in which the Company can reset the exercise price substantially below the current market price. These condensed consolidated financial statements do not include any adjustments that might result from repricing the outstanding warrants. Management's plans include increasing revenues through acquisition, investment, and organic growth. Management anticipates funding these activities by raising additional capital through the sale of equity securities and debt. Impact Related to COVID-19 The effect of the novel coronavirus (COVID-19) has significantly impacted the United States and the global economy. COVID-19 and the measures taken by many countries in response have adversely affected and could in the future materially adversely impact the Companys business, results of operations, financial condition, and stock price. The ongoing worldwide economic situation, future weakness in the credit markets and significant liquidity problems for the financial services industry may impact our financial condition in a number of ways. For example, our current or potential customers, or the current or potential customers of our partners or affiliates, may delay or decrease spending with us, or may not pay us, or may delay paying us for previously purchased products and services. Also, we, or our partners or affiliates, may have difficulties in securing additional financing. Additionally, our legal recovery efforts may be hindered due to the closure of the courts in California and British Columbia, which may cause COVID-19-related scheduling delays, hindering our legal recovery from the G Farma entities and delaying the receipt of the Companys interest in the Electrum Partners, LLC legal recovery, respectively. Public health efforts to mitigate the impact of COVID-19 include government actions such as travel restrictions, limitations on public gatherings, shelter in place orders and mandatory closures. These actions could impact WCIs client businesses ability and speed of collecting their tenant rent payments. We do not expect this to significantly reduce demand for WCI services because WCI helps lower monthly service costs paid by its client properties. However, WCIs clients will likely experience a delay in collecting rent from tenants, which in turn is expected to cause slower payments to WCI and possible discontinued service and uncollectible accounts receivable. WCI revenue in six months ended June 30, 2020 increased by 15.7%, as compared to the same period in 2019 and any impact of COVID-19 for the first half of 2020 is estimated to be immaterial. We will closely monitor our customer accounts and continue to assess the impact on collection of accounts receivable as we collect more information. According to the Critical Infrastructure Standards released by the Cybersecurity and Infrastructure Security Agency on March 18, 2020, Financial Services Sector businesses, like Mentor, are considered essential businesses. Because of the financial nature of Mentors operations, which consist of oversight of our portfolio companies, accounting, compliance, investor relations, and sales, Mentors day to day operations are not substantially hindered by remote office work or telework. We anticipate that current cash resources will be sufficient for us to execute our business plan for the next 10 months. The ultimate impact of COVID-19 on our business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of COVID-19 and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time. Use of estimates The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates, assumptions, and judgements that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of our consolidated financial statements, and the reported amount of revenues and expenses during the reporting period. Significant estimates relied upon in preparing these consolidated financial statements include revenue recognition, accounts and notes receivable reserves, expected future cash flows used to evaluate the recoverability of long-lived assets, estimated fair values of long-lived assets used to record impairment charges related to investments, goodwill, amortization periods, accrued expenses, and recoverability of the Companys net deferred tax assets and any related valuation allowance. Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from managements estimates if past experience or other assumptions do not turn out to be substantially accurate. Recent Accounting Standards From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standard Codifications (ASCs) are communicated through issuance of an Accounting Standards Update (ASU). Unless otherwise discussed, we believe that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on our consolidated financial statements upon adoption. Intangibles-Goodwill and Other Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment Fair Value Measurement Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement Newly Issued Not Yet Effective Accounting Standards Credit Losses - Measurement of Credit Losses on Financial Instruments Financial Instruments - Credit Losses Measurement of Credit Losses on Financial Instruments, Simplifying the Accounting for Income Taxes Simplifying the Accounting for Income Taxes Debt with Conversion and Other Options, and Derivatives and Hedging on Contracts in an Entitys Own Equity Debt Debt with Conversion and Other Options and Derivatives and Hedging Contracts in an Entitys Own Equity Concentrations of cash The Company maintains its cash and cash equivalents in bank deposit accounts which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts nor does the Company believe it is exposed to any significant credit risk on cash and cash equivalents. Accounts receivable Accounts receivable consist of trade accounts arising in the normal course of business and are classified as current assets and carried at original invoice amounts less an estimate for doubtful receivables based on a review of outstanding balances on a quarterly basis. The estimate of allowance for doubtful accounts is based on the Company's bad debt experience, market conditions, and aging of accounts receivable, among other factors. If the financial condition of the Company's customers deteriorates resulting in the customer's inability to pay the Company's receivables as they come due, additional allowances for doubtful accounts will be required. At June 30, 2020 and December 31, 2019, the Company has recorded an allowance in the amount of $53,866 and $38,984, respectively. The Company has two convertible notes receivable from NeuCourt, Inc. which are recorded at the aggregate principal face amount of $75,000 plus accrued interest of $5,045 and $3,121 at June 30, 2020 and December 31, 2019, as presented in Note 7. The notes bear 5% interest. One $25,000 principal face amount note, which matured November 22, 2019, was extended to November 22, 2021. A second $50,000 principal face amount note matures on October 31, 2020. No payments are required prior to maturity, however, at the time the $25,000 note was extended, accrued interest through November 4, 2019 was paid to Mentor. Principal and unpaid interest may be converted into a blend of shares of a to-be-created series of Preferred Stock, and Common Stock, of NeuCourt (defined as Conversion Shares) (i) on closing of a future financing round of at least $750,000, (ii) on the election of NeuCourt on maturity of the Note, or (iii) an election of Mentor following NeuCourts election to prepay the Note. The Conversion Price for the Note is the lower of (i) 75% of the price paid in the Next Equity Financing, or the price obtained by dividing a $3,000,000 valuation cap by the fully diluted number of shares. The number of Conversion Shares issued on conversion shall be the quotient obtained by dividing the outstanding principal and unpaid accrued interest on a Note to be converted on the date of conversion by the Conversion Price (the Total Number of Shares), The Total Number of Shares shall consist of Preferred Stock and Common Stock as follows: (i) That number of shares of Preferred Stock obtained by dividing (a) the principal amount of each Note and all accrued and unpaid interest thereunder by (b) the price per share paid by other purchasers of Preferred Stock in the Next Equity Financing (such number of shares, the "Number of Preferred Stock") and (ii) that number of shares of Common Stock equal to the Total Number of Shares minus the Number of Preferred Stock. Using the valuation cap of $3,000,000, the Notes would convert into an aggregate of 296,329 and 289,207 Conversion Shares at June 30, 2020 and December 31, 2019, respectively. In the event of a Corporate Transaction prior to repayment or conversion of the Note, the Company shall receive back two times the outstanding principal of each note, plus all accrued unpaid interest. NeuCourt is a Delaware corporation that is developing a technology that is expected to be useful in the dispute resolution industry. Investment in account receivable, net of discount On April 10, 2015, the Company entered into an exchange agreement whereby the Company received an investment in account receivable with annual installment payments of $117,000 through 2026. The investment is stated at face value, net of unamortized purchase discount. The discount is amortized to interest income over the term of the exchange agreement. Finance leases receivable The Company, through its subsidiaries, is the lessor of manufacturing equipment subject to leases under master leasing agreements. The leases contain an element of dealer profit and lessee bargain purchase options at prices substantially below the subject assets estimated residual values at the exercise date for the options. Consequently, the Company classified the leases as sales-type leases (the finance leases) for financial accounting purposes. For such finance leases, the Company reports the discounted present value of (i) future minimum lease payments (including the bargain purchase option, if any) and (ii) any residual value not subject to a bargain purchase option as a finance lease receivable on its balance sheet and accrues interest on the balance of the finance lease receivable based on the interest rate inherent in the applicable lease over the term of the lease. For each finance lease, the Company recognized revenue in an amount equal to the net investment in the lease and cost of sales equal to the net book value of the equipment at the inception of the applicable lease. A finance receivable is considered impaired, based on current information and events, if it is probable that we will be unable to collect all amounts due according to contractual terms. Impaired finance receivables include finance receivables that have been restructured and are troubled debt restructures. As discussed in Note 9, impairment of the finance lease receivable from G Farma was $803,399 and $786,680 at June 30, 2020 and December 31, 2019, respectively, based on Managements estimate of amounts we expect to recover. The June 30, 2020 impairment represents full impairment of the finance lease receivable from G Farma after applying proceeds from the sale of all recovered assets. The Company will continue to pursue collection for the lease payments remaining from the G Farma Lease Entities and G Farma Lease Guarantors. Credit quality of notes receivable and finance leases receivable and credit loss reserve As our notes receivable and finance leases receivable are limited in number, our management analyzes estimated credit loss reserves based on a detailed analysis of each receivable as opposed to using portfolio-based metrics. Our management does not use a system of assigning internal risk ratings to each of our receivables. Rather, each note receivable and finance lease receivable are analyzed quarterly and categorized as either performing or non-performing based on certain factors including, but not limited to, financial results, satisfying scheduled payments and compliance with financial covenants. A note receivable or finance lease receivable will be categorized as non-performing when a borrower experiences financial difficulty and has failed to make scheduled payments. As part of the monitoring process we may physically inspect the collateral or a borrowers facility and meet with a borrowers management to better understand such borrowers financial performance and its future plans on an as-needed basis. As described in Note 1, on March 14, 2019, the Company was notified by G Farma that the City of Corona Building Department closed access to G Farmas corporate location and posted a notice preventing entry to the facility. The Building Department notice stated that G Farma had modified electric and gas lines. On April 24, 2019, the Company learned that certain G Farma assets at their corporate location, including equipment leased to G Farma by Mentor Partner I valued at approximately $427,804, had been impounded by the City of Corona. In March 2020, we discovered that an additional component valued at $36,594 was missing from the equipment we recovered. This event significantly impacted G Farmas financial position and its ability to make payments under the finance lease receivable. G Farma has not made a lease payment since February 19, 2019. On May 28, 2019, the Company and Mentor Partner I, LLC filed a complaint against the G Farma Entities and three guarantors to the G Farma agreements, described in Notes 1, 8, 9, and 10, in the California Superior Court in and for the County of Marin. The Company is primarily seeking monetary damages for breach of the G Farma agreements including promissory notes, leases, and other agreements, as well as actions for an injunction to recover leased property, to recover collateral under a security agreement, and to collect from guarantors on the agreements. Mentor intends to vigorously pursue this matter; however, collection is uncertain at this time, see Note 20. On January 31, 2020, following grant of the Companys request for a writ of possession, all remaining equipment leased by Mentor Partner I to G Farma, which was not impounded by the Corona Police, was repossessed by the Company and moved to storage under the Companys control, See Note 9. In June 2020, all remaining repossessed equipment was sold by the Company. Goodwill Goodwill of $1,324,142 was derived from consolidating WCI effective January 1, 2014, and $102,040 of goodwill resulted from the 2005 acquisition of a 50% interest in WCI. The Company accounts for its Goodwill in accordance with FASB Accounting Standards Codification 350, Intangibles Goodwill and Other, which requires the Company to test goodwill for impairment annually or whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable, rather than amortize. Goodwill impairment tests consist of a comparison of each reporting units fair value with its carrying value. Impairment exists when the carrying amount of goodwill exceeds the implied fair value for each reporting unit. To estimate the fair value, management used valuation techniques which included the discounted value of estimated future cash flows. The evaluation of impairment requires the Company to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and are subject to change as future events and circumstances change. Actual results may differ from assumed and estimated amounts. Management determined that no impairment write-downs were required as of June 30, 2020 and December 31, 2019. Basic and diluted income (loss) per common share We compute net income (loss) per share in accordance with ASC 260, Earnings Per Share Outstanding warrants that had no effect on the computation of dilutive weighted average number of shares outstanding as their effect would be anti-dilutive were approximately 7,000,000 and 7,000,000 as of June 30, 2020 and December 31, 2019, respectively. There were 87,456 and 87,456 potentially dilutive shares outstanding at June 30, 2020 and December 31, 2019, respectively. Conversion of Series Q Preferred Stock into Common Stock would be anti-dilutive for the three and six months ended June 30, 2020 and 2019 and is not included in calculating the diluted weighted average number of shares outstanding. Paycheck Protection Program loans The Company has recorded Paycheck Protection Program (PPP) loans as a liability in accordance with FASB ASC 470, Debt and has accrued interest through June 30, 2020. Proceeds from the loans will remain recorded as a liability until either (1) the loan is, in part or wholly, forgiven and the Company has been legally released, or (2) the Company pays off the loan. If the loan is, in part or wholly, forgiven the liability will be reduced and a gain on the extinguishment will be recognized. See Note 17. |
