Item 1A. Risk Factors. 6
Item IB. Unresolved Staff Comments. 11
Item 2. Properties. 12
Item 3. Legal Proceedings. 12
Item 4. Mines and Safety Disclosures. 13
PART II
Item 6. Reserved 15
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 26
Item 8. Financial Statements and Supplementary Data. 26
Item 9A. Controls and Procedures. 27
Item 9B. Other Information. 28
PART III
Item 10. Directors, Executive Officers and Corporate Governance. 28
Item 11. Executive Compensation. 33
Item 14. Principal Accounting Fees and Services. 36
PART IV
Item 15. Exhibits, Financial Statement Schedules. 37
SIGNATURES 39
PART
I
Item
1. Business.
Corporate
History and Background
Mentor
Capital, Inc. (“Mentor” or “the Company”), which reincorporated under the laws of the State of Delaware in September
2015, was founded as an investment partnership in Silicon Valley, California by the current CEO in 1985. The Company was originally incorporated
under the laws of the State of California in 1994 as Main Street Athletic Clubs, Inc. and operated a small chain of athletic clubs, a
trucking company, and food companies, among other things. On September 12, 1996, our Offering Statement was qualified pursuant to Regulation
A under Section 3(b) of the Securities Act of 1933 and on March 12, 1997 we began to trade publicly. In 1997, the Company changed its
name to Main Street AC, Inc. and merged with a group of approximately fifteen oil and gas partnerships which proved to be unsuccessful.
In 1998 we entered a Chapter 11 bankruptcy reorganization in the Northern District of California due to a need to decrease oil and gas
related debt in excess of asset value.
As
we emerged from bankruptcy, the court allowed the original issuance of approximately $145 Million in warrants to the Company’s
claimants and creditors. The warrants were in (4) four classes, have been reset to lower prices, and have been principally exercised
at $0.09, $0.11, $0.65, $1.00, $1.60, and $7.00 per share. On October 14, 2023 the Board of Directors authorized the reset of the
Series D warrants strike price to $0.02 per share subject to the assignment of the requesting shareholders and Company approved
parties for a $0.10 per warrant redemption fee in accordance with the court-approved plan of reorganization. Designees that redeem
and exercise such Series D warrants would pay $0.12 per share. For original holders, the remaining outstanding Series D warrants are
exercisable at $0.02 per share plus a $0.10 warrant redemption fee, if applicable. The amount