Annual report pursuant to Section 13 and 15(d)

Note 10 - Finance leases receivable

v3.19.1
Note 10 - Finance leases receivable
12 Months Ended
Dec. 31, 2018
Notes  
Note 10 - Finance leases receivable

Note 10 – Finance leases receivable

 

Mentor Partner I

 

Partner I entered into a Master Equipment Lease Agreement with G FarmaLabs Limited, G FarmabLabs DHS, LLC, and GFBrands, Inc. (the “G Farma Entities”) dated January 16, 2018, and amended March 7, April 4, June 20 and September 7, 2018. Partner I acquired and delivered manufacturing equipment as selected by G Farma Entities under sales-type finance leases. Partner I recorded equipment sales revenue of $1,157,166 for the year ended December 31, 2018. At December 31, 2018, all Partner I leased equipment under finance leases receivable is located in California.

 

Mentor Partner II

 

Partner II entered into a Master Equipment Lease Agreement with Pueblo West, dated February 11, 2018 and amended November 28, 2018. Partner II acquired and delivered manufacturing equipment as selected by Pueblo West under sales-type finance leases. Partner II recorded equipment sales revenue of $460,225 for the year ended December 31, 2018. At December 31, 2018, all Partner II leased equipment under finance leases receivable is located in Colorado.

 

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 December 31, 2018.

 

The Company issues a payment schedule upon inception of the lease. Revenue is recognized at the time equipment is delivered. Principal on lease payments received prior to delivery of equipment is recorded as a decrease in the finance lease receivable and interest received in advance is recorded as a liability under deferred revenue.

 

Net investment in finance leases

 

The net investment included in finance leases at December 31, 2018 are as follows:

 

 

 

Partner I

 

Partner II

 

Total

Gross minimum lease payments receivable

$

1,516,985

$

581,000

$

2,097,985

Accrued interest

 

5,312

 

2,752

 

8,064

Less: unearned interest

 

(410,837)

 

(157,931)

 

(568,768)

Finance leases receivable

 

1,111,460

 

425,821

 

1,537,281

Less current portion

 

(127,644)

 

(48,083)

 

(175,727)

Long term portion

$

983,816

$

377,738

$

1,361,554

 

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

 

At December 31, 2018, minimum future payments receivable under finance leases were as follows:

 

12 months ending

 

 

December 31,

 

Amount

2019

$

175,727

2020

 

193,821

2021

 

215,450

2022

 

239,493

2023

 

266,219

Thereafter

 

446,571

 

$

1,537,281