UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________ to __________________
Commission
file number
| (Exact name of registrant as specified in its charter) |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| (Address of principal executive offices) (Zip Code) |
Registrant’s
telephone number, including area code (
Securities registered pursuant to Section 12(b) of the Act: N/A
| Title of each class to be so registered | Trading Symbols (s) | Name of each exchange on which each class is to be registered |
Securities registered pursuant to section 12(g) of the Act:
| Common Stock |
| (Title of class) |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
At November 12, 2021, there were shares of Mentor Capital, Inc.’s common stock outstanding and 11 shares of Series Q Preferred Stock outstanding.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities and Exchange Act 1934, as amended. All statements contained in this report, other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “seek,” “look,” “hope,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations, and objectives and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions. For example, statements in this Form 10-Q regarding the potential future impact of COVID-19 on the Company’s business and results of operations are forward-looking statements. Moreover, due to our investments in the cannabis-related industry or other industries, we may be subject to heightened scrutiny and our portfolio companies may be subject to additional laws, rules, regulations, and statutes. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
All references in this Form 10-Q to the “Company,” “Mentor,” “we,” “us,” or “our” are to Mentor Capital, Inc.
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MENTOR CAPITAL, INC.
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Mentor Capital, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
| September 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Investment in securities at fair value | ||||||||
| Accounts receivable, net | ||||||||
| Net finance leases receivable, current portion | ||||||||
| Investment in installment receivable, current portion | ||||||||
| Convertible notes receivable, current portion | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Employee advances and other receivable | ||||||||
| Total current assets | ||||||||
| Property and equipment | ||||||||
| Property and equipment | ||||||||
| Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Property and equipment, net | ||||||||
| Other assets | ||||||||
| Operating lease right-of-use assets | ||||||||
| Finance lease right-of-use assets | ||||||||
| Investment in account receivable, net of discount and current portion | ||||||||
| Net finance leases receivable, net of current portion | ||||||||
| Convertible notes receivable, net of current portion | ||||||||
| Contractual interest in legal recovery | ||||||||
| Deposits | ||||||||
| Long term investments | ||||||||
| Goodwill | ||||||||
| Total other assets | ||||||||
| Total assets | $ | $ | ||||||
| See accompanying Notes to Financial Statements | -4- |
Mentor Capital, Inc.
Condensed Consolidated Balance Sheets (Unaudited, Continued)
| September 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Related party payable | ||||||||
| Deferred revenue | ||||||||
| Paycheck protection program loans, current portion | - | |||||||
| Finance lease liability, current portion | ||||||||
| Operating lease liability, current portion | ||||||||
| Current portion of long-term debt | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Accrued salary, retirement, and incentive fee - related party | ||||||||
| Related party loan | - | |||||||
| Paycheck protection program loans, net of current portion | ||||||||
| Economic injury disaster loan | ||||||||
| Finance lease liability, net of current portion | ||||||||
| Operating lease liability, net of current portion | ||||||||
| Long term debt, net of current portion | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies | - | - | ||||||
| Shareholders’ equity | ||||||||
| Preferred stock, $par value, shares authorized; and shares issued and outstanding at September 30, 2021 and December 31, 2020 * | - | - | ||||||
| Common stock, $ par value, shares authorized; and shares issued and outstanding at September 30, 2021 and December 31, 2020 | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Non-controlling interest | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
| * |
| See accompanying Notes to Financial Statements | -5- |
Mentor Capital, Inc.
Condensed Consolidated Income Statements (Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue | ||||||||||||||||
| Service fees | $ | $ | $ | $ | ||||||||||||
| Finance lease revenue | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Operating income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Other income and (expense) | ||||||||||||||||
| Gain (loss) on investments | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Paycheck Protection Program Loan Forgiven | - | - | ||||||||||||||
| Gain on equipment disposal | ( | ) | - | |||||||||||||
| Recovery on impaired asset | ||||||||||||||||
| Economic Injury Disaster Loan advance | - | - | - | |||||||||||||
| Other income (expense) | ||||||||||||||||
| Total other income and (expense) | ||||||||||||||||
| Income (loss) before provision for income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Provision for income taxes | ||||||||||||||||
| Net income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Gain (loss) attributable to non-controlling interest | ( | ) | ( | ) | ( | ) | ||||||||||
| Net income (loss) attributable to Mentor | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted net income (loss) per Mentor common share: | ||||||||||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of shares of Mentor common stock outstanding: | ||||||||||||||||
| Basic and diluted* | ||||||||||||||||
| * |
| See accompanying Notes to Financial Statements | -6- |
Mentor Capital, Inc.
Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)
For the Three Months Ended September 30, 2021 and 2020
| Controlling Interest | Non- | |||||||||||||||||||||||||||||||||||
| Preferred stock | Common stock | Additional | Accumulated | controlling | ||||||||||||||||||||||||||||||||
| Shares | $0.0001 par* | Shares | $0.0001 par | paid in capital | equity (deficit) | Total |
equity (deficit) | Totals | ||||||||||||||||||||||||||||
| Balances at June 30, 2021 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Balance at June 30, 2020 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balances at September 30, 2020 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| * |
| See accompanying Notes to Financial Statements | -7- |
Mentor Capital, Inc.
Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)
For the Nine Months Ended September 30, 2021 and 2020
| Controlling Interest | Non- | |||||||||||||||||||||||||||||||||||
| Preferred stock | Common stock | Additional | Accumulated | controlling | ||||||||||||||||||||||||||||||||
| Shares | $par* | Shares | $ par | paid in capital | equity (deficit) | Total | equity
(deficit) | Totals | ||||||||||||||||||||||||||||
| Balances at December 31, 2020 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Balance at December 31, 2019 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balances at September 30, 2020 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| * |
| See accompanying Notes to Financial Statements | -8- |
Mentor Capital, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
| For the Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net (loss) | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net (loss) to net cash provided by (used by) operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of right of use asset | ||||||||
| PPP loan forgiven | ( | ) | - | |||||
| (Gain) loss on ROU asset disposal | ( | ) | ||||||
| (Gain) loss on property and equipment disposal | ( | ) | - | |||||
| Bad debt expense | ||||||||
| Amortization of discount on investment in account receivable | ( | ) | ( | ) | ||||
| Increase in accrued investment interest income | ( | ) | ( | ) | ||||
| (Gain) loss on investment in securities, at fair value | ||||||||
| (Gain) loss on long-term investments | - | |||||||
| Decrease (increase) in operating assets | ||||||||
| Finance leases receivable | - | |||||||
| Accounts receivable - trade | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Employee advances | ||||||||
| Increase (decrease) in operating liabilities | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ||||||||
| Deferred revenue | ( | ) | ( | ) | ||||
| Accrued salary, retirement, and benefits - related party | ( | ) | ||||||
| Net cash provided by (used by) operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of investment securities | ( | ) | ||||||
| Proceeds from finance lease receivable | - | |||||||
| Purchase contractual interest in legal recovery | - | ( | ) | |||||
Purchases of property and equipment | ( | ) | ( | ) | ||||
| Proceeds from sale of property and equipment | ||||||||
| Down payments on right of use assets | ( | ) | ( | ) | ||||
| Proceeds from investment in receivable | - | |||||||
| Net cash (used by) investing activities | ( | ) | ||||||
| See accompanying Notes to Financial Statements | -9- |
Mentor Capital, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited, Continued)
| For the Nine Months Ended | ||||||||
| Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from related party loan | $ | $ | ||||||
| Proceeds from Paycheck Protection Program loan | ||||||||
| Proceeds from economic injury disaster loan | - | |||||||
| Refund of Paycheck Protection Program payments | - | |||||||
| Payments on related party payable | - | ( | ) | |||||
| Payments on long-term debt | ( | ) | ( | ) | ||||
| Payments on finance lease liability | ( | ) | ( | ) | ||||
| Net cash provided by (used by) financing activities | ||||||||
| Net change in cash | ( | ) | ( | ) | ||||
| Beginning cash | ||||||||
| Ending cash | $ | $ | ||||||
| SUPPLEMENTARY INFORMATION: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING TRANSACTIONS: | ||||||||
| Right of use assets acquired through operating lease liability | $ | $ | ||||||
| Right of use assets acquired through finance lease liability | $ | $ | ||||||
| See accompanying Notes to Financial Statements | -10- |
Note 1 - Nature of operations
Corporate Structure Overview
Mentor
Capital, Inc. (“Mentor” or “the Company”), reincorporated under the laws of the State of
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
The Company’s common stock trades publicly under the trading symbol OTCQB: MNTR.
The Company’s broad target industry focus includes energy, mining and minerals, technology, consumer products, management services, and manufacturing sectors with the goal of ensuring increased market opportunities and investment diversification. In April 2021, the Company announced that it was adding a cryptocurrency focus for Mentor.
Mentor
has a
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 —
Mentor
Partner I, LLC (“Partner I”) was reorganized as a limited liability company under the laws of the State of Texas as of February
17, 2021. The entity was initially organized as a limited liability company under the laws of the State of California on September 19,
2017. Partner I was formed as a wholly owned subsidiary of Mentor for the purpose of cannabis-focused acquisition and investment. In
2018, Mentor contributed $
Mentor
Partner II, LLC (“Partner II”) was reorganized as a limited liability company under the laws of the State of Texas on February
17, 2021. The entity was initially organized as a limited liability company under the laws of the State of California on February
1, 2018. Partner II was formed as a wholly owned subsidiary of Mentor for the purpose of cannabis-focused investing and acquisition.
On February 8, 2018, Mentor contributed $
| -11- |
Note 1 - Nature of operations (continued)
The
Company has a membership equity interest in Electrum Partners, LLC (“Electrum”) which is carried at a cost of $
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 9, Mentor provided capital
for payment of Litigation costs in the amount of $
On
December 21, 2018, Mentor paid $
Note 2 - Summary of significant accounting policies
Condensed consolidated financial statements
The unaudited condensed consolidated financial statements of the Company for the nine month period ended September 30, 2021 and 2020 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, 2020 was derived from the audited financial statements included in the Company’s financial statements as of and for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2021. 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 the current period presentation.
Basis of presentation (continued)
As shown in the accompanying financial statements, the Company has a significant accumulated deficit of $10,968,166 as of September 30, 2021. The Company continues to experience negative cash flows from operations.
The Company management believes it is more likely than not that Electrum will prevail in the legal action described in Note 9 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.
| -12- |
Note 2 - Summary of significant accounting policies (continued)
Going Concern Uncertainties
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
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 Company’s business, results of operations, financial condition, and stock price. As of September 30, 2021, the fatality rate from COVID-19 in the United States has significantly declined from its peak, but the impact of COVID-19 continues to unfold. 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. Our legal recovery efforts have been hindered and may continue to be constrained 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 Company’s interest in the Electrum Partners, LLC legal recovery, respectively. Additionally, the collectability of our investment in accounts receivable has been impaired by $139,148 in the fourth quarter of 2020, due to a reduction in our expected collection amount of the 2020 and 2021 payments of an installment contract, see Note 4.
Public health efforts to mitigate the impact of COVID-19 have included government actions such as travel restrictions, limitations on public gatherings, shelter in place orders, and mandatory closures. These actions are being lifted to varying degrees. WCI has not experienced an overall reduced demand for services initially anticipated because WCI helps lower monthly service costs paid by its client properties. However, WCI’s clients may experience a delay in collecting rent from tenants, which may cause slower payments to WCI. WCI closely monitors customer accounts and has not experienced significant delays in the collection of accounts receivable.
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 Mentor’s operations, which consist of oversight of our portfolio companies, accounting, compliance, investor relations, and sales, Mentor’s day-to-day operations are not substantially hindered by remote office work or telework.
We anticipate that current cash and associated resources will be sufficient to execute our business plan for the next twelve 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, government response and the related length of this impact on the 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 judgments 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.
| -13- |
Note 2 - Summary of significant accounting policies (continued)
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 Company’s 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 management’s 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 the 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.
There were no accounting pronouncements issued during the nine months ended September 30, 2021 that are expected to have a material impact on the Company’s condensed consolidated financial statements.
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.
Cash and cash equivalents
The Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. The Company had no short-term debt securities as of September 30, 2021 and December 31, 2020.
Accounts receivable
Accounts
receivable consists 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 historical losses as a percent of revenue in conjunction with a review
of outstanding balances on a quarterly basis. The estimate of the 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 September 30, 2021 and December 31, 2020, the Company has an allowance for doubtful
receivables in the amount of $
Investments in securities at fair value
Investment in securities consists of debt and equity securities reported at fair value. Under ASU 2016-01, “Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities,” the Company elected to report changes in the fair value of equity investment in realized investment gains (losses), net.
Long term investments
The Company’s investments in entities where it is a minority owner and does not have the ability to exercise significant influence are recorded at fair value if readily determinable. If the fair market value is not readily determinable, the investment is recorded under the cost method. Under this method, the Company’s share of the earnings or losses of such investee company is not included in the Company’s financial statements. The Company reviews the carrying value of its long-term investments for impairment each reporting period.
| -14- |
Note 2 - Summary of significant accounting policies (continued)
Investments in debt securities
The
Company’s investment in debt securities consists of two convertible notes receivable from NeuCourt, Inc., which are recorded at
the aggregate principal face amount of $
Investment in account receivable, net of discount
The
Company’s investment in account receivable is stated at face value, net of unamortized purchase discount. The discount is amortized
to interest income over the term of the exchange agreement. In the fourth quarter of 2020, we were notified that due to the effect of
COVID-19 on the estimated receivable, we may not receive the 2020 installment payment or the full 2021 installment payment. At September
30, 2021 and December 31, 2020, the Company has an impairment of the investment in account receivable of $
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 is able to analyze 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 is 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 borrower’s facility and meet with a borrower’s management to better understand such borrower’s financial performance and its future plans on an as-needed basis.
Lessee Leases
We determine whether an arrangement is a lease at inception. Lessee leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria is met: (i) the lease transfers ownership of the asset by the end of the lease term, (ii) the lease contains an option to purchase the asset that is reasonably certain to be exercised, and (iii) the lease term is for a significant part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of these criteria. Our operating leases are comprised of office space leases and office equipment. Fleet vehicle leases entered into prior to January 1, 2019, are classified as operating leases based on an expected lease term of four years. Fleet vehicle leases entered into on or after January 1, 2019, for which the lease is expected to be extended to five years, are classified as finance leases. Our leases have remaining lease terms of one to forty-eight months. Our fleet finance leases contain a residual value guarantee which, based on past lease experience, is unlikely to result in a liability at the end of the lease. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.
Costs associated with operating lease assets are recognized on a straight-line basis, over the term of the lease, within cost of goods sold for vehicles used in direct servicing of WCI customers and in operating expenses for costs associated with all other operating leases. Finance lease assets are amortized within cost of goods sold for vehicles used in direct servicing of WCI customers and within operating expenses for all other finance lease assets, on a straight-line basis over the shorter of the estimated useful lives of the assets or the lease term. The interest component of a finance lease is included in interest expense and recognized using the effective interest method over the lease term. We have agreements that contain both lease and non-lease components. For vehicle fleet operating leases, we account for lease components together with non-lease components (e.g., maintenance fees).
| -15- |
Note 2 - Summary of significant accounting policies (continued)
Property, and equipment
Property and equipment is recorded at cost less accumulated depreciation. Depreciation is computed on the declining balance method over the estimated useful lives of various classes of property. The estimated lives of the property and equipment are generally as follows: computer equipment, three to five years; furniture and equipment, seven years; and vehicles and trailers, four to five years. Depreciation on vehicles used by WCI to service its customers is included in cost of goods sold in the consolidated income statements. All other depreciation is included in selling, general and administrative costs in the consolidated income statements.
Expenditures for major renewals and improvements are capitalized, while minor replacements, maintenance and repairs, which do not extend the asset lives, are charged to operations as incurred. Upon sale or disposition, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. The Company continually monitors events and changes in circumstances that could indicate that the carrying balances of its property and equipment may not be recoverable in accordance with the provisions of ASC 360, “Property, Plant, and Equipment.” When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets.
The Company reviews intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. Conditions that may indicate impairment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset, a product recall, or an adverse action or assessment by a regulator. If an impairment indicator exists, we test the intangible asset for recoverability. For purposes of the recoverability test, we group our amortizable intangible assets with other assets and liabilities at the lowest level of identifiable cash flows if the intangible asset does not generate cash flows independent of other assets and liabilities. If the carrying value of the intangible asset (asset group) exceeds the undiscounted cash flows expected to result from the use and eventual disposition of the intangible asset (asset group), the Company will write the carrying value down to the fair value in the period identified.
Goodwill
Goodwill
of $
The Company reviews the goodwill allocated to each of our reporting units for possible impairment annually as of December 31 and whenever events or changes in circumstances indicate carrying amount may not be recoverable. In the impairment test, the Company measures the recoverability of goodwill by comparing a reporting unit’s carrying amount, including goodwill, to the estimated fair value of the reporting unit. If the carrying amount of a reporting unit is in excess of its fair value, the Company recognizes an impairment charge equal to the amount in excess. To estimate the fair value, management uses 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 September 30, 2021 and December 31, 2020.
| -16- |
Note 2 - Summary of significant accounting policies (continued)
Revenue recognition
The Company recognizes revenue in accordance with ASC 606, “Revenue from Contracts with Customers,” and FASB ASC Topic 842, “Leases.” Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to government authorities.
WCI works with business park owners, governmental centers, and apartment complexes to reduce facilities related costs. WCI performs monthly services pursuant to agreements with customers. Customer monthly service fees are based on WCI’s assessment of the amount and frequency of monthly services requested by a customer. WCI may also provide additional services, such as apartment cleanout services, large item removals, or similar services, on an as needed basis at an agreed upon rate as requested by customers. All services are invoiced and recognized as revenue in the month the agreed on services are performed.
For each finance lease, the Company recognized as a gain the amount equal to (i) the net investment in the finance lease less (ii) the net book value of the equipment at the inception of the applicable lease. At lease inception, we capitalize the total minimum finance lease payments receivable from the lessee, the estimated unguaranteed residual value of the equipment at lease termination, if any, and the initial direct costs related to the lease, less unearned income. Unearned income is recognized as finance income over the term of the lease using the effective interest rate method.
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.
We compute net income (loss) per share in accordance with ASC 260, “Earnings Per Share.” Under the provisions of ASC 260, basic net loss per share includes no dilution and is computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of Common Stock outstanding during the period. Diluted net income (loss) per share takes into consideration shares of Common Stock outstanding (computed under basic net loss per share) and potentially dilutive securities that are not anti-dilutive.
Outstanding warrants that had no effect on the computation of the dilutive weighted average number of shares outstanding as their effect would be anti-dilutive were approximately and as of September 30, 2021 and December 31, 2020, respectively. There were and potentially dilutive shares outstanding at September 30, 2021 and December 31, 2020, respectively.
Conversion of Series Q Preferred Stock into Common Stock would be anti-dilutive for the three and nine months ended September 30, 2021 and 2020 and is not included in calculating the diluted weighted average number of shares outstanding.
