Mentor Capital Inc

Previous wording

The following discussion will assist in the understanding of our financial position at March 31, 2024 and the results of operations for the three months ended March 31, 2024 and 2023. The information below should be read in conjunction with the information contained in the unaudited Condensed Consolidated Financial Statements and related notes to the financial statements included within this Quarterly Report on Form 10-Q for the three months ended March 31, 2024 and 2023 and our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

The following discussion will assist in the understanding of our financial position at June 30, 2024 and the results of operations for the three and six months ended June 30, 2024 and 2023. The information below should be read in conjunction with the information contained in the unaudited Condensed Consolidated Financial Statements and related notes to the financial statements included within this Quarterly Report on Form 10-Q for the three and six months ended June 30, 2024 and 2023 and our Annual Report for the year ended December 31, 2023 on Form 10-K filed with the Securities and Exchange Commission on April 1, 2024.

Previous wording

In the public arena, the Company continues its diverse investment activities. These have included the acquisition of oil and gas partnerships, New York Stock Exchange gas trading company mini-tender offers, ATM ownership, facilities operations investment, cancer immunotherapy investment, equipment financing, intellectual property investment, litigation financing, investment in a dispute resolution company, and discounted funding of annuity-like fund flows. Most recently, from its new Texas base, the Company has signaled a substantial return to its energy roots, starting with a tracking investment in five New York Stock Exchange energy companies in the oil and gas, coal, and uranium markets.

Current wording

In the public arena, the Company continues its diverse investment activities. These have included the acquisition of oil and gas partnerships, New York Stock Exchange gas trading company mini-tender offers, ATM ownership, facilities operations investment, cancer immunotherapy investment, equipment financing, intellectual property investment, litigation financing, investment in a dispute resolution company, and discounted funding of annuity-like fund flows. Most recently, from its new Texas base, the Company has signaled a substantial return to its energy roots, starting with a tracking investment in five New York Stock Exchange energy companies in the oil and gas, coal, and uranium markets and cooperatively acquiring operating companies in these classic energy markets.

Previous wording

On July 11, 2023, the Court entered judgment against the G Farma Settlers in favor of the Company and Mentor Partner I, LLC in the amount of $2,539,597. The judgment also accrues post-judgment interest at the rate of 10% from July 11, 2023 until such time as the judgment is paid in full. The judgment and interest receivable of $183,686 at March 31, 2024 is fully reserved pending the outcome of the Company’s collection process. Payments from G Farma and G Farma guarantors will be recognized in Other Income as they are received. The Company has retained the full reserve on the unpaid notes receivable balance and collections of the unpaid lease receivable balance due to the long history of uncertain payments from G Farma and the G Farma Settlors. Payments from G Farma and G Farma Settlors will be recognized in Other Income as they are received. Recovery payments of $3,550 and $2,000 were included in other income in the consolidated financial statements for the year ended December 31, 2022 and 2021, respectively.

Current wording

On July 11, 2023, the Court entered judgment against the G Farma Settlers in favor of the Company and Mentor Partner I, LLC in the amount of $2,539,597. The judgment also accrues post-judgment interest at the rate of 10% from July 11, 2023 until such time as the judgment is paid in full. The judgment and interest receivable of $247,002 at June 30, 2024 is fully reserved pending the outcome of the Company’s collection process. Payments from G Farma and G Farma guarantors will be recognized in Other Income as they are received. The Company has retained the full reserve on the unpaid notes receivable balance and collections of the unpaid lease receivable balance due to the long history of uncertain payments from G Farma and the G Farma Settlors. Payments from G Farma and G Farma Settlors will be recognized in Other Income as they are received. Recovery payments of $3,550 and $2,000 were included in other income in the consolidated financial statements for the year ended December 31, 2022 and 2021, respectively.

Previous wording

On October 4, 2023, in connection with the sale of the Company’s 51% ownership interest in WCI, in addition to a $5,000,000 cash payment, the Company received a one-year unsecured, subordinated, promissory note in initial principal face amount of $1,000,000 from Ally Waste Services, LLC (“Ally”) at 6% per annum. The note is recorded at the principal face amount of $1,000,000 plus accrued interest of $30,000 and $15,000 at March 31, 2024 and December 31, 2023, respectively. The note is unsecured, subordinated, and junior in right of payment of the indebtedness of borrowed money and obligations of Ally owed to senior lenders. Subject to the terms of agreements with senior lenders, the note principal plus accrued interest is payable on October 4, 2024. Ally’s failure to pay the principal and accrued interest on October 4, 2024, among other enumerated events of default, will result in the interest rate retroactively increasing to 12% per annum. The note may be set off against any indemnification obligations owed by the Company to Ally, which indemnification obligations are secondary to indemnification obligations owed by the other WCI selling shareholder to Ally. The Company has received assurances from Ally that the purchased business is performing well, and the note will be paid, so management has not impaired the note receivable. If management is given any indication from Ally or the other WCI selling shareholder that collection is uncertain, the Company will impair the note receivable at such time.

Current wording

On October 4, 2023, in connection with the sale of the Company’s 51% ownership interest in WCI, in addition to a $5,000,000 cash payment, the Company received a one-year unsecured, subordinated, promissory note in initial principal face amount of $1,000,000 from Ally Waste Services, LLC (“Ally”) at 6% per annum. The note is recorded at the principal face amount of $1,000,000 plus accrued interest of $45,000 and $15,000 at June 30, 2024 and December 31, 2023, respectively. The note is unsecured, subordinated, and junior in right of payment of the indebtedness of borrowed money and obligations of Ally owed to senior lenders. Subject to the terms of agreements with senior lenders, the note principal plus accrued interest is payable on October 4, 2024. Ally’s failure to pay the principal and accrued interest on October 4, 2024, among other enumerated events of default, will result in the interest rate retroactively increasing to 12% per annum. The note may be set off against any indemnification obligations owed by the Company to Ally, which indemnification obligations are secondary to indemnification obligations owed by the other WCI selling shareholder to Ally. The Company has continued to receive assurances from Ally that the purchased business is performing well, and the note will be paid, so management has not impaired the note receivable. If management is given any indication from Ally or the other WCI selling shareholder that collection is uncertain, the Company will impair the note receivable at such time.

Previous wording

The Company’s future success depends upon its ability to make a return on its investments, generate positive cash flow, and obtain sufficient capital from non-portfolio-related sources. Management believes they have approximately five years of operating resources on hand and can raise additional funds as may be needed to support their business plan and develop an operating, cash flow positive company.

Current wording

The Company’s future success depends upon its ability to make a return on its investments, generate positive cash flow, and obtain sufficient capital from non-portfolio-related sources. Management believes they have approximately four years of operating resources on hand and can raise additional funds as may be needed to support their business plan and develop an operating, cash flow positive company.

Previous wording

On October 4, 2023, the Company sold its majority ownership interest in WCI for $6,000,000, resulting in the elimination of the Company’s facilities operations segment at the time of such sale. Following the sale, the Company received no new income from WCI and had no further involvement or continuing influence over its operations. Accordingly, the results of operations for this segment are not applicable to the Company’s continuing operations at March 31, 2024 and the results of operations related to our facilities operations segment are excluded from the March 31, 2023, the prior period of comparison, and such financial results are presented as a discontinued operation. See Note 3 to the consolidated financial statements.

Current wording

On October 4, 2023, the Company sold its majority ownership interest in WCI for $6,000,000, resulting in the elimination of the Company’s facilities operations segment at the time of such sale. Following the sale, the Company received no new income from WCI and had no further involvement or continuing influence over its operations. Accordingly, the results of operations for this segment are not applicable to the Company’s continuing operations at June 30, 2024 and the results of operations related to our facilities operations segment are excluded from the three and six months ended June 30, 2023, the prior period of comparison, and such financial results are presented as a discontinued operation. See Note 3 to the consolidated financial statements.