Note 3 - Prepaid expenses and o
Note 3 - Prepaid expenses and other assets | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 3 - Prepaid expenses and other assets | Note 3 - Prepaid expenses and other assets Prepaid expenses and other assets consist of the following: June 30, 2020 December 31, 2019 Prepaid health insurance $ 5,240 $ 5,867 Other prepaid costs 25,022 53,198 $ 30,262 $ 59,065 |
Note 4 - Investment in account
Note 4 - Investment in account receivable | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 4 - Investment in account receivable | Note 4 Investment in account receivable On April 10, 2015, the Company entered into an exchange agreement whereby the Company received an investment in an account receivable with annual installment payments of $117,000 for 11 years, through 2026, totaling $1,287,000 in exchange for 757,059 shares of Mentor Common Stock obtained through exercise of 757,059 Series D warrants at $1.60 per share plus a $0.10 per warrant redemption price. The Company valued the transaction based on the market value of Company common shares exchanged in the transaction, resulting in a 17.87% discount from the face value of the account receivable. The discount is being amortized monthly to interest over the 11-year term of the agreement. The investment in account receivable is supported by an exchange agreement and consisted of the following: June 30, 2020 December 31, 2019 Face value $ 702,000 $ 706,000 Unamortized discount (282,271) (320,488) Net balance 419,729 385,512 Current portion (117,000) (4,000) Long term portion $ 302,729 $ 381,512 For the three months ended June 30, 2020 and 2019, $19,872 and $19,999 of discount amortization is included in interest income, respectively. For the six months ended June 30, 2020 and 2019, $38,217 and $39,997 of discount amortization is included in interest income, respectively. |
Note 5 - Property and equipment
Note 5 - Property and equipment | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 5 - Property and equipment | Note 5 - Property and equipment Property and equipment are comprised of the following: June 30, 2020 December 31, 2019 Computers $ 37,122 $ 37,271 Furniture and fixtures 22,075 22,075 Machinery and vehicles 110,559 93,817 169,756 153,163 Accumulated depreciation and amortization (125,580) (121,542) Net Property and equipment $ 44,176 $ 31,621 Depreciation and amortization expense was $5,097 and $218 for the three months ended June 30, 2020 and 2019, respectively. Depreciation and amortization expense was $8,938 and $11,170 for the six months ended June 30, 2020 and 2019, respectively. Depreciation on WCI vehicles used to service customer accounts is included in cost of goods sold and all other depreciation is included in selling, general and administrative expenses in the condensed consolidated income statements. |
Note 6 - Lessee Leases
Note 6 - Lessee Leases | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 6 - Lessee Leases | Note 6 Lessee Leases Our operating leases are comprised of office space and office equipment leases. Fleet leases entered into prior to January 1, 2019, are classified as operating leases. Fleet leases entered into beginning January 1, 2019, under ASC 842 guidelines, are classified as finance leases. Gross right of use assets recorded under finance leases related to WCI vehicle fleet leases were $296,716 and $206,332 as of June 30, 2020 and December 31, 2019, respectively. Accumulated amortization associated with finance leases was $68,067 and $36,640 as of June 30, 2020 and December 31, 2019, respectively. Lease costs recognized in our consolidated statements of operations is summarized as follows: Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Operating lease cost included in cost of goods $ 38,615 $ 34,238 $ 84,571 $ 91,095 Operating lease cost included in operating costs 13,846 14,592 28,119 28,288 Total operating lease cost (1) 52,461 48,830 112,690 119,383 Finance lease cost, included in cost of goods: Amortization of lease assets 17,434 7,076 31,427 12,443 Interest on lease liabilities 4,475 1,890 7,969 2,150 Total finance lease cost 21,909 8,966 39,396 14,593 Short-term lease cost 8,970 8,370 17,940 16,740 Total lease cost $ 83,340 $ 66,166 $ 170,026 $ 150,716 (1) Other information about lease amounts recognized in our condensed consolidated financial statements is summarized as follows: June 30, December 31, 2020 2019 Weighted-average remaining lease term operating leases 1.30 years 1.73 years Weighted-average remaining lease term finance leases 3.37 years 3.25 years Weighted-average discount rate operating leases 10.60% 10.20% Weighted-average discount rate finance leases 8.60% 9.00% Finance lease liabilities were as follows: June 30, December 31, 2020 2019 Gross finance lease liabilities $ 246,723 $ 208,641 Less: imputed interest (36,981) (54,548) Present value of finance lease liabilities 209,742 154,093 Less: current portion (58,942) (41,675) Long-term finance lease liabilities $ 150,800 $ 112,418 Operating lease liabilities were as follows: June 30, December 31, 2020 2019 Gross operating lease liabilities $ 246,827 $ 356,958 Less: imputed interest (20,018) (31,622) Present value of operating lease liabilities 226,809 325,336 Less: current portion (161,441) (184,436) Long-term operating lease liabilities $ 65,367 $ 140,900 |
Note 7 - Convertible notes rece
Note 7 - Convertible notes receivable | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 7 - Convertible notes receivable | Note 7 Convertible notes receivable Convertible notes receivable consists of the following: June 30, December 31, 2020 2019 November 22, 2017, NeuCourt, Inc. convertible note receivable including accrued interest of $812 and $191 at June 30, 2020 and December 31, 2019, respectively. The note bears interest at 5% per annum, originally matured November 22, 2019, and was extended to mature November 22, 2021. Principal and accrued interest are due at maturity. At the time of extension, NeuCourt paid the Company $2,496 of interest accrued through November 4, 2019. Principal and unpaid interest may be converted into a blend of shares of a to-be-created series of Preferred Stock and Common Stock of NeuCourt (i) on closing of a future financing round of at least $750,000, (ii) on the election of NeuCourt on maturity of the Note, or (iii) on election of Mentor following NeuCourts election to prepay the Note. * $ 25,812 $ 25,191 October 31, 2018, NeuCourt, Inc. convertible note receivable including accrued interest of $4,233 and $2,930 at June 30, 2020 and December 31, 2019, respectively. The note bears interest at 5% per annum and matures October 31, 2020. Principal and accrued interest are due at maturity. Principal and unpaid interest may be converted into a blend of shares of a to-be-created series of Preferred Stock and Common Stock of NeuCourt (i) on closing of a future financing round of at least $750,000, (ii) on the election of NeuCourt on maturity of the Note, or (iii) on election of Mentor following NeuCourts election to prepay the Note. * 54,233 52,930 Total convertible notes receivable 80,045 78,121 Less current portion (54,233) (52,930) Long term portion $ 25,812 $ 25,191 * |
Note 8 - Note purchase agreemen
Note 8 - Note purchase agreement and consulting agreement with G FarmaLabs Limited | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 8 - Note purchase agreement and consulting agreement with G FarmaLabs Limited | Note 8 - Note purchase agreement and consulting agreement with G FarmaLabs Limited On March 17, 2017, the Company entered into a Notes Purchase Agreement with G FarmaLabs Limited (G Farma), a Nevada corporation. Under the Agreement the Company purchased two secured promissory notes from G Farma in an aggregate principal amount of $500,000, both of which bore interest at 7.42% per annum, with monthly payments beginning on April 15, 2017, and maturity on April 15, 2022. The two G Farma notes, as amended by subsequent addenda, are secured by all property, real and personal, tangible or intangible of G Farma and are guaranteed by GF Brands, Inc. and two majority shareholders of G Farma. Effective as of March 4, 2019, the Company and G Farma had executed eight addenda subsequent to the original agreement. Addendum II through Addendum VIII increased the aggregate principal face amount of the working capital note to $990,000 and increased the monthly payments on the working capital note to $10,239 per month beginning March 15, 2019. G Farma has not made scheduled payments on the notes receivable since February 19, 2019. On September 6, 2018, as a result of an Equity Purchase and Issuance Agreement, certain entities were obligated to deliver to Mentor equity interests equal to 3.75% of G Farma and its affiliates (G Farma Equity Entities) in exchange for Mentor relinquishing its contingent equity rights under the Rights Agreement, increasing the working capital loan by $79,000, and leasing $171,000 of additional equipment to G Farma through Partner I. At December 31, 2018, Mentor had estimated the fair value of the 3.75% equity interest in the G Farma Equity Entities Mentor was supposed to receive, based on then licensed operations of the G Farma Equity Entities, at $41,600. On March 4, 2019, Addendum VIII increased the working capital note by $31,000 and the Company obtained from G Farma an obligation to issue an additional 0.093% interest in the G Farma Equity Entities, resulting in a total 3.843% equity interest in the G Farma Equity Entities and included the addition of Goya Ventures, LLC as a party to the Equity Purchase and Issuance Agreement. However, due to the uncertain financial position of the G Farma Entities, following the closure of its Corporate office and impoundment of certain Mentor assets leased to G Farma, described in Notes 1 and 10, the Company fully impaired its equity interests in G Farma Equity Entities and recorded a loss on investments of $41,600 in the quarter ended March 31, 2019. In addition, on March 17, 2017, the Company entered into a Consulting Agreement with G Farma whereby the Company was to receive a monthly consulting fee in arrears of $1,400 per month. This monthly consulting fee was increased proportionately with Addendum II and Addenda IV through VIII, resulting in a required fee of $2,828, effective March 15, 2019; however consulting fees have not been remitted by G Farma since February 19, 2019 and recognition of consulting fee revenue was suspended, effective April 1, 2019. Consulting fee revenue was $0 and $0 for the three months ended June 30, 2020 and 2019, respectively. Consulting fee revenue was $0 and $8,310 for the six months ended June 30, 2020 and 2019, respectively. As described in Note 1, on February 22, 2019, the City of Corona Building Department closed access to G Farmas corporate location and posted a notice preventing entry to the facility; the Company was not informed by G Farma of this incident until March 14, 2019. The notice cited unpermitted modifications to electrical, mechanical and plumbing, including all undetermined building modifications, as the reason for closure. On April 24, 2019, the Company was notified that certain G Farma assets at the corporate location, including equipment leased to G Farma by Mentor Partner I valued at approximately $427,804, were impounded by the Corona Police. This event significantly impacted G Farmas financial position and its ability to make future payments under the notes purchase agreements and the finance leases receivable, described in Note 9, due the Company. In March 2020, we discovered that an additional component valued at $36,594 was missing from the equipment we recovered but we are uncertain whether this was taken by the Corona Police. G Farma has not made scheduled payments on the notes receivable or the G Farma finance lease receivable, described in Note 9, since February 19, 2019. All arrangements with G Farma, were placed on non-accrual basis effective April 1, 2019. Accrual of interest on notes receivable and finance leases, as well as consulting revenue, was suspended April 1, 2019. |
Note 9 - Finance leases receiva