Note 3 – Prepaid expenses and other assets
Prepaid expenses and other assets consist of the following:
| September 30, 2021 | December 31, 2020 | |||||||
| Prepaid insurance | - | |||||||
| Other prepaid costs | ||||||||
| $ | $ | |||||||
| -17- |
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 $
The
Company valued the transaction based on the market value of Company common shares exchanged in the transaction, resulting in a
The investment in account receivable consists of the following at September 30, 2021 and December 31, 2020:
| September 30, 2021 | December 31, 2020 | |||||||
| Face value | $ | $ | ||||||
| Impairment | ( | ) | ( | ) | ||||
| Unamortized discount | ( | ) | ( | ) | ||||
| Net balance | ||||||||
| Current portion | ( | ) | ||||||
| Long term portion | $ | $ | ||||||
For
the three months ended September 30, 2021 and 2020, $
Note 5 - Property and equipment
Property and equipment are comprised of the following:
| September 30, 2021 | December 31, 2020 | |||||||
| Computers | $ | $ | ||||||
| Furniture and fixtures | ||||||||
| Machinery and vehicles | ||||||||
| Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Net Property and equipment | $ | $ | ||||||
Depreciation
and amortization expense was $
| -18- |
Note 6 – Lessee Leases
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 on or after 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 $
Lease costs recognized in our consolidated statements of operations is summarized as follows:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Operating lease cost included in cost of goods | $ | $ | $ | $ | ||||||||||||
| Operating lease cost included in operating costs | ||||||||||||||||
| Total operating lease cost (1) | ||||||||||||||||
| Finance lease cost, included in cost of goods: | ||||||||||||||||
| Amortization of lease assets | ||||||||||||||||
| Interest on lease liabilities | ||||||||||||||||
| Total finance lease cost | ||||||||||||||||
| Short-term lease cost | ||||||||||||||||
| Total lease cost | $ | $ | $ | $ | ||||||||||||
| (1) |
Other information about lease amounts recognized in our condensed consolidated financial statements is summarized as follows:
September 30, 2021 | December 31, 2020 | |||||||
| Weighted-average remaining lease term – operating leases | ||||||||
| Weighted-average remaining lease term – finance leases | ||||||||
| Weighted-average discount rate – operating leases | % | % | ||||||
| Weighted-average discount rate – finance leases | % | % | ||||||
Finance lease liabilities were as follows:
September 30, 2021 | December 31, 2020 | |||||||
| Gross finance lease liabilities | $ | $ | ||||||
| Less: imputed interest | ( | ) | ( | ) | ||||
| Present value of finance lease liabilities | ||||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Long-term finance lease liabilities | $ | $ | ||||||
Operating lease liabilities were as follows:
September 30, 2021 | December 31, 2020 | |||||||
| Gross operating lease liabilities | $ | $ | ||||||
| Less: imputed interest | ( | ) | ( | ) | ||||
| Present value of operating lease liabilities | ||||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Long-term operating lease liabilities | $ | $ | ||||||
| -19- |
Note 6 – Lessee Leases (continued)
Lease maturities were as follows:
| Maturity of lease liabilities | ||||||||
| 12 months ending September 30, | Finance leases | Operating leases | ||||||
| 2022 | $ | $ | ||||||
| 2023 | ||||||||
| 2024 | ||||||||
| 2025 | ||||||||
| 2026 | ||||||||
| Total | ||||||||
| Less: Current maturities | ||||||||
| Long-term liability | $ | $ | ||||||
Note 7 – Convertible notes receivable
Convertible notes receivable consists of the following:
September 30, 2021 | December 31, 2020 | |||||||
| November 22, 2017, NeuCourt, Inc. convertible note receivable including accrued interest of $ | $ | $ | ||||||
| October 31, 2018, NeuCourt, Inc. convertible note receivable including accrued interest of $ | ||||||||
| Total convertible notes receivable | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Long term portion | $ | $ | ||||||
| * |
| -20- |
Note 8 – Finance leases receivable
Partner II entered into a Master Equipment Lease Agreement with Pueblo West, dated February 11, 2018, 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 did not record any sales revenue for the nine months ended September 30, 2021 and 2020. At September 30, 2021, all Partner II leased equipment under finance leases receivable is located in Colorado.
Performing net finance leases receivable consisted of the following:
| September 30, 2021 | December 31, 2020 | |||||||
| Gross minimum lease payments receivable | $ | $ | ||||||
| Accrued interest | ||||||||
| Less: unearned interest | ( | ) | ( | ) | ||||
| Finance leases receivable | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Long term portion | $ | $ | ||||||
Interest
income recognized on Partner II finance leases for the three months ended September 30, 2021 and 2020 was $
At September 30, 2021, minimum future payments receivable for performing finance leases receivable were as follows:
| 12 months ending September 30, | Lease Receivable | Lease Interest | ||||||
| 2022 | $ | $ | ||||||
| 2023 | ||||||||
| 2024 | ||||||||
| 2025 | ||||||||
| 2026 | ||||||||
| Thereafter | ||||||||
| $ | $ | |||||||
Note 9 - Contractual interests in legal recoveries
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, pending in the Supreme Court of British Columbia (“Litigation”). On October 23, 2018, Mentor entered into a Joint Prosecution Agreement among Mentor, Mentor’s corporate legal counsel, Electrum, and Electrum’s legal counsel.
On
October 30, 2018, Mentor entered into a Recovery Purchase Agreement (“Recovery Agreement”) with Electrum under which Mentor
purchased a portion of Electrum’s potential recovery in the Litigation. Mentor agreed to pay $
Subsequent
to quarter end, the Company invested an additional $
| -21- |
Note 9 - Contractual interests in legal recoveries (continued)
On
October 31, 2018, Mentor also entered into a secured Capital Agreement with Electrum under which Mentor invested an additional $
On
January 28, 2019, Mentor entered into a second secured Capital Agreement with Electrum. Under the second Capital Agreement, Mentor invested
an additional $
Recovery on this claim has been delayed due to COVID-19. The Company’s interest in the Electrum Partners, LLC legal recovery, carried at cost, at September 30, 2021 and December 31, 2020 is summarized as follows:
| September 30, 2021 | December 31, 2020 | |||||||
| October 30, 2018 Recovery Purchase Agreement | $ | $ | ||||||
| October 31, 2018 secured Capital Agreement | ||||||||
| January 28, 2019 secured Capital Agreement | ||||||||
| Total Invested | $ | $ | ||||||
| -22- |
Note 10 – Investments and fair value
The hierarchy of Level 1, Level 2 and Level 3 Assets are listed as following:
| Fair Value Measurement Using | ||||||||||||||||||||
| Unadjusted Quoted Market Prices | Quoted Prices for Identical or Similar Assets in Active Markets | Significant Unobservable Inputs | Significant Unobservable Inputs | Significant Unobservable Inputs | ||||||||||||||||
| (Level 1) | (Level 2) | (Level 3) | (Level 3) | (Level 3) | ||||||||||||||||
| Investment in Securities | Contractual interest Legal Recovery | Investment in Common Stock Warrants | Other Equity Investments | |||||||||||||||||
| Balance at December 31, 2019 | $ | $ | - | $ | $ | $ | ||||||||||||||
| Total gains or losses | ||||||||||||||||||||
| Included in earnings (or changes in net assets) | ( | ) | - | - | ( | ) | - | |||||||||||||
| Purchases, issuances, sales, and settlements | ||||||||||||||||||||
| Purchases | - | - | - | |||||||||||||||||
| Issuances | - | - | - | - | - | |||||||||||||||
| Sales | ( | ) | - | - | - | - | ||||||||||||||
| Settlements | - | - | ( | ) | - | - | ||||||||||||||
| Balance at December 31, 2020 | $ | $ | $ | $ | $ | |||||||||||||||
| Total gains or losses | ||||||||||||||||||||
| Included in earnings (or changes in net assets) | ( | ) | - | - | - | - | ||||||||||||||
| Purchases, issuances, sales, and settlements | ||||||||||||||||||||
| Purchases | - | - | - | - | ||||||||||||||||
| Issuances | - | - | - | - | - | |||||||||||||||
| Sales | ( | ) | - | - | - | - | ||||||||||||||
| Settlements | - | - | - | - | - | |||||||||||||||
| Balance at September 30, 2021 | $ | $ | $ | $ | $ | |||||||||||||||
| -23- |
Note 10 – Investments and fair value (continued)
The amortized costs, gross unrealized holding gains and losses, and fair values of the Company’s investment securities classified as equity securities, at fair value, at September 30, 2021 consists of the following:
| Type | Amortized Costs | Gross Unrealized Gains | Gross Unrealized Losses | Fair Values | ||||||||||||
| NASDAQ listed company stock | $ | $ | $ | $ | ||||||||||||
| $ | $ | $ | $ | |||||||||||||
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 September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net gains and losses recognized during the period on equity securities | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Less: Net gains (losses) recognized during the period on equity securities sold during the period | - | - | ( | ) | - | |||||||||||
| Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
On
August 21, 1998, the Company filed for voluntary reorganization with the United States Bankruptcy Court for the Northern District of
California, and on January 11, 2000, the Company’s Plan of Reorganization was approved. Among other things, the Company’s
Plan of Reorganization allowed creditors and claimants to receive new Series A, B, C, and D warrants in settlement of their prior claims.
The warrants expire on
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 $ per share redemption fee payable to the original warrant holders. 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 September 30,
2021 for Series B warrants were $
| -24- |
Note 11 - Common stock warrants (continued)
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
As
of September 30, 2021 and December 31, 2020, the weighted average contractual life for all Mentor warrants was
During
the nine months ended September 30, 2021 and 2020, there were
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, 2019 | ||||||||||||
| Issued | - | - | - | |||||||||
| Exercised | - | - | - | |||||||||
| Outstanding at December 31, 2020 | ||||||||||||
| Issued | - | - | - | |||||||||
| Exercised | - | - | - | |||||||||
| Outstanding at September 30, 2021 | ||||||||||||
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 ($
Series H $7.00 exercise price | ||||
| Outstanding at December 31, 2019 | ||||
| Issued | - | |||
| Exercised | - | |||
| Outstanding at December 31, 2020 | ||||
| Issued | - | |||
| Exercised | - | |||
| Outstanding at September 30, 2021 | ||||
On February 9, 2015, in accordance with Section 1145 of the United States Bankruptcy Code and the Company’s 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 Company’s 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 to be scheduled 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 nine months ended September 30, 2021 and 2020, no warrants were redeemed.
| -25- |
Note 12 - 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 $
In
prior years the Series A, Series B, and Series C redemption fees have been distributed through DTCC into holder’s brokerage accounts
or directly to the holders. All Series A and Series C warrants have been exercised and are no longer outstanding. There are
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 September 30, 2021 and December 31, 2020.
Note 13 - 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 authorized shares of Common Stock at $ 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
Preferred Stock
Mentor has , $ 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 preferred shares as Series Q Preferred Stock, such series having a par value of $ 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 to 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.
| -26- |
Note 13 - Stockholders’ equity (continued)
Preferred Stock (continued)
The “Conversion Price” of the Series Q Preferred Stock shall be at the product of 105% and the closing price of the Company’s 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 shares of Series Q Preferred Stock on May 30,
2018, at a price of $per share, for an aggregate purchase price of
$
Note 14 - Term Loan
Term debt as of September 30, 2021 and December 31, 2020 consists of the following:
| September 30, 2021 | December 31, 2020 | |||||||
| Bank of America auto loan, interest at | $ | $ | ||||||
| Bank of America auto loan, interest at | - | |||||||
| Less: Current maturities | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Note 15 – Paycheck Protection Program Loans and Economic Injury Disaster Loans
Paycheck Protection Program loans
In
2020, the Company and WCI each received loans in the amount of $
On
February 17, 2021, Mentor received a second PPP Loan in the amount of $
The Second PPP Loan is forgivable so long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent, utilities, and other covered operations expenditures, 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.
| -27- |
Note 15 – Paycheck Protection Program loans and Economic Injury Disaster Loan (continued)
The Company records PPP Loans as a liability in accordance with FASB ASC 470, “Debt” and records accrued interest through the effective date of forgiveness on the PPP Loans. Total gain on extinguishment of the PPP Loans and accrued interest is reported in other income and expense in the consolidated income statement.
PPP loan balances consist of the following:
| September 30, 2021 | December 31, 2020 | |||||||
| May 5, 2020, PPP loan from Republic Bank of Arizona to Waste Consolidators, Inc., revised December 1, 2020. The note bears interest at 1% per annum, with a revised maturation date of | $ | $ | ||||||
| February 17, 2021, Second PPP loan from the Bank of Southern California, with
accrued interest of $ | - | |||||||
| Total | ||||||||
| Less: Current maturities | - | ( | ) | |||||
| Long-term portion of paycheck protection plan loans | $ | $ | ||||||
Interest
expense on PPP Loans for the three months ended September 30, 2021 and 2020 was $
Economic injury disaster loan
On
July 9, 2020, WCI received an additional Economic Injury Disaster Loan in the amount of $
EIDL loan balances at September 30, 2021 consist of the following:
| September 30, 2021 | December 31, 2020 | |||||||
| July 9, 2020, WCI received an additional Economic Injury Disaster Loan, including accrued interest of $ | $ | $ | ||||||
| Less: Current maturities* | ||||||||
| Long-term portion of economic injury disaster loan | $ | $ | ||||||
| * |
Interest
expense on the EIDL Loan for the three months ended September 30, 2021 and 2020 was $
Interest
expense on the EIDL Loan for the nine months ended September 30, 2021 and 2020 was $
| -28- |
Note 16 - Accrued salary, accrued retirement, and incentive fee - related party
The Company had an outstanding liability to its CEO as follows:
| September 30, 2021 | December 31, 2020 | |||||||
| Accrued salaries and benefits | $ | $ | ||||||
| Accrued retirement and other benefits | ||||||||
| Offset by shareholder advance | ( | ) | ( | ) | ||||
| $ | $ | |||||||
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 CEO’s option. The incentive fee is 1% of the increase in market capitalization based on the bid price of the Company’s
stock beyond the book value at confirmation of the bankruptcy, which was approximately $
Note 17 – Related party transactions
On
December 15, 2020, WCI received a $
On
March 12, 2021, Mentor received a $
Note 18 – Commitments and contingencies
G FarmaLabs Limited, a Nevada corporation (“G Farma”) has not made scheduled payments on the finance lease receivable or the notes receivable summarized below since February 19, 2019. All amounts due from G Farma are fully impaired at September 30, 2021 and December 31, 2020. A complete description of the agreements can be found in the Company’s Annual Report for the period ended December 31, 2020 on Form 10-K as filed with the SEC on April 15, 2021.
On
March 17, 2017, the Company entered into a Notes Purchase Agreement with G Farma, with operations in Washington that had planned operations
in California under two temporary licenses pending completion of its Desert Hot Springs, California, location. Under the Agreement, the
Company purchased two secured promissory notes from G Farma in an aggregate principal face amount of $
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
Partner I acquired and delivered manufacturing equipment as selected by the G Farma Entities under sales-type finance leases. The finance leases resulting from this investment have been fully impaired at September 30, 2021 and December 31, 2020.
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Note 18 – Commitments and contingencies (continued)
On
On November 4, 2020, the Court granted Mentor Capital, Inc.’s and Mentor Partner I’s motion for summary adjudication as to both causes of action against G FarmaLabs Limited for liability for breach of the two promissory notes and one cause of action against each of Mr. Gonzalez and Ms. Gonzalez related to their duties as guarantors of G FarmaLabs Limited’s obligations under the promissory notes.
On
August 27, 2021, the Company entered into a Settlement Agreement and Mutual Release with the G Farma Entities to resolve and settle all
outstanding claims (“Settlement Agreement”).
The Company has retained the reserve on collections of the unpaid lease receivable balance due to the long history of uncertain payments from G Farma. See the Company’s Annual Report for the period ended December 31, 2020 on Form 10-K, Footnotes 8 and 9, as filed with the SEC April 15, 2021, for a discussion of the reserve against the finance lease receivable.
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Note 19 – 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 generally has 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, and the operation of subsidiaries in the cannabis and medical marijuana sector; and 2) the Company’s 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 had small investments in securities listed on the NYSE and NASDAQ, an investment in note receivable from a non-affiliated party, the fair value of convertible notes receivable and accrued interest from NeuCourt, and the investment in NeuCourt that is included in the Corporate, Other, and Eliminations section below. The NeuCourt investments were previously reported as an investment that would be useful in the cannabis space; however, NeuCourt has determined that its legal services would likely be more useful to users outside of the cannabis space. Prior period segment information presented below contains reclassification of NeuCourt investments from the cannabis and medical marijuana segment to the Corporate, other, and eliminations segment.
| Cannabis and Medical Marijuana Segment | Facility Operations Related | Corporate and Eliminations | Consolidated | |||||||||||||
| Three months ended September 30, 2021 | ||||||||||||||||
| Net revenue | $ | $ | $ | $ | ||||||||||||
| Operating income (loss) | ( | ) | ||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ||||||||||||||||
| Property additions | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Three months ended September 30, 2020 | ||||||||||||||||
| Net revenue | $ | $ | $ | $ | ||||||||||||
| Operating income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ||||||||||||||
| Property additions | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Nine months ended September 30, 2021 | ||||||||||||||||
| Net revenue | $ | $ | $ | $ | ||||||||||||
| Operating income (loss) | ( | ) | ( | ) | ||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ||||||||||||||
| Property additions | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total assets | ||||||||||||||||
| Nine months ended September 30, 2020 | ||||||||||||||||
| Net revenue | $ | $ | $ | $ | ||||||||||||
| Operating income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ||||||||||||||
| Property additions | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total assets | ||||||||||||||||
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 September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Operating loss | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Gain (loss) on investments | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain on equipment disposals | ( | ) | ||||||||||||||
| EIDL Advance | - | - | - | |||||||||||||
| Other income | ||||||||||||||||
| Income before income taxes | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
Note 20 – Subsequent events
On
October 6, 2021, the Company invested additional capital of $
On
or about October 26, 2021, the Company was notified of complete forgiveness, effective October 26, 2021, of its $
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion will assist in the understanding of our financial position at September 30, 2021 and the results of operations for the nine months ended September 30, 2021 and 2020. The information below should be read in conjunction with the information contained in the unaudited Condensed Consolidated Financial Statements and related notes to the financial statements included within this Quarterly Report on Form 10-Q for the nine months ended September 30, 2021 and 2020 and our Annual Report on Form 10-K for the year ended December 31, 2020.
Corporate Background
The Company’s common stock trades publicly under the trading symbol OTCQB: MNTR.
In 2009 the Company began focusing its investing activities in leading-edge cancer companies. In response to government limitations on reimbursement for 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 fully divest 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 increased market opportunities and investment diversification. In April 2021, the Company announced that it is adding a cryptocurrency focus for Mentor.
In September 2020, the Company moved its corporate office to Plano, Texas.
Acquisitions and investments
Waste Consolidators, Inc. (WCI)
WCI is a long standing investment of which the Company owns a 51% interest and is included in the condensed consolidated financial statements for the nine months ended September 30, 2021 and 2020. In the third quarter of 2020, WCI began offering services in Houston, Texas. This has led to an increase in selling, general and administrative salaries as WCI positions itself to operate in this new location.
Electrum Partners, LLC (Electrum)
Electrum is a Nevada based consulting, investment, and management company. The Company’s equity interest in Electrum is reported in the condensed consolidated balance sheets as an investment at cost of $194,028 and $194,028 at September 30, 2021 and December 31, 2020, respectively. At September 30, 2021 and December 31, 2020, the Company had approximately 6.69% and 6.69% interest of Electrum’s outstanding equity, respectively.
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On October 30, 2018, the Company entered into a Recovery Purchase Agreement with Electrum to purchase a portion of Electrum’s potential recovery in its legal action captioned Electrum Partners, LLC, Plaintiff, and Aurora Cannabis Inc., Defendant, pending in the Supreme Court of British Columbia (“Litigation”). As of September 30, 2021 and December 31, 2020, Mentor has provided $181,529 and $181,529, respectively, in capital for payment of Litigation costs. In exchange, 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”). On October 31, 2018, Mentor entered into a secured Capital Agreement with Electrum and invested an additional $100,000 in Electrum. Under the Capital Agreement, on the payment date, Electrum will pay 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 for the Capital Agreement 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 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 $194,027.78 plus an additional 19.4% of the Recovery. See Note 9 to the condensed consolidated financial statements.
On October 6, 2021, the Company invested additional capital of $9,998 in Electrum for Litigation costs pursuant to the Recovery Purchase Agreement. The amount invested by the Company into Electrum for Litigation costs has increased to $191,527 and the Company is entitled to receive to 19% of anything of value received by Electrum as a result of the Recovery, following reimbursement to the Company of Litigation costs, see Note 9 to the condensed consolidated financial statements. Trial in the Electrum Litigation is currently scheduled to commence on March 7, 2022.
Mentor IP, LLC (MCIP)
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. Activity is currently limited to the annual payment of patent maintenance fees in Canada. 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 June 29, 2020, the Canadian Intellectual Property Office granted a Notice of Allowance for the Canada patent, and on September 22, 2020, the Canadian patent was issued. Patent application national phase maintenance fees were expensed when paid, and therefore, no capitalized assets related to MCIP are reported on the condensed consolidated financial statements at September 30, 2021 and December 31, 2020.
NeuCourt, Inc.
NeuCourt, Inc. is a Delaware corporation that is developing a technology that is expected to be useful to the dispute resolution industry.
On November 22, 2017, the Company invested $25,000 in NeuCourt, Inc. (“NeuCourt”) as a convertible note receivable. The note bears interest at 5% per annum, originally matured November 22, 2019, and was amended to extend the maturity date to November 22, 2021. No payments are required prior to maturity. However, at the time the November 22, 2017 note was extended, interest accrued through November 4, 2019, was remitted to Mentor. As consideration for the extension of the maturity date for the $25,000 note, a warrant to purchase up to 25,000 shares of NeuCourt common stock at $0.02 per share was issued to Mentor.
On October 31, 2018, the Company invested an additional $50,000 as a convertible note receivable in NeuCourt, which bears interest at 5%, originally matured October 31, 2020, and was amended to extend the maturity date to October 31, 2022. As consideration for the extension of the maturity date for the $50,000 note plus accrued interest of $5,132, a warrant to purchase up to 52,500 shares of NeuCourt common stock at $0.02 per share was issued to Mentor. Principal and unpaid interest on the Notes may be converted into a blend of shares of a to-be-created series of Preferred Stock and Common Stock of NeuCourt (i) on the closing of a future financing round of at least $750,000, (ii) on the election of NeuCourt on the maturity of the Note, or (iii) on the election of Mentor following NeuCourt’s election to prepay the Note.
On December 21, 2018, the Company purchased 500,000 shares of NeuCourt Common Stock for $10,000. This represents approximately 6.1% of the issued and outstanding NeuCourt shares at September 30, 2021.