Previous wording

Pending the application of sale proceeds to operating energy businesses, revenue for the three months ended March 31, 2024 was $0 compared to $0 for the three months ended March 31, 2023 (“the prior year period”).

Current wording

Pending the application of sale proceeds to operating energy businesses, revenue for the three months ended June 30, 2024 was $0 compared to ($291) for the three months ended June 30, 2023 (“the prior year period”).

Previous wording

The lack of revenue is due to the deconsolidation of our discontinued operation, WCI, which the Company sold for $6,000,000 on October 4, 2023. At March 31, 2023, our discontinued operation had $2,175,135 in quarterly revenue, which was reported in our consolidated financials in the prior reporting period.

Current wording

The lack of revenue is due to the deconsolidation of our discontinued operation, WCI, which the Company sold for $6,000,000 on October 4, 2023. At the three months ended June 30, 2023, our discontinued operation had $2,105,961 in quarterly revenue, which was reported in our consolidated financials in the prior reporting period.

Previous wording

Gross profit for the three months ended March 31, 2024 was $0 compared to $0 for the prior year period. The Company’s cost of goods sold for the three months ended March 31, 2024 were $0 and $0 for the prior year period.

Current wording

Gross profit for the three months ended June 30, 2024 was $0 compared to ($291) for the prior year period. The Company’s cost of goods sold for the three months ended June 30, 2024 were $0 and $0 for the prior year period.

Previous wording

Gross profit amounts of zero are due to the deconsolidation of our discontinued operation, WCI. At March 31, 2023, gross profit for our discontinued operation was $914,534. WCI gross profit was included in our consolidated financials in the prior reporting period. Cost of goods sold of $1,260,602 at March 31, 2023 were related to WCI.

Current wording

Gross profit amounts of zero are due to the deconsolidation of our discontinued operation, WCI. At the three months ended June 30, 2023, gross profit for our discontinued operation was $691,840. WCI gross profit was included in our consolidated financials in the prior reporting period. Cost of goods sold of $1,414,121 at the three months ended June 30, 2023 were related to WCI.

Previous wording

Our selling, general and administrative expenses for the three months ended March 31, 2024 was $271,263 compared to $171,441 for the prior year period, an increase of $99,821. We experienced a $51,983 increase in professional audit, tax, and accounting expenses, a $7,000 increase in legal fees, a $26,066 increase in officer salary, and a $6,250 increase in board fees, a $3,035 increase in employee salary, and a $7,500 increase in payroll taxes, offset by a ($1,723) decrease in shareholder services expenses, and a ($345) decrease in patent right costs, resulting in an increase in other selling, general and administrative expenses of 58.22%, for the three months ended March 31, 2024 as compared to the prior year period.

Current wording

Our selling, general and administrative expenses for the three months ended June 30, 2024 was $212,027 compared to $118,496 for the prior year period, an increase of $93,531. We experienced a $21,413 increase in professional audit, tax, and accounting expenses, a $11,939 increase in legal fees, a $28,153 increase in officer salary, a $3,619 increase in officer accrued benefits, a $847 increase in employee salary, a $840 increase in employee accrued benefits, a $2,288 increase in payroll taxes, and a $25,500 increase in board fees, offset by a ($1,177) decrease in miscellaneous and other expenses, resulting in an increase in other selling, general and administrative expenses of 78.93%, for the three months ended June 30, 2024 as compared to the prior year period.

Previous wording

At March 31, 2023 selling, general and administrative expenses for our discontinued operation, WCI, was $670,479. WCI selling, general and administrative expenses were included in our consolidated financials in the prior reporting period.

