Note 2 - Summary of significant accounting policies: Credit quality of notes receivable and finance leases receivable and credit loss reserve (Policies)
|12 Months Ended|
Dec. 31, 2019
|Credit quality of notes receivable and finance leases receivable and credit loss reserve||
Credit quality of notes receivable and finance leases receivable and credit loss reserve
As our notes receivable and finance leases receivable are limited in number, our management is able to analyze estimated credit loss reserves based on a detailed analysis of each receivable as opposed to using portfolio-based metrics. Our management does not use a system of assigning internal risk ratings to each of our receivables. Rather, each note receivable and finance lease receivable are analyzed quarterly and categorized as either performing or non-performing based on certain factors including, but not limited to, financial results, satisfying scheduled payments and compliance with financial covenants. A note receivable or finance lease receivable will be categorized as non-performing when a borrower experiences financial difficulty and has failed to make scheduled payments. As part of the monitoring process we may physically inspect the collateral or a borrowers facility and meet with a borrowers management to better understand such borrowers financial performance and its future plans on an as-needed basis.
As described in Note 1, on March 14, 2019, the Company was notified by G Farma that the City of Corona Building Department closed access to G Farmas corporate location and posted a notice preventing entry to the facility. The Building Department notice stated that G Farma had modified electric and gas lines. On April 24, 2019, the Company learned that certain G Farma assets at their corporate location, including equipment leased to G Farma by Mentor Partner I valued at approximately $427,804, had been impounded by the Corona Police. This event significantly impacted G Farmas financial position and its ability to make payments under the finance lease receivable. G Farma has not made a lease payment since February 19, 2019 and had refused to return the remaining $792,425 of leased equipment. In addition, equipment valued at $66,374, being stored by a distributor at G Farmas request, was returned by Partner I to the distributor for $15,000 less $5,000 for storage fees.
On May 28, 2019, the Company and Mentor Partner I, LLC filed a complaint against the G Farma Entities and three guarantors to the G Farma agreements, described in Notes 1, 8, 9, and 11, in the California Superior Court in and for the County of Marin. The Company is primarily seeking monetary damages for breach of the G Farma agreements including promissory notes, leases, and other agreements, as well as actions for an injunction to recover leased property, to recover collateral under a security agreement, and to collect from guarantors on the agreements. Mentor intends to vigorously pursue this matter; however, collection is uncertain at this time, see Note 21. Subsequent to year-end, on January 22, 2020, the Court granted the Companys motion for a writ of possession and preliminary injunction prohibiting defendants from retaining control of or selling leased equipment. On January 31, 2020, all remaining equipment leased by Mentor Partner I to G Farma, which was not impounded by the Corona Police, was repossessed by the Company and moved to storage under the Companys control and, on March 5, 2020, a portion of the recovered equipment was sold, See Note 25.
Disclosure of accounting policy for emission credits or allowances. Such accounting policy has generally been based on an inventory or intangible asset model.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef