Company: MNTR
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001641172-25-010157
Chunk: 19

Company: Mentor Capital, Inc.
Filing Date: 2025-05-14
Form: 10-Q
Item: Item 1
Chunk 19
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 which are subsequently
remitted to government authorities.

The discontinued operation that we sold on October
4, 2023, worked with business park owners, governmental centers, and apartment complexes to reduce facilities-related costs. Our discontinued
operation performed monthly services pursuant to agreements with customers. Customer monthly service fees were based on our discontinued
operation’s assessment of the amount and frequency of monthly services requested by a customer. Our discontinued operation may have
also provided additional services, such as apartment cleanout services, large item removals, or similar services, on an as-needed basis
at an agreed-upon rate as requested by customers. All services were invoiced and recognized as revenue in the month the agreed-on services
were performed.

For each finance lease, the Company recognized as
a gain the amount equal to (i) the net investment in the finance lease less (ii) the net book value of the equipment at the inception
of the applicable lease. At lease inception, we capitalized the total minimum finance lease payments receivable from the lessee, the estimated
unguaranteed residual value of the equipment at lease termination, if any, and the initial direct costs related to the lease, less unearned
income. Unearned income was recognized as finance income over the term of the lease using the effective interest rate method.

The Company, through its subsidiary Mentor Partner
I, LLC,  was the lessor of manufacturing equipment subject to leases under master leasing agreements. The leases
contained an element of dealer profit and lessee bargain purchase options at prices substantially below the subject assets’ estimated
residual values at the exercise date for the options. Consequently, the Company classified the leases as sales-type leases (the “finance
leases”) for financial accounting purposes. For such finance leases, the Company reported the discounted present value of (i) future
minimum lease payments (including the bargain purchase option, if any) and (ii) any residual value not subject to a bargain purchase option
as a finance lease receivable on its balance sheet and accrued interest on the balance of the finance lease receivable based on the interest
rate inherent in the applicable lease over the term of the lease. For each finance lease, the Company recognized revenue in an amount
equal to the net investment in the lease and cost of sales equal to the net book value of the equipment at the inception of the applicable
lease. The Mentor Partner I, LLC finance lease is fully impaired, pending collection of the G Farma judgment. See Notes
8 and 16.