Note 5 - Investment in account receivable
|6 Months Ended|
Jun. 30, 2017
|Note 5 - Investment in account receivable||
Note 5 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 installment payments of $117,000 per year for 11 years totaling $1,287,000 in exchange for 757,059 shares of Mentor Common Stock obtained through exercise of Series D warrants at $1.60 per share. The Counterparty to the exchange agreement could have elected to partially rescind the exchange at any time after June 1, 2017 and ending on the earlier of (i) December 1, 2017, and (ii) two weeks following the date on which the Counterparty receives notice from Mentor that Mentors warrant holders have been notified that they have approximately 30 days left to exercise Mentor warrants. The partial rescission election terms require return of all or part of 313,820 of the Mentor shares exchanged for all or part of the installment payments due in or around January of each of 2018, 2019, 2020 and 2021. In May 2017, the 313,820 shares were deposited into a brokerage account resulting in termination of the partial rescission option.
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.
The April 10, 2015 investment in account receivable is supported by an exchange agreement and consisted of the following at June 30, 2017 and December 31, 2016:
* The 2016 installment receivable was exchanged with a third party as payment for service on December 13, 2016 and therefore there was no current balance due at December 31, 2016.
For the three months ended June 30, 2017 and 2016, $22,591 and $31,754 of discount amortization is included in interest income, respectively. For the six months ended June 30, 2017 and 2016, $46,193 and $56,212 of discount amortization is included in interest income, respectively.
The entire disclosure for financing receivables. Examples of financing receivables include, but are not limited to, loans, trade accounts receivables, notes receivable, credit cards, and receivables relating to a lessor's right(s) to payment(s) from a lease other than an operating lease that is recognized as assets.
Reference 1: http://www.xbrl.org/2003/role/presentationRef