Note 9 - Contractual interests in legal recoveries

3 Months Ended

Mar. 31, 2021

Notes

Note 9 - 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 March 31, 2021 and December 31, 2020, Mentor invested an additional $81,529 and $81,529, respectively, of capital in Electrum for payment of legal retainers and fees in consideration for an additional eight percent (8%) of the Recovery. At March 31, 2021 and December 31, 2020, the Recovery Agreement investment is reported in the condensed consolidated balance sheets at our 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 March 31, 2019 and December 31, 2020.

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 March 31, 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 the date hereof until the payment date if the Recovery occurs prior to the payment date, and (B) $833.34 for each full month from the date hereof until the payment date. The payment date is the earlier of November 1, 2021, and the final resolution of the Litigation. This investment is included at its $100,000 cost as part of the Contractual interests in legal recoveries on the condensed consolidated balance sheets at March 31, 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 March 31, 2021 and December 31, 2020 is summarized as follows:

		March 31, 2021		December 31, 2020
October 30, 2018 Recovery Purchase Agreement	$	181,529	$	181,529
October 31, 2018 secured Capital Agreement		100,000		100,000
January 28, 2019 secured Capital Agreement		100,000		100,000
Total Invested	$	381,529	$	381,529

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		-		-		346,195			5,669		204,028
Total gains or losses
Included in earnings (or changes in net assets)		(10,292)		-		-			(4,669)		-
Purchases, issuances, sales, and settlements
Purchases		83,536		-		50,717			-		-
Issuances		-		-		-			-		-
Sales		(38,418)		-		-			-		-
Settlements		-		-		(15,383)			-		-
Balance at December 31, 2020	$	34,826	$	-	$	381,529		$	1,000	$	204,028
Total gains or losses
Included in earnings (or changes in net assets)		4,850		-		-			-		-
Purchases, issuances, sales, and settlements
Purchases		-		-		-			-		-
Issuances		-		-		-			-		-
Sales		-		-		-			-		-
Settlements		-		-		-			-		-
Balance at March 31, 2021	$	39,676	$	-	$	381,529		$	1,000	$	204,028

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 March 31, 2021 consists of the following:

Type		Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses		Fair Values
NYSE listed company stock	$	10,080	$	(1,167)	$	-	$	8,913
NASDAQ listed company stock		35,341		(4,578)		-		30,763
	$	45,421	$	(5,745)	$	-	$	39,676

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 March 31,
		2021		2020
Net gains and losses recognized during the period on equity securities	$	4,849	$	(5,037)
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	$	4,849	$	(5,037)