Annual report pursuant to Section 13 and 15(d)

Note 4 - Investment in account receivable

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Note 4 - Investment in account receivable
12 Months Ended
Dec. 31, 2020
Notes  
Note 4 - 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 or the full 2021 installment. Based on management’s collection estimates, we recorded an impairment of $139,148 on the investment in account receivable at December 31, 2020 which is reflected in other income on the consolidated income statement.

 

The April 10, 2015 investment in account receivable is supported by an exchange agreement and consisted of the following at December 31, 2020 and 2019:

 

 

 

2020

 

2019

Face value

$

702,000

$

706,000

Impairment

 

(139,148)

 

-

Unamortized discount

 

(232,794)

 

(320,488)

Net balance

 

330,058

 

385,512

Current portion

 

(26,162)

 

(4,000)

Long term portion

$

303,896

$

381,512

 

For the years ended December 31, 2020 and 2019, $87,694 and $79,994 of discount amortization is included in interest income.