Note 9 - Finance leases receivable | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 9 - Finance leases receivable | Note 9 Finance leases receivable Mentor Partner I Partner I entered into a Master Equipment Lease Agreement with G FarmaLabs Limited and G FarmaLabs DHS, LLC (the G Farma Lease Entities) with guarantees by GFBrands, Inc., formerly known as G FarmaBrands, Inc, Ata Gonzalez and Nicole Gonzalez (collectively, the G Farma Lease Guarantors) dated January 16, 2018, and amended March 7, April 4, June 20, and September 7, 2018, and March 4, 2019. Partner I acquired and delivered manufacturing equipment as selected by G Farma Lease Entities under sales-type finance leases. Partner I did not report equipment sales revenue for the six month periods ended June 30, 2020 and 2019. As discussed in Notes 1 and 8, on February 22, 2019, the City of Corona Building Department closed access to G Farmas corporate location; the Company was not informed by G Farma of this incident until March 14, 2019. On April 24, 2019, the Company was informed that certain G Farma assets at its corporate location, including equipment leased to G Farma by Mentor Partner I under the Master Equipment Lease Agreement valued at approximately $427,804, was impounded by the Corona Police. This event severely impacted G Farmas ability to pay amounts due the Company in the future and the G Farma lease receivable was put on non-accrual status effective April 1, 2019 and is classified as non-performing on the consolidated balance sheets at June 30, 2020 and December 31, 2019. In March 2020, we discovered that an additional component valued at $36,594 was missing from the equipment recovered by Mentor. Bad debt expense of $12,550 and $60,427 for the three months ended June 30, 2020 and 2019, respectively, is included in selling, general and administrative expenses in the consolidated income statement. Bad debt expense of $19,519 and $729,385 for the six months ended June 30, 2020 and 2019, respectively, is included in selling, general and administrative expenses in the consolidated income statement. On January 31, 2020, all remaining equipment leased to G Farma by Mentor Partner I which was not impounded by the Corona Police was repossessed by the Company and moved to storage under the Companys control. In the quarter ended March 31, 2020, the Company sold a portion of the recovered equipment, with an original cost of $495,967, for net proceeds of $222,031. In the quarter ended June 30, 2020, the Company sold all remaining recovered equipment, with an original cost of $126,703, for net proceeds of $27,450, after deducting shipping and delivery costs. All proceeds from sale of repossessed equipment has been applied to the G Farma lease receivable balance. Remaining net lease payments receivable from G Farma are fully reserved for at June 30, 2020. The Company has initiated an action against the G Farma Lease Entities and the G Farma Lease Guarantors in the Superior Court of California in the County of Marin seeking, among other things, damages caused by G Farmas and its guarantors breaches of the various agreements. We will continue to pursue collection to the maximum extent possible from the G Farma Lease Entities and G Farma Lease Guarantors for collection on all amounts due that have not been recovered through the sale of assets. Net finance leases receivable, non-performing, consists of the following: June 30, December 31, 2020 2019 Gross minimum lease payments receivable $ 1,203,404 $ 1,455,685 Less: unearned interest (400,005) (400,005) Less: reserve for bad debt (803,399) (786,680) Finance leases receivable - 269,000 Less current portion - (269,000) Long term portion $ - $ - Mentor Partner II Partner II entered into a Master Equipment Lease Agreement with Pueblo West, dated February 11, 2018 and amended November 28, 2018 and March 12, 2019. Partner II acquired and delivered manufacturing equipment as selected by Pueblo West under sales-type finance leases. Partner II recorded equipment sales revenue of $0 and $0 for the three months ended June 30, 2020 and 2019, respectively. Partner II recorded equipment sales revenue of $0 and $74,889 for the six months ended June 30, 2020 and 2019, respectively. At June 30, 2020, all Partner II leased equipment under finance leases receivable is located in Colorado. We review the finance leases receivables by individual account to determine expected collectability. The allowance for credit losses is an estimate of the losses inherent in our finance receivables taking into consideration past loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrowers ability to repay, estimated value of underlying collateral and current economic conditions. The Company issues a payment schedule upon inception of the lease. Revenue is recognized at the time equipment is delivered. Principal on lease payments received prior to delivery of equipment is recorded as a decrease in the finance lease receivable and interest received in advance is recorded as a liability under deferred revenue. Performing net finance leases receivable consists of the following: June 30, December 31, 2020 2019 Gross minimum lease payments receivable $ 532,767 $ 587,854 Accrued interest 2,196 2,463 Less: unearned interest (123,828) (145,445) Finance leases receivable 411,135 444,872 Less current portion (65,508) (62,145) Long term portion $ 345,627 $ 382,727 Interest income recognized from Partner I finance leases for the three months ended June 30, 2020 and 2019, was $0 and $0, respectively. Interest income recognized from Partner I finance leases for the six months ended June 30, 2020 and 2019, was $0 and $23,811, respectively. Interest income recognized from Partner II finance leases for the three months ended June 30, 2020 and 2019, was $12,028 and $12,162, respectively. Interest income recognized from Partner II finance leases for the six months ended June 30, 2020 and 2019, was $24,567 and $25,242, respectively. At June 30, 2020, minimum future payments receivable for performing finance leases receivable were as follows: 12 months ending June 30, Total 2021 $ 65,508 2022 72,789 2023 80,879 2024 89,869 2025 88,975 Thereafter 13,115 $ 411,135 |
Note 10 - Contractual interests
Note 10 - Contractual interests in legal recoveries | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 10 - Contractual interests in legal recoveries | Note 10 - Contractual interests in legal recoveries Interest in G FarmaLabs Limited legal recovery On March 22, 2017, G Farma purchased 222,223 restricted shares of the Companys Common Stock in a private placement at a price of $2.25 per share, for an aggregate purchase price of $500,002. Pursuant to Addendum II entered into on April 28, 2017, G Farma purchased an additional 66,667 shares of the Companys Common Stock at $1.50 per share for an aggregate purchase price of $100,000. The combined total purchase of $600,002 was to be paid as follows: (i) Assignment to the Company of an interest, equal to the amount of the purchase price, in any and all civil forfeiture or similar recoveries received by, or due to, G Farma including a $10 million claim filed March 29, 2017, against the County of Calaveras, or (ii) at any time before payment of the full purchase price from recovery, the Company may elect to have G Farma pay all or some of the purchase price on the date of the maturity of the promissory notes, described above under the Notes Purchase Agreement, or (iii) the Company may elect to have G Farma pay all or some of the purchase price by issuance to the Company of G Farma securities in aggregate amount equal to the purchase price as are offered to any other person (other than stock options offered to employees). G Farmas civil forfeiture case in the Federal District Court for the Eastern District of California, a portion of which was one of the three ways in which the purchase price could be paid for the purchase of shares of Mentor Common Stock, was dismissed on April 12, 2018 and has no value. In the quarter ended March 31, 2019, the $600,002 contractual interest in G Farmas legal recovery intended as consideration for payment of the shares of Companys Common Stock was fully impaired due to the events discussed in Notes 1, 8, and 9, where the City of Corona Building Department closed access to G Farmas corporate location and the Corona Police impounded certain G Farma assets. On October 3, 2019, the Company rescinded the sale of an aggregate of 288,890 shares of its Common Stock to G Farma, issued at an aggregate purchase price of $600,002, due to a complete failure of consideration. The Company recognized the rescission of the Common Stock at par value on December 31, 2019. On March 6, 2020, the 288,890 shares of Common Stock were cancelled and returned to unissued shares by the Companys stock transfer agent. Interest in Electrum Partners, LLC legal recovery Electrum is the plaintiff in that certain legal action captioned Electrum Partners, LLC, Plaintiff, and Aurora Cannabis Inc., Defendant, On October 30, 2018, Mentor entered into a Recovery Purchase Agreement (Recovery Agreement) with Electrum under which Mentor purchased a portion of Electrums potential recovery in the Litigation. Mentor agreed to pay $100,000 of costs incurred in the Litigation, in consideration for ten percent (10%) of anything of value received by Electrum as a result of the Litigation (Recovery) in addition to repayment of its initial investment. As of June 30, 2020 and December 31, 2019, Mentor invested an additional $81,529 and $46,195, respectively, of capital in Electrum for payment of legal retainers and fees in consideration for an additional eight percent (8%) and four percent (4%), respectively, of the Recovery. At June 30, 2020 and December 31, 2019, the Recovery Agreement investment is reported in the condensed consolidated balance sheets at our cost of $181,529 and $146,195, respectively. This investment is subject to loss should Electrum not prevail in the Litigation. However Company management estimates that recovery is more likely than not, and no impairment has been recorded at June 30, 2020 and December 31, 2019. On October 31, 2018, Mentor also entered into a secured Capital Agreement with Electrum under which Mentor invested an additional $100,000 of capital in Electrum. In consideration for Mentors investment, Electrum shall pay to Mentor, on the payment date, the sum of (i) $100,000, (ii) ten percent of the Recovery, and (iii) 0.083334% of the Recovery for each full month from October 31, 2018 to the payment date for each full month that $833 is not paid to Mentor. The payment date under the October 31, 2018 Capital Agreement is the earlier of November 1, 2021, or the final resolution of the Litigation. Payment is secured by all assets of Electrum. This investment is included at cost of $100,000 in Contractual interests in legal recoveries on the condensed consolidated balance sheets at June 30, 2020 and December 31, 2019. On January 28, 2019, Mentor entered into a second secured Capital Agreement with Electrum. Under the second Capital Agreement, Mentor invested an additional $100,000 of capital in Electrum. In consideration for Mentors investment, Electrum shall pay to Mentor on the payment date the sum of (i) $100,000, (ii) ten percent (10%) of the Recovery, and (iii) the greater of (A) 0.083334% of the Recovery for each full month from the date hereof until the payment date if the Recovery occurs prior to the payment date, and (B) $833.34 for each full month from the date hereof until the payment date. The payment date is the earlier of November 1, 2021, and the final resolution of the Litigation. This investment is included at its $100,000 cost as part of the Contractual interests in legal recoveries on the condensed consolidated balance sheets at June 30, 2020 and December 31, 2019. In addition, the second Capital Agreement provides that Mentor may, at any time up to and including 90 days following the payment date, elect to convert its 6,198 membership interests in Electrum into a cash payment of $194,028 plus an additional 19.4% of the Recovery. |
Note 11 - Investments and fair
Note 11 - Investments and fair value | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 11 - Investments and fair value | Note 11 Investments and fair value We account for our financial assets in accordance with ASC 820, Fair Value Measurement The hierarchy of Level 1, Level 2 and Level 3 Assets are listed as following: Fair Value Measurement Using Unadjusted Quoted Market Prices (Level 1) Quoted Prices for Identical or Similar Assets in Assets in Active Markets (Level 2) Significant Unobservable Inputs (Level 3) Significant Unobservable Inputs (Level 3) Significant Unobservable Inputs (Level 3) Investment in Securities Contractual interest Legal Recovery Investment in Common Stock Warrants Other Equity Investments Total gains or losses Included in earnings (or changes in net assets) (76,395) - (600,002) - (41,600) Purchases, issuances, sales, and settlements Purchases - - 146,195 - - Issuances - - - - - Sales (286,190) - - - - Settlements - - - - - Balance at December 31, 2019 - - 346,195 5,669 204,028 Total gains or losses Included in earnings (or changes in net assets) (750) - - (5,169) - Purchases, issuances, sales, and settlements Purchases 38,115 - 50,717 - - Issuances - - - - - Sales - - - - - Settlements - - (15,383) - - Balance at June 30, 2020 $ 37,365 $ - $ 381,529 $ 500 $ 204,028 The amortized costs, gross unrealized holding gains and losses, and fair values of the Companys investment securities classified as equity securities, at fair value, at June 30, 2020 consists of the following: Gross Gross Amortized Unrealized Unrealized Type Costs Gains Losses Fair Values NYSE listed company stock $ 38,115 $ - $ (750) $ 37,365 The portion of unrealized gains and losses for the period related to equity securities still held at the reporting date is calculated as follows: Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Net gains and losses recognized during the period on equity securities $ 4,288 $ 71,930 (750) - Less: Net gains (losses) recognized during the period on equity securities sold during the period - 69,403 - - Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date $ 4,288 $ 2,527 (750) - |
Note 12 - Common stock warrants
Note 12 - Common stock warrants | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 12 - Common stock warrants | Note 12 - Common stock warrants The Companys Plan of Reorganization, which was approved by the United States Bankruptcy Court for the Northern District of California on January 11, 2000, provided for the creditors and claimants to receive new warrants in settlement of their claims. The warrants expire May 11, 2038. All Series A, B, C and D warrants have been called, and all Series A and C warrants have been exercised. The Company intends to allow warrant holders or Company designees, in place of original holders, additional time as needed to exercise the remaining series B and D warrants. The Company may lower the exercise price of all or part of a warrant series at any time. Similarly, the Company could reverse split the stock to raise the stock price above the warrant exercise price. The warrants are specifically not affected and do not split with the shares in the event of a reverse split. If the called warrants are not exercised, the Company has the right to designate the warrants to a new holder in return for a $0.10 per share redemption fee payable to the original warrant holders as discussed further in Note 14. All such changes in the exercise price of warrants were provided for by the court in the Plan of Reorganization to provide a mechanism for all debtors to receive value even if they could not or did not exercise their warrant. Therefore, Management believes that the act of lowering the exercise price is not a change from the original warrant grants and the Company did not record an accounting impact as the result of such change in exercise prices. All Series A and Series C warrants were exercised by December 31, 2014. Exercise prices in effect at January 1, 2015 through June 30, 2020 for Series B warrants were $0.11 and Series D warrants were $1.60. In 2009, the Company entered into an Investment Banking agreement with Network 1 Financial Securities, Inc. and a related Strategic Advisory Agreement with Lenox Hill Partners, LLC with regard to a potential merger with a cancer development company. In conjunction with those related agreements, the Company issued 689,159 Series H ($7) Warrants, with a 30-year life. The warrants are subject to cashless exercise based upon the ten-day trailing closing bid price preceding the exercise as interpreted by the Company. As of June 30, 2020 and December 31, 2019, the weighted average contractual life for all Mentor warrants was 18.0 years and 18.5 years, respectively, and the weighted average outstanding warrant exercise price was $2.11 and $2.11 per share, respectively. During the six months ended June 30, 2020 and 2019, there were no warrants exercised and there were no warrants issued. The intrinsic value of outstanding warrants at June 30, 2020 and December 31, 2019 was $0 and $875, respectively. The following table summarizes Series B and Series D common stock warrants as of each period: Series B Series D B and D Total Outstanding at December 31, 2018 $ 87,456 6,252,954 6,340,410 Issued - - - Exercised - - - Outstanding at December 31, 2019 87,456 6,252,954 6,340,410 Issued - - - Exercised - - - Outstanding at June 30, 2020 87,456 6,252,954 6,340,410 Series E, F, G and H warrants were issued for investment banking and advisory services during 2009. Series E, F and G warrants were exercised in 2014. The following table summarizes Series H ($7) warrants as of each period: Series H $7.00 exercise price Outstanding at December 31, 2018 689,159 Issued - Exercised - Outstanding at December 31, 2019 689,159 Issued - Exercised - Outstanding at June 30, 2020 689,159 On February 9, 2015, in accordance with Section 1145 of the United States Bankruptcy Code and the Companys Plan of Reorganization, the Company announced a minimum 30-day partial redemption of up to 1% (approximately 90,000) of the already outstanding Series D warrants to provide for the court specified redemption mechanism for warrants not exercised timely by the original holder or their estates. Company designees that applied during the 30 days paid 10 cents per warrant to redeem the warrant and then exercised the Series D warrant to purchase a share at the court specified formula of not more than one-half of the closing bid price on the day preceding the 30-day exercise period. In the Companys October 7, 2016 press release, Mentor stated that the 1% redemptions which were formerly priced on a calendar month schedule would subsequently be initiated and be priced on a random date schedule after the prior 1% redemption is completed to prevent potential third-party manipulation of share prices at month-end. The periodic partial redemptions will continue to be periodically recalculated and repeated until such unexercised warrants are exhausted, or the partial redemption is otherwise paused, suspended or truncated by the Company. For the six months ended June 30, 2020 and 2019, no warrants were redeemed. |
