Investment in account receivable
|6 Months Ended|
Jun. 30, 2022
|Investment in account receivable||
Note 3 – 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 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 payment or the full 2021 installment payment. Based on management’s collection estimates, we recorded an impairment of $116,430 at December 31, 2021.
On February 16, 2022, subject to effecting certain agreed upon payment changes, the parties agreed to modify the terms of the installment payments. The Company will retain annual payments of $100,000 for the remaining four years of the agreement and will also receive an additional $100 per month through the end of the agreement term. The modification was accounted for using the same original discount rate, and a loss of $41,930 was recognized in the quarter ended March 31, 2022.
The investment in account receivable consists of the following at June 30, 2022 and December 31, 2021:
Schedule of receivables with imputed interest
For the three months ended June 30, 2022 and 2021, $12,369 and $15,228 of discount amortization is included in interest income, respectively. For the six months ended June 30, 2022 and 2021, $25,838 and $30,456 of discount amortization is included in interest income, respectively.
The entire disclosure for financing receivable.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef
No definition available.