Note 10 – Finance leases receivable

Mentor Partner I

On January 16, 2018, Partner I entered into a Master Equipment Lease Agreement with G FarmaLabs Limited and GFarma Brands, Inc. (the “GFarma Entities”) dated January 16, 2018. Partner I acquired and delivered manufacturing equipment as determined by GFarma Entities under sales-type finance leases. The Company recorded equipment sales revenue of $317,680 for the three months ended June 30, 2018 and $470,084 for the six months ended June 30, 2018. At June 30, 2018, all leased equipment under the finance leases receivable is located in California.

The net investment included in finance leases at June 30, 2018 are as follows:

There were no finance leases receivable at December 31, 2017.

At June 30, 2018, minimum future payments receivable under finance leases were as follows:

Mentor Partner II

On February 11, 2018, Partner II entered into a Master Equipment Lease Agreement with Pueblo West, a Colorado limited liability company (“Pueblo West”). No equipment had been delivered to Pueblo West as of June 30, 2018.

We review the finance leases receivables by individual account to determine expected collectability. The allowance for credit losses is an estimate of the losses inherent in our finance receivables taking into consideration past loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of underlying collateral and current economic conditions. No allowance is recorded at June 30, 2018.

The Company records prepayments on leases as a liability under deferred revenue.