Note 13 - Warrant redemption li
Note 13 - Warrant redemption liability | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 13 - Warrant redemption liability | Note 13 - Warrant redemption liability The Plan of Reorganization provides the right for the Company to call, and the Company or its designee to redeem warrants that are not exercised timely, as specified in the Plan, by transferring a $0.10 redemption fee to the former holders. Certain individuals desiring to become a Company designee to redeem warrants have deposited redemption fees with the Company that, when warrants are redeemed, will be forwarded to the former warrant holders through DTCC or at their last known address 30 days after the last warrant of a class is exercised, or earlier at the discretion of the Company. The Company has arranged for a service to process the redemption fees in offset to an equal amount of liability. In prior years the Series A, Series B and Series C redemption fees have been distributed through DTCC into holders brokerage accounts or directly to the holders. All Series A and Series C warrants have been exercised and are no longer outstanding. There are 87,456 Series B warrants outstanding which are held by Chet Billingsley, the Companys Chief Executive Officer (CEO). Once the Series D warrants have been fully redeemed and exercised the fees for the Series D warrant series will likewise be distributed. Mr. Billingsley has agreed to assume liability for paying these redemption fees and therefore warrant redemption fees received are retained by the Company for operating costs. Should Mr. Billingsley be incapacitated or otherwise become unable to pay the warrant redemption fees, the Company will remit the warrant redemption fees to former holders from amounts due to Mr. Billingsley from the Company, which are sufficient to cover the redemption fees at June 30, 2020 and December 31, 2019. |
Note 14 - Stockholders' equity
Note 14 - Stockholders' equity | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 14 - Stockholders' equity | Note 14 - Stockholders equity Common Stock The Company was incorporated in California in 1994 and was redomiciled as a Delaware corporation, effective September 24, 2015. There are 75,000,000 authorized shares of Common Stock at $0.0001 par value. The holders of Common Stock are entitled to one vote per share on all matters submitted to a vote of the stockholders. On August 8, 2014, the Company announced that it was initiating the repurchase of 300,000 shares of its Common Stock (approximately 2% of the Companys common shares outstanding at that time). As of June 30, 2020 and December 31, 2019, 44,748 and 44,748 shares have been repurchased and retired, respectively. Preferred Stock Mentor has 5,000,000, $0.0001 par value, preferred shares authorized. On July 13, 2017, the Company filed a Certificate of Designation of Rights, Preferences, Privileges and Restrictions of Series Q Preferred Stock (Certificate of Designation) with the Delaware Secretary of State to designate 200,000 preferred shares as Series Q Preferred Stock, such series having a par value of $0.0001 per share. Series Q Preferred Stock is convertible into Common Stock, at the option of the holder, at any time after the date of issuance of such share and prior to notice of redemption of such share of Series Q Preferred Stock by the Company, into such number of fully paid and nonassessable shares of Common Stock as determined by dividing the Series Q Conversion Value by the Conversion Price at the time in effect for such share. The per share Series Q Conversion Value, as defined in the Certificate of Designation, shall be calculated by the Company at least once each calendar quarter as follows: The per share Series Q Conversion Value shall be equal the quotient of the Core Q Holdings Asset Value divided by the number of issued and outstanding shares of Series Q Preferred Stock. The Core Q Holdings Asset Value shall equal the value, as calculated and published by the Company, of all assets that constitute Core Q Holdings which shall include such considerations as the Company designates and need not accord with any established or commonly employed valuation method or considerations. Core Q Holdings consists of all proceeds received by the Company on the sale of shares of Series Q Preferred Stock and all securities, acquisitions, and business acquired from such proceeds by the Company. The Company shall periodically, but at least once each calendar quarter, identify, update, account for and value, the assets that comprise the Core Q Holdings. The Conversion Price of the Series Q Preferred Stock shall be at the product of 105% and the closing price of the Companys Common Stock on a date designated and published by the Company. The Series Q Preferred Stock is intended to allow for a pure play investment in cannabis companies that have the potential to go public. The Series Q Preferred Stock will be available only to accredited, institutional or qualified investors. The Company sold and issued 11 shares of Series Q Preferred Stock on May 30, 2018, at a price of $10,000 per share, for an aggregate purchase price of $110,000 (Series Q Purchase Price). The Company invested the Series Q Purchase Price as capital in Partner II to purchase equipment to be leased to Pueblo West. Therefore, the Core Q Holdings at June 30, 2020 and December 31, 2019 include this interest. The Core Q Holdings Asset Value at June 30, 2020 and December 31, 2019 was $15,343 and $14,621 per share, respectively. There is no contingent liability for the Series Q Preferred Stock conversion at June 30, 2020 and December 31, 2019. At June 30, 2020 and December 31, 2019, the Series Q Preferred Stock could have been converted at the Conversion Price of $0.105 and $0.13, respectively, into an aggregate of 1,607,408 and 1,237,166 shares of the Companys Common Stock, respectively. Because there were net losses for the three and six month periods ended June 30, 2020 and 2019, these shares were anti-dilutive and therefore are not included in the weighted average share calculation for these periods. |
Note 15 - Lease commitments
Note 15 - Lease commitments | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 15 - Lease commitments | Note 15 Lease commitments We have entered into non-cancellable operating and finance leases for office and warehouse space, computers, furniture, fixtures, machinery, and vehicles, see Note 6. The following summarizes our lease liability maturities for operating and finance leases: Maturity of lease liabilities 12 months ending June 30, Finance leases Operating leases 2021 $ 58,942 $ 161,441 2022 64,268 64,399 2023 57,877 968 2024 20,422 - 2025 8,233 - Total 209,742 226,808 Less: Current maturities 58,942 161,441 Long-term liability $ 150,800 $ 65,367 |
Note 16 - Term Loan
Note 16 - Term Loan | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 16 - Term Loan | Note 16 - Term Loan Term debt at June 30, 2020 and December 31, 2019 consists of the following: June 30, 2020 December 31, 2019 Loan through American Express National Bank, AENB,interest at 8.99% per annum, monthly principal and interest payments of $2,284,maturing December 2020. $ 11,151 $ 24,017 |
Note 17 - Paycheck Protection P
Note 17 - Paycheck Protection Plan loans and Economic Injury Disaster Loan | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 17 - Paycheck Protection Plan loans and Economic Injury Disaster Loan | Note 17 Paycheck Protection Plan loans and Economic Injury Disaster Loan On April 23, 2020 and May 5, 2020, The Company and WCI each received loans in the amount of $76,500 and $383,342, respectively, from the Bank of Southern California and Republic Bank of Arizona (collectively, the PPP Loans). The Paycheck Protection Program was established under Sections 1102 and 1106 of the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"), which was enacted March 27, 2020. The CARES Act temporarily amends Section 7(a) of the Small Business Act to expand the scope and criterion of a businesss eligibility to receive financial assistance from the Small Business Administration (SBA). Originally, Section 1106 of the CARES Act limited the period during which PPP loan expenditures were eligible for forgiveness to eight weeks after the loan disbursement date. On June 5, 2020, the Paycheck Protection Program Flexibility Act (PPP Flexibility Act) extended the PPP loan term and forgiveness period to the earlier of (i) twenty-four weeks after the PPP loan disbursement date, or (ii) December 31, 2020. Section 1106 of the CARES Act required that 75% of PPP loan proceeds be spent on eligible payroll costs during the forgiveness period to qualify for loan forgiveness, with the remaining 25% of PPP proceeds spent on qualified non-payroll expenses. In contrast, the PPP Flexibility Act requires that borrowers spend at least 60% of PPP loan proceeds on eligible payroll costs, with the remaining 40% of PPP loan proceeds spent on any combination of qualified non-payroll expenses. The PPP loans may be forgivable so long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the forgiveness period. On April 24, 2020, WCI received a $10,000 SBA Economic Injury Disaster Loan Advance (EIDL Advance). The EIDL Advance is an emergency grant under Section 1110 of the Cares Act, which expands businesss access to Economic Injury Disaster Loans under Section 7(b)(2) of the Small Business Act. The EIDL Advance does not need to be repaid and is recognized in other income for the three and six months ended June 30, 2020. This amount will reduce the portion of PPP Loans available for forgiveness by $10,000. The Company has recorded the PPP Loans as a liability in accordance with FASB ASC 470, Debt and has recorded accrued interest through June 30, 2020. Proceeds from the PPP Loans will remain recorded as a liability until either (1) the PPP Loans are, in part or wholly, forgiven and the Company has been legally released, or (2) the Company pays off the PPP Loans. If the PPP Loans are, in part or wholly, forgiven the liability will be reduced and a gain on the extinguishment will be recognized. Paycheck protection plan loan balances at June 30, 2020 consist of the following: June 30, 2020 April 23, 2020 loan from Bank of California to Mentor Capital, Inc., including accrued interest of $140 at June 30, 2020. The note bears interest at 1% per annum, maturing April 23, 2022, with monthly principle and interest payments of $4,305 beginning November 1, 2020. The note may be forgiven in its entirety if used for eligible purposes. $ 76,640 May 5, 2020, loan from Republic Bank of Arizona to Waste Consolidators, Inc., including accrued interest of $565 at June 30, 2020. The note bears interest at 1% per annum, maturing May 5, 2022, with monthly principle and interest payments of $21,579 beginning December 15, 2020. The note may be forgiven for all except $10,000 if used for eligible purposes. 383,907 Total paycheck protection program loans 460,547 Less: Current maturities 181,530 Long-term portion of paycheck protection plan loans $ 279,017 Interest expense on PPP Loans for the three and six months ended June 30, 2020 was $705. The Company has used approximately 96% of its PPP Loans proceeds to fund payroll expenses, with the remainder spent for utilities and rent. As a result, the Company believes that at June 30, 2020, it had met the PPP eligibility criteria for forgiveness on $320,962 of the PPP Loans. Subsequent to quarter end, as of July 30, 2020, the Company met the PPP eligibility criteria for forgiveness of all PPP Loans amounts in excess of the $10,000 EIDL Advance received by WCI and plans to apply for forgiveness of the loans in the third quarter of 2020. The Company does not anticipate taking any action that would cause any portion of the loans to be ineligible for forgiveness. However, to the extent that any amount is deemed unforgivable, such amount is payable over two years at an interest rate of 1%, with a deferral of payments for the first six months. Subsequent to June 30, 2020, WCI received an additional Economic Injury Disaster Loan of $150,000, see Note 22. |
Note 18 - Accrued salary, accru
Note 18 - Accrued salary, accrued retirement, and incentive fee - related party | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 18 - Accrued salary, accrued retirement, and incentive fee - related party | Note 18 - Accrued salary, accrued retirement, and incentive fee - related party As of June 30, 2020 and December 31, 2019, the Company had an outstanding liability to its CEO as follows: June 30, December 31, 2020 2019 Accrued salaries and benefits $ 839,004 $ 829,231 Accrued retirement and other benefits 549,692 540,860 Offset by shareholder advance (261,653) (261,653) $ 1,127,043 $ 1,108,438 As approved by resolution of the Board of Directors in 1998, the CEO will be paid an incentive fee and a bonus which are payable in installments at the CEOs option. The incentive fee is 1% of the increase in market capitalization based on the bid price of the Companys stock beyond the book value at confirmation of the bankruptcy, which was approximately $260,000. The bonus is 0.5% of the increase in market capitalization for each $1 increase in stock price up to a maximum of $8 per share (4%) based on the bid price of the stock beyond the book value at confirmation of the bankruptcy. For the three and six months ended June 30, 2020 and 2019, the incentive fee expense was $0 and $0, respectively. |
