Note 8 - Notes purchase agreement receivable

Prior to 2024, G FarmaLabs Limited (“G Farma”) had defaulted on a certain Notes Purchase Agreement associated with certain underlying secured promissory notes with the Company, resulting in an eventual final $1,039,501 recordation of an expected credit loss and impairment by the Company. Under ASC 326, “Current Expected Credit Loss” the Company’s impairment of the Notes Purchase Agreement involved estimating losses based on historical data, current conditions, and reasonable forecasts. The Company’s investment in accounts receivable was evaluated for impairment because, collectively, there were risk characteristics that created an allowance for expected credit losses on its collection of future Notes Purchase Agreement payments. On July 11, 2023, a $2,539,597 Judgment was entered against the G Farma and other related G Farma entities and guarantors (collectively, the “G Farma Settlors”) in favor of the Company’s collection of the Company’s fully impaired Notes Purchase Agreement receivable and Partner I’s collection on a certain fully impaired equipment finance lease receivable described at Note 9. In addition to the Judgment, interest of $628,985 is due at December 31, 2025. However, collection is unlikely, and since its inception, the Judgment and associated interest have remained fully reserved. See “Credit quality of notes receivable and finance leases receivable and credit loss reserve” under “Critical Accounting Policies” at Note 2 for further explanation. The Company routinely monitors post-judgment collection potential and feasibility from a long-term collection perspective regarding the Notes Purchase Agreement portion of the Judgment related to the Company’s share of the Judgment collection proceeds. Payment received will first be applied against the notes receivable, and if any additional amounts are recovered, they will then be applied against the finance leases receivable, described at Note 9. No recovery payments were included in other income in the consolidated financial statements for the year ended December 31, 2025 and 2024, respectively. See Note 8 to the consolidated financial statements and the Company’s Annual Report for the period ended December 31, 2024, on Form 10-K as filed with the Securities and Exchange Commission on March 31, 2025, for further information related to notes purchase agreement and consulting agreement with G Farma.

Mentor Capital, Inc.

Notes to Consolidated Financial Statements

December 31, 2025 and 2024