Note 8 – Finance leases receivable

Mentor Partner I

Partner I entered into a Master Equipment Lease Agreement with G FarmaLabs Limited and G FarmaLabs DHS, LLC (the “G Farma Lease Entities”) with guarantees by GFBrands, Inc., formerly known as G FarmaBrands, Inc, Ata Gonzalez and Nicole Gonzalez (collectively, the “G Farma Lease Guarantors”) dated January 16, 2018, and amended March 7, April 4, June 20, and September 7, 2018, and March 4, 2019. Partner I acquired and delivered manufacturing equipment as selected by G Farma Lease Entities under sales-type finance leases. Partner I did not report equipment sales revenue or lease revenue for the years ended December 31, 2021 or 2020.

As discussed in Notes 1 and 7, on February 22, 2019, the City of Corona Building Department closed access to G Farma’s corporate location; the Company was not informed by G Farma of this incident until March 14, 2019. On April 24, 2019, the Company was informed that certain G Farma assets at its corporate location, including equipment valued at approximately $427,804 leased to the G Farma Lease Entities under the Master Equipment Lease Agreement, was impounded by the Corona Police. This event severely impacted G Farma’s ability to pay amounts due the Company in the future and the G Farma lease receivable was put on non-accrual status effective April 1, 2019. In 2019 an impairment of $783,880 was recorded. Additional bad debt expense of $0 and $19,519, recognized for the years ended December 31, 2021 and 2020, respectively, is included in selling, general and administrative expenses in the consolidated income statement.

Mentor Capital, Inc.

Notes to Consolidated Financial Statements

December 31, 2021 and 2020

In 2020, the Company repossessed leased equipment under G Farma’s control with a cost of $622,569 and sold it to the highest offerors for net proceeds of $348,734, after shipping and delivery costs. Net sales proceeds were applied against the finance lease receivable.

On August 27, 2021, the Company and Mentor Partner I entered into a Settlement Agreement and Mutual Release with the G Farma Entities to resolve and settle all outstanding claims as further discussed in Notes 1,7 and 19. Net finance leases receivable from G Farma remain fully impaired at December 31, 2021 and 2020. Payment received under this settlement will first be applied against the notes receivable described in Note 7 and if any additional amounts are recovered, will then be applied against the finance leases receivable.

Net finance leases receivable, non-performing, consists of the following at December 31, 2021 and 2020:

 Schedule of net finance leases receivable, non-performing

Mentor Partner II

Partner II entered into a Master Equipment Lease Agreement with Pueblo West, dated February 11, 2018, amended November 28, 2018 and March 12, 2019. Partner II acquired and delivered manufacturing equipment as selected by Pueblo West under sales-type finance leases. At December 31, 2021, all Partner II leased equipment under finance leases receivable is located in Colorado.

Performing net finance leases receivable consists of the following at December 31, 2021 and 2020:

 Schedule of net finance leases receivable, performing

Finance lease revenue recognized on Partner I finance leases for the years ended December 31, 2021 and 2020, was $0 and $0, respectively.

Finance lease revenue recognized on Partner II finance leases for the years ended December 31, 2021 and 2020 was $40,764 and $47,707, respectively.

Mentor Capital, Inc.

Notes to Consolidated Financial Statements

December 31, 2021 and 2020

At December 31, 2021, minimum future payments receivable for performing finance leases receivable were as follows:

 Schedule of minimum future payments receivable for performing finance leases receivable