Note 19 - Related party transac
Note 19 - Related party transactions | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 19 - Related party transactions | Note 19 Related party transactions WCI received a short term loan from an officer of WCI in December 2018. The loan did not originally bear interest and the balance reported on the condensed consolidated balance sheet as a related party payable, at June 30, 2020 and December 31, 2019, was $0 and $27,472, respectively. Due to the length of time the loan was outstanding, interest of $2,065 (6%) was paid with the final balance due on January 23, 2020. |
Note 20 - Commitments and conti
Note 20 - Commitments and contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 20 - Commitments and contingencies | Note 20 Commitments and contingencies On May 28, 2019, the Company and Mentor Partner I, LLC filed suit against the G Farma Entities and three guarantors to the G Farma agreements, described in Notes 1, 8, 9, and 10, in the California Superior Court in and for the County of Marin. The Company is primarily seeking monetary damages for breach of the G Farma agreements including promissory notes, leases, and other agreements, to recover collateral under a security agreement, and to collect from guarantors on the agreements. The Company previously sought, and the Court granted, the Companys request for a writ of possession to recover leased equipment within G Farmas possession. Mentor intends to vigorously pursue this matter; however, collection is uncertain at this time. Due to uncertainty of collection, the Company has fully reserved against the finance leases receivable described in Note 9 and has fully impaired all other notes receivables and investments in G Farma described in Notes 8, 9 and 10. On January 31, 2020, all remaining equipment leased to G Farma by Mentor Partner I which was not impounded by the Corona Police was repossessed by the Company and moved to storage under the Companys control. In the quarter ended March 31, 2020, the Company sold a portion of the recovered equipment, with an original cost of $495,967, for net proceeds of $222,031. In the quarter ended June 30, 2020, the Company sold all remaining recovered equipment, with an original cost of $126,703, for net proceeds of $27,450, after deducting shipping and delivery costs. All proceeds from sale of repossessed equipment has been applied to the G Farma lease receivable balance. For G Farma notes receivable we will continue to pursue collection from G Farma, its affiliates, and the guarantors of the various G Farma note purchase agreements, see Note 8. We will continue to pursue collection for lease payments remaining, after applying proceeds from the sale of recovered assets, from the G Farma Lease Entities and G Farma Lease Guarantors, see Note 9. On November 13, 2019, G Farma filed a Cross-Complaint for declaratory relief and breach of contract relating to the consulting agreement between Mentor and G Farma. The Company filed an answer on December 6, 2019 denying each and every allegation of the Cross-Complaint and intends to vigorously defend itself in this matter. |
Note 21 - Segment Information
Note 21 - Segment Information | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 21 - Segment Information | Note 21 Segment Information The Company is an operating, acquisition, and investment business. Subsidiaries in which the Company has a controlling financial interest are consolidated. The Company has determined that there are two reportable segments; 1) the cannabis and medical marijuana segment which includes the cost basis of membership interests of Electrum, the contractual interest in the Electrum legal recovery, the fair value of convertible notes receivable and accrued interest from NeuCourt, the notes receivable from G Farma, the contractual interest in the G Farma legal recovery, the equity in G Farma Equity Entities, finance leases to G Farma and finance leases to Pueblo West, the operation of subsidiaries in the cannabis and medical marijuana sector, and in 2019, included the fair value of cannabis stock securities investments, and 2) the Companys long standing investment in WCI which works with business park owners, governmental centers, and apartment complexes to reduce their facility related operating costs. The Company also has a small investment in General Dynamics Corp. (NYSE: GD), an aerospace and defense corporation, and an investment in note receivable from a non-affiliated party that is included in the Corporate and Eliminations section below. Cannabis and Medical Marijuana Segment Facility Operations Related Corporate and Eliminations Consolidated Three months ended June 30, 2020 Net revenue $ 12,028 $ 1,146,839 $ - $ 1,158,867 Operating income (loss) (12,235) 21,436 (214,076) (204,875) Interest income 681 - 20,452 21,133 Interest expense - 6,706 140 6,846 Property additions - 13,412 5,012 18,424 Depreciation and amortization - 3,658 1,439 5,097 Three months ended June 30, 2019 Net revenue $ 12,162 $ 1,017,587 $ - $ 1,029,749 Operating income (loss) (84,695) 40,707 (242,350) (286,338) Interest income 982 3 21,899 22,884 Interest expense - 5,851 - 5,851 Property additions - - - - Depreciation and amortization - (2,714) 2,932 218 Six months ended June 30, 2020 Net revenue $ 24,567 $ 2,283,763 $ - $ 2,308,330 Operating income (loss) (21,140) 57,886 (478,345) (441,599) Interest income 1,924 - 38,613 40,537 Interest expense - 14,044 140 14,184 Property additions - 16,741 5,012 21,753 Depreciation and amortization - 6,298 2,641 8,939 Total assets 2,337,447 1,978,746 619,408 4,935,601 Six months ended June 30, 2019 Net revenue $ 132,252 $ 1,973,493 $ - $ 2,105,745 Operating income (loss) (696,392) 57,886 (504,074) (1,142,580) Interest income 21,628 6 43,830 65,464 Interest expense - 10,375 - 10,375 Property additions - 8,159 - 8,159 Depreciation and amortization - 5,306 5,864 11,170 Total assets 2,859,528 1,726,522 1,071,868 5,657,918 The following table reconciles operating segments and corporate-unallocated operating income (loss) to consolidated income before income taxes, as presented in the unaudited condensed consolidated income statements: Three Months Ended Six Months Ended June 30, 30-Jun 2020 2019 2020 2019 Operating loss $ (204,875) $ (286,338) $ (441,599) $ (1,142,580) Gain (loss) on investments 4,288 (132,088) (5,919) (1,701,969) Interest income 21,133 22,884 40,537 65,464 Interest expense (6,846) (5,851) (14,184) (10,375) Gain on equipment disposals - 1,500 - 1,500 EIDL Advance 10,000 - 10,000 - Other income 4,272 11,340 16,358 11,340 Income before income taxes $ (172,028) $ (388,553) $ (394,807) $ (2,776,620) |
Note 22 - Subsequent events
Note 22 - Subsequent events | 6 Months Ended |
Jun. 30, 2020 | |
Notes | |
Note 22 - Subsequent events | Note 22 Subsequent events On July 9, 2020, WCI received an additional Economic Injury Disaster Loan in the amount of $150,000, through the SBA. The loan is secured by all tangible and intangible personal property of WCI, bears interest at 3.75% per annum, requires monthly installment payments of $731 beginning July 2020, and matures July 2050. |
Note 2 - Summary of significa_2
Note 2 - Summary of significant accounting policies: Condensed consolidated financial statements (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Policies | |
Condensed consolidated financial statements | Condensed consolidated financial statements The unaudited condensed consolidated financial statements of the Company for the six month period ended June 30, 2020 and 2019 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2019 was derived from the audited financial statements included in the Company's financial statements as of and for the year ended December 31, 2019 included in the Companys Annual Report on Form 10-K filed with the Securities and Exchange Commission (the SEC) on March 25, 2020. These financial statements should be read in conjunction with that report. |
Note 2 - Summary of significa_3
Note 2 - Summary of significant accounting policies: Basis of presentation (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Policies | |
Basis of presentation | Basis of presentation The accompanying consolidated financial statements and related notes include the activity of subsidiaries in which a controlling financial interest is owned. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Significant intercompany balances and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform with current period presentation. As shown in the accompanying financial statements, the Company has a significant accumulated deficit of $10,307,161 as of June 30, 2020. The Company also continues to experience negative cash flows from operations. The Companys operating results in 2019 were significantly impacted by G Farmas default on the notes receivable, failure of consideration related to G Farmas purchase of shares of Common Stock, and loss of value of the equity interest in G Farma Equity Entities, described in Note 8 to the condensed consolidated financial statements, resulting in full impairment of these investments in the aggregate amount of $1,686,653. In addition, in 2019, the Company recorded a bad debt reserve on the G Farma equipment leases receivable of $765,001 and recorded an additional bad debt reserve of $19,519 for the six months ended June 30, 2020, see Note 9. The Company management believes it is more likely than not that Electrum will prevail in the legal action described in Note 10 to the consolidated financial statements, in which the Company has an interest. However, there is no surety that Electrum will prevail in its legal action or that we will be able to recover our funds and our percentage of the Litigation Recovery if Electrum does prevail. The Company will be required to raise additional capital to fund its operations and will continue to attempt to raise capital resources from both related and unrelated parties until such time as the Company is able to generate revenues sufficient to maintain itself as a viable entity. These factors have raised substantial doubt about the Company's ability to continue as a going concern. These financial statements are presented on the basis that we will continue as a going concern. The going concern concept contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. There can be no assurances that the Company will be able to raise additional capital or achieve profitability. However, the Company has approximately 6.2 million warrants outstanding in which the Company can reset the exercise price substantially below the current market price. These condensed consolidated financial statements do not include any adjustments that might result from repricing the outstanding warrants. Management's plans include increasing revenues through acquisition, investment, and organic growth. Management anticipates funding these activities by raising additional capital through the sale of equity securities and debt. |
Note 2 - Summary of significa_4
Note 2 - Summary of significant accounting policies: Impact Related to COVID-19 (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Policies | |
Impact Related to COVID-19 | Impact Related to COVID-19 The effect of the novel coronavirus (COVID-19) has significantly impacted the United States and the global economy. COVID-19 and the measures taken by many countries in response have adversely affected and could in the future materially adversely impact the Companys business, results of operations, financial condition, and stock price. The ongoing worldwide economic situation, future weakness in the credit markets and significant liquidity problems for the financial services industry may impact our financial condition in a number of ways. For example, our current or potential customers, or the current or potential customers of our partners or affiliates, may delay or decrease spending with us, or may not pay us, or may delay paying us for previously purchased products and services. Also, we, or our partners or affiliates, may have difficulties in securing additional financing. Additionally, our legal recovery efforts may be hindered due to the closure of the courts in California and British Columbia, which may cause COVID-19-related scheduling delays, hindering our legal recovery from the G Farma entities and delaying the receipt of the Companys interest in the Electrum Partners, LLC legal recovery, respectively. Public health efforts to mitigate the impact of COVID-19 include government actions such as travel restrictions, limitations on public gatherings, shelter in place orders and mandatory closures. These actions could impact WCIs client businesses ability and speed of collecting their tenant rent payments. We do not expect this to significantly reduce demand for WCI services because WCI helps lower monthly service costs paid by its client properties. However, WCIs clients will likely experience a delay in collecting rent from tenants, which in turn is expected to cause slower payments to WCI and possible discontinued service and uncollectible accounts receivable. WCI revenue in six months ended June 30, 2020 increased by 15.7%, as compared to the same period in 2019 and any impact of COVID-19 for the first half of 2020 is estimated to be immaterial. We will closely monitor our customer accounts and continue to assess the impact on collection of accounts receivable as we collect more information. According to the Critical Infrastructure Standards released by the Cybersecurity and Infrastructure Security Agency on March 18, 2020, Financial Services Sector businesses, like Mentor, are considered essential businesses. Because of the financial nature of Mentors operations, which consist of oversight of our portfolio companies, accounting, compliance, investor relations, and sales, Mentors day to day operations are not substantially hindered by remote office work or telework. We anticipate that current cash resources will be sufficient for us to execute our business plan for the next 10 months. The ultimate impact of COVID-19 on our business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of COVID-19 and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time. |
Note 2 - Summary of significa_5
Note 2 - Summary of significant accounting policies: Use of estimates (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Policies | |
Use of estimates | Use of estimates The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates, assumptions, and judgements that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of our consolidated financial statements, and the reported amount of revenues and expenses during the reporting period. Significant estimates relied upon in preparing these consolidated financial statements include revenue recognition, accounts and notes receivable reserves, expected future cash flows used to evaluate the recoverability of long-lived assets, estimated fair values of long-lived assets used to record impairment charges related to investments, goodwill, amortization periods, accrued expenses, and recoverability of the Companys net deferred tax assets and any related valuation allowance. Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from managements estimates if past experience or other assumptions do not turn out to be substantially accurate. |
