Quarterly report pursuant to Section 13 or 15(d)

Convertible note receivable

Convertible note receivable

3 Months Ended

Mar. 31, 2017

Convertible note receivable Text Block:

Note 7 – Convertible notes receivable

Convertible notes receivable consists of the following:

		March 31, 2017		December 31, 2016
March 12, 2014 Electrum Partners, LLC convertible note receivable including accrued interest of $6,874 and $6,874, respectively. The note bears interest at 10% per annum, compounded until maturity or until it is converted to shares of equity in Electrum. From October 12, 2015 to March 12, 2017 interest only payments are required; and from March 12, 2017 through March 12, 2022 payments of principal and interest in the amount of $2,289.83 are required.* Mentor has the option to convert the note plus any accrued interest or fees into shares of equity in Electrum at any time prior to its maturity. **	$	106,874	$	106,874

NeuCourt, Inc. convertible note receivable including accrued interest of $489 and $181 at March 31, 2017 and December 31, 2016, respectively. The note bears interest at 5% per annum and matures November 8, 2018. Principal and accrued interest are due at maturity. Principal and unpaid interest may be converted into shares of a to-be-created series of Preferred Stock of NeuCourt (i) on closing of a future financing round of at least $750,000, (ii) on the election of NeuCourt on maturity of the Note, or (iii) on election of Mentor following NeuCourt’s election to prepay the Note. ***		25,489		25,181
Total convertible notes receivable		132,363		132,055
Less current portion		-		(12,951)

Long term portion	$	132,363	$	119,104

* Subsequent to March 31, 2017, an addendum to the convertible note provides for continued monthly interest payments of $898 until such time as the Company may request commencement of principal and interest of $2,290 per month. The addendum also provided for a second promissory note from Electrum in a principal face amount of $100,000 with an approximate 0.5% equity conversion option, see Note 21.

** The conversion price is the Electrum Partners, LLC note balance plus any accrued interest at conversion date. The conversion percentage is [conversion price divided by (conversion price plus $1.9 million)], currently approximately 5%.

*** The Conversion Price for the Note is the lower of (i) 75% of the price paid in the Next Equity Financing, or the price obtained by dividing a $3,000,000 valuation cap by the fully diluted number of shares. The number of Conversion Shares issued on conversion shall be the quotient obtained by dividing the outstanding principal and unpaid accrued interest on a Note to be converted on the date of conversion by the Conversion Price (the “Total Number of Shares”). The Total Number of Shares shall consist of Preferred Stock and Common Stock as follows: (i) That number of shares of Preferred Stock obtained by dividing (a) the principal amount of each Note and all accrued and unpaid interest thereunder by (b) the price per share paid by other purchasers of Preferred Stock in the Next Equity Financing (such number of shares, the “Number of Preferred Stock”) and (ii) that number of shares of Common Stock equal to the Total Number of Shares minus the Number of Preferred Stock. Using the valuation cap of $3,000,000, the Note would today convert into 128,583 Conversion Shares. In the event of a Corporate Transaction prior to repayment or conversion of the Note, the Company shall receive back two times its investment, plus all accrued unpaid interest.