Investment in account receivable

3 Months Ended

Mar. 31, 2024

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 757,059 shares of Mentor Common Stock obtained through the 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 recorded an investment loss of ($139,148) on the investment in account receivable at December 31, 2020. In 2021, the Company reevaluated estimated collections and recorded an investment gain of $22,718. Subsequently, on February 15, 2022, the terms of the investment were modified, resulting in an additional loss of ($41,930). The loss of ($41,930) and gain of $22,718 were reflected in other income on the consolidated income statement for the years ended December 31, 2022 and 2021, respectively.

On January 10, 2023, the Company received the 2023 annual installment payment of $117,000. Three additional $117,000 annual installment payments are due in early 2024, 2025, and 2026. At March 31, 2024, the Company had yet to receive the 2024 payment installment due in or around January 2024. The Company has retained its prior impairment reserves and previously recorded losses on investment due to a history of uncertain payments.

Note 4 – Investment in account receivable (continued)

The investment in account receivable consists of the following at March 31, 2024 and December 31, 2023:

	March 31, 2024			December 31, 2023
Face value*	$	285,100		$	285,400
Unamortized discount		(41,800	)		(46,551	)
Net balance		243,300			238,849
Current portion		-			-
Long term portion	$	243,300		$	238,849

* On January 10, 2023, the Company received the 2023 annual installment payment of $117,000. The Company applied the $117,000 to the face value of its investment in account receivable. At March 31, 2024, the Company had yet to receive the 2024 payment installment due in or around January 2024. Additionally, the Company reduced the face value of its investment in account receivable by an additional $300 for the three months ended March 31, 2024.

For the three months ended March 31, 2024 and 2023, $4,751 and $6,456 of discount amortization is included in interest income, respectively.

Subsequent to quarter end, on June 11, 2024 our investment in account receivable was fully impaired. The Company’s recognition of an impairment loss due to the uncertainty of collection does not diminish its contractual rights to collect the full amounts due pursuant to the contract. The Company intends to continue to vigorously pursue the payment of the amounts owed by available legal means. See Note 18.