Note 2 - Summary of significa_6
Note 2 - Summary of significant accounting policies: Recent Accounting Standards (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Policies | |
Recent Accounting Standards | Recent Accounting Standards From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standard Codifications (ASCs) are communicated through issuance of an Accounting Standards Update (ASU). Unless otherwise discussed, we believe that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on our consolidated financial statements upon adoption. Intangibles-Goodwill and Other Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment Fair Value Measurement Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement |
Note 2 - Summary of significa_7
Note 2 - Summary of significant accounting policies: Newly Issued Not Yet Effective Accounting Standards (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Policies | |
Newly Issued Not Yet Effective Accounting Standards | Newly Issued Not Yet Effective Accounting Standards Credit Losses - Measurement of Credit Losses on Financial Instruments Financial Instruments - Credit Losses Measurement of Credit Losses on Financial Instruments, Simplifying the Accounting for Income Taxes Simplifying the Accounting for Income Taxes Debt with Conversion and Other Options, and Derivatives and Hedging on Contracts in an Entitys Own Equity Debt Debt with Conversion and Other Options and Derivatives and Hedging Contracts in an Entitys Own Equity |
Note 2 - Summary of significa_8
Note 2 - Summary of significant accounting policies: Concentrations of cash (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Policies | |
Concentrations of cash | Concentrations of cash The Company maintains its cash and cash equivalents in bank deposit accounts which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts nor does the Company believe it is exposed to any significant credit risk on cash and cash equivalents. |
Note 2 - Summary of significa_9
Note 2 - Summary of significant accounting policies: Accounts receivable (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Policies | |
Accounts receivable | Accounts receivable Accounts receivable consist of trade accounts arising in the normal course of business and are classified as current assets and carried at original invoice amounts less an estimate for doubtful receivables based on a review of outstanding balances on a quarterly basis. The estimate of allowance for doubtful accounts is based on the Company's bad debt experience, market conditions, and aging of accounts receivable, among other factors. If the financial condition of the Company's customers deteriorates resulting in the customer's inability to pay the Company's receivables as they come due, additional allowances for doubtful accounts will be required. At June 30, 2020 and December 31, 2019, the Company has recorded an allowance in the amount of $53,866 and $38,984, respectively. The Company has two convertible notes receivable from NeuCourt, Inc. which are recorded at the aggregate principal face amount of $75,000 plus accrued interest of $5,045 and $3,121 at June 30, 2020 and December 31, 2019, as presented in Note 7. The notes bear 5% interest. One $25,000 principal face amount note, which matured November 22, 2019, was extended to November 22, 2021. A second $50,000 principal face amount note matures on October 31, 2020. No payments are required prior to maturity, however, at the time the $25,000 note was extended, accrued interest through November 4, 2019 was paid to Mentor. Principal and unpaid interest may be converted into a blend of shares of a to-be-created series of Preferred Stock, and Common Stock, of NeuCourt (defined as Conversion Shares) (i) on closing of a future financing round of at least $750,000, (ii) on the election of NeuCourt on maturity of the Note, or (iii) an election of Mentor following NeuCourts election to prepay the Note. The Conversion Price for the Note is the lower of (i) 75% of the price paid in the Next Equity Financing, or the price obtained by dividing a $3,000,000 valuation cap by the fully diluted number of shares. The number of Conversion Shares issued on conversion shall be the quotient obtained by dividing the outstanding principal and unpaid accrued interest on a Note to be converted on the date of conversion by the Conversion Price (the Total Number of Shares), The Total Number of Shares shall consist of Preferred Stock and Common Stock as follows: (i) That number of shares of Preferred Stock obtained by dividing (a) the principal amount of each Note and all accrued and unpaid interest thereunder by (b) the price per share paid by other purchasers of Preferred Stock in the Next Equity Financing (such number of shares, the "Number of Preferred Stock") and (ii) that number of shares of Common Stock equal to the Total Number of Shares minus the Number of Preferred Stock. Using the valuation cap of $3,000,000, the Notes would convert into an aggregate of 296,329 and 289,207 Conversion Shares at June 30, 2020 and December 31, 2019, respectively. In the event of a Corporate Transaction prior to repayment or conversion of the Note, the Company shall receive back two times the outstanding principal of each note, plus all accrued unpaid interest. NeuCourt is a Delaware corporation that is developing a technology that is expected to be useful in the dispute resolution industry. |
Note 2 - Summary of signific_10
Note 2 - Summary of significant accounting policies: Investment in account receivable, net of discount (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Policies | |
Investment in account receivable, net of discount | Investment in account receivable, net of discount On April 10, 2015, the Company entered into an exchange agreement whereby the Company received an investment in account receivable with annual installment payments of $117,000 through 2026. The investment is stated at face value, net of unamortized purchase discount. The discount is amortized to interest income over the term of the exchange agreement. |
Note 2 - Summary of signific_11
Note 2 - Summary of significant accounting policies: Finance leases receivable (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Policies | |
Finance leases receivable | Finance leases receivable The Company, through its subsidiaries, is the lessor of manufacturing equipment subject to leases under master leasing agreements. The leases contain an element of dealer profit and lessee bargain purchase options at prices substantially below the subject assets estimated residual values at the exercise date for the options. Consequently, the Company classified the leases as sales-type leases (the finance leases) for financial accounting purposes. For such finance leases, the Company reports the discounted present value of (i) future minimum lease payments (including the bargain purchase option, if any) and (ii) any residual value not subject to a bargain purchase option as a finance lease receivable on its balance sheet and accrues interest on the balance of the finance lease receivable based on the interest rate inherent in the applicable lease over the term of the lease. For each finance lease, the Company recognized revenue in an amount equal to the net investment in the lease and cost of sales equal to the net book value of the equipment at the inception of the applicable lease. A finance receivable is considered impaired, based on current information and events, if it is probable that we will be unable to collect all amounts due according to contractual terms. Impaired finance receivables include finance receivables that have been restructured and are troubled debt restructures. As discussed in Note 9, impairment of the finance lease receivable from G Farma was $803,399 and $786,680 at June 30, 2020 and December 31, 2019, respectively, based on Managements estimate of amounts we expect to recover. The June 30, 2020 impairment represents full impairment of the finance lease receivable from G Farma after applying proceeds from the sale of all recovered assets. The Company will continue to pursue collection for the lease payments remaining from the G Farma Lease Entities and G Farma Lease Guarantors. |
Note 2 - Summary of signific_12
Note 2 - Summary of significant accounting policies: Credit quality of notes receivable and finance leases receivable and credit loss reserve (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Policies | |
Credit quality of notes receivable and finance leases receivable and credit loss reserve | Credit quality of notes receivable and finance leases receivable and credit loss reserve As our notes receivable and finance leases receivable are limited in number, our management analyzes estimated credit loss reserves based on a detailed analysis of each receivable as opposed to using portfolio-based metrics. Our management does not use a system of assigning internal risk ratings to each of our receivables. Rather, each note receivable and finance lease receivable are analyzed quarterly and categorized as either performing or non-performing based on certain factors including, but not limited to, financial results, satisfying scheduled payments and compliance with financial covenants. A note receivable or finance lease receivable will be categorized as non-performing when a borrower experiences financial difficulty and has failed to make scheduled payments. As part of the monitoring process we may physically inspect the collateral or a borrowers facility and meet with a borrowers management to better understand such borrowers financial performance and its future plans on an as-needed basis. As described in Note 1, on March 14, 2019, the Company was notified by G Farma that the City of Corona Building Department closed access to G Farmas corporate location and posted a notice preventing entry to the facility. The Building Department notice stated that G Farma had modified electric and gas lines. On April 24, 2019, the Company learned that certain G Farma assets at their corporate location, including equipment leased to G Farma by Mentor Partner I valued at approximately $427,804, had been impounded by the City of Corona. In March 2020, we discovered that an additional component valued at $36,594 was missing from the equipment we recovered. This event significantly impacted G Farmas financial position and its ability to make payments under the finance lease receivable. G Farma has not made a lease payment since February 19, 2019. On May 28, 2019, the Company and Mentor Partner I, LLC filed a complaint against the G Farma Entities and three guarantors to the G Farma agreements, described in Notes 1, 8, 9, and 10, in the California Superior Court in and for the County of Marin. The Company is primarily seeking monetary damages for breach of the G Farma agreements including promissory notes, leases, and other agreements, as well as actions for an injunction to recover leased property, to recover collateral under a security agreement, and to collect from guarantors on the agreements. Mentor intends to vigorously pursue this matter; however, collection is uncertain at this time, see Note 20. On January 31, 2020, following grant of the Companys request for a writ of possession, all remaining equipment leased by Mentor Partner I to G Farma, which was not impounded by the Corona Police, was repossessed by the Company and moved to storage under the Companys control, See Note 9. In June 2020, all remaining repossessed equipment was sold by the Company. |
Note 2 - Summary of signific_13
Note 2 - Summary of significant accounting policies: Goodwill (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Policies | |
Goodwill | Goodwill Goodwill of $1,324,142 was derived from consolidating WCI effective January 1, 2014, and $102,040 of goodwill resulted from the 2005 acquisition of a 50% interest in WCI. The Company accounts for its Goodwill in accordance with FASB Accounting Standards Codification 350, Intangibles Goodwill and Other, which requires the Company to test goodwill for impairment annually or whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable, rather than amortize. Goodwill impairment tests consist of a comparison of each reporting units fair value with its carrying value. Impairment exists when the carrying amount of goodwill exceeds the implied fair value for each reporting unit. To estimate the fair value, management used valuation techniques which included the discounted value of estimated future cash flows. The evaluation of impairment requires the Company to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and are subject to change as future events and circumstances change. Actual results may differ from assumed and estimated amounts. Management determined that no impairment write-downs were required as of June 30, 2020 and December 31, 2019. |
Note 2 - Summary of signific_14
Note 2 - Summary of significant accounting policies: Basic and diluted income (loss) per common share (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Policies | |
Basic and diluted income (loss) per common share | Basic and diluted income (loss) per common share We compute net income (loss) per share in accordance with ASC 260, Earnings Per Share Outstanding warrants that had no effect on the computation of dilutive weighted average number of shares outstanding as their effect would be anti-dilutive were approximately 7,000,000 and 7,000,000 as of June 30, 2020 and December 31, 2019, respectively. There were 87,456 and 87,456 potentially dilutive shares outstanding at June 30, 2020 and December 31, 2019, respectively. Conversion of Series Q Preferred Stock into Common Stock would be anti-dilutive for the three and six months ended June 30, 2020 and 2019 and is not included in calculating the diluted weighted average number of shares outstanding. |
Note 2 - Summary of signific_15
Note 2 - Summary of significant accounting policies: Paycheck Protection Program loans (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Policies | |
Paycheck Protection Program loans | Paycheck Protection Program loans The Company has recorded Paycheck Protection Program (PPP) loans as a liability in accordance with FASB ASC 470, Debt and has accrued interest through June 30, 2020. Proceeds from the loans will remain recorded as a liability until either (1) the loan is, in part or wholly, forgiven and the Company has been legally released, or (2) the Company pays off the loan. If the loan is, in part or wholly, forgiven the liability will be reduced and a gain on the extinguishment will be recognized. See Note 17. |
Note 3 - Prepaid expenses and_2
Note 3 - Prepaid expenses and other assets: Schedule of Prepaid expenses and other assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of Prepaid expenses and other assets | June 30, 2020 December 31, 2019 Prepaid health insurance $ 5,240 $ 5,867 Other prepaid costs 25,022 53,198 $ 30,262 $ 59,065 |