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Mentor Partner I, LLC
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. Partner I has subsequently been reorganized under the laws of the State of Texas. In 2018 and 2019, Mentor contributed $1,010,326 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 fully impaired at September 30, 2021 and December 31, 2020. Management considers collection on the leases to be unlikely, see Note 18 to the condensed consolidated financial statements.
Mentor Partner II, LLC
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. Partner II has subsequently reorganized under the laws of the State of Texas. 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 under a Master Equipment Lease Agreement dated February 11, 2018, as amended see Note 8 to the condensed consolidated financial statements. On March 12, 2019, Mentor agreed to use Partner II’s earnings of $61,368 to facilitate the purchase of additional manufacturing equipment to Pueblo West under a Second Amendment to the lease, see Note 8 to the condensed consolidated financial statements. Payment on the leases are current.
Overview
The Company expanded its target industry focus, beginning in the third quarter of 2019, from its investment in WCI and investments in the medical marijuana and social use cannabis sector to include energy, mining and minerals, technology, consumer products, management services, and manufacturing sectors with the goal of ensuring increased market opportunities and investment diversification. In April 2021, the Company announced that it is adding a cryptocurrency focus. Our general business operations are intended to provide management consultation and headquarters functions, especially with regard to accounting and audits, for our larger investment targets and our majority-owned subsidiaries. We monitor our smaller and less than majority positions for value and investment security. Management also spends considerable effort reviewing possible acquisition candidates on an ongoing basis.
Mentor seeks to take significant positions in the companies it invests in to provide public market liquidity for founders, protection for investors, funding for the companies, and to incubate private companies that Mentor believes to have significant potential. When Mentor takes a significant position in its investees, it provides financial management when needed but leaves operating control in the hands of the company founders. Retaining control, receiving greater liquidity, and working with an experienced organization to efficiently develop disclosures and compliance are three potential key advantages to founders working with Mentor Capital, Inc.
Because adult social use and medical marijuana opportunities often overlap, Mentor Capital has participated in the ancillary side of the legal recreational marijuana market. However, Mentor’s preferred focus was medical, and the Company sought to facilitate the application of cannabis to cancer wasting, Parkinson’s disease, calming seizures, reducing ocular pressures from glaucoma, and blunting chronic pain.
Business Segments
We generally manage our operations through two operating segments, cannabis and medical marijuana segment and our long-standing investment in WCI. WCI works with business park owners, governmental centers, and apartment complexes in Arizona and Texas to reduce their facilities’ operating costs. In late 2019, Mentor 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 increased market opportunities and investment diversification. In April 2021, the Company announced that it is adding a cryptocurrency focus.
Liquidity and Capital Resources
The Company’s future success is dependent upon its ability to make a return on its investments, to generate positive cash flow, and to obtain sufficient capital from non-portfolio-related sources. Management believes they have approximately twelve months of operating resources on hand and can raise additional funds as may be needed to support their business plan and develop an operating, cash flow positive company.
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Results of Operations
Three Months Ended September 30, 2021, compared to Three Months Ended September 30, 2020
Revenues
Revenue for the three months ended September 30, 2021 was $1,492,624 compared to $1,231,530 for the three months ended September 30, 2020 (“the prior year period”), an increase of $261,094 or 21.2%. This increase is due to a $262,801 increase in WCI service fees.
Gross profit
Gross profit for the three months ended September 30, 2021 was $488,584 compared to $375,735 for the prior year period. Cost of goods sold relate to WCI and Partner II. WCI experienced gross profit of $478,609 or 32.3% of revenue for the three months ended September 30, 2021, compared to $364,004 or 29.8% for the prior year period, an increase of $114,605 with an increase of 2.5% in gross profit as a percentage of revenue. Partner II had gross profit of $9,975 for the three months ended September 30, 2021 as compared to $11,730 in the prior year period. Partner I did not have revenue for the three months ended September 30, 2021 and 2020.
The increase in WCI gross profit percentage was due largely to revenue increasing at a higher rate (29.8%) than costs of goods sold (17.3%). Labor and related costs increased by $105,204 or 19.2% over the prior year period. Other costs of goods sold increased by $43,050 or 14%. compared to the third quarter of 2020, which represents a 19.7% decrease.
Selling, general and administrative expenses
Our selling, general and administrative expenses for the three months ended September 30, 2021 was $402,255 compared to $790,714 for the prior year period, a decrease of $388,459. We experienced a decrease of ($72,497) in salary and wages, and a decrease of ($320,841) in management fees, partially offset by an increase of $8,642 in professional fees, an increase of $7,000 in bad debt expense, and an increase in office expense of $5,642 for the three months ended September 30, 2021 as compared to the prior year period.
Other income and expense
Other income and expense, net, totaled $489 for the three months ended September 30, 2021 compared to $25,063 for the prior year period, a decrease of ($24,574). We experienced increases of $87,393 in WCI non-controlling interest, $671 in losses on disposal of right of use assets and ($16,714) in interest expense. We experienced decreases of ($1,427) in gain on investment securities, ($16,269) in interest income, and ($3,032) in other miscellaneous income and expense
Net results
The net result for the three months ended September 30, 2021 was a net loss attributable to Mentor of ($3,390) or ($0.000) per Mentor common share compared to a net loss attributable to Mentor in the prior year period of ($273,955) or ($0.012) per Mentor common share. Management will continue to make an effort to lower operating expenses and increase revenue and gross margin. The Company will continue to look for acquisition opportunities to expand its portfolio in companies that are positive for operating revenue or have the potential to become positive for operating revenue.
Nine months Ended September 30, 2021, compared to Nine months Ended September 30, 2020
Revenues
Revenue for the nine months ended September 30, 2021 was $4,154,711 compared to $3,539,860 for the nine months ended September 30, 2020 (“the prior year period”), an increase of $646,027 or 18.3%. This increase is due to a $651,148 increase in WCI service fees, partially offset by a ($5,121) decrease in finance lease revenue in the current period as compared to the prior year period.
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Gross profit
Gross profit for the nine months ended September 30, 2021 was $1,303,612 compared to $1,120,659 for the prior year period. Cost of goods sold relate to WCI and Partner II. WCI experienced gross profit of $1,276,462 or 30.7% of revenue for the nine months ended September 30, 2021, compared to $1,084,362 or 31.0% for the prior year period, an increase of $27,150 with a decrease of 0.3% as a percentage of revenue. Partner II had gross profit of $31,176 for the nine months ended September 30, 2021 as compared to $36,297.
The decrease in WCI gross profit percentage was due to an increase in labor and related costs of 19.1%, an increase of 18.0% in disposal costs and an increase of 113.8% in Right of Use Asset amortization over the prior year period. These increases were partially offset by an increase of (18.6%) in revenue, over the prior year period.
Selling, general and administrative expenses
Our selling, general and administrative expenses for the nine months ended September 30, 2021 were $1,689,317 compared to $1,977,237 for the prior year period, a decrease of $287,920. We experienced a decrease of $163,699 in salary and wages, and a decrease of $100,841 in professional fees, partially offset by an increase of $33,227 in office expense, an increase of $133,227 in outside services, for the nine months ended September 30, 2021 as compared to the prior year period.
Other income and expense
Other income and expense, net, totaled $12,293 for the nine months ended September 30, 2021 compared to $71,855 for the prior year period, a decrease of $59,562. WCI received a $10,000 EIDL Advance in the prior nine-month period. Of the decrease, $21,202 is due to an increase in interest expense of $43,899 in the current year period compared to $22,697 in the prior year period. The decrease was also partially due to a decrease in interest income of $16,501 and a decrease in other miscellaneous income of $19,923. This was offset by forgiveness of WCI’s $10,000 EIDL Advance during the current nine-month period.
Net results
The net result for the nine months ended September 30, 2021 was a net loss attributable to Mentor of ($366,934) or ($0.016) per Mentor common share compared to a net loss attributable to Mentor in the prior year period of ($705,910) or ($0.031) per Mentor common share. Management will continue to make an effort to lower operating expenses and increase revenue and gross margin. The Company will continue to look for acquisition opportunities to expand its portfolio in companies that are positive for operating revenue or have the potential to become positive for operating revenue.
Liquidity and Capital Resources
Since our reorganization, we have raised capital through warrant holder exercise of warrants to purchase shares of Common Stock. At September 30, 2021 we had cash and cash equivalents of $278,068 and working capital of $623,786. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
Operating cash outflows in the nine months ended September 30, 2021 was ($343,709), including ($381,977) of net loss, less noncash forgiveness of PPP loan of ($10,000), less non-cash amortization of discount on our investment in account receivable of ($45,684), less an increase in accrued interest income of ($3,049), plus a loss on an investment in securities of $9,001, and a decrease in operating assets of ($134,220), partially offset by non-cash depreciation and amortization of $34,305, non-cash amortization on right of use assets of $111,307, non-cash bad debt expense of $19,580, loss on right of use asset disposal of $643, and a $57,789 increase in operating liabilities.
Cash outflows from investing activities in the nine months ended September 30, 2021 were ($59,468) due to purchase and sale of investment securities netting to $4,442, purchase and sale of property and equipment netting to ($17,173), and down payments on right of use assets of ($46,737).
Net inflows from financing activities during the nine months ended September 30, 2021 were $175,071 consisting of proceeds from related party loan of $204,006, proceeds from Paycheck Protection Program loans of $76,593, and refund of payment on Paycheck Protection Program loans of $551. Cash outflows from financing activities include payments on long-term debt of ($15,996) and ($90,082) of payments on finance lease liabilities.
We will be required to raise additional funds through financing, additional collaborative relationships or other arrangements until we are able to raise revenues to a point of positive cash flow.
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In addition, on February 9, 2015, in accordance with Section 1145 of the United States Bankruptcy Code and the Company’s court-approved Plan of Reorganization, the Company announced a minimum 30 day partial redemption of up to 1% 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 Company’s 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 to be scheduled after the prior 1% redemption is completed to prevent potential third party manipulation of share prices at month-end. The periodic partial redemptions may continue to be recalculated and repeated until such unexercised warrants are exhausted, or the partial redemption is otherwise temporarily paused, suspended, or truncated by the Company.
For the nine months ended September 30, 2021, there were no redemptions of Series D Warrants. There were no redemptions of Series D Warrants in 2020. We believe that if warrants are redeemed and exercised, partial warrant redemptions would provide monthly cash in excess of what is required for monthly operations for an extending period of time while we are exploring other major sources of funding for further acquisitions.
Disclosure About Off-Balance Sheet Arrangements
We do not have any transactions, agreements, or other contractual arrangements that constitute off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this item.
Item 4. Controls and Procedures.
Evaluation of disclosure controls and procedures
Management, with the participation of our chief executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on management’s evaluation, our chief executive officer and principal financial officer concluded that, as of September 30, 2021, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our managers, including our chief executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting.
We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.
There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2021 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
G FarmaLabs Limited
On May 28, 2019, Mentor Capital, Inc. and Mentor Partner I, LLC filed a complaint in the Superior Court of California in the County of Marin for, among other things, breach of contract against G FarmaLabs Limited, Atanachi (“Ata”) Gonzalez, Nicole Gonzalez, G FarmaLabs DHS, LLC, GFBrands, Inc., fka G FarmaBrands, Inc., Finka Distribution, Inc., G FarmaLabs WA, LLC, and Goya Ventures, LLC (together “Defendants”). Under the complaint, among other things:
| ● | Mentor Capital, Inc. alleged that G FarmaLabs Limited and Ata Gonzalez and Nicole Gonzalez as guarantors of the G Farma obligations failed to perform their several obligations under a Note Purchase Agreement and two secured Promissory Notes dated March 17, 2017, as amended. At December 31, 2019, the aggregate amount due, owing, and unpaid under both Notes is $1,045,051. Interest of approximately $67,770 was also due but was not accrued in the financial statements due to uncertainty of collection. | |
| ● | Mentor Partner I, LLC alleged that G FarmaLabs Limited, G FarmaLabs DHS, LLC as Lessees and GFBrands, Inc, Ata Gonzalez, and Nicole Gonzalez as guarantors of the lease obligations failed to perform their several obligations under a Master Equipment Lease dated January 16, 2018, as amended. At December 31, 2019, the aggregate amount due, owing, and unpaid under the Lease is $1,055,680. Interest of approximately $93,710 was also due but was not accrued in the financial statements due to uncertainty of collection. | |
| ● | Mentor Capital, Inc. also alleged that the G FarmaLabs Limited and Ata Gonzalez and Nicole Gonzalez as guarantors failed to perform their obligations under (i) a Consulting Agreement dated March 17, 2017, as amended, (ii) a Rights Agreement dated March 17, 2017, and (iii) a Security Agreement dated March 17, 2017, as amended. | |
| ● | Mentor Capital, Inc. also alleged that G FarmaLabs Limited, G FarmaLabs DHS, LLC, GFBrands, Inc., Finka Distribution, Inc., G FarmaLabs WA, LLC, and Goya Ventures, LLC failed to perform their obligations under an Equity Purchase and Issuance Agreement dated September 6, 2018, as amended. | |
| ● | Mentor Capital, Inc. and Mentor Partner I, LLC sought an injunction against all Defendants preventing Defendants from keeping equipment leased under the Master Lease Agreement. |
On or about November 13, 2019, G FarmaLabs Limited, Ata Gonzales, and Nicole Gonzales filed a cross-complaint against Mentor Capital, Inc. alleging breach of contract related to the Consulting Agreement dated March 17, 2017, and seeking declaratory relief related to the validity of the agreements between the parties. Mentor Capital, Inc. filed its answer to the cross-complaint on December 6, 2019.
On January 31, 2020, following the Court’s grant of the Company’s motion for a writ of possession, all equipment leased to G Farma by Mentor Partner I, was repossessed by the Company. Repossessed equipment with a cost of $622,670 was sold in 2020 to the highest offerors for net proceeds of $249,481, after shipping and delivery costs, which proceeds were applied against the lease receivable balance that is fully reserved at September 30, 2021 and December 31, 2020.
On November 4, 2020, the Court granted Mentor Capital, Inc.’s and Mentor Partner I’s motion for summary adjudication as to both causes of action against G FarmaLabs Limited for liability for breach of the two promissory notes and one cause of action against each of Mr. Gonzalez and Ms. Gonzalez related to their duties as guarantors of G FarmaLabs Limited’s obligations under the promissory notes.
On August 27, 2021, the Company entered into a Settlement Agreement and Mutual Release with the G Farma Entities to resolve and settle all outstanding claims (“Settlement Agreement”). The Settlement Agreement requires the G Farma Entities to pay the Company an aggregate of $500,000 plus interest, payable monthly as follows: (i) $500 per month for 12 months beginning on September 5, 2021, (ii) $1,000 per month for 12 months beginning September 5, 2022, (iii) $2,000 per month for 12 months beginning September 5, 2023, and (iv) increasing by an additional $1,000 per month on each succeeding September 5 thereafter, until the settlement amount and accrued unpaid interest is paid in full. Interest on the unpaid balance shall initially accrue at the rate of 4.25%, commencing February 25, 2021, and shall be adjusted on February 25th of each year to equal the Prime Rate as published in the Wall Street Journal plus 1%. In the event that the G Farma Entities fail to make any monthly payment and have not cured such default within 10 days of notice from the Company, the parties have stipulated that an additional $2,000,000 will be immediately added to the unpaid settlement amount payable by the G Farma Entities.
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Item 1A. Risk Factors.
In addition to other information in this Quarterly Report on Form 10-Q, the following risk factors should be carefully considered in evaluating our business since it operates in a highly changing and complex business environment that involves numerous risks, some of which are beyond our control. The following discussion highlights a few of these risk factors, any one of which may have a significant adverse impact on our business, operating results, and financial condition.
As a result of the risk factors set forth below and elsewhere in this Form 10-Q and in our Form 10-K, and the risks discussed in our Rule 15c2-11 and other publicly disclosed submissions, actual results could differ materially from those projected in any forward-looking statements.
We face significant risks, and the risks described below may not be the only risks we face. Additional risks that we do not know of or that we currently consider immaterial may also impair our business operations. If any of the events or circumstances described in the following risks actually occurs, our business, financial condition or results of operations could be harmed, and the trading price of our Common Stock could decline.
We may not be able to continue as a going concern.
Management has noted certain financial conditions that raise substantial doubts about the Company’s ability to continue as a going concern. During the nine months ended September 30, 2021, and years ended December 31, 2020 and 2019, we experienced significant operating losses, liquidity constraints, and negative cash flows from operations. If we are unable to make a return on our investments to generate positive cash flow and cannot obtain sufficient capital from non-portfolio-related sources to fund operations and pay liabilities in a timely manner, we may have to cease our operations. Securing additional sources of financing to enable us to continue investing in our target markets will be difficult, and there is no assurance of our ability to secure such financing. A failure to obtain additional financing and generate positive cash flow from operations could prevent us from making expenditures that are needed to pay current obligations, allow us to hire additional personnel, and continue to seek out and invest in new companies. This leaves doubt as to our ability to continue as a going concern.
A failure to obtain financing could prevent us from executing our business plan or operate as a going concern
We anticipate that current cash resources and opportunities will be sufficient for us to execute our business plan for twelve months after the date these financial statements are issued. It is possible that if future financing is not obtained, we will not be able to operate as a going concern. We believe that securing substantial additional sources of financing is possible, but there is no assurance of our ability to secure such financing. A failure to obtain additional financing could prevent us from making necessary expenditures for advancement and growth to partner with businesses and hire additional personnel. If we raise additional financing by selling equity, or convertible debt securities, the relative equity ownership of our existing investors could be diluted, or the new investors could obtain terms more favorable than previous investors. If we raise additional funds through debt financing, we could incur significant borrowing costs and be subject to adverse consequences in the event of a default.
Management voluntarily transitioned to a fully reporting company and spends considerable time meeting the associated reporting obligations.
Management operated Mentor Capital, Inc. as a non-reporting public company for over 26 years and voluntarily transitioned to reporting company status subject to financial and other SEC-required disclosures. Prior to such voluntary transition, management had not been required to prepare and make such required disclosures. As a reporting company, we may be subject to certain reporting requirements of the Securities Exchange Act of 1934, as amended (“Exchange Act”), the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of a national securities exchange, and other applicable securities rules and regulations. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating activities. Preparing and filing periodic reports imposes a significant expense, time, and reporting burden upon management. This distraction can divert management from its operation of the business to the detriment of core operations. Also, inadvertent improper reporting due to Mentor’s officers’ limited reporting experience can result in trading restrictions and other sanctions that may impair or even suspend trading in the Company’s Common Stock.
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Investors may suffer risk of dilution following exercise of warrants for cash.
As of September 30, 2021, the Company had 22,850,947 outstanding shares of its Common Stock trading at approximately $0.11. As of the same date, the Company also had 6,252,954 outstanding Series D warrants exercisable for shares of Common Stock at $1.60 per share. These Series D warrants do not have a cashless exercise feature. The Company anticipates that the warrants may be increasingly exercised anytime the per share price of the Company’s Common Stock is greater than $1.60 per share. Exercise of these Series D warrants may result in immediate and potentially substantial dilution to current holders of the Company’s Common Stock. At September 30, 2021, there were 87,456 Series B warrants exercisable at $0.11 that do not have a cashless exercise feature. In addition, the Company has 689,159 outstanding Series H warrants with a per share exercise price of $7.00 held by an investment bank and its affiliates. These $7.00 Series H warrants include a cashless exercise feature. Current and future shareholders may suffer dilution of their investment and equity ownership if any of the warrant holders elect to exercise their warrants.
Beginning on February 9, 2015, in accordance with Section 1145 of the United States Bankruptcy Code and in accordance with the Company’s court-approved Plan of Reorganization, the Company announced that it would allow for partial redemption of up to 1% per month of the outstanding Series D warrants to provide for the court specified redemption mechanism for warrants not exercised timely by the original holder or their estates. On October 7, 2016, the Company announced that the 1% redemptions which were formerly priced on a calendar month schedule would subsequently be initiated and priced on a random date to be scheduled after the prior 1% redemption is complete to prevent potential third-party manipulation of share prices during the pricing period at month-end. Company designees that apply during the redemption period must pay 10 cents per warrant to redeem the warrants and then exercise the Series D warrant to purchase a share of the Company’s Common Stock at a maximum of one-half of the closing bid price on the day preceding the 1% partial redemption. The 1% partial redemption may continue to be periodically recalculated and repeated according to the court formula until such unexercised warrants are exhausted, or the partial redemption is otherwise suspended or truncated by the Company. There were no warrant redemptions in the first quarter of 2021 or in fiscal 2020.
We operate in a turbulent markets populated by businesses that are highly volatile.
The U.S. market for cannabis products is highly volatile. While we believe that it is an exciting and growing market, many companies involved in cannabis products and services used to be involved in illegal activities, some still are, and many of them operate in unconventional ways. Some of these differences which represent challenges to us include not keeping appropriate financial records, inexperience with business contracts, not having access to customary business banking or brokerage relationships, not having quality manufacturing relationships, and not having customary distribution arrangements.
In addition to our cannabis-related business focus, we are also focusing on cryptocurrencies, which each experience their own marketplace volatility. Similar to the cannabis market, the cryptocurrency market has patchy adoption and may suffer reputational risks due to the United States Securities and Exchange Commission rulings and the public perception that cryptocurrencies may sometimes be associated with illegal activities.
Any one of these challenges, if not managed well, could materially adversely impact our business.
Many cannabis activities, products, and services still violate law.
The legal patchwork to which cannabis companies are subject is still evolving and frequently uncertain. While we believe that anti-cannabis laws are softening and that the trend is toward the legalization of cannabis products, many states and the U.S. government still view some or all cannabis activity as illegal. Notwithstanding this uncertainty, we intend to do our best to engage in activities that are unambiguously legal and to use what influence we have with our affiliates for them to do the same. But we will not always have control over those companies with whom we do business, and there is a risk that we could suffer a substantial and material loss due to routine legal prosecution. Similarly, many jurisdictions have adopted so-called “zero tolerance” drug laws and laws prohibiting the sale of what is considered drug paraphernalia. If our or our affiliates’ activities related to cannabis activities, products, and services are deemed to violate one or more federal or state laws, we may be subject to civil and criminal penalties, including fines, impounding of cannabis products, and seizure of our assets. A company in which we invested suffered asset seizure which included some equipment licensed by us that caused us to incur a loss.
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Our business model is to partner with or acquire other companies.
We do not manufacture or sell products or services. Rather, we historically sought to find businesses whose products, managers, technology, or other factors we like and acquire or invest in those businesses. There is no certainty that we will find suitable partners or that we will be able to engage in transactions on advantageous terms with partners we identify. There is also no certainty that we will be able to consummate a transaction on favorable terms, or any transaction at all, with any potential acquisitions. To date, several of our acquisitions/investments have not turned out well for us.
The Federal Government’s attitude toward cannabis and cryptocurrency could materially harm our business
Changes to the Federal Government’s administration, the manner in which the federal government regulates cannabis, including how it intends to enforce laws prohibiting medical marijuana and recreational cannabis use, and the United States Securities and Exchange Commission rulings on the treatment of cryptocurrencies and initial coin offerings could materially negatively affect our business.
Many of the people and entities with whom we work in the cannabis industry are not used to engaging in other than normal course business transactions.
Many of the people and entities with whom we engage may not be used to operating in business transactions in the normal course. Entities and persons operating in the cannabis industry may be unaccustomed to entering into written agreements or keeping financial records according to GAAP. Additionally, entities and persons with whom we engage may not pay particular attention to the obligations with which they have agreed in written contracts. We have experienced these differences with several different entities in which we have invested or considered investing, including several entities which failed to comply with contractual obligations, which led us into litigation and other legal remedies.
Our actual results could differ materially from those anticipated in our forward-looking statements.
This Form 10-Q contains forward-looking statements within the meaning of the federal securities laws that relate to future events or future financial performance. When used in this report, you can identify forward-looking statements by terminology such as “believes,” “anticipates,” “seeks,” “looks,” “hopes,” “plans,” “predicts,” “expects,” “estimates,” “intends,” “will,” “continue,” “may,” “potential,” “should” and similar expressions. These statements are only expressions of expectation. Our actual results could, and likely will, differ materially from those anticipated in such forward-looking statements as a result of many factors, including those set forth above and elsewhere in this report and including factors unanticipated by us and not included herein. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Neither we nor any other person assumes responsibility for the accuracy and completeness of these statements. Accordingly, we caution readers not to place undue reliance on these statements. Where required by applicable law, we will undertake to update any disclosures or forward-looking statements.
If we are unable to protect our intellectual property, our competitive position would be adversely affected.
We and our partners and subsidiaries intend to rely on patent protection, trademark and copyright law, trade secret protection and confidentiality agreements with our employees and others to protect our intellectual property. Despite our precautions, unauthorized third parties may copy our and our affiliates’ and partners’, products and services or reverse engineer or obtain and use information that we regard as proprietary. In addition, the laws of some foreign countries do not protect proprietary rights to the same extent as do the laws of the United States. Our means of protecting our, and our affiliates’ and partners’ proprietary rights may not be adequate, and third parties may infringe or misappropriate our and our affiliates’ and partners’ patents, copyrights, trademarks, and similar proprietary rights. If we, or our affiliates and partners, fail to protect intellectual property and proprietary rights, our business, financial condition, and results of operations would suffer. We believe that neither we nor our affiliates and partners infringe upon the proprietary rights of any third party, and no third party has asserted an infringement claim against us. It is possible, however, that such a claim might be asserted successfully against us in the future. We may be forced to suspend our operations to pay significant amounts to defend our rights, and a substantial amount of the attention of our management may be diverted from our ongoing business, all of which would materially adversely affect our business.
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We depend on our key personnel and may have difficulty attracting and retaining the skilled staff and outside professionals we need to execute our growth plans.
Our success will be dependent largely upon the personal efforts of our Chief Executive Officer, Chet Billingsley. The loss of key staff could have a material adverse effect on our business and prospects. Currently, we have two full-time employees, and we rely on the services provided by outside professionals. To execute our plans, we will have to retain our current employees and work with outside professionals that we believe will help us achieve our goals. Competition for recruiting and retaining highly skilled employees with accounting, technical, management, marketing, sales, product development, and other specialized training is intense. We may not be successful in employing and retaining such qualified personnel. Specifically, we may experience increased costs in order to retain skilled employees. If we are unable to retain experienced employees as needed, we would be unable to execute our business plan.
Founder and CEO Chet Billingsley, along with other members of the Company Board of Directors, have considerable control over the company through their aggregate ownership of 16.87% of the outstanding shares of the Company’s Common Stock on a fully diluted basis.
As of November 15, 2021, Mr. Billingsley owned approximately 11.00% of the outstanding shares of the Company’s Common Stock on a fully diluted basis. Together with other members of the Company’s Board of Directors, management of the Company owns approximately 16.87% of the outstanding shares of the Company’s Common Stock on a fully diluted basis. Mr. Billingsley also holds 2,050,228 Series D warrants, exercisable at $1.60 per share, and 87,456 Series B warrants, exercisable at $0.11 per share. Additionally, Robert Meyer, David Carlile, and Lori Stansfield, directors of the Company, hold an aggregate of 631,455 Series D warrants exercisable at $1.60 per share. Due to the large number of shares of Common Stock owned by Mr. Billingsley and the directors of the Company, management has considerable ability to exercise control over the Company and matters submitted for shareholder approval, including the election of directors and approval of any merger, consolidation or sale of substantially all of the assets of the Company. Additionally, due to his position as CEO and Chairman of the Board, Mr. Billingsley has the ability to control the management and affairs of the Company. The Company’s directors and Mr. Billingsley owe a fiduciary duty to our shareholders and must act in good faith in a manner each reasonably believes to be in the best interests of our shareholders. As shareholders, Mr. Billingsley and the other directors are entitled to vote their shares in their own interests, which may not always be in the interests of our shareholders generally.
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We face rapid change.
The market for our partners’ and subsidiaries’ products and services is characterized by rapidly changing laws and technologies, marketing efforts, and extensive research, and the introduction of new products and services. We believe that our future success will depend in part upon our ability to continue to invest in companies that develop and enhance products and services offered in the cryptocurrency, energy, mining and minerals, technology, consumer products, management services, manufacturing, or cannabis markets. As a result, we expect to continue to make investments in our partners and subsidiaries to promote further engineering, research, and development. There can be no assurance that our partners and subsidiaries will be able to develop and introduce new products and services or enhance initial products in a timely manner to satisfy customer needs, achieve market acceptance or address technological changes in our target markets. Failure to develop products and services and introduce them successfully and in a timely manner could adversely affect our competitive position, financial condition, and results of operations.
If we experience rapid growth, we will need to manage such growth well.
We may experience substantial growth in the size of our staff and the scope of our operations, resulting in increased responsibilities for management. To manage this possible growth effectively, we will need to continue to improve our operational, financial and management information systems, will possibly need to create departments that do not now exist, and hire, train, motivate and manage a growing number of staff. Due to a competitive employment environment for qualified accounting, technical, marketing, and sales personnel, we expect to experience difficulty in filling our needs for qualified personnel. There can be no assurance that we will be able to effectively achieve or manage any future growth, and our failure to do so could delay product development cycles and market penetration or otherwise have a material adverse effect on our financial condition and results of operations.
We could face product liability risks and may not have adequate insurance.
Our partners’ and affiliates’ products may be used for medical purposes. We may become the subject of litigation alleging that our partners’ and affiliates’ products were ineffective or unsafe. Thus, we may become the target of lawsuits from injured or disgruntled customers or other users. We intend to, but do not now, carry product and liability insurance, but in the event that we are required to defend more than a few such actions, or in the event we are found liable in connection with such an action, our business and operations may be severely and materially adversely affected.
There is a limited market for our Common Stock.
Our Common Stock is not listed on any exchange and trades on the OTC Markets OTCQB system. As such, the market for our Common Stock is limited and is not regulated by the rules and regulations of any exchange. Freely trading shares of even fully reporting cannabis companies receive careful scrutiny by brokers who may require legal opinion letters, proof of consideration, medallion guarantees, or expensive fee payments before accepting or declining share deposit. Through association with cannabis companies and products, we have been subject to heightened scrutiny by brokers in the past which may make it difficult for current shareholders to sell or interested investors from purchasing our shares of common stock. Further, the price of our Common Stock and its volume in the market may be subject to wide fluctuations. Our stock price could decline regardless of our actual operating performance, and stockholders could lose a substantial part of their investment as a result of industry or market-based fluctuations. Our stock may trade relatively thinly. If a more active public market for our stock is not sustained, it may be difficult for stockholders to sell shares of our Common Stock. Because we do not anticipate paying cash dividends on our Common Stock for the foreseeable future, stockholders will not be able to receive a return on their shares unless they are able to sell them. The market price of our Common Stock will likely fluctuate in response to a number of factors, including but not limited to, the following:
| ● | sales, sales cycle, and market acceptance or rejection of our affiliates’ products; | |
| ● | our ability to engage with partners who are successful in selling products; | |
| ● | economic conditions within the cannabis industry; | |
| ● | development of law related to cannabis products and services; | |
| ● | the timing of announcements by us or our competitors of significant products, contracts or acquisitions or publicity regarding actual or potential results or performance thereof; | |
| ● | domestic and international economic, business and political conditions; | |
| ● | justified or unjustified adverse publicity; and | |
| ● | proper or improper third-party short sales or other manipulation of our stock. |
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We have a long business and corporate existence.
We began in Silicon Valley in 1985 as a limited partnership and operated as Mentor Capital, LP until we incorporated as Main Street Athletic Clubs, Inc. in California in 1994. We were privately owned until September 1996; our Common Stock began trading on the Over The Counter Pink Sheets on March 12, 1997. Our merger and acquisition and business development activities have spanned many business sectors, and we went through a bankruptcy reorganization in 1998. In late 2015, we reincorporated under the laws of the State of Delaware. We currently focus our investment efforts on a wide variety of sectors, some of which are new to us and with which we have limited experience.
Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our stock price.
Section 404 of the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC require annual management assessments of the effectiveness of our internal control over financial reporting. If we fail to adequately maintain compliance with, or maintain the adequacy of, our internal control over financial reporting, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC. If we cannot favorably assess our internal controls over financial reporting, investor confidence in the reliability of our financial reports may be adversely affected, which could have a material adverse effect on our stock price.
We have indemnified our officers and directors.
We have indemnified our Officers and Directors against possible monetary liability to the maximum extent permitted under California and Delaware law. The managers of Mentor Partner I, LLC and Mentor Partner II, LLC have been indemnified to the maximum extent permitted under California and Texas law.
The worldwide economy could impact the company in numerous ways.
The effects of negative worldwide economic events, such as the continuing coronavirus outbreak, product and labor shortages, and a global economic slowdown may cause disruptions and extreme volatility in global financial markets, increased rates of default and bankruptcy, impact levels of consumer spending, and may impact our business, operating results, or financial condition. The ongoing worldwide economic situation, future weakness in the credit markets, and significant liquidity problems for the financial services industry may also impact our financial condition in a number of ways. For example, current or potential customers may delay or decrease spending with us, or our partners and affiliates, or may not pay us, or our partners or affiliates, or may delay paying us, or our partners or affiliates, for previously purchased products and services. Also, we may have difficulties in securing additional financing.
Competitors in the Canadian public market may have a material advantage over us. The Canadian government has loosened the laws and regulations with regard to cannabis earlier and at a faster pace than in the United States. The financial regulations with regard to cannabis investing and banking are also more favorable in Canada than for the Company in the United States. This Canadian advantage may have a material negative effect on the Company’s business.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On May 30, 2018, Mentor sold 11 shares of its unregistered Series Q Preferred Stock in a private placement for $110,000.
Other than as stated above, there have been no other unregistered securities sold within the past three years.
Item 3. Defaults Upon Senior Securities and Use of Proceeds.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
None.
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Item 6. Exhibits.
The following exhibits are filed as part of this report:
| -45- |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Mentor Capital, Inc. | ||
| Date: November 12, 2021 | By: | /s/ Chet Billingsley |
| Chet Billingsley, Chief Executive Officer | ||
| Date: November 12, 2021 | By: | /s/ Chet Billingsley |
| Chet Billingsley, Principal Financial Officer | ||
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Exhibit 31.1 and 31.2
Quarter ended September 30, 2021
CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Chet Billingsley, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Mentor Capital, Inc.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: | November 12, 2021 | |
| /s/ CHET BILLINGSLEY | ||
| Chet Billingsley | ||
Chief Executive Officer Principal Financial Officer |
Exhibit 32.1 and 32.2
Certification of Chief Executive Officer and Principal Financial Officer
Certification Pursuant to 18 U.S.C. Section 1350, as Amended,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
I, Chet Billingsley, Chief Executive Officer and Principal Financial Officer of Mentor Capital, Inc. (the “Company”), hereby certify pursuant to Rule 13a-14(b) or 15d-14(b) of the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code that to my knowledge:
| 1. | The Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2021, to which this statement is furnished as an exhibit (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2 | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: | November 12, 2021 | |
| /s/ CHET BILLINGSLEY | ||
| Chet Billingsley | ||
Chief Executive Officer Principal Financial Officer |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
| Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 |
| Preferred Stock, Shares Issued | 11 | 11 |
| Preferred Stock, Shares Outstanding | 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 |
Condensed Consolidated Income Statements (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|||
| Revenue | ||||||
| Total revenue | $ 1,492,624 | $ 1,231,530 | $ 4,185,887 | $ 3,539,860 | ||
| Cost of sales | 1,004,040 | 855,795 | 2,882,275 | 2,419,201 | ||
| Gross profit | 488,584 | 375,735 | 1,303,612 | 1,120,659 | ||
| Selling, general and administrative expenses | 402,257 | 790,714 | 1,689,318 | 1,977,237 | ||
| Operating income (loss) | 86,327 | (414,979) | (385,706) | (856,578) | ||
| Other income and (expense) | ||||||
| Gain (loss) on investments | (2,427) | (2,758) | (9,001) | (8,676) | ||
| Interest income | 16,269 | 24,968 | 49,003 | 65,504 | ||
| Interest expense | (16,714) | (8,513) | (43,899) | (22,697) | ||
| Paycheck Protection Program Loan Forgiven | 3,372 | 10,000 | ||||
| Gain on equipment disposal | (671) | 761 | 3,372 | |||
| Recovery on impaired asset | 1,000 | |||||
| Economic Injury Disaster Loan advance | 10,000 | |||||
| Other income (expense) | 4,032 | 7,994 | 4,429 | 24,352 | ||
| Total other income and (expense) | 489 | 25,063 | 12,293 | 71,855 | ||
| Income (loss) before provision for income taxes | 86,816 | (389,916) | (373,413) | (784,723) | ||
| Provision for income taxes | 2,815 | 50 | 8,565 | 13,650 | ||
| Net income (loss) | 84,001 | (389,966) | (381,978) | (798,373) | ||
| Gain (loss) attributable to non-controlling interest | 87,393 | (116,011) | (15,043) | (92,463) | ||
| Net income (loss) attributable to Mentor | $ (3,392) | $ (273,955) | $ (366,935) | $ (705,910) | ||
| Basic and diluted net income (loss) per Mentor common share: | ||||||
| Basic and diluted | $ (0.000) | $ (0.012) | $ (0.016) | $ (0.031) | ||
| Weighted average number of shares of Mentor common stock outstanding: | ||||||
| Basic and diluted* | [1] | 22,850,947 | 22,850,947 | 22,850,947 | 22,850,947 | |
| Service [Member] | ||||||
| Revenue | ||||||
| Total revenue | $ 1,482,649 | $ 1,219,800 | $ 4,154,711 | $ 3,503,563 | ||
| Finance Lease Revenue [Member] | ||||||
| Revenue | ||||||
| Total revenue | $ 9,975 | $ 11,730 | $ 31,176 | $ 36,297 | ||
| ||||||
Condensed Consolidated Statement of Shareholders' Equity (Unaudited) - USD ($) |
Preferred Stock [Member] |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Parent [Member] |
Noncontrolling Interest [Member] |
Total |
|||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Beginning balance, value at Dec. 31, 2019 | [1] | $ 2,285 | $ 13,071,655 | $ (9,875,206) | $ 3,198,734 | $ (186,050) | $ 3,012,684 | |||||
| Beginning balance, shares at Dec. 31, 2019 | 11 | 22,850,947 | ||||||||||
| Net income (loss) | [1] | (705,910) | (705,910) | (92,463) | (798,373) | |||||||
| Ending balance, value at Sep. 30, 2020 | [2] | $ 2,285 | 13,071,655 | (10,581,116) | 2,492,824 | (278,513) | 2,214,311 | |||||
| Ending balance, shares at Sep. 30, 2020 | 11 | 22,850,947 | ||||||||||
| Beginning balance, value at Jun. 30, 2020 | [2] | $ 2,285 | 13,071,655 | (10,307,161) | 2,766,779 | (152,502) | 2,604,277 | |||||
| Beginning balance, shares at Jun. 30, 2020 | 11 | 22,850,947 | ||||||||||
| Net income (loss) | [2] | (273,955) | (273,955) | (116,011) | (389,966) | |||||||
| Ending balance, value at Sep. 30, 2020 | [2] | $ 2,285 | 13,071,655 | (10,581,116) | 2,492,824 | (278,513) | 2,214,311 | |||||
| Ending balance, shares at Sep. 30, 2020 | 11 | 22,850,947 | ||||||||||
| Beginning balance, value at Dec. 31, 2020 | [1] | $ 2,285 | 13,071,655 | (10,601,231) | 2,472,709 | (137,566) | 2,335,143 | |||||
| Beginning balance, shares at Dec. 31, 2020 | 11 | 22,850,947 | ||||||||||
| Net income (loss) | [1] | (366,935) | (366,935) | (15,043) | (381,978) | |||||||
| Ending balance, value at Sep. 30, 2021 | [2] | $ 2,285 | 13,071,655 | (10,968,166) | 2,105,774 | (152,609) | 1,953,165 | |||||
| Ending balance, shares at Sep. 30, 2021 | 11 | 22,850,947 | ||||||||||
| Beginning balance, value at Jun. 30, 2021 | [2] | $ 2,285 | 13,071,655 | (10,964,774) | 2,109,166 | (240,002) | 1,869,164 | |||||
| Beginning balance, shares at Jun. 30, 2021 | 11 | 22,850,947 | ||||||||||
| Net income (loss) | [2] | (3,392) | (3,392) | 87,393 | 84,001 | |||||||
| Ending balance, value at Sep. 30, 2021 | [2] | $ 2,285 | $ 13,071,655 | $ (10,968,166) | $ 2,105,774 | $ (152,609) | $ 1,953,165 | |||||
| Ending balance, shares at Sep. 30, 2021 | 11 | 22,850,947 | ||||||||||
| ||||||||||||
Condensed Consolidated Statement of Shareholders' Equity (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2021 |
Dec. 31, 2020 |
Sep. 30, 2020 |
|---|---|---|---|
| Statement of Stockholders' Equity [Abstract] | |||
| Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | $ 0.0001 |
| Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net (loss) | $ (381,978) | $ (798,373) |
| Adjustments to reconcile net (loss) to net cash provided by (used by) operating activities: | ||
| Depreciation and amortization | 34,305 | 14,869 |
| Amortization of right of use asset | 111,307 | 59,562 |
| PPP loan forgiven | (10,000) | |
| (Gain) loss on ROU asset disposal | 643 | (3,372) |
| (Gain) loss on property and equipment disposal | (1,404) | |
| Bad debt expense | 19,580 | 44,993 |
| Amortization of discount on investment in account receivable | (45,684) | (61,908) |
| Increase in accrued investment interest income | (3,049) | (2,914) |
| (Gain) loss on investment in securities, at fair value | 9,001 | 3,507 |
| (Gain) loss on long-term investments | 5,169 | |
| Decrease (increase) in operating assets | ||
| Finance leases receivable | 56,342 | |
| Accounts receivable - trade | (183,477) | (18,779) |
| Prepaid expenses and other current assets | (7,605) | (46,193) |
| Employee advances | 520 | 2,041 |
| Increase (decrease) in operating liabilities | ||
| Accounts payable | 5,979 | (8,762) |
| Accrued expenses | 66,631 | 56,865 |
| Deferred revenue | (4,886) | (4,834) |
| Accrued salary, retirement, and benefits - related party | (9,935) | 17,949 |
| Net cash provided by (used by) operating activities | (343,710) | (740,180) |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchase of investment securities | 4,442 | (38,115) |
| Proceeds from finance lease receivable | 300,648 | |
| Purchase contractual interest in legal recovery | (35,334) | |
| Purchases of property and equipment | (108,554) | (32,177) |
| Proceeds from sale of property and equipment | 91,381 | 4,140 |
| Down payments on right of use assets | (46,737) | (21,104) |
| Proceeds from investment in receivable | 4,000 | |
| Net cash (used by) investing activities | (59,468) | 182,058 |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Proceeds from related party loan | 204,006 | |
| Proceeds from Paycheck Protection Program loan | 76,593 | 459,842 |
| Proceeds from economic injury disaster loan | 150,000 | |
| Refund of Paycheck Protection Program payments | 551 | |
| Payments on related party payable | (27,472) | |
| Payments on long-term debt | (15,996) | (19,518) |
| Payments on finance lease liability | (90,082) | (40,383) |
| Net cash provided by (used by) financing activities | 175,072 | 522,469 |
| Net change in cash | (228,106) | (35,653) |
| Beginning cash | 506,174 | 686,611 |
| Ending cash | 278,068 | 650,958 |
| SUPPLEMENTARY INFORMATION: | ||
| Cash paid for interest | 43,899 | 22,697 |
| Cash paid for income taxes | 8,565 | 9,170 |
| NON-CASH INVESTING AND FINANCING TRANSACTIONS: | ||
| Right of use assets acquired through operating lease liability | 55,624 | |
| Right of use assets acquired through finance lease liability | $ 340,999 | $ 143,909 |
Nature of operations |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| 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 Company’s 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. In September 2020, Mentor relocated its corporate office from San Diego, California, to Plano, Texas.
