Note 6 - Investment in account receivable

12 Months Ended

Dec. 31, 2017

Notes

Note 6 - Investment in account receivable

Note 6 – 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 installment payments of $117,000 per year for 11 years totaling $1,287,000 in exchange for 757,059 shares of Mentor Common Stock obtained through exercise of Series D warrants at $1.60 per share. The Counterparty to the exchange agreement could have elected to partially rescind the exchange at any time after June 1, 2017 and ending on the earlier of (i) December 1, 2017, and (ii) two weeks following the date on which the Counterparty receives notice from Mentor that Mentor’s warrant holders have been notified that they have approximately 30 days left to exercise Mentor warrants. The partial rescission election terms required return of all or part of 313,820 of the Mentor shares exchanged for all or part of the installment payments due in or around January of each of 2018, 2019, 2020 and 2021. In May 2017, the 313,820 shares were deposited into a brokerage account resulting in termination of the partial rescission option.

The Company valued the transaction based on the market value of Company common shares exchanged in the transaction, resulting in a 17.87% discount from the face value of the account receivable. The discount is being amortized monthly to interest over the 11 year term of the agreement.

The investment in account receivable is supported by an exchange agreement and consisted of the following at December 31, 2017 and 2016:

		2017		2016
Face value	$	1,053,000	$	1,053,000
Unamortized discount		(479,638)		(571,013)
Net balance		573,362		481,987
Current portion *		(117,000)		-
Long term portion	$	456,362	$	481,987

* The 2016 installment receivable was exchanged with a third party as payment for service on December 13, 2016 and therefore there is no current balance due at December 31, 2016.

For the years ended December 31, 2017 and 2016, $91,375 and $103,413 of discount amortization is included in interest income.