Current wording

At the three months ended June 30, 2023 selling, general and administrative expenses for our discontinued operation, WCI, was $709,365. WCI selling, general and administrative expenses were included in our consolidated financials in the prior reporting period.

Previous wording

At March 31, 2023 other income and expense, net for our discontinued operation, WCI, was ($4,045). WCI other income and expense, net was included in our consolidated financials in the prior reporting period.

Current wording

At the three months ended June 30, 2023 other income and expense, net for our discontinued operation, WCI, was ($14,664). WCI other income and expense, net was included in our consolidated financials in the prior reporting period.

Previous wording

Other income and expense, net, totaled $78,586 for the three months ended March 31, 2024 compared to $3,863 for the prior year period, an increase of $74,722 or 1,934%. The increase is due to a $40,440 increase in interest income, a $31,487 increase in unrealized gain on investment, and a ($2,796) decrease for the three months ended March 31, 2024.

Current wording

Other income and expense, net, totaled ($131,062) for the six months ended June 30, 2024 compared to $8,850 for the prior year period, an increase of $139,912 or 1,580.93%. The increase is due to our $250,208 impairment of investment in account receivable resulting in a ($249,984) loss on investments net, offset by a $22,637 increase in unrealized gain on investment, and a $79,675 increase in interest income for the three months ended June 30, 2024.

Previous wording

The net result for the three months ended March 31, 2024 was a net loss attributable to Mentor of ($208,006) or ($0.008) per Mentor common share compared to a net loss attributable to Mentor in the prior year period of ($49,412) or ($0.002) per Mentor common share. Management will continue to make an effort to lower operating expenses and increase revenue and gross margin. The Company will continue to look for acquisition opportunities to expand its portfolio in companies that are positive for operating revenue or have the potential to become positive for operating revenue.

Current wording

The net result for the six months ended June 30, 2024 was a net loss attributable to Mentor of ($629,681) or ($0.017) per Mentor common share compared to a net loss attributable to Mentor in the prior year period of ($178,658) or ($0.008) per Mentor common share. Management will continue to make an effort to lower operating expenses and increase revenue and gross margin. The Company will continue to look for acquisition opportunities to expand its portfolio in companies that are positive for operating revenue or have the potential to become positive for operating revenue.

Previous wording

Since our reorganization, we have raised capital through warrant holder exercise of warrants to purchase shares of Common Stock. At March 31, 2024 we had cash and cash equivalents of $2,228,354 and working capital of $3,806,240.

Current wording

Since our reorganization, we have raised capital through warrant holder exercise of warrants to purchase shares of Common Stock. At June 30, 2024 we had cash and cash equivalents of $1,881,108 and working capital of $3,558,539.

Previous wording

Operating cash inflows in the three months ended March 31, 2024 was ($203,245), including ($208,006) of net income, increased by non-cash depreciation and amortization of $269, gain on investments of ($31,487), a decrease in operating assets of ($26,794), and a decrease in operating liabilities of $67,524, and non-cash amortization of discount on investment in account receivable of ($4,751) ,

Current wording

Operating cash inflows in the six months ended June 30, 2024 was ($471,465), including ($629,681) of net income (loss), increased by non-cash depreciation and amortization of $538, gain (loss) on investments at fair value of ($22,637), a decrease in operating assets of ($35,854), a decrease in operating liabilities of ($24,479), non-cash amortization of discount on investment in account receivable of ($9,559), and a $250,208 loss on long-term investments.

Previous wording

For the three months ended March 31, 2024, there were no redemptions of Series D Warrants. There were no redemptions of Series D Warrants in 2023. We believe that if warrants are redeemed and exercised, partial warrant redemptions will provide monthly cash for monthly operations.

Current wording

For the three and six months ended June 30, 2024, there were no redemptions of Series D Warrants. There were no redemptions of Series D Warrants in 2023. We believe that if warrants are redeemed and exercised, partial warrant redemptions will provide monthly cash for monthly operations.