The Company’s common stock trades publicly under the trading symbol OTCQB: MNTR.
The Company’s broad target industry focus includes energy, mining and minerals, technology, consumer products, management services, and manufacturing sectors with the goal of ensuring increased market opportunities and investment diversification. In April 2021, the Company announced that it was adding a cryptocurrency focus for Mentor.
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 of the Company since 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. On May 5, 2020, a patent was issued by the United States Patent and Trademark Office and on September 22, 2020, a patent was issued by the Canadian Intellectual Property Office. Patent application national phase maintenance fees were expensed when paid rather than capitalized and therefore, no capitalized assets related to MCIP are recognized on the consolidated financial statements at September 30, 2021 and December 31, 2020.
Mentor Partner I, LLC (“Partner I”) was reorganized as a limited liability company under the laws of the State of Texas as of February 17, 2021. The entity was initially organized as a limited liability company under the laws of the State of California on September 19, 2017. Partner I was formed as a wholly owned subsidiary of Mentor for the purpose of cannabis-focused acquisition and investment. 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 were fully impaired at September 30, 2021 and December 31, 2020. See Note 8.
Mentor Partner II, LLC (“Partner II”) was reorganized as a limited liability company under the laws of the State of Texas on February 17, 2021. The entity was initially organized as a limited liability company under the laws of the State of California on February 1, 2018. Partner II was formed as a wholly owned subsidiary of Mentor for the purpose of cannabis-focused investing and acquisition. 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, as amended. 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. This lease is fully performing, see Note 8.
Note 1 - Nature of operations (continued)
The Company has a membership equity interest in Electrum Partners, LLC (“Electrum”) which is carried at a cost of $194,028 and $194,028 at September 30, 2021 and December 31, 2020, respectively.
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 9, Mentor provided capital for payment of Litigation costs in the amount of $181,529 and $146,195 as of December 31, 2020 and 2019, respectively. 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 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 $194,028 plus an additional 19.4% of the Recovery. See Note 9. Subsequent to quarter end, on October 6, 2021, the Company invested additional capital of $9,998 for Litigation costs which increased the percentage of what Mentor will receive to 19% of the Recovery, after first receiving reimbursement of Litigation costs, see Note 20.
On December 21, 2018, Mentor paid $10,000 to purchase shares of NeuCourt, Inc. common stock, representing approximately % of NeuCourt’s issued and outstanding common stock as of September 30, 2021.
|
Summary of significant accounting policies |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Accounting Policies [Abstract] | |
| 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 nine month period ended September 30, 2021 and 2020 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, 2020 was derived from the audited financial statements included in the Company’s financial statements as of and for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2021. 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 the current period presentation.
Basis of presentation (continued)
As shown in the accompanying financial statements, the Company has a significant accumulated deficit of $10,968,166 as of September 30, 2021. The Company continues to experience negative cash flows from operations.
The Company management believes it is more likely than not that Electrum will prevail in the legal action described in Note 9 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.
Note 2 - Summary of significant accounting policies (continued)
Going Concern Uncertainties
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 6,252,954 Series D 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 Company’s business, results of operations, financial condition, and stock price. As of September 30, 2021, the fatality rate from COVID-19 in the United States has significantly declined from its peak, but the impact of COVID-19 continues to unfold. 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. Our legal recovery efforts have been hindered and may continue to be constrained 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 Company’s interest in the Electrum Partners, LLC legal recovery, respectively. Additionally, the collectability of our investment in accounts receivable has been impaired by $139,148 in the fourth quarter of 2020, due to a reduction in our expected collection amount of the 2020 and 2021 payments of an installment contract, see Note 4.
Public health efforts to mitigate the impact of COVID-19 have included government actions such as travel restrictions, limitations on public gatherings, shelter in place orders, and mandatory closures. These actions are being lifted to varying degrees. WCI has not experienced an overall reduced demand for services initially anticipated because WCI helps lower monthly service costs paid by its client properties. However, WCI’s clients may experience a delay in collecting rent from tenants, which may cause slower payments to WCI. WCI closely monitors customer accounts and has not experienced significant delays in the collection of accounts receivable.
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 Mentor’s operations, which consist of oversight of our portfolio companies, accounting, compliance, investor relations, and sales, Mentor’s day-to-day operations are not substantially hindered by remote office work or telework.
We anticipate that current cash and associated resources will be sufficient to execute our business plan for the next twelve 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, government response and the related length of this impact on the 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 judgments 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.
Note 2 - Summary of significant accounting policies (continued)
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 Company’s 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 management’s 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 the 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.
There were no accounting pronouncements issued during the nine months ended September 30, 2021 that are expected to have a material impact on the Company’s condensed consolidated financial statements.
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.
Cash and cash equivalents
The Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. The Company had no short-term debt securities as of September 30, 2021 and December 31, 2020.
Accounts receivable
Accounts receivable consists 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 historical losses as a percent of revenue in conjunction with a review of outstanding balances on a quarterly basis. The estimate of the 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 September 30, 2021 and December 31, 2020, the Company has an allowance for doubtful receivables in the amount of $79,041 and $59,461, respectively.
Investments in securities at fair value
Investment in securities consists of debt and equity securities reported at fair value. Under ASU 2016-01, “Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities,” the Company elected to report changes in the fair value of equity investment in realized investment gains (losses), net.
Long term investments
The Company’s investments in entities where it is a minority owner and does not have the ability to exercise significant influence are recorded at fair value if readily determinable. If the fair market value is not readily determinable, the investment is recorded under the cost method. Under this method, the Company’s share of the earnings or losses of such investee company is not included in the Company’s financial statements. The Company reviews the carrying value of its long-term investments for impairment each reporting period.
Note 2 - Summary of significant accounting policies (continued)
Investments in debt securities
The Company’s investment in debt securities consists of two convertible notes receivable from NeuCourt, Inc., which are recorded at the aggregate principal face amount of $75,000 plus accrued interest of $10,087 and $7,038 at September 30, 2021 and December 31, 2020, respectively, as presented in Note 7.
Investment in account receivable, net of discount
The Company’s investment in account receivable is stated at face value, net of unamortized purchase discount. The discount is amortized to interest income over the term of the exchange agreement. In the fourth quarter of 2020, we were notified that due to the effect of COVID-19 on the estimated receivable, we may not receive the 2020 installment payment or the full 2021 installment payment. At September 30, 2021 and December 31, 2020, the Company has an impairment of the investment in account receivable of $139,148 and $139,148, respectively.
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 is able to analyze 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 is 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 borrower’s facility and meet with a borrower’s management to better understand such borrower’s financial performance and its future plans on an as-needed basis.
Lessee Leases
We determine whether an arrangement is a lease at inception. Lessee leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria is met: (i) the lease transfers ownership of the asset by the end of the lease term, (ii) the lease contains an option to purchase the asset that is reasonably certain to be exercised, and (iii) the lease term is for a significant part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of these criteria. Our operating leases are comprised of office space leases and office equipment. Fleet vehicle leases entered into prior to January 1, 2019, are classified as operating leases based on an expected lease term of four years. Fleet vehicle leases entered into on or after January 1, 2019, for which the lease is expected to be extended to five years, are classified as finance leases. Our leases have remaining lease terms of one to forty-eight months. Our fleet finance leases contain a residual value guarantee which, based on past lease experience, is unlikely to result in a liability at the end of the lease. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.
Costs associated with operating lease assets are recognized on a straight-line basis, over the term of the lease, within cost of goods sold for vehicles used in direct servicing of WCI customers and in operating expenses for costs associated with all other operating leases. Finance lease assets are amortized within cost of goods sold for vehicles used in direct servicing of WCI customers and within operating expenses for all other finance lease assets, on a straight-line basis over the shorter of the estimated useful lives of the assets or the lease term. The interest component of a finance lease is included in interest expense and recognized using the effective interest method over the lease term. We have agreements that contain both lease and non-lease components. For vehicle fleet operating leases, we account for lease components together with non-lease components (e.g., maintenance fees).
Note 2 - Summary of significant accounting policies (continued)
Property, and equipment
Property and equipment is recorded at cost less accumulated depreciation. Depreciation is computed on the declining balance method over the estimated useful lives of various classes of property. The estimated lives of the property and equipment are generally as follows: computer equipment, three to five years; furniture and equipment, seven years; and vehicles and trailers, four to five years. Depreciation on vehicles used by WCI to service its customers is included in cost of goods sold in the consolidated income statements. All other depreciation is included in selling, general and administrative costs in the consolidated income statements.
Expenditures for major renewals and improvements are capitalized, while minor replacements, maintenance and repairs, which do not extend the asset lives, are charged to operations as incurred. Upon sale or disposition, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. The Company continually monitors events and changes in circumstances that could indicate that the carrying balances of its property and equipment may not be recoverable in accordance with the provisions of ASC 360, “Property, Plant, and Equipment.” When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets.
The Company reviews intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. Conditions that may indicate impairment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset, a product recall, or an adverse action or assessment by a regulator. If an impairment indicator exists, we test the intangible asset for recoverability. For purposes of the recoverability test, we group our amortizable intangible assets with other assets and liabilities at the lowest level of identifiable cash flows if the intangible asset does not generate cash flows independent of other assets and liabilities. If the carrying value of the intangible asset (asset group) exceeds the undiscounted cash flows expected to result from the use and eventual disposition of the intangible asset (asset group), the Company will write the carrying value down to the fair value in the period identified.
Goodwill
Goodwill of $1,324,142 was derived from consolidating WCI effective January 1, 2014, and $102,040 of goodwill related to the 1999 acquisition of a 50% interest in WCI. In accordance with ASC 350, “Intangibles-Goodwill and Other,” goodwill and other intangible assets with indefinite lives are no longer subject to amortization but are tested for impairment annually or whenever events or changes in circumstances indicate that the asset might be impaired.
The Company reviews the goodwill allocated to each of our reporting units for possible impairment annually as of December 31 and whenever events or changes in circumstances indicate carrying amount may not be recoverable. In the impairment test, the Company measures the recoverability of goodwill by comparing a reporting unit’s carrying amount, including goodwill, to the estimated fair value of the reporting unit. If the carrying amount of a reporting unit is in excess of its fair value, the Company recognizes an impairment charge equal to the amount in excess. To estimate the fair value, management uses 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 September 30, 2021 and December 31, 2020.
Note 2 - Summary of significant accounting policies (continued)
Revenue recognition
The Company recognizes revenue in accordance with ASC 606, “Revenue from Contracts with Customers,” and FASB ASC Topic 842, “Leases.” Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to government authorities.
WCI works with business park owners, governmental centers, and apartment complexes to reduce facilities related costs. WCI performs monthly services pursuant to agreements with customers. Customer monthly service fees are based on WCI’s assessment of the amount and frequency of monthly services requested by a customer. WCI may also provide additional services, such as apartment cleanout services, large item removals, or similar services, on an as needed basis at an agreed upon rate as requested by customers. All services are invoiced and recognized as revenue in the month the agreed on services are performed.
For each finance lease, the Company recognized as a gain the amount equal to (i) the net investment in the finance lease less (ii) the net book value of the equipment at the inception of the applicable lease. At lease inception, we capitalize the total minimum finance lease payments receivable from the lessee, the estimated unguaranteed residual value of the equipment at lease termination, if any, and the initial direct costs related to the lease, less unearned income. Unearned income is recognized as finance income over the term of the lease using the effective interest rate method.
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.
We compute net income (loss) per share in accordance with ASC 260, “Earnings Per Share.” Under the provisions of ASC 260, basic net loss per share includes no dilution and is computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of Common Stock outstanding during the period. Diluted net income (loss) per share takes into consideration shares of Common Stock outstanding (computed under basic net loss per share) and potentially dilutive securities that are not anti-dilutive.
Outstanding warrants that had no effect on the computation of the dilutive weighted average number of shares outstanding as their effect would be anti-dilutive were approximately and as of September 30, 2021 and December 31, 2020, respectively. There were and potentially dilutive shares outstanding at September 30, 2021 and December 31, 2020, respectively.
Conversion of Series Q Preferred Stock into Common Stock would be anti-dilutive for the three and nine months ended September 30, 2021 and 2020 and is not included in calculating the diluted weighted average number of shares outstanding.
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Prepaid expenses and other assets |
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||
| Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
| Prepaid expenses and other assets | Note 3 – Prepaid expenses and other assets
Prepaid expenses and other assets consist of the following:
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Investment in account receivable |
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 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. In the fourth quarter of 2020, we were notified that due to the effect of COVID-19 on the estimated receivable, we may not receive the 2020 installment payment or the full 2021 installment payment. Based on management’s collection estimates, we have recorded an impairment of $139,148 and $139,148 on the investment in account receivable at September 30, 2021 and December 31, 2020, respectively.
The investment in account receivable consists of the following at September 30, 2021 and December 31, 2020:
For the three months ended September 30, 2021 and 2020, $15,228 and $23,691 of discount amortization is included in interest income, respectively. For the nine months ended September 30, 2021 and 2020, $45,684 and $61,908 of discount amortization is included in interest income, respectively.
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Property and equipment |
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and equipment | Note 5 - Property and equipment
Property and equipment are comprised of the following:
Depreciation and amortization expense was $15,031 and $5,585 for the three months ended September 30, 2021 and 2020, respectively. Depreciation and amortization expense was $34,305 and $14,869 for the nine months ended September 30, 2021 and 2020, respectively. Depreciation on WCI vehicles used to service customer accounts is included in the cost of goods sold, and all other depreciation is included in selling, general and administrative expenses in the condensed consolidated income statements.
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Lessee Leases |
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| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lessee Leases | Note 6 – Lessee Leases
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 on or after 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 $777,451 and $406,242 as of September 30, 2021 and December 31, 2020, respectively. Accumulated amortization associated with finance leases was $202,861 and $110,164 as of September 30, 2021 and December 31, 2020, respectively.
Lease costs recognized in our consolidated statements of operations is summarized as follows:
Other information about lease amounts recognized in our condensed consolidated financial statements is summarized as follows:
Finance lease liabilities were as follows:
Operating lease liabilities were as follows:
Note 6 – Lessee Leases (continued)
Lease maturities were as follows:
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Convertible notes receivable |
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible notes receivable | Note 7 – Convertible notes receivable
Convertible notes receivable consists of the following:
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Finance leases receivable |
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| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Finance leases receivable | Note 8 – Finance leases receivable
Partner II entered into a Master Equipment Lease Agreement with Pueblo West, dated February 11, 2018, 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 did not record any sales revenue for the nine months ended September 30, 2021 and 2020. At September 30, 2021, all Partner II leased equipment under finance leases receivable is located in Colorado.
Performing net finance leases receivable consisted of the following:
Interest income recognized on Partner II finance leases for the three months ended September 30, 2021 and 2020 was $9,957 and $11,730 respectively. Interest income recognized on Partner II finance leases for the nine months ended September 30, 2021 and 2020 was $31,176 and $36,297, respectively.
At September 30, 2021, minimum future payments receivable for performing finance leases receivable were as follows:
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Contractual interests in legal recoveries |
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| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Contractual interests in legal recoveries | Note 9 - Contractual interests in legal recoveries
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, pending in the Supreme Court of British Columbia (“Litigation”). On October 23, 2018, Mentor entered into a Joint Prosecution Agreement among Mentor, Mentor’s corporate legal counsel, Electrum, and Electrum’s legal counsel.
On October 30, 2018, Mentor entered into a Recovery Purchase Agreement (“Recovery Agreement”) with Electrum under which Mentor purchased a portion of Electrum’s 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 September 30, 2021 and December 31, 2020, Mentor invested an additional $81,529 of capital in Electrum for payment of legal retainers and fees in consideration for an additional eight percent (8%) of the Recovery. At September 30, 2021 and December 31, 2020, the Recovery Agreement investment is reported in the condensed consolidated balance sheets at cost of $181,529 and $181,529, 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 September 30, 2021 and December 31, 2020.
Subsequent to quarter end, the Company invested an additional $9,998 in Electrum’s Litigation expenses, see Note 20 to the condensed consolidated financial statements.
Note 9 - Contractual interests in legal recoveries (continued)
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 Mentor’s 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 September 30, 2021 and December 31, 2020.
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 Mentor’s 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 January 28, 2019 until the payment date if the Recovery occurs prior to the payment date, and (B) $833.34 for each full month from January 28, 2019 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 September 30, 2021 and December 31, 2020. 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.
Recovery on this claim has been delayed due to COVID-19. The Company’s interest in the Electrum Partners, LLC legal recovery, carried at cost, at September 30, 2021 and December 31, 2020 is summarized as follows:
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Investments and fair value |
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| Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments and fair value | Note 10 – Investments and fair value
The hierarchy of Level 1, Level 2 and Level 3 Assets are listed as following:
Note 10 – Investments and fair value (continued)
The amortized costs, gross unrealized holding gains and losses, and fair values of the Company’s investment securities classified as equity securities, at fair value, at September 30, 2021 consists of the following:
The portion of unrealized gains and losses for the period related to equity securities still held at the reporting date is calculated as follows:
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Common stock warrants |
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| Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock warrants |
On August 21, 1998, the Company filed for voluntary reorganization with the United States Bankruptcy Court for the Northern District of California, and on January 11, 2000, the Company’s Plan of Reorganization was approved. Among other things, the Company’s Plan of Reorganization allowed creditors and claimants to receive new Series A, B, C, and D warrants in settlement of their prior claims. The warrants expire on 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 $ per share redemption fee payable to the original warrant holders. 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 September 30, 2021 for Series B warrants were $0.11 and Series D warrants were $1.60.
Note 11 - Common stock warrants (continued)
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 September 30, 2021 and December 31, 2020, the weighted average contractual life for all Mentor warrants was 17 years and 17.5 years, respectively, and the weighted average outstanding warrant exercise price was $0.17 and $2.11 per share, respectively.
During the nine months ended September 30, 2021 and 2020, there were no warrants exercised and there were no warrants issued. The intrinsic value of outstanding warrants at September 30, 2021 and December 31, 2020 was $0 and $0, respectively.
The following table summarizes Series B and Series D common stock warrants as of each period:
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:
On February 9, 2015, in accordance with Section 1145 of the United States Bankruptcy Code and the Company’s 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 Company’s 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 to be scheduled 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 nine months ended September 30, 2021 and 2020, no warrants were redeemed.
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Warrant redemption liability |
9 Months Ended |
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Sep. 30, 2021 | |
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
| Warrant redemption liability | Note 12 - 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 holder’s 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 Company’s 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 September 30, 2021 and December 31, 2020.