Note 4 - Investment in accoun_2
Note 4 - Investment in account receivable: Schedule of Receivables with Imputed Interest (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of Receivables with Imputed Interest | June 30, 2020 December 31, 2019 Face value $ 702,000 $ 706,000 Unamortized discount (282,271) (320,488) Net balance 419,729 385,512 Current portion (117,000) (4,000) Long term portion $ 302,729 $ 381,512 |
Note 5 - Property and equipme_2
Note 5 - Property and equipment: Property, Plant and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Property, Plant and Equipment | June 30, 2020 December 31, 2019 Computers $ 37,122 $ 37,271 Furniture and fixtures 22,075 22,075 Machinery and vehicles 110,559 93,817 169,756 153,163 Accumulated depreciation and amortization (125,580) (121,542) Net Property and equipment $ 44,176 $ 31,621 |
Note 6 - Lessee Leases_ Schedul
Note 6 - Lessee Leases: Schedule of Lease costs recognized in Consolidated Statements of Operations (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of Lease costs recognized in Consolidated Statements of Operations | Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Operating lease cost included in cost of goods $ 38,615 $ 34,238 $ 84,571 $ 91,095 Operating lease cost included in operating costs 13,846 14,592 28,119 28,288 Total operating lease cost (1) 52,461 48,830 112,690 119,383 Finance lease cost, included in cost of goods: Amortization of lease assets 17,434 7,076 31,427 12,443 Interest on lease liabilities 4,475 1,890 7,969 2,150 Total finance lease cost 21,909 8,966 39,396 14,593 Short-term lease cost 8,970 8,370 17,940 16,740 Total lease cost $ 83,340 $ 66,166 $ 170,026 $ 150,716 |
Note 6 - Lessee Leases_ Sched_2
Note 6 - Lessee Leases: Schedule of other information about lease amounts recognized in Condensed Consolidated Financial Statements (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of other information about lease amounts recognized in Condensed Consolidated Financial Statements | June 30, December 31, 2020 2019 Weighted-average remaining lease term operating leases 1.30 years 1.73 years Weighted-average remaining lease term finance leases 3.37 years 3.25 years Weighted-average discount rate operating leases 10.60% 10.20% Weighted-average discount rate finance leases 8.60% 9.00% |
Note 6 - Lessee Leases_ Sched_3
Note 6 - Lessee Leases: Schedule of Finance lease liabilities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of Finance lease liabilities | June 30, December 31, 2020 2019 Gross finance lease liabilities $ 246,723 $ 208,641 Less: imputed interest (36,981) (54,548) Present value of finance lease liabilities 209,742 154,093 Less: current portion (58,942) (41,675) Long-term finance lease liabilities $ 150,800 $ 112,418 |
Note 6 - Lessee Leases_ Sched_4
Note 6 - Lessee Leases: Schedule of Operating lease liabilities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of Operating lease liabilities | June 30, December 31, 2020 2019 Gross operating lease liabilities $ 246,827 $ 356,958 Less: imputed interest (20,018) (31,622) Present value of operating lease liabilities 226,809 325,336 Less: current portion (161,441) (184,436) Long-term operating lease liabilities $ 65,367 $ 140,900 |
Note 7 - Convertible notes re_2
Note 7 - Convertible notes receivable: Schedule of Convertible Notes Receivable (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of Convertible Notes Receivable | June 30, December 31, 2020 2019 November 22, 2017, NeuCourt, Inc. convertible note receivable including accrued interest of $812 and $191 at June 30, 2020 and December 31, 2019, respectively. The note bears interest at 5% per annum, originally matured November 22, 2019, and was extended to mature November 22, 2021. Principal and accrued interest are due at maturity. At the time of extension, NeuCourt paid the Company $2,496 of interest accrued through November 4, 2019. Principal and unpaid interest may be converted into a blend of shares of a to-be-created series of Preferred Stock and Common Stock of NeuCourt (i) on closing of a future financing round of at least $750,000, (ii) on the election of NeuCourt on maturity of the Note, or (iii) on election of Mentor following NeuCourts election to prepay the Note. * $ 25,812 $ 25,191 October 31, 2018, NeuCourt, Inc. convertible note receivable including accrued interest of $4,233 and $2,930 at June 30, 2020 and December 31, 2019, respectively. The note bears interest at 5% per annum and matures October 31, 2020. Principal and accrued interest are due at maturity. Principal and unpaid interest may be converted into a blend of shares of a to-be-created series of Preferred Stock and Common Stock of NeuCourt (i) on closing of a future financing round of at least $750,000, (ii) on the election of NeuCourt on maturity of the Note, or (iii) on election of Mentor following NeuCourts election to prepay the Note. * 54,233 52,930 Total convertible notes receivable 80,045 78,121 Less current portion (54,233) (52,930) Long term portion $ 25,812 $ 25,191 |
Note 9 - Finance leases recei_2
Note 9 - Finance leases receivable: Schedule of Net finance leases receivable, non-performing (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of Net finance leases receivable, non-performing | June 30, December 31, 2020 2019 Gross minimum lease payments receivable $ 1,203,404 $ 1,455,685 Less: unearned interest (400,005) (400,005) Less: reserve for bad debt (803,399) (786,680) Finance leases receivable - 269,000 Less current portion - (269,000) Long term portion $ - $ - |
Note 9 - Finance leases recei_3
Note 9 - Finance leases receivable: Schedule of Performing net finance leases receivable (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of Performing net finance leases receivable | June 30, December 31, 2020 2019 Gross minimum lease payments receivable $ 532,767 $ 587,854 Accrued interest 2,196 2,463 Less: unearned interest (123,828) (145,445) Finance leases receivable 411,135 444,872 Less current portion (65,508) (62,145) Long term portion $ 345,627 $ 382,727 |
Note 9 - Finance leases recei_4
Note 9 - Finance leases receivable: Schedule of minimum future payments receivable under finance leases (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of minimum future payments receivable under finance leases | 12 months ending June 30, Total 2021 $ 65,508 2022 72,789 2023 80,879 2024 89,869 2025 88,975 Thereafter 13,115 $ 411,135 |
Note 11 - Investments and fai_2
Note 11 - Investments and fair value: Schedule of hierarchy of Level 1, Level 2 and Level 3 Assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of hierarchy of Level 1, Level 2 and Level 3 Assets | Fair Value Measurement Using Unadjusted Quoted Market Prices (Level 1) Quoted Prices for Identical or Similar Assets in Assets in Active Markets (Level 2) Significant Unobservable Inputs (Level 3) Significant Unobservable Inputs (Level 3) Significant Unobservable Inputs (Level 3) Investment in Securities Contractual interest Legal Recovery Investment in Common Stock Warrants Other Equity Investments Total gains or losses Included in earnings (or changes in net assets) (76,395) - (600,002) - (41,600) Purchases, issuances, sales, and settlements Purchases - - 146,195 - - Issuances - - - - - Sales (286,190) - - - - Settlements - - - - - Balance at December 31, 2019 - - 346,195 5,669 204,028 Total gains or losses Included in earnings (or changes in net assets) (750) - - (5,169) - Purchases, issuances, sales, and settlements Purchases 38,115 - 50,717 - - Issuances - - - - - Sales - - - - - Settlements - - (15,383) - - Balance at June 30, 2020 $ 37,365 $ - $ 381,529 $ 500 $ 204,028 |
Note 11 - Investments and fai_3
Note 11 - Investments and fair value: Schedule of amortized costs, gross unrealized holding gains and losses, and fair values of Available-for-sale Securities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of amortized costs, gross unrealized holding gains and losses, and fair values of Available-for-sale Securities | Gross Gross Amortized Unrealized Unrealized Type Costs Gains Losses Fair Values NYSE listed company stock $ 38,115 $ - $ (750) $ 37,365 |
Note 11 - Investments and fai_4
Note 11 - Investments and fair value: Schedule of unrealized gains and losses on Available-for-sale Securities held at the reporting date (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of unrealized gains and losses on Available-for-sale Securities held at the reporting date | Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Net gains and losses recognized during the period on equity securities $ 4,288 $ 71,930 (750) - Less: Net gains (losses) recognized during the period on equity securities sold during the period - 69,403 - - Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date $ 4,288 $ 2,527 (750) - |
Note 12 - Common stock warran_2
Note 12 - Common stock warrants: Schedule of Series B and Series D common stock warrants (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of Series B and Series D common stock warrants | Series B Series D B and D Total Outstanding at December 31, 2018 $ 87,456 6,252,954 6,340,410 Issued - - - Exercised - - - Outstanding at December 31, 2019 87,456 6,252,954 6,340,410 Issued - - - Exercised - - - Outstanding at June 30, 2020 87,456 6,252,954 6,340,410 |
Note 12 - Common stock warran_3
Note 12 - Common stock warrants: Schedule of Series E, F, G and H warrants (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of Series E, F, G and H warrants | Series H $7.00 exercise price Outstanding at December 31, 2018 689,159 Issued - Exercised - Outstanding at December 31, 2019 689,159 Issued - Exercised - Outstanding at June 30, 2020 689,159 |
Note 15 - Lease commitments_ Sc
Note 15 - Lease commitments: Schedule of Lease Commitments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of Lease Commitments | Maturity of lease liabilities 12 months ending June 30, Finance leases Operating leases 2021 $ 58,942 $ 161,441 2022 64,268 64,399 2023 57,877 968 2024 20,422 - 2025 8,233 - Total 209,742 226,808 Less: Current maturities 58,942 161,441 Long-term liability $ 150,800 $ 65,367 |
Note 16 - Term Loan_ Schedule o
Note 16 - Term Loan: Schedule of Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of Term Debt | June 30, 2020 December 31, 2019 Loan through American Express National Bank, AENB,interest at 8.99% per annum, monthly principal and interest payments of $2,284,maturing December 2020. $ 11,151 $ 24,017 |
Note 17 - Paycheck Protection_2
Note 17 - Paycheck Protection Plan loans and Economic Injury Disaster Loan: Schedule of Paycheck protection plan loan balances (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of Paycheck protection plan loan balances | June 30, 2020 April 23, 2020 loan from Bank of California to Mentor Capital, Inc., including accrued interest of $140 at June 30, 2020. The note bears interest at 1% per annum, maturing April 23, 2022, with monthly principle and interest payments of $4,305 beginning November 1, 2020. The note may be forgiven in its entirety if used for eligible purposes. $ 76,640 May 5, 2020, loan from Republic Bank of Arizona to Waste Consolidators, Inc., including accrued interest of $565 at June 30, 2020. The note bears interest at 1% per annum, maturing May 5, 2022, with monthly principle and interest payments of $21,579 beginning December 15, 2020. The note may be forgiven for all except $10,000 if used for eligible purposes. 383,907 Total paycheck protection program loans 460,547 Less: Current maturities 181,530 Long-term portion of paycheck protection plan loans $ 279,017 |
Note 18 - Accrued salary, acc_2
Note 18 - Accrued salary, accrued retirement, and incentive fee - related party: Schedule of Outstanding Liability (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of Outstanding Liability | June 30, December 31, 2020 2019 Accrued salaries and benefits $ 839,004 $ 829,231 Accrued retirement and other benefits 549,692 540,860 Offset by shareholder advance (261,653) (261,653) $ 1,127,043 $ 1,108,438 |
Note 21 - Segment Information_
Note 21 - Segment Information: Schedule of Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Schedule of Segment Information | Cannabis and Medical Marijuana Segment Facility Operations Related Corporate and Eliminations Consolidated Three months ended June 30, 2020 Net revenue $ 12,028 $ 1,146,839 $ - $ 1,158,867 Operating income (loss) (12,235) 21,436 (214,076) (204,875) Interest income 681 - 20,452 21,133 Interest expense - 6,706 140 6,846 Property additions - 13,412 5,012 18,424 Depreciation and amortization - 3,658 1,439 5,097 Three months ended June 30, 2019 Net revenue $ 12,162 $ 1,017,587 $ - $ 1,029,749 Operating income (loss) (84,695) 40,707 (242,350) (286,338) Interest income 982 3 21,899 22,884 Interest expense - 5,851 - 5,851 Property additions - - - - Depreciation and amortization - (2,714) 2,932 218 Six months ended June 30, 2020 Net revenue $ 24,567 $ 2,283,763 $ - $ 2,308,330 Operating income (loss) (21,140) 57,886 (478,345) (441,599) Interest income 1,924 - 38,613 40,537 Interest expense - 14,044 140 14,184 Property additions - 16,741 5,012 21,753 Depreciation and amortization - 6,298 2,641 8,939 Total assets 2,337,447 1,978,746 619,408 4,935,601 Six months ended June 30, 2019 Net revenue $ 132,252 $ 1,973,493 $ - $ 2,105,745 Operating income (loss) (696,392) 57,886 (504,074) (1,142,580) Interest income 21,628 6 43,830 65,464 Interest expense - 10,375 - 10,375 Property additions - 8,159 - 8,159 Depreciation and amortization - 5,306 5,864 11,170 Total assets 2,859,528 1,726,522 1,071,868 5,657,918 |
Note 21 - Segment Information_2
Note 21 - Segment Information: Reconciliation of Revenue from Segments to Consolidated (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Tables/Schedules | |
Reconciliation of Revenue from Segments to Consolidated | Three Months Ended Six Months Ended June 30, 30-Jun 2020 2019 2020 2019 Operating loss $ (204,875) $ (286,338) $ (441,599) $ (1,142,580) Gain (loss) on investments 4,288 (132,088) (5,919) (1,701,969) Interest income 21,133 22,884 40,537 65,464 Interest expense (6,846) (5,851) (14,184) (10,375) Gain on equipment disposals - 1,500 - 1,500 EIDL Advance 10,000 - 10,000 - Other income 4,272 11,340 16,358 11,340 Income before income taxes $ (172,028) $ (388,553) $ (394,807) $ (2,776,620) |
Note 1 - Nature of operations (
Note 1 - Nature of operations (Details) | 6 Months Ended |
Jun. 30, 2020 | |
Details | |
Entity Incorporation, State or Country Code | DE |
Entity Incorporation, Date of Incorporation | Jul. 29, 1994 |
Note 2 - Summary of signific_16
Note 2 - Summary of significant accounting policies: Goodwill (Details) | Jun. 30, 2020USD ($) |
Details | |
Goodwill from consolidating WCI | $ 1,324,142 |
Note 3 - Prepaid expenses and_3
Note 3 - Prepaid expenses and other assets: Schedule of Prepaid expenses and other assets (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Details | ||
Prepaid health insurance | $ 5,240 | $ 5,867 |
Other prepaid costs | 25,022 | 53,198 |
Prepaid expenses and other current assets | $ 30,262 | $ 59,065 |
Note 4 - Investment in accoun_3
Note 4 - Investment in account receivable: Schedule of Receivables with Imputed Interest (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Details | ||
Face value | $ 702,000 | $ 706,000 |
