Note 23 - Commitments and Contingencies |
12 Months Ended |
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Dec. 31, 2017 | |
Notes | |
Note 23 - Commitments and Contingencies |
Note 23 Commitments and contingencies
On December 29, 2016, Mentor obtained a judgment in the amount of $1,921,535 against Bhang Corporation and its predecessor in interest, Bhang Chocolate Company, Inc., in the United States District Court for the Northern District of California related to an action filed by Mentor on August 11, 2014 seeking rescission of the February 28, 2014 co-operative funding agreement with Bhang Corporation (Bhang Agreement) and return of the $1,500,000 paid by the Company to Bhang. The judgment accrued interest at the rate of 10% from December 29, 2016 until November 20, 2017, when the parties agreed to stipulated payment terms. Collections of $55,585 received in the quarter ended September 30, 2017 were applied against accrued interest and, in addition, the associated reserve pending collections was reduced and interest income of $55,585 was recognized during the quarter.
Subsequent to year-end, on January 23, 2018, the Company received a net payment of $1,758,949 in satisfaction of the judgement and 117,000 shares of Mentor common stock, originally sold to two Bhang founders, were returned to Mentor in exchange for a payment of $286,719, which was offset from the accrued judgment of $2,045,668, see Note 5 and 26. The Company also collected and recognized $55,585 of interest income in the quarter ended September 30, 2017. In the fourth quarter of 2017, at the time the parties agreed to stipulated payment terms, $540,521 of interest income was recognized on the judgement. At December 31, 2016, the likelihood of collecting interest was not known, therefore accrued interest receivable from Bhang was fully reserved at December 31, 2016, pending the outcome of collection efforts.
Mentor accounted for the return of the shares from the Bhang owners as a capital transaction subsequent to year-end when the physical shares were received by Mentor and cancelled through our stock transfer agent, see Note 26.
In July 2015, Mentor was served with a complaint in an action in the United States District Court for the District of Utah initiated by the wife and daughter of Bhangs corporate counsel related to 75,000 shares of Mentors Common Stock purchased from Bhang Corporations CEO in a secondary sale. The 75,000 shares at issue were returned to Mentor as a part of the Bhang settlement above. On December 21, 2017, the plaintiffs filed a motion to dismiss their complaint with prejudice which was granted on January 25, 2018. Within the same order, the Court vacated an earlier order dated September 25, 2017, related to issuance of Mentors stock. On February 2, 2018, Mentors third-party claims, related to plaintiffs now-dismissed complaint, were dismissed with prejudice, see Note 26. |