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Stockholders’ equity |
9 Months Ended |
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Sep. 30, 2021 | |
| Equity [Abstract] | |
| Stockholders’ equity | Note 13 - 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 authorized shares of Common Stock at $ 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 Company’s common shares outstanding at that time). As of September 30, 2021 and December 31, 2020, 44,748 and 44,748 shares have been repurchased and retired, respectively.
Preferred Stock
Mentor has , $ 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 preferred shares as Series Q Preferred Stock, such series having a par value of $ 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 to 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.
Note 13 - Stockholders’ equity (continued)
Preferred Stock (continued)
The “Conversion Price” of the Series Q Preferred Stock shall be at the product of 105% and the closing price of the Company’s 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 shares of Series Q Preferred Stock on May 30, 2018, at a price of $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 September 30, 2021 and December 31, 2020 include this interest. The Core Q Holdings Asset Value at September 30, 2021 and December 31, 2020 was $and $per share, respectively. There is no contingent liability for the Series Q Preferred Stock conversion at September 30, 2021 and December 31, 2020. At September 30, 2021 and December 31, 2020, the Series Q Preferred Stock could have been converted at the Conversion Price of $0.112 and $0.085, respectively, into an aggregate of and shares of the Company’s Common Stock, respectively. Because there were net losses for the three and nine month periods ended September 30, 2021 and 2020, these shares were anti-dilutive and therefore are not included in the weighted average share calculation for these periods.
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Term Loan |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Term Loan | Note 14 - Term Loan
Term debt as of September 30, 2021 and December 31, 2020 consists of the following:
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Paycheck Protection Program Loans and Economic Injury Disaster Loans |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Paycheck Protection Program Loans and Economic Injury Disaster Loans | Note 15 – Paycheck Protection Program Loans and Economic Injury Disaster Loans
Paycheck Protection Program loans
In 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 the Republic Bank of Arizona (collectively, the “PPP Loans”). The PPP Loans were forgiven in November 2020, except for $10,000 of WCI’s loan that was not eligible for forgiveness due to receipt of a $10,000 Economic Injury Disaster Loan Advance (“EIDL Advance”). However, on December 27, 2020, Section 1110(e)(6) of the CARES Act was repealed by Section 333 of the Economic Aid Act. As a result, the SBA automatically remitted a reconciliation payment to WCI’s PPP lender, the Republic Bank of Arizona, for the previously deducted EIDL Advance amount, plus interest through the remittance date. On March 16, 2021, The Republic Bank of Arizona notified WCI of receipt of the reconciliation payment and full forgiveness of the EIDL Advance. The $10,000 forgiveness is reflected as other income for the nine months ended September 30, 2021, in the condensed consolidated income statements.
On February 17, 2021, Mentor received a second PPP Loan in the amount of $76,593 (“Second PPP Loan”) pursuant to Division N, Title III, of the Consolidated Appropriations Act, 2021 (the “Economic Aid Act”) as further set forth at Section 311 et. seq. of the Economic Aid Act.
The Second PPP Loan is forgivable so long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent, utilities, and other covered operations expenditures, 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.
Note 15 – Paycheck Protection Program loans and Economic Injury Disaster Loan (continued)
The Company records PPP Loans as a liability in accordance with FASB ASC 470, “Debt” and records accrued interest through the effective date of forgiveness on the PPP Loans. Total gain on extinguishment of the PPP Loans and accrued interest is reported in other income and expense in the consolidated income statement.
PPP loan balances consist of the following:
Interest expense on PPP Loans for the three months ended September 30, 2021 and 2020 was $194 and $1,048, respectively. Interest expense on PPP Loans for the nine months ended September 30, 2021 and 2020 was $385 and $1,798, respectively.
Economic injury disaster loan
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 2021, and matures July 2050. The loan is collateralized by all tangible and intangible assets of WCI.
EIDL loan balances at September 30, 2021 consist of the following:
Interest expense on the EIDL Loan for the three months ended September 30, 2021 and 2020 was $1,449 and $1,172, respectively.
Interest expense on the EIDL Loan for the nine months ended September 30, 2021 and 2020 was $4,260 and $1,172, respectively.
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Accrued salary, accrued retirement, and incentive fee - related party |
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| Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Accrued salary, accrued retirement, and incentive fee - related party | Note 16 - Accrued salary, accrued retirement, and incentive fee - related party
The Company had an outstanding liability to its CEO as follows:
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 CEO’s option. The incentive fee is 1% of the increase in market capitalization based on the bid price of the Company’s 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 nine months ended September 30, 2021 and 2020, the incentive fee expense was $0 and $0, respectively.
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Related party transactions |
9 Months Ended |
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Sep. 30, 2021 | |
| Related Party Transactions [Abstract] | |
| Related party transactions | Note 17 – Related party transactions
On December 15, 2020, WCI received a $20,000 short term loan from an officer of WCI, which is reflected as a related party payable at September 30, 2021 and December 31, 2020.
On March 12, 2021, Mentor received a $100,000 loan from its CEO, which bears interest at 7.8% per annum compounded quarterly and is due upon demand. On June 17, 2021, Mentor received an additional $100,000 loan from its CEO with the same terms as the previous loan. The loan from the related party and accrued interest of $6,442 is reflected as a long-term liability at September 30, 2021. For the three months ended September 30, 2021 and 2020, the interest expense on the long-term loan from the related party was $4,006 and $0 respectively. For the nine months ended September 30, 2021 and 2020, the interest expense on the long-term loan from the related party was $6,442 and $0 respectively.
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Commitments and contingencies |
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Sep. 30, 2021 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and contingencies | Note 18 – Commitments and contingencies
G FarmaLabs Limited, a Nevada corporation (“G Farma”) has not made scheduled payments on the finance lease receivable or the notes receivable summarized below since February 19, 2019. All amounts due from G Farma are fully impaired at September 30, 2021 and December 31, 2020. A complete description of the agreements can be found in the Company’s Annual Report for the period ended December 31, 2020 on Form 10-K as filed with the SEC on April 15, 2021.
On March 17, 2017, the Company entered into a Notes Purchase Agreement with G Farma, with operations in Washington that had planned operations in California under two temporary licenses pending completion of its Desert Hot Springs, California, location. Under the Agreement, the Company purchased two secured promissory notes from G Farma in an aggregate principal face amount of $500,000. Subsequent to the initial investment, the Company executed eight addenda. Addendum II through Addendum VIII increased the aggregate principal face amount of the two notes to $1,100,000 and increased the combined monthly payments of the notes to $10,239 per month beginning March 15, 2019 with a balloon payment on the notes of approximately $894,172 due at maturity.
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. 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. The G Farma Entities failed to perform their obligations under the Equity Purchase and Issuance Agreement and the equity investment was fully impaired at September 30, 2021 and December 31, 2020.
Partner I acquired and delivered manufacturing equipment as selected by the G Farma Entities under sales-type finance leases. The finance leases resulting from this investment have been fully impaired at September 30, 2021 and December 31, 2020.
Note 18 – Commitments and contingencies (continued)
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, summarized above, in the California Superior Court in and for the County of Marin. The Company primarily sought 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 obtained, in January 2020, a writ of possession to recover leased equipment within G Farma’s possession. On January 31, 2020, all remaining equipment leased to G Farma by Mentor Partner I was repossessed by the Company. In the quarter ended June 30, 2020, the Company sold all of the recovered equipment, with an original cost of $622,670, for net proceeds of $249,481, after deducting shipping and delivery costs. All proceeds from the sale of repossessed equipment have been applied to the G Farma lease receivable balance that is fully reserved at September 30, 2021 and December 30, 2020.
On November 4, 2020, the Court granted Mentor Capital, Inc.’s and Mentor Partner I’s motion for summary adjudication as to both causes of action against G FarmaLabs Limited for liability for breach of the two promissory notes and one cause of action against each of Mr. Gonzalez and Ms. Gonzalez related to their duties as guarantors of G FarmaLabs Limited’s obligations under the promissory notes.
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.
On August 27, 2021, the Company entered into a Settlement Agreement and Mutual Release with the G Farma Entities to resolve and settle all outstanding claims (“Settlement Agreement”). The Settlement Agreement requires the G Farma Entities to pay the Company an aggregate of $500,000 plus interest, payable monthly as follows: (i) $500 per month for 12 months beginning on September 5, 2021, (ii) $1,000 per month for 12 months beginning September 5, 2022, (iii) $2,000 per month for 12 months beginning September 5, 2023, and (iv) increasing by an additional $1,000 per month on each succeeding September 5 thereafter, until the settlement amount and accrued unpaid interest is paid in full. Interest on the unpaid balance shall initially accrue at the rate of 4.25%, commencing February 25, 2021, and shall be adjusted on February 25th of each year to equal the Prime Rate as published in the Wall Street Journal plus 1%. In the event that the G Farma Entities fail to make any monthly payment and have not cured such default within 10 days of notice from the Company, the parties have stipulated that an additional $2,000,000 will be immediately added to the unpaid settlement amount payable by the G Farma Entities.
The Company has retained the reserve on collections of the unpaid lease receivable balance due to the long history of uncertain payments from G Farma. See the Company’s Annual Report for the period ended December 31, 2020 on Form 10-K, Footnotes 8 and 9, as filed with the SEC April 15, 2021, for a discussion of the reserve against the finance lease receivable.
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| Segment Information | Note 19 – 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 generally has 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, and the operation of subsidiaries in the cannabis and medical marijuana sector; and 2) the Company’s 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 had small investments in securities listed on the NYSE and NASDAQ, an investment in note receivable from a non-affiliated party, the fair value of convertible notes receivable and accrued interest from NeuCourt, and the investment in NeuCourt that is included in the Corporate, Other, and Eliminations section below. The NeuCourt investments were previously reported as an investment that would be useful in the cannabis space; however, NeuCourt has determined that its legal services would likely be more useful to users outside of the cannabis space. Prior period segment information presented below contains reclassification of NeuCourt investments from the cannabis and medical marijuana segment to the Corporate, other, and eliminations segment.
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:
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Subsequent events |
9 Months Ended |
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Sep. 30, 2021 | |
| Subsequent Events [Abstract] | |
| Subsequent events | Note 20 – Subsequent events
On October 6, 2021, the Company invested additional capital of $9,998 in Electrum for Litigation costs pursuant to the Recovery Purchase Agreement. The amount invested by the Company into Electrum for Litigation costs has increased to $191,527 and the Company is entitled to receive to 19% of anything of value received by Electrum as a result of the Recovery, following reimbursement to the Company of Litigation costs, see Note 9. Trial in the Electrum Litigation is currently scheduled to commence on March 7, 2022.
On or about October 26, 2021, the Company was notified of complete forgiveness, effective October 26, 2021, of its $76,593 PPP Loan principal plus accrued interest of $528. |
Summary of significant accounting policies (Policies) |
9 Months Ended |
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Sep. 30, 2021 | |
| Accounting Policies [Abstract] | |
| Condensed consolidated financial statements | Condensed consolidated financial statements
The unaudited condensed consolidated financial statements of the Company for the nine month period ended September 30, 2021 and 2020 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, 2020 was derived from the audited financial statements included in the Company’s financial statements as of and for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2021. These financial statements should be read in conjunction with that report.
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| 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 the current period presentation.
Basis of presentation (continued)
As shown in the accompanying financial statements, the Company has a significant accumulated deficit of $10,968,166 as of September 30, 2021. The Company continues to experience negative cash flows from operations.
The Company management believes it is more likely than not that Electrum will prevail in the legal action described in Note 9 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.
Note 2 - Summary of significant accounting policies (continued)
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| Going Concern Uncertainties | Going Concern Uncertainties
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 6,252,954 Series D 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.
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| 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 Company’s business, results of operations, financial condition, and stock price. As of September 30, 2021, the fatality rate from COVID-19 in the United States has significantly declined from its peak, but the impact of COVID-19 continues to unfold. 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. Our legal recovery efforts have been hindered and may continue to be constrained 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 Company’s interest in the Electrum Partners, LLC legal recovery, respectively. Additionally, the collectability of our investment in accounts receivable has been impaired by $139,148 in the fourth quarter of 2020, due to a reduction in our expected collection amount of the 2020 and 2021 payments of an installment contract, see Note 4.
Public health efforts to mitigate the impact of COVID-19 have included government actions such as travel restrictions, limitations on public gatherings, shelter in place orders, and mandatory closures. These actions are being lifted to varying degrees. WCI has not experienced an overall reduced demand for services initially anticipated because WCI helps lower monthly service costs paid by its client properties. However, WCI’s clients may experience a delay in collecting rent from tenants, which may cause slower payments to WCI. WCI closely monitors customer accounts and has not experienced significant delays in the collection of accounts receivable.
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 Mentor’s operations, which consist of oversight of our portfolio companies, accounting, compliance, investor relations, and sales, Mentor’s day-to-day operations are not substantially hindered by remote office work or telework.
We anticipate that current cash and associated resources will be sufficient to execute our business plan for the next twelve 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, government response and the related length of this impact on the economy, which are uncertain and cannot be predicted at this time.
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| 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 judgments 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.
Note 2 - Summary of significant accounting policies (continued)
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 Company’s 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 management’s estimates if past experience or other assumptions do not turn out to be substantially accurate.
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| 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 the 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.
There were no accounting pronouncements issued during the nine months ended September 30, 2021 that are expected to have a material impact on the Company’s condensed consolidated financial statements.
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| 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.
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| Cash and cash equivalents | Cash and cash equivalents
The Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. The Company had no short-term debt securities as of September 30, 2021 and December 31, 2020.
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| Accounts receivable | Accounts receivable
Accounts receivable consists 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 historical losses as a percent of revenue in conjunction with a review of outstanding balances on a quarterly basis. The estimate of the 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 September 30, 2021 and December 31, 2020, the Company has an allowance for doubtful receivables in the amount of $79,041 and $59,461, respectively.
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| Investments in securities at fair value | Investments in securities at fair value
Investment in securities consists of debt and equity securities reported at fair value. Under ASU 2016-01, “Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities,” the Company elected to report changes in the fair value of equity investment in realized investment gains (losses), net.
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| Long term investments | Long term investments
The Company’s investments in entities where it is a minority owner and does not have the ability to exercise significant influence are recorded at fair value if readily determinable. If the fair market value is not readily determinable, the investment is recorded under the cost method. Under this method, the Company’s share of the earnings or losses of such investee company is not included in the Company’s financial statements. The Company reviews the carrying value of its long-term investments for impairment each reporting period.
Note 2 - Summary of significant accounting policies (continued)
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| Investments in debt securities | Investments in debt securities
The Company’s investment in debt securities consists of two convertible notes receivable from NeuCourt, Inc., which are recorded at the aggregate principal face amount of $75,000 plus accrued interest of $10,087 and $7,038 at September 30, 2021 and December 31, 2020, respectively, as presented in Note 7.
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| Investment in account receivable, net of discount | Investment in account receivable, net of discount
The Company’s investment in account receivable is stated at face value, net of unamortized purchase discount. The discount is amortized to interest income over the term of the exchange agreement. In the fourth quarter of 2020, we were notified that due to the effect of COVID-19 on the estimated receivable, we may not receive the 2020 installment payment or the full 2021 installment payment. At September 30, 2021 and December 31, 2020, the Company has an impairment of the investment in account receivable of $139,148 and $139,148, respectively.
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| 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 is able to analyze 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 is 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 borrower’s facility and meet with a borrower’s management to better understand such borrower’s financial performance and its future plans on an as-needed basis.
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| Lessee Leases | Lessee Leases
We determine whether an arrangement is a lease at inception. Lessee leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria is met: (i) the lease transfers ownership of the asset by the end of the lease term, (ii) the lease contains an option to purchase the asset that is reasonably certain to be exercised, and (iii) the lease term is for a significant part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of these criteria. Our operating leases are comprised of office space leases and office equipment. Fleet vehicle leases entered into prior to January 1, 2019, are classified as operating leases based on an expected lease term of four years. Fleet vehicle leases entered into on or after January 1, 2019, for which the lease is expected to be extended to five years, are classified as finance leases. Our leases have remaining lease terms of one to forty-eight months. Our fleet finance leases contain a residual value guarantee which, based on past lease experience, is unlikely to result in a liability at the end of the lease. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.
Costs associated with operating lease assets are recognized on a straight-line basis, over the term of the lease, within cost of goods sold for vehicles used in direct servicing of WCI customers and in operating expenses for costs associated with all other operating leases. Finance lease assets are amortized within cost of goods sold for vehicles used in direct servicing of WCI customers and within operating expenses for all other finance lease assets, on a straight-line basis over the shorter of the estimated useful lives of the assets or the lease term. The interest component of a finance lease is included in interest expense and recognized using the effective interest method over the lease term. We have agreements that contain both lease and non-lease components. For vehicle fleet operating leases, we account for lease components together with non-lease components (e.g., maintenance fees).
Note 2 - Summary of significant accounting policies (continued)
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| Property, and equipment | Property, and equipment
Property and equipment is recorded at cost less accumulated depreciation. Depreciation is computed on the declining balance method over the estimated useful lives of various classes of property. The estimated lives of the property and equipment are generally as follows: computer equipment, three to five years; furniture and equipment, seven years; and vehicles and trailers, four to five years. Depreciation on vehicles used by WCI to service its customers is included in cost of goods sold in the consolidated income statements. All other depreciation is included in selling, general and administrative costs in the consolidated income statements.
Expenditures for major renewals and improvements are capitalized, while minor replacements, maintenance and repairs, which do not extend the asset lives, are charged to operations as incurred. Upon sale or disposition, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. The Company continually monitors events and changes in circumstances that could indicate that the carrying balances of its property and equipment may not be recoverable in accordance with the provisions of ASC 360, “Property, Plant, and Equipment.” When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets.
The Company reviews intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. Conditions that may indicate impairment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset, a product recall, or an adverse action or assessment by a regulator. If an impairment indicator exists, we test the intangible asset for recoverability. For purposes of the recoverability test, we group our amortizable intangible assets with other assets and liabilities at the lowest level of identifiable cash flows if the intangible asset does not generate cash flows independent of other assets and liabilities. If the carrying value of the intangible asset (asset group) exceeds the undiscounted cash flows expected to result from the use and eventual disposition of the intangible asset (asset group), the Company will write the carrying value down to the fair value in the period identified.
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| Goodwill | Goodwill
Goodwill of $1,324,142 was derived from consolidating WCI effective January 1, 2014, and $102,040 of goodwill related to the 1999 acquisition of a 50% interest in WCI. In accordance with ASC 350, “Intangibles-Goodwill and Other,” goodwill and other intangible assets with indefinite lives are no longer subject to amortization but are tested for impairment annually or whenever events or changes in circumstances indicate that the asset might be impaired.
The Company reviews the goodwill allocated to each of our reporting units for possible impairment annually as of December 31 and whenever events or changes in circumstances indicate carrying amount may not be recoverable. In the impairment test, the Company measures the recoverability of goodwill by comparing a reporting unit’s carrying amount, including goodwill, to the estimated fair value of the reporting unit. If the carrying amount of a reporting unit is in excess of its fair value, the Company recognizes an impairment charge equal to the amount in excess. To estimate the fair value, management uses 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 September 30, 2021 and December 31, 2020.
Note 2 - Summary of significant accounting policies (continued)
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| Revenue recognition | Revenue recognition
The Company recognizes revenue in accordance with ASC 606, “Revenue from Contracts with Customers,” and FASB ASC Topic 842, “Leases.” Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to government authorities.
WCI works with business park owners, governmental centers, and apartment complexes to reduce facilities related costs. WCI performs monthly services pursuant to agreements with customers. Customer monthly service fees are based on WCI’s assessment of the amount and frequency of monthly services requested by a customer. WCI may also provide additional services, such as apartment cleanout services, large item removals, or similar services, on an as needed basis at an agreed upon rate as requested by customers. All services are invoiced and recognized as revenue in the month the agreed on services are performed.
For each finance lease, the Company recognized as a gain the amount equal to (i) the net investment in the finance lease less (ii) the net book value of the equipment at the inception of the applicable lease. At lease inception, we capitalize the total minimum finance lease payments receivable from the lessee, the estimated unguaranteed residual value of the equipment at lease termination, if any, and the initial direct costs related to the lease, less unearned income. Unearned income is recognized as finance income over the term of the lease using the effective interest rate method.
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.
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| Basic and diluted income (loss) per common share |
We compute net income (loss) per share in accordance with ASC 260, “Earnings Per Share.” Under the provisions of ASC 260, basic net loss per share includes no dilution and is computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of Common Stock outstanding during the period. Diluted net income (loss) per share takes into consideration shares of Common Stock outstanding (computed under basic net loss per share) and potentially dilutive securities that are not anti-dilutive.
Outstanding warrants that had no effect on the computation of the dilutive weighted average number of shares outstanding as their effect would be anti-dilutive were approximately and as of September 30, 2021 and December 31, 2020, respectively. There were and potentially dilutive shares outstanding at September 30, 2021 and December 31, 2020, respectively.