Unamortized discount | (282,271) | (320,488) |
Net balance | 419,729 | 385,512 |
Current portion * | (117,000) | (4,000) |
Long term portion | $ 302,729 | $ 381,512 |
Note 4 - Investment in accoun_4
Note 4 - Investment in account receivable (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Details | ||||
Discount Amortization included in Interest Income | $ 19,872 | $ 19,999 | $ 38,217 | $ 39,997 |
Note 5 - Property and equipme_3
Note 5 - Property and equipment: Property, Plant and Equipment (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Details | ||
Computers | $ 37,122 | $ 37,271 |
Furniture and fixtures | 22,075 | 22,075 |
Machinery and vehicles | 110,559 | 93,817 |
Property and equipment | 169,756 | 153,163 |
Accumulated depreciation and amortization | (125,580) | (121,542) |
Property and equipment, net | $ 44,176 | $ 31,621 |
Note 5 - Property and equipme_4
Note 5 - Property and equipment (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Details | ||||
Depreciation, Depletion and Amortization, Nonproduction | $ 5,097 | $ 218 | $ 8,938 | $ 11,170 |
Note 6 - Lessee Leases_ Sched_5
Note 6 - Lessee Leases: Schedule of Lease costs recognized in Consolidated Statements of Operations (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | ||
Details | |||||
Operating lease cost included in cost of goods | $ 38,615 | $ 34,238 | $ 84,571 | $ 91,095 | |
Operating lease cost included in operating costs | 13,846 | 14,592 | 28,119 | 28,288 | |
Total operating lease cost | [1] | 52,461 | 48,830 | 112,690 | 119,383 |
Amortization of lease assets | 17,434 | 7,076 | 31,427 | 12,443 | |
Interest on lease liabilities | 4,475 | 1,890 | 7,969 | 2,150 | |
Total finance lease cost | 21,909 | 8,966 | 39,396 | 14,593 | |
Short-term lease cost | 8,970 | 8,370 | 17,940 | 16,740 | |
Total lease cost | $ 83,340 | $ 66,166 | $ 170,026 | $ 150,716 | |
[1] | Right of use asset amortization under operating agreements was $49,896 and $45,094 for the three months ended June 30, 2020 and 2019, respectively. Right of use asset amortization under operating agreements was $95,722 and $93,767 for the six months ended June 30, 2020 and 2019, respectively. |
Note 6 - Lessee Leases (Details
Note 6 - Lessee Leases (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Details | ||||
Rental expense under operating agreements | $ 49,896 | $ 45,094 | $ 95,722 | $ 93,767 |
Note 6 - Lessee Leases_ Sched_6
Note 6 - Lessee Leases: Schedule of other information about lease amounts recognized in Condensed Consolidated Financial Statements (Details) | Jun. 30, 2020 | Dec. 31, 2019 |
Details | ||
Weighted-average remaining lease term –operating leases | 1 year 3 months 18 days | 1 year 8 months 23 days |
Weighted-average remaining lease term –finance leases | 3 years 4 months 13 days | 3 years 3 months |
Weighted-average discount rate –operating leases | 10.60% | 10.20% |
Weighted-average discount rate - finance leases | 8.60% | 9.00% |
Note 6 - Lessee Leases_ Sched_7
Note 6 - Lessee Leases: Schedule of Finance lease liabilities (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Details | ||
Gross finance lease liabilities | $ 246,723 | $ 208,641 |
Less: imputed interest | (36,981) | (54,548) |
Present value of finance lease liabilities | 209,742 | 154,093 |
Less: current portion | (58,942) | (41,675) |
Long-term finance lease liabilities | $ 150,800 | $ 112,418 |
Note 6 - Lessee Leases_ Sched_8
Note 6 - Lessee Leases: Schedule of Operating lease liabilities (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Details | ||
Gross operating lease liabilities | $ 246,827 | $ 356,958 |
Less: imputed interest | (20,018) | (31,622) |
Present value of operating lease liabilities | 226,809 | 325,336 |
Less: current portion | (161,441) | (184,436) |
Long-term operating lease liabilities | $ 65,367 | $ 140,900 |
Note 7 - Convertible notes re_3
Note 7 - Convertible notes receivable: Schedule of Convertible Notes Receivable (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 | |
Details | |||
NeuCourt, Inc. convertible note receivable 2 | [1] | $ 25,812 | $ 25,191 |
NeuCourt, Inc. second convertible note receivable | [1] | 54,233 | 52,930 |
Total convertible notes receivable | 80,045 | 78,121 | |
Less current portion | (54,233) | (52,930) | |
Long term portion | $ 25,812 | $ 25,191 | |
[1] | The Conversion Price for each Note is the lower of (i) 75% of the price paid in the Next Equity Financing, or the price obtained by dividing a $3,000,000 valuation cap by the fully diluted number of shares. The number of Conversion Shares issued on conversion shall be the quotient obtained by dividing the outstanding principal and unpaid accrued interest on a Note to be converted on the date of conversion by the Conversion Price (the Total Number of Shares), The Total Number of Shares shall consist of Preferred Stock and Common Stock as follows: (i) That number of shares of Preferred Stock obtained by dividing (a) the principal amount of each Note and all accrued and unpaid interest thereunder by (b) the price per share paid by other purchasers of Preferred Stock in the Next Equity Financing (such number of shares, the 'Number of Preferred Stock') and (ii) that number of shares of Common Stock equal to the Total Number of Shares minus the Number of Preferred Stock. Using the valuation cap of $3,000,000, the November 22, 2017 Note would convert into 95,555 Conversion Shares and the October 31, 2018 Note would convert into 200,774 Conversion Shares at June 30, 2020. In the event of a Corporate Transaction prior to repayment or conversion of the Note, the Company shall receive back two times the outstanding principal on the Note, plus all accrued unpaid interest. |
Note 9 - Finance leases recei_5
Note 9 - Finance leases receivable: Schedule of Net finance leases receivable, non-performing (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Details | ||
Gross minimum lease payments receivable | $ 1,203,404 | $ 1,455,685 |
Less: unearned interest | (400,005) | (400,005) |
Less: reserve for bad debt | (803,399) | (786,680) |
Finance leases receivable | 0 | 269,000 |
Less current portion | 0 | (269,000) |
Long term portion | $ 0 | $ 0 |
Note 9 - Finance leases recei_6
Note 9 - Finance leases receivable: Schedule of Performing net finance leases receivable (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Details | ||
Gross minimum lease payments receivable | $ 532,767 | $ 587,854 |
Accrued interest | 2,196 | 2,463 |
Less: unearned interest | (123,828) | (145,445) |
Finance leases receivable | 411,135 | 444,872 |
Less current portion | (65,508) | (62,145) |
Long term portion | $ 345,627 | $ 382,727 |
Note 9 - Finance leases recei_7
Note 9 - Finance leases receivable: Schedule of minimum future payments receivable under finance leases (Details) | Jun. 30, 2020USD ($) |
Details | |
2021 | $ 65,508 |
2022 | 72,789 |
2023 | 80,879 |
2024 | 89,869 |
2025 | 88,975 |
Thereafter | 13,115 |
Capital Leases, Future Minimum Payments Due | $ 411,135 |
Note 11 - Investments and fai_5
Note 11 - Investments and fair value: Schedule of hierarchy of Level 1, Level 2 and Level 3 Assets (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Fair Value, Inputs, Level 1 | ||
Included in earnings (or changes in net assets) | $ (750) | $ (76,395) |
Purchases | 38,115 | 0 |
Issuances | 0 | 0 |
Sales | 0 | (286,190) |
Settlements | 0 | 0 |
Fair Value, Ending Balance | 37,365 | 0 |
Fair Value, Inputs, Level 2 | ||
Included in earnings (or changes in net assets) | 0 | 0 |
Purchases | 0 | 0 |
Issuances | 0 | 0 |
Sales | 0 | 0 |
Settlements | 0 | 0 |
Fair Value, Ending Balance | 0 | 0 |
Fair Value, Inputs, Level 3 | ||
Included in earnings (or changes in net assets) | 0 | (600,002) |
Purchases | 50,717 | 146,195 |
Issuances | 0 | 0 |
Sales | 0 | 0 |
Settlements | (15,383) | 0 |
Fair Value, Ending Balance | 381,529 | 346,195 |
Level 3, Equity Options | ||
Included in earnings (or changes in net assets) | (5,169) | 0 |
Purchases | 0 | 0 |
Issuances | 0 | 0 |
Sales | 0 | 0 |
Settlements | 0 | 0 |
Fair Value, Ending Balance | 500 | 5,669 |
Level 3, Other Equity Investments | ||
Included in earnings (or changes in net assets) | 0 | (41,600) |
Purchases | 0 | 0 |
Issuances | 0 | 0 |
Sales | 0 | 0 |
Settlements | 0 | 0 |
Fair Value, Ending Balance | $ 204,028 | $ 204,028 |
Note 11 - Investments and fai_6
Note 11 - Investments and fair value: Schedule of amortized costs, gross unrealized holding gains and losses, and fair values of Available-for-sale Securities (Details) - NASDAQ listed company stock | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Costs | $ 38,115 |
Gains | 0 |
Losses | (750) |
Fair Values | $ 37,365 |
Note 11 - Investments and fai_7
Note 11 - Investments and fair value: Schedule of unrealized gains and losses on Available-for-sale Securities held at the reporting date (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Details | ||||
Net gains and losses recognized during the period on equity securities | $ 4,288 | $ 71,930 | $ (750) | $ 0 |
Less: Net gains (losses) recognized during the period on equity securities sold during the period | 0 | 69,403 | 0 | 0 |
Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date | $ 4,288 | $ 2,527 | $ (750) | $ 0 |
Note 12 - Common stock warran_4
Note 12 - Common stock warrants (Details) | 6 Months Ended | ||
Jun. 30, 2020USD ($)$ / sharesshares | Jun. 30, 2019shares | Dec. 31, 2019USD ($)$ / shares | |
Details | |||
Warrants issued, Average Contractual Life in Years | 18 | 18.5 | |
Weighted Average outstanding warrant exercise price | $ / shares | $ 2.11 | $ 2.11 | |
Warrants exercised in period, Total | 0 | 0 | |
Warrants issued in period, Total | 0 | 0 | |
Warrants issued in period, Intrinsic Value | $ | $ 0 | $ 875 |
Note 12 - Common stock warran_5
Note 12 - Common stock warrants: Schedule of Series B and Series D common stock warrants (Details) - shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Series B | ||
Warrants Outstanding, Starting Balance | 87,456 | 87,456 |
Warrants Issued | 0 | 0 |
Warrants Exercised | 0 | 0 |
Warrants Outstanding, Ending Balance | 87,456 | 87,456 |
Series D | ||
Warrants Outstanding, Starting Balance | 6,252,954 | 6,252,954 |
Warrants Issued | 0 | 0 |
Warrants Exercised | 0 | 0 |
Warrants Outstanding, Ending Balance | 6,252,954 | 6,252,954 |
B and D Total | ||
Warrants Outstanding, Starting Balance | 6,340,410 | 6,340,410 |
Warrants Issued | 0 | 0 |
Warrants Exercised | 0 | 0 |
Warrants Outstanding, Ending Balance | 6,340,410 | 6,340,410 |
Note 12 - Common stock warran_6
Note 12 - Common stock warrants: Schedule of Series E, F, G and H warrants (Details) - Series H $7.00 exercise price - shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Warrants Outstanding, Starting Balance | 689,159 | 689,159 |
Warrants Issued | 0 | 0 |
Warrants Exercised | 0 | 0 |
Warrants Outstanding, Ending Balance | 689,159 | 689,159 |
Note 14 - Stockholders' equity
Note 14 - Stockholders' equity (Details) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 | |
Details | |||
Common Stock, Shares Authorized | 75,000,000 | 75,000,000 | |
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | |
Preferred Stock, Shares Authorized | [1] | 5,000,000 | 5,000,000 |
Preferred Stock, Par or Stated Value Per Share | [1] | $ 0.0001 | $ 0.0001 |
[1] | Par value is less than $0.01. |
Note 15 - Lease commitments_ _2
Note 15 - Lease commitments: Schedule of Lease Commitments (Details) | Jun. 30, 2020USD ($) |
Finance leases | |
2021 | $ 58,942 |
2022 | 64,268 |
2023 | 57,877 |
2024 | 20,422 |
2025 | 8,233 |
Total | 209,742 |
Less: Current maturities | 58,942 |
Long-term liability | 150,800 |
Operating leases | |
2021 | 161,441 |
2022 | 64,399 |
2023 | 968 |
2024 | 0 |
2025 | 0 |
Total | 226,808 |
Less: Current maturities | 161,441 |
Long-term liability | $ 65,367 |
Note 18 - Accrued salary, acc_3
Note 18 - Accrued salary, accrued retirement, and incentive fee - related party: Schedule of Outstanding Liability (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Details | ||
Accrued salaries and benefits | $ 839,004 | $ 829,231 |
Accrued retirement and other benefits | 549,692 | 540,860 |
Offset by shareholder advance | (261,653) | (261,653) |
Total Outstanding Liabilities | $ 1,127,043 | $ 1,108,438 |
Note 21 - Segment Information_3
Note 21 - Segment Information: Schedule of Segment Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Operating income (loss) | $ (204,875) | $ (286,338) | $ (441,599) | $ (1,142,580) |
Interest income | 21,133 | 22,884 | 40,537 | 65,464 |
Interest expense | 6,846 | 5,851 | 14,184 | 10,375 |
Cannabis and Medical Marijuana Segment | ||||
Net revenue | 12,028 | 12,162 | 24,567 | 132,252 |
Operating income (loss) | (12,235) | (84,695) | (21,140) | (696,392) |
Interest income | 681 | 982 | 1,924 | 21,628 |
Interest expense | 0 | 0 | 0 | 0 |
Property additions | 0 | 0 | 0 | 0 |
Depreciation and amortization | 0 | 0 | 0 | 0 |
Total assets | 2,337,447 | 2,859,528 | ||
Facility Operations Related | ||||
Net revenue | 1,146,839 | 1,017,587 | 2,283,763 | 1,973,493 |
Operating income (loss) | 21,436 | 40,707 | 57,886 | 57,886 |
Interest income | 0 | 3 | 0 | 6 |
Interest expense | 6,706 | 5,851 | 14,044 | 10,375 |
Property additions | 13,412 | 0 | 16,741 | 8,159 |
Depreciation and amortization | 3,658 | (2,714) | 6,298 | 5,306 |
Total assets | 1,978,746 | 1,726,522 | ||
Corporate and Eliminations | ||||
Net revenue | 0 | 0 | 0 | 0 |
Operating income (loss) | (214,076) | (242,350) | (478,345) | (504,074) |
Interest income | 20,452 | 21,899 | 38,613 | 43,830 |
Interest expense | 140 | 0 | 140 | 0 |
Property additions | 5,012 | 0 | 5,012 | 0 |
Depreciation and amortization | 1,439 | 2,932 | 2,641 | 5,864 |
Total assets | 619,408 | 1,071,868 | ||
Consolidated | ||||
Net revenue | 1,158,867 | 1,029,749 | 2,308,330 | 2,105,745 |
Operating income (loss) | (204,875) | (286,338) | (441,599) | (1,142,580) |
Interest income | 21,133 | 22,884 | 40,537 | 65,464 |
Interest expense | 6,846 | 5,851 | 14,184 | 10,375 |
Property additions | 18,424 | 0 | 21,753 | 8,159 |
Depreciation and amortization | $ 5,097 | $ 218 | 8,939 | 11,170 |
Total assets | $ 4,935,601 | $ 5,657,918 |
Note 21 - Segment Information_4
Note 21 - Segment Information: Reconciliation of Revenue from Segments to Consolidated (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Details | ||||
Segment Reconciliation, Operating Loss | $ (204,875) | $ (286,338) | $ (441,599) | $ (1,142,580) |
Segment Reconciliation, Gain (Loss) on Investments | 4,288 | (132,088) | (5,919) | (1,701,969) |
Segment Reconciliation, Interest income | 21,133 | 22,884 | 40,537 | 65,464 |
Segment Reconciliation, Interest Expense | (6,846) | (5,851) | (14,184) | (10,375) |
Segment Reconciliation - Gain on equipment disposals | 0 | 1,500 | 0 | 1,500 |
Segment Reconciliation - EIDL Advance | 10,000 | 0 | 10,000 | 0 |
Segment Reconciliation - Other income | 4,272 | 11,340 | 16,358 | 11,340 |
Segment Reconciliation, Income before income taxes | $ (172,028) | $ (388,553) | $ (394,807) | $ (2,776,620) |
Note 22 - Subsequent events (De
Note 22 - Subsequent events (Details) | 6 Months Ended |
Jun. 30, 2020 | |
Details | |
Subsequent Event, Date | Jul. 9, 2020 |
Subsequent Event, Description | WCI received an additional Economic Injury Disaster Loan in the amount of $150,000, through the SBA |