Conversion of Series Q Preferred Stock into Common Stock would be anti-dilutive for the three and nine months ended September 30, 2021 and 2020 and is not included in calculating the diluted weighted average number of shares outstanding.
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Prepaid expenses and other assets (Tables) |
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||
| Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
| Schedule of prepaid expenses and other assets | Prepaid expenses and other assets consist of the following:
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Investment in account receivable (Tables) |
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| Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of receivables with imputed interest | The investment in account receivable consists of the following at September 30, 2021 and December 31, 2020:
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Property and equipment (Tables) |
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| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of property, plant and equipment | Property and equipment are comprised of the following:
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Lessee Leases (Tables) |
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| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of lease costs recognized in consolidated statements of operations | Lease costs recognized in our consolidated statements of operations is summarized as follows:
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| Schedule of other information about lease amounts recognized in Condensed Consolidated Financial Statements | Other information about lease amounts recognized in our condensed consolidated financial statements is summarized as follows:
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| Schedule of Finance lease liabilities | Finance lease liabilities were as follows:
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| Schedule of operating lease liabilities | Operating lease liabilities were as follows:
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| Schedule of lease maturities | Lease maturities were as follows:
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Convertible notes receivable (Tables) |
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| Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of convertible notes receivable | Convertible notes receivable consists of the following:
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Finance leases receivable (Tables) |
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of performing net finance leases receivable | Performing net finance leases receivable consisted of the following:
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| Schedule of minimum future payments receivable for performing finance leases receivable | At September 30, 2021, minimum future payments receivable for performing finance leases receivable were as follows:
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Contractual interests in legal recoveries (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of interest in legal recovery carried at cost |
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Investments and fair value (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments, All Other Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of hierarchy of level 1, level 2 and level 3 assets | The hierarchy of Level 1, Level 2 and Level 3 Assets are listed as following:
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| Schedule of amortized costs, gross unrealized holding gains and losses, and fair values of investment securities | The amortized costs, gross unrealized holding gains and losses, and fair values of the Company’s investment securities classified as equity securities, at fair value, at September 30, 2021 consists of the following:
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| Schedule of portion of unrealized gains and losses related to equity securities | The portion of unrealized gains and losses for the period related to equity securities still held at the reporting date is calculated as follows:
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Common stock warrants (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of common stock warrants | The following table summarizes Series B and Series D common stock warrants as of each period:
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:
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Term Loan (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of term debt | Term debt as of September 30, 2021 and December 31, 2020 consists of the following:
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Paycheck Protection Program Loans and Economic Injury Disaster Loans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of paycheck protection plan loan balances | PPP loan balances consist of the following:
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| Schedule of EIDL loan balances | EIDL loan balances at September 30, 2021 consist of the following:
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Accrued salary, accrued retirement, and incentive fee - related party (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of outstanding liability | The Company had an outstanding liability to its CEO as follows:
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of segment information |
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| Schedule of reconciliation of revenue from segments to consolidated | 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:
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Nature of operations (Details Narrative) - USD ($) |
1 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 12, 2019 |
Dec. 31, 2018 |
Sep. 30, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Oct. 06, 2021 |
Jan. 28, 2019 |
Oct. 31, 2018 |
Feb. 08, 2018 |
Apr. 18, 2016 |
Dec. 31, 1999 |
|
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||||||
| Entity incorporation, state or country code | DE | ||||||||||
| Entity incorporation, date of incorporation | Jul. 29, 1994 | ||||||||||
| Equity interest cost | $ 194,028 | $ 194,028 | |||||||||
| Litigation Settlement, Expense | 181,529 | $ 146,195 | |||||||||
| Agreement description | Under the Capital Agreement, on the payment date, Electrum will pay 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. | ||||||||||
| Additional Paid in Capital | $ 13,071,655 | $ 13,071,655 | |||||||||
| Capital Agreement [Member] | |||||||||||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||||||
| Cash | $ 194,028 | ||||||||||
| Recovery of membership interest | 19.40% | ||||||||||
| Partner I [Member] | |||||||||||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||||||
| Entity incorporation, date of incorporation | $ 996,000 | ||||||||||
| Partner Two [Member] | |||||||||||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||||||
| Entity incorporation, date of incorporation | $ 400,000 | ||||||||||
| Payments to Acquire Machinery and Equipment | $ 61,368 | ||||||||||
| Electrum Partners, LLC [Member] | Secured Capital Agreement [Member] | |||||||||||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||||||
| Entity incorporation, date of incorporation | $ 100,000 | ||||||||||
| Electrum Partners, LLC [Member] | Second Secured Capital Agreement [Member] | |||||||||||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||||||
| Entity incorporation, date of incorporation | $ 100,000 | ||||||||||
| NeuCourt, Inc [Member] | |||||||||||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||||||
| Stock issued, value | $ 10,000 | ||||||||||
| Stock issued, shares | 500,000 | ||||||||||
| Shares issued and outstanding percentage | 6.10% | ||||||||||
| Waste Consolidators, Inc.[Member] | |||||||||||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||||||
| Ownership interest, percentage | 51.00% | 50.00% | |||||||||
| Mentor IP LLC [Member] | |||||||||||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||||||
| Agreement title | 80.00% | ||||||||||
| Mentor IP LLC [Member] | Subsequent Event [Member] | |||||||||||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||||||
| Recovery of membership interest | 19.00% | ||||||||||
| Additional Paid in Capital | $ 9,998 | ||||||||||
| Mentor IP LLC [Member] | Non-US [Member] | |||||||||||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||||||
| Agreement title | 50.00% | ||||||||||
| Mentor IP LLC [Member] | Larson and Larson Capital LLC [Member] | |||||||||||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||||||
| Agreement title | 20.00% | ||||||||||
| Mentor IP LLC [Member] | Larson and Larson Capital LLC [Member] | Non-US [Member] | |||||||||||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||||||
| Agreement title | 50.00% | ||||||||||
Summary of significant accounting policies (Details Narrative) - USD ($) |
9 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Jan. 01, 2014 |
Sep. 30, 2021 |
Dec. 31, 2020 |
Dec. 31, 1999 |
|
| Warrants outstanding | 6,252,954 | |||
| Allowance for doubtful receivables | $ 79,041 | $ 59,461 | ||
| Investment in accounts receivable, impairment | $ 139,148 | $ 139,148 | ||
| Anti-dilutive securities excluded from computaion of outstanding warrents | 7,000,000 | 7,000,000 | ||
| Potentially dilutive shares outstanding | 87,456 | 87,456 | ||
| Waste Consolidators, Inc.[Member] | ||||
| Goodwill accquired | $ 1,324,142 | $ 102,040 | ||
| Ownership interest, percentage | 51.00% | 50.00% | ||
| NeuCourt, Inc [Member] | ||||
| Investments in debt securities, face value | $ 75,000 | |||
| Investments in debt securities, accrued interest | $ 10,087 | $ 7,038 | ||
Schedule of prepaid expenses and other assets (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
| Prepaid insurance | $ 342 | |
| Other prepaid costs | 25,444 | 17,497 |
| Prepaid expenses and other current assets | $ 25,444 | $ 17,839 |
Schedule of receivables with imputed interest (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
Apr. 10, 2015 |
|---|---|---|---|
| Receivables [Abstract] | |||
| Face value | $ 702,000 | $ 702,000 | $ 1,287,000 |
| Impairment | (139,148) | (139,148) | |
| Unamortized discount | (187,110) | (232,794) | |
| Net balance | 375,742 | 330,058 | |
| Current portion | 117,000 | (26,162) | |
| Long term portion | $ 258,742 | $ 303,896 |
Investment in account receivable (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Apr. 10, 2015 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
|
| Receivables [Abstract] | ||||||
| Annual installment receivable | $ 117,000 | |||||
| Annual installment receivable, term | 11 years | |||||
| Investment in account receivable, face value | $ 1,287,000 | $ 702,000 | $ 702,000 | $ 702,000 | ||
| Common stock shares issuable upon conversion | 757,059 | |||||
| Warrants exercised | 757,059 | |||||
| Warrant exercise price | $ 1.60 | $ 0.17 | $ 0.17 | $ 2.11 | ||
| Warrant redemption price | $ 0.10 | |||||
| Investment in account receivable discount percent | 17.87% | 17.87% | ||||
| Investment in account receivable discount percent | $ 139,148 | $ 139,148 | $ 139,148 | |||
| Discount Amortization included in Interest Income | $ 15,228 | $ 23,691 | $ 45,684 | $ 61,908 | ||
Schedule of property, plant and equipment (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Property, Plant and Equipment [Abstract] | ||
| Computers | $ 39,809 | $ 38,545 |
| Furniture and fixtures | 23,428 | 23,428 |
| Machinery and vehicles | 205,625 | 205,187 |
| Property and equipment | 268,862 | 267,160 |
| Accumulated depreciation and amortization | (147,404) | (129,974) |
| Property and equipment, net | $ 121,458 | $ 137,186 |
Property and equipment (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Property, Plant and Equipment [Abstract] | ||||
| Depreciation, Depletion and Amortization, Nonproduction | $ 15,031 | $ 5,585 | $ 34,305 | $ 14,869 |
Schedule of lease costs recognized in consolidated statements of operations (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
| Operating lease cost included in cost of goods | $ 27,868 | $ 35,581 | $ 90,569 | $ 120,153 | ||
| Operating lease cost included in operating costs | 13,496 | 13,846 | 35,788 | 41,965 | ||
| Total operating lease cost (1) | [1] | 41,364 | 49,427 | 126,357 | 162,118 | |
| Finance lease cost, included in cost of goods: | ||||||
| Amortization of lease assets | 41,111 | 19,349 | 90,082 | 50,776 | ||
| Interest on lease liabilities | 6,765 | 4,719 | 18,595 | 12,689 | ||
| Total finance lease cost | 47,876 | 24,068 | 108,677 | 63,465 | ||
| Short-term lease cost | 0 | 5,980 | 2,300 | 23,920 | ||
| Total lease cost | 89,240 | 79,475 | 237,334 | 249,503 | ||
| Operating lease, Right of use asset amortization | 111,307 | 59,562 | ||||
| Operating Agreements [Member] | ||||||
| Finance lease cost, included in cost of goods: | ||||||
| Operating lease, Right of use asset amortization | $ 39,006 | $ 45,707 | $ 106,545 | $ 141,429 | ||
| ||||||
Schedule of other information about lease amounts recognized in Condensed Consolidated Financial Statements (Details) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Leases [Abstract] | ||
| Weighted-average remaining lease term - operating leases | 8 months 12 days | 11 months 4 days |
| Weighted-average remaining lease term - finance leases | 3 years 9 months 29 days | 3 years 4 months 28 days |
| Weighted-average discount rate - operating leases | 2.90% | 10.10% |
| Weighted-average discount rate - finance leases | 4.60% | 8.30% |
Schedule of Finance lease liabilities (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Leases [Abstract] | ||
| Gross finance lease liabilities | $ 566,867 | $ 310,685 |
| Less: imputed interest | (45,448) | (40,183) |
| Present value of finance lease liabilities | 521,419 | 270,502 |
| Less: current portion | (147,527) | (79,526) |
| Long-term finance lease liabilities | $ 373,892 | $ 190,976 |
Schedule of operating lease liabilities (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Leases [Abstract] | ||
| Gross operating lease liabilities | $ 67,147 | $ 146,171 |
| Less: imputed interest | (2,183) | (6,863) |
| Present value of operating lease liabilities | 64,964 | 139,308 |
| Less: current portion | (52,587) | (123,158) |
| Long-term operating lease liabilities | $ 12,377 | $ 16,150 |
Schedule of lease maturities (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Leases [Abstract] | ||
| Finance leases - 2022 | $ 147,527 | |
| Operating leases - 2022 | 52,587 | |
| Finance leases - 2023 | 136,233 | |
| Operating leases - 2023 | 12,377 | |
| Finance leases - 2024 | 114,082 | |
| Operating leases - 2024 | ||
| Finance leases - 2025 | 89,908 | |
| Operating leases - 2025 | ||
| Finance leases - 2026 | 33,669 | |
| Operating leases - 2026 | ||
| Total Finance leases | 521,419 | $ 270,502 |
| Total Operating leases | 64,964 | |
| Less: Finance leases current maturities | 147,527 | 79,526 |
| Less: Operating leases current maturities | 52,587 | 123,158 |
| Finance leases, Long-term liability | 373,892 | 190,976 |
| Operating leases, Long-term liability | $ 12,377 | $ 16,150 |
Lessee Leases (Details Narrative) - Vehicle Fleet [Member] - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Gross right of use assets under finance leases | $ 777,451 | $ 406,242 |
| Accumulated amortization of finance leases | $ 202,861 | $ 110,164 |
Schedule of convertible notes receivable (Details) - USD ($) |
6 Months Ended | 9 Months Ended | |
|---|---|---|---|
Jun. 30, 2021 |
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Convertible Notes Receivable [Member] | 2017 Notes [Member] | |||
| Debt Instrument [Line Items] | |||
| Notes convert into conversion shares | 102,435 | ||
| Convertible Notes Receivable [Member] | 2018 Notes [Member] | |||
| Debt Instrument [Line Items] | |||
| Notes convert into conversion shares | 215,228 | ||
| Convertible Notes Receivable One [Member] | NeuCourt, Inc [Member] | |||
| Debt Instrument [Line Items] | |||
| Total convertible notes receivable | $ 27,102 | $ 26,454 | |
| Convertible Notes Receivable Two [Member] | NeuCourt, Inc [Member] | |||
| Debt Instrument [Line Items] | |||
| Total convertible notes receivable | 57,985 | 55,584 | |
| Convertible Notes Receivable [Member] | NeuCourt, Inc [Member] | |||
| Debt Instrument [Line Items] | |||
| Total convertible notes receivable | 85,087 | 82,038 | |
| Less current portion | (27,102) | (26,454) | |
| Long term portion | 57,985 | $ 55,584 | |
| Valuation cap amount | $ 3,000,000 | $ 3,000,000 | |
| Convertible Notes Receivable [Member] | NeuCourt, Inc [Member] | October 31, 2018 [Member] | |||
| Debt Instrument [Line Items] | |||
| Convertible note description | 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 $750,000, (ii) on the election of NeuCourt on the maturity of the Note, or (iii) on the election of Mentor following NeuCourt’s election to prepay the Note. |
Schedule of Convertible Notes Receivable (Details) (Parenthetical) - USD ($) |
9 Months Ended | |||
|---|---|---|---|---|
Nov. 04, 2019 |
Sep. 30, 2021 |
Jun. 30, 2021 |
Dec. 31, 2020 |
|
| Short-term Debt [Line Items] | ||||
| Accrued interest | $ 1,849 | $ 2,141 | ||
| November 22, 2017 [Member] | Convertible Notes Receivable [Member] | NeuCourt, Inc [Member] | ||||
| Short-term Debt [Line Items] | ||||
| Accrued interest | $ 2,438 | 1,454 | ||
| Interest rate | 5.00% | |||
| Maturity date | Nov. 22, 2019 | |||
| Extended maturity date | Nov. 22, 2021 | |||
| Cash payment received for accrued interest | $ 2,496 | |||
| Convertible note description | 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 NeuCourt’s election to prepay the Note. | |||
| Minimum closing financing amount for blend of shares | $ 750,000 | |||
| October 31, 2018 [Member] | Convertible Notes Receivable [Member] | NeuCourt, Inc [Member] | ||||
| Short-term Debt [Line Items] | ||||
| Interest rate | 5.00% | |||
| Maturity date | Oct. 31, 2022 | |||
| Convertible note description | 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 the maturity of the Note, or (iii) on the election of Mentor following NeuCourt’s election to prepay the Note. | |||
| Minimum closing financing amount for blend of shares | $ 750,000 | |||
| Accrued interest | $ 7,650 | $ 5,584 |
Schedule of performing net finance leases receivable (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Leases [Abstract] | ||
| Gross minimum lease payments receivable | $ 394,986 | $ 477,680 |
| Accrued interest | 1,849 | 2,141 |
| Less: unearned interest | (77,226) | (103,870) |
| Finance leases receivable | 319,609 | 375,951 |
| Less current portion | (72,789) | (69,053) |
| Long term portion | $ 246,820 | $ 306,898 |
Schedule of minimum future payments receivable for performing finance leases receivable (Details) |
Sep. 30, 2021
USD ($)
|
|---|---|
| Leases [Abstract] | |
| Performance finance lease receivable, Lease Receivable, 2022 | $ 79,275 |
| Performance finance lease receivable, Lease Interest, 2022 | 32,163 |
| Performance finance lease receivable, Lease Receivable 2023 | 87,577 |
| Performance finance lease receivable, Lease Interest, 2023 | 20,595 |
| Performance finance lease receivable, Lease Receivable, 2024 | 96,747 |
| Performance finance lease receivable, Lease Interest, 2024 | 11,425 |
| Performance finance lease receivable, Lease Receivable, 2025 | 51,486 |
| Performance finance lease receivable, Lease Interest, 2025 | 2,662 |
| Performance finance lease receivable, Lease Receivable, 2026 | 8,804 |
| Performance finance lease receivable, Lease Interest, 2025 | 336 |
| Performance finance lease receivable, Lease Receivable, Thereafter | |
| Performance finance lease receivable, Lease Interest, Thereafter | |
| Performance finance lease receivable, Total Lease Receivable | 323,889 |
| Performance finance lease receivable, Total Lease Interest | $ 67,181 |
Finance leases receivable (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Partner Two [Member] | ||||
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Direct Financing Lease, Lease Income | $ 9,957 | $ 11,730 | $ 31,176 | $ 36,297 |
Schedule of interest in legal recovery carried at cost (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
| Total Invested | $ 381,529 | $ 381,529 |
| October 30, 2018 Recovery Purchase Agreement [Member] | ||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
| Total Invested | 181,529 | 181,529 |
| Secured Captial Agreement [Member] | ||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
| Total Invested | 100,000 | 100,000 |
| January 28, 2019 Secured Capital Agreement [Member] | ||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
| Total Invested | $ 100,000 | $ 100,000 |
Contractual interests in legal recoveries (Details Narrative) - USD ($) |
1 Months Ended | 12 Months Ended | ||||
|---|---|---|---|---|---|---|
Oct. 31, 2018 |
Nov. 09, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2021 |
Oct. 30, 2018 |
|
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
| Contractual interests in legal recoveries | $ 381,529 | $ 381,529 | ||||
| Litigation expense | 181,529 | $ 146,195 | ||||
| Electrum [Member] | Subsequent Event [Member] | ||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
| Litigation expense | $ 9,998 | |||||
| October 30, 2018 Recovery Purchase Agreement [Member] | ||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
| Contractual interests in legal recoveries | 181,529 | 181,529 | ||||
| October 30, 2018 Recovery Purchase Agreement [Member] | Electrum [Member] | ||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
| Investment of capital for legal recovery | 81,529 | 81,529 | $ 100,000 | |||
| Contractual interests in legal recoveries | 181,529 | 181,529 | ||||
| Secured Captial Agreement [Member] | ||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
| Contractual interests in legal recoveries | 100,000 | 100,000 | ||||
| Secured Captial Agreement [Member] | Electrum [Member] | ||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
| Contractual interests in legal recoveries | 100,000 | 100,000 | ||||
| Agreement description | In consideration for Mentor’s 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 | |||||
| January 28, 2019 Secured Capital Agreement [Member] | ||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
| Contractual interests in legal recoveries | 100,000 | 100,000 | ||||
| January 28, 2019 Secured Capital Agreement [Member] | Electrum [Member] | ||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
| Contractual interests in legal recoveries | $ 100,000 | $ 100,000 | ||||
| Agreement description | In consideration for Mentor’s 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 January 28, 2019 until the payment date if the Recovery occurs prior to the payment date, and (B) $833.34 for each full month from January 28, 2019 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 September 30, 2021 and December 31, 2020. 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. | |||||
| Membership interest available for conversion | 6,198 | |||||
| Conversion of member interest into cash | $ 194,028 | |||||
Schedule of hierarchy of level 1, level 2 and level 3 assets (Details) - USD ($) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Fair Value, Inputs, Level 2 [Member] | ||
| Impairment Effects on Earnings Per Share [Line Items] | ||
| Beginning balance | ||
| Included in earnings (or changes in net assets) | ||
| Purchases, issuances, sales, and settlements | ||
| Purchases | ||
| Issuances | ||
| Sales | ||
| Settlements | ||
| Ending balance | ||
| Securities (Assets) [Member] | Fair Value, Inputs, Level 1 [Member] | ||
| Impairment Effects on Earnings Per Share [Line Items] | ||
| Beginning balance | 34,826 | |
| Included in earnings (or changes in net assets) | (9,000) | (10,292) |
| Purchases, issuances, sales, and settlements | ||
| Purchases | 38,470 | 83,536 |
| Issuances | ||
| Sales | (42,913) | (38,418) |
| Settlements | ||
| Ending balance | 21,383 | 34,826 |
| Contractual Interests in Legal Recoveries [Member] | Fair Value, Inputs, Level 3 [Member] | ||
| Impairment Effects on Earnings Per Share [Line Items] | ||
| Beginning balance | 381,529 | 346,195 |
| Included in earnings (or changes in net assets) | ||
| Purchases, issuances, sales, and settlements | ||
| Purchases | 50,717 | |
| Issuances | ||
| Sales | ||
| Settlements | (15,383) | |
| Ending balance | 381,529 | 381,529 |
| Investment in Common Stock Warrants [Member] | Fair Value, Inputs, Level 3 [Member] | ||
| Impairment Effects on Earnings Per Share [Line Items] | ||
| Beginning balance | 1,000 | 5,669 |
| Included in earnings (or changes in net assets) | (4,669) | |
| Purchases, issuances, sales, and settlements | ||
| Purchases | ||
| Issuances | ||
| Sales | ||
| Settlements | ||
| Ending balance | 1,000 | 1,000 |
| Other Equity Investments [Member] | Fair Value, Inputs, Level 3 [Member] | ||
| Impairment Effects on Earnings Per Share [Line Items] | ||
| Beginning balance | 204,028 | 204,028 |
| Included in earnings (or changes in net assets) | ||
| Purchases, issuances, sales, and settlements | ||
| Purchases | ||
| Issuances | ||
| Sales | ||
| Settlements | ||
| Ending balance | $ 204,028 | $ 204,028 |
Schedule of amortized costs, gross unrealized holding gains and losses, and fair values of investment securities (Details) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Net Investment Income [Line Items] | ||
| Amortized cost | $ 38,470 | |
| Gross Unrealized Gains | 17,087 | |
| Gross Unrealized Loss | ||
| Fair Values | 21,383 | $ 34,826 |
| Equity Securities [Member] | ||
| Net Investment Income [Line Items] | ||
| Amortized cost | 38,470 | |
| Gross Unrealized Gains | 17,087 | |
| Gross Unrealized Loss | ||
| Fair Values | $ 21,383 |
Schedule of portion of unrealized gains and losses related to equity securities (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Investments, All Other Investments [Abstract] | ||||
| Net gains and losses recognized during the period on equity securities | $ (2,427) | $ (2,758) | $ 9,001 | $ (3,507) |
| Less: Net gains (losses) recognized during the period on equity securities sold during the period | (2,508) | |||
| Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date | $ (2,427) | $ (2,758) | $ (6,493) | $ (3,507) |
Schedule of common stock warrants (Details) - shares |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Series B Common Stock Warrants [Member] | ||
| Class of Warrant or Right [Line Items] | ||
| Outstanding balance | 87,456 | 87,456 |
| Issued | ||
| Exercised | ||
| Outstanding balance | 87,456 | 87,456 |
| Series D Common Stock Warrants [Member] | ||
| Class of Warrant or Right [Line Items] | ||
| Outstanding balance | 6,252,954 | 6,252,954 |
| Issued | ||
| Exercised | ||
| Outstanding balance | 6,252,954 | 6,252,954 |
| Series B and D Common Stock Warrants [Member] | ||
| Class of Warrant or Right [Line Items] | ||
| Outstanding balance | 6,340,410 | 6,340,410 |
| Issued | ||
| Exercised | ||
| Outstanding balance | 6,340,410 | 6,340,410 |
| Series H Warrants [Member] | ||
| Class of Warrant or Right [Line Items] | ||
| Outstanding balance | 689,159 | 689,159 |
| Issued | ||
| Exercised | ||
| Outstanding balance | 689,159 | 689,159 |
Common stock warrants (Details Narrative) - USD ($) |
9 Months Ended | |||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
Apr. 10, 2015 |
|
| Class of Warrant or Right [Line Items] | ||||
| Warrants maturity date | May 11, 2038 | |||
| Warrants redemption fee per share | $ 0.10 | |||
| Weighted average outstanding warrant exercise price | $ 0.17 | $ 2.11 | $ 1.60 | |
| Warrants issued | 6,252,954 | |||
| Weighted average contractual life of warrants | 17 years | 17 years 6 months | ||
| Warrants exercised | 0 | 0 | ||
| Warrants issued | 0 | 0 | ||
| Intrinsic value of outstanding warrants | $ 0 | $ 0 | ||
| Series B Common Stock Warrants [Member] | ||||
| Class of Warrant or Right [Line Items] | ||||
| Weighted average outstanding warrant exercise price | $ 0.11 | |||
| Series D Common Stock Warrants [Member] | ||||
| Class of Warrant or Right [Line Items] | ||||
| Weighted average outstanding warrant exercise price | 1.60 | |||
| Series H Warrants [Member] | ||||
| Class of Warrant or Right [Line Items] | ||||
| Weighted average outstanding warrant exercise price | $ 7 | |||
| Warrants issued | 689,159 | |||
| Warrants term | 30 years | |||
Warrant redemption liability (Details Narrative) - $ / shares |
Sep. 30, 2021 |
Apr. 10, 2015 |
|---|---|---|
| Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
| Warrants redemption price | $ 0.10 | |
| Warrants outstanding | 6,252,954 | |
| Chet Billingsley CEO [Member] | Series B Common Stock Warrants [Member] | ||
| Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
| Warrants outstanding | 87,456 |
Stockholders’ equity (Details Narrative) - USD ($) |
9 Months Ended | 12 Months Ended | ||||
|---|---|---|---|---|---|---|
May 30, 2018 |
Aug. 08, 2014 |
Sep. 30, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Sep. 30, 2020 |
|
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
| Common Stock, Shares Authorized | 75,000,000 | 75,000,000 | ||||
| Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
| Initiate of repurchase of common stock | 300,000 | |||||
| Stock Repurchased During Period, Value | $ 44,748 | $ 44,748 | ||||
| Preferred stock, shares authorized | 5,000,000 | 5,000,000 | ||||
| Preferred stock, value per share | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
| Series Q Preferred Stock [Member] | ||||||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
| Preferred stock, shares authorized | 200,000 | |||||
| Preferred stock, value per share | $ 0.0001 | |||||
| Stock Issued During Period, Shares, New Issues | 11 | |||||
| Shares Issued, Price Per Share | $ 10,000 | |||||
| Stock Issued During Period, Value, New Issues | $ 110,000 | |||||
| Asset value | 17,455 | $ 16,207 | ||||
| Asset Acquisition, Contingent Consideration, Liability | $ 0 | |||||
| Preferred Stock, Convertible, Conversion Price | $ 0.112 | $ 0.085 | ||||
| Convertible Preferred Stock, Shares Issued upon Conversion | 1,714,319 | 2,097,358 |
Schedule of term debt (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Debt Disclosure [Abstract] | ||
| Bank of America auto loan, interest at 2.37% per annum, monthly principal and interest payments of $1,448, maturing December 2025, collateralized by vehicle. | $ 81,812 | |
| Bank of America auto loan, interest at 2.49% per annum, monthly principal and interest payments of $1,505, maturing July 2025, collateralized by vehicle. | 65,816 | |
| Less: Current maturities | (15,099) | (15,566) |
| Long term debt | $ 50,717 | $ 66,246 |
Schedule of term debt (Details) (Parenthetical) |
9 Months Ended |
|---|---|
|
Sep. 30, 2021
USD ($)
| |
| Loans Payable [Member] | |
| Debt Instrument [Line Items] | |
| Interest rate per annum | 2.37% |
| Debt principle and interest payment | $ 1,448 |
| Maturity date | 2025-12 |
| Loans Payable One [Member] | |
| Debt Instrument [Line Items] | |
| Interest rate per annum | 249.00% |
| Debt principle and interest payment | $ 1,505 |
| Maturity date | 2025-07 |
Schedule of paycheck protection plan loan balances (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Debt Instrument [Line Items] | ||
| Less: Current maturities | $ (15,099) | $ (15,566) |
| Long-term portion of paycheck protection plan loans | 50,717 | 66,246 |
| Paycheck Protection Program [Member] | ||
| Debt Instrument [Line Items] | ||
| Total | 77,066 | 9,449 |
| Less: Current maturities | (6,658) | |
| Long-term portion of paycheck protection plan loans | 77,066 | 2,791 |
| Bank Of Southern [Member] | Paycheck Protection Program [Member] | ||
| Debt Instrument [Line Items] | ||
| Total | 77,066 | |
| Paycheck Protection Program [Member] | Bank Of Arizona [Member] | ||
| Debt Instrument [Line Items] | ||
| Total | $ 9,449 |
Schedule of paycheck protection plan loan balances (Details)) (Parenthetical) |
9 Months Ended |
|---|---|
|
Sep. 30, 2021
USD ($)
| |
| Second Paycheck Protection Program [Member] | |
| Debt Instrument [Line Items] | |
| Debt Instrument, Maturity Date | Jan. 16, 2026 |
| Debt Instrument, Increase, Accrued Interest | $ 473 |
| Paycheck Protection Program [Member] | |
| Debt Instrument [Line Items] | |
| Debt Instrument, Maturity Date | May 15, 2020 |
| Debt Instrument, Periodic Payment | $ 560 |
Schedule of EIDL loan balances (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Defined Benefit Plan Disclosure [Line Items] | ||
| Less: Current maturities* | $ (15,099) | $ (15,566) |
| Long-term portion of economic injury disaster loan | 50,717 | 66,246 |
| Waste Consolidators, Inc.[Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| July 9, 2020, WCI received an additional Economic Injury Disaster Loan, including accrued interest of $5,513 and $2,502 as of September 30, 2021 and December 31, 2020, respectively. The note 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 2021, and matures July 2050. | 156,862 | 152,602 |
| Less: Current maturities* | 0 | 0 |
| Long-term portion of economic injury disaster loan | $ 156,862 | $ 152,602 |
Schedule of EIDL loan balances (Details) (Parenthetical) - USD ($) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Defined Benefit Plan Disclosure [Line Items] | ||
| Current maturity | $ 15,099 | $ 15,566 |
| Waste Consolidators, Inc.[Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Debt Instrument, Increase, Accrued Interest | $ 5,513 | 2,502 |
| Interest rate | 375.00% | |
| Installment payment | $ 731 | |
| Maturity date | 2050-07 | |
| Current maturity | $ 0 | $ 0 |
Paycheck Protection Program Loans and Economic Injury Disaster Loans (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Jul. 09, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Feb. 17, 2021 |
Dec. 31, 2020 |
Nov. 30, 2020 |
|
| Short-term Debt [Line Items] | ||||||||
| Interest Expense | $ 16,714 | $ 8,513 | $ 43,899 | $ 22,697 | ||||
| Debt Instrument, Payment Terms | July 2021, and matures July 2050 | |||||||
| Economic Injury Disaster Loan [Member] | ||||||||
| Short-term Debt [Line Items] | ||||||||
| Proceeds from Loans | $ 150,000 | |||||||
| Debt Instrument, Interest Rate, Stated Percentage | 375.00% | |||||||
| Debt Instrument, Annual Principal Payment | $ 731 | |||||||
| Waste Consolidators, Inc.[Member] | ||||||||
| Short-term Debt [Line Items] | ||||||||
| Loan forgive | $ 10,000 | |||||||
| EIDL Advance | $ 10,000 | |||||||
| Debt forgiveness | 10,000 | |||||||
| Republic Bank of Arizona [Member] | ||||||||
| Short-term Debt [Line Items] | ||||||||
| Loan forgive | $ 76,500 | |||||||
| Bank of Southern California [Member] | ||||||||
| Short-term Debt [Line Items] | ||||||||
| Loan forgive | $ 383,342 | |||||||
| Second Paycheck Protection Program Loan [Member] | ||||||||
| Short-term Debt [Line Items] | ||||||||
| Loan forgive | $ 76,593 | |||||||
| Paycheck Protection Program [Member] | ||||||||
| Short-term Debt [Line Items] | ||||||||
| Interest Expense | 194 | 1,048 | 385 | 1,798 | ||||
| Economic Injury Disaster Loan Advance [Member] | ||||||||
| Short-term Debt [Line Items] | ||||||||
| Interest Expense | $ 1,449 | $ 1,172 | $ 4,260 | $ 1,172 | ||||
Schedule of outstanding liability (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accrued salaries and benefits | $ 873,013 | $ 848,796 |
| Accrued retirement and other benefits | 516,039 | 550,191 |
| Offset by shareholder advance | (261,653) | (261,653) |
| Total Outstanding Liabilities | $ 1,127,399 | $ 1,137,334 |
Accrued salary, accrued retirement, and incentive fee - related party (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 09, 1998 |
|
| Market Capitalization | $ 260,000 | ||||
| Market capitalization rate | 0.50% | 0.50% | |||
| Increase in stock price | $ 1 | ||||
| Incentive fee expense | $ 0 | $ 0 | $ 0 | $ 0 | |
| Maximum [Member] | |||||
| Market capitalization rate | (4.00%) | (4.00%) | |||
| Increase in stock price | $ 8 | ||||
Related party transactions (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |||||
|---|---|---|---|---|---|---|---|
Jun. 17, 2021 |
Mar. 12, 2021 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 15, 2020 |
|
| Related Party Transaction [Line Items] | |||||||
| Loan received from related party | $ 204,006 | ||||||
| Interest expense from related party | $ 4,006 | $ 0 | $ 6,442 | $ 0 | |||
| Waste Consolidators, Inc.[Member] | |||||||
| Related Party Transaction [Line Items] | |||||||
| Short term loan, reflected as related party payable | $ 20,000 | ||||||
| Mentor Capital Inc CEO [Member] | |||||||
| Related Party Transaction [Line Items] | |||||||
| Loan received from related party | $ 100,000 | $ 100,000 | |||||
| Interest rate | 7.80% | ||||||
Commitments and contingencies (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Aug. 27, 2021 |
Sep. 06, 2018 |
Mar. 17, 2017 |
Jun. 30, 2021 |
Sep. 30, 2021 |
Jun. 30, 2020 |
|
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
| Loss Contingency, Lawsuit Filing Date | May 28, 2019 | |||||
| Description on trial dispute resolution | 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. | |||||
| G Farma Labs Limited [Member] | ||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
| Business Acquisition, Equity Interest Issued or Issuable, Description | 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. | |||||
| G Farma Labs Limited [Member] | ||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
| Sale Leaseback Transaction, Net Book Value | $ 622,670 | |||||
| Loss Contingency, Receivable, Proceeds | $ 249,481 | |||||
| Notes Purchase Agreement [Member] | G Farma Labs Limited [Member] | ||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
| Purchase of secured promissory notes | $ 500,000 | |||||
| Increased aggregate principal face amount | 1,100,000 | |||||
| Notes Purchase Agreement [Member] | G Farma Labs Limited [Member] | Secured Promissory Notes [Member] | ||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
| Monthly payments | 10,239 | |||||
| Ballon payments on notes | $ 894,172 | |||||
| Equity Purchase and Issuance Agreement [Member] | G Farma Labs Limited [Member] | ||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
| Business Acquisition, Percentage of Voting Interests Acquired | 3.75% | |||||
| Settlement Agreement And Mutual Release [Member] | G Farma [Member] | ||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
| Contingent claim description | The Settlement Agreement requires the G Farma Entities to pay the Company an aggregate of $500,000 plus interest, payable monthly as follows: (i) $500 per month for 12 months beginning on September 5, 2021, (ii) $1,000 per month for 12 months beginning September 5, 2022, (iii) $2,000 per month for 12 months beginning September 5, 2023, and (iv) increasing by an additional $1,000 per month on each succeeding September 5 thereafter, until the settlement amount and accrued unpaid interest is paid in full. Interest on the unpaid balance shall initially accrue at the rate of 4.25%, commencing February 25, 2021, and shall be adjusted on February 25th of each year to equal the Prime Rate as published in the Wall Street Journal plus 1%. | |||||
| Liability for Unpaid Claims and Claims Adjustment Expense, Net | $ 500,000 | |||||
| Additional outstanding claim | $ 2,000,000 |
Schedule of segment information (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
|
| Segment Reporting Information [Line Items] | |||||
| Net revenue | $ 1,492,624 | $ 1,231,530 | $ 4,185,887 | $ 3,539,860 | |
| Operating income (loss) | 86,327 | (414,979) | (385,706) | (856,578) | |
| Interest income | 16,269 | 24,968 | 49,003 | 65,504 | |
| Interest expense | 16,714 | 8,513 | 43,899 | 22,697 | |
| Depreciation and amortization | 34,305 | 14,869 | |||
| Interest expense | (16,714) | (8,513) | (43,899) | (22,697) | |
| Total assets | 4,548,633 | 4,548,633 | $ 4,441,095 | ||
| Cannabis and Medical Marijuana Segment [Member] | |||||
| Segment Reporting Information [Line Items] | |||||
| Net revenue | 9,972 | 11,730 | 31,176 | 36,297 | |
| Operating income (loss) | 6,426 | 4,516 | 20,876 | (16,624) | |
| Interest income | 8 | ||||
| Interest expense | |||||
| Property additions | |||||
| Depreciation and amortization | |||||
| Interest expense | |||||
| Total assets | 396,907 | 2,095,569 | 396,907 | 2,095,569 | |
| Facility Operations Related [Member] | |||||
| Segment Reporting Information [Line Items] | |||||
| Net revenue | 1,482,649 | 1,219,800 | 4,154,711 | 3,503,563 | |
| Operating income (loss) | 196,565 | (230,490) | 11,062 | (174,878) | |
| Interest income | |||||
| Interest expense | 9,381 | 9,517 | 27,421 | 25,829 | |
| Property additions | 92,013 | 6,490 | 107,290 | 23,231 | |
| Depreciation and amortization | 13,570 | 3,892 | 29,923 | 10,190 | |
| Interest expense | (9,381) | (9,517) | (27,421) | (25,829) | |
| Total assets | 1,997,786 | 1,955,675 | 1,997,786 | 1,955,675 | |
| Corporate and Eliminations | |||||
| Segment Reporting Information [Line Items] | |||||
| Net revenue | |||||
| Operating income (loss) | (116,664) | (189,005) | (417,644) | (665,076) | |
| Interest income | 16,269 | 24,960 | 49,003 | 65,504 | |
| Interest expense | 7,333 | 1,004 | 23,032 | 3,132 | |
| Property additions | 1,264 | 2,581 | 1,264 | 7,593 | |
| Depreciation and amortization | 1,461 | 2,038 | 4,382 | 4,679 | |
| Interest expense | (7,333) | (1,004) | (23,032) | (3,132) | |
| Total assets | 2,153,940 | 702,561 | 2,153,940 | 702,561 | |
| Consolidated | |||||
| Segment Reporting Information [Line Items] | |||||
| Net revenue | 1,492,624 | 1,231,530 | 4,185,887 | 3,539,860 | |
| Operating income (loss) | 86,327 | (414,979) | (385,706) | (856,578) | |
| Interest income | 16,269 | 24,968 | 49,003 | 65,504 | |
| Interest expense | 16,714 | 8,513 | 4,389 | 22,697 | |
| Property additions | 93,277 | 9,071 | 108,554 | 30,824 | |
| Depreciation and amortization | 15,031 | 5,930 | 34,305 | 14,869 | |
| Interest expense | (16,714) | (8,513) | (4,389) | (22,697) | |
| Total assets | $ 4,548,633 | $ 4,753,805 | $ 4,548,633 | $ 4,753,805 | |
Schedule of reconciliation of revenue from segments to consolidated (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Segment Reporting [Abstract] | ||||
| Operating loss | $ 86,327 | $ (414,979) | $ (385,706) | $ (856,578) |
| Gain (loss) on investments | (2,427) | (2,758) | (9,001) | (8,676) |
| Interest income | 16,269 | 24,968 | 49,003 | 65,504 |
| Interest expense | (16,714) | (8,513) | (43,899) | (22,697) |
| Gain on equipment disposals | (671) | 3,372 | 761 | 3,372 |
| EIDL Advance | 10,000 | |||
| Other income | 4,032 | 7,994 | 15,429 | 24,352 |
| Income (loss) before provision for income taxes | $ 86,816 | $ (389,916) | $ (373,413) | $ (784,723) |
Subsequent events (Details Narrative) - USD ($) |
12 Months Ended | ||||
|---|---|---|---|---|---|
Oct. 26, 2021 |
Oct. 26, 2021 |
Oct. 06, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Subsequent Event [Line Items] | |||||
| Litigation Settlement, Expense | $ 181,529 | $ 146,195 | |||
| Subsequent Event [Member] | P P P Loan [Member] | |||||
| Subsequent Event [Line Items] | |||||
| Debt forgiveness | $ 76,593 | ||||
| Debt Instrument, Increase, Accrued Interest | $ 528 | ||||
| Subsequent Event [Member] | Legal Recovery Purchase Agreement [Member] | |||||
| Subsequent Event [Line Items] | |||||
| Litigation Settlement, Expense | $ 9,998 | ||||
| Legal Fees | $ 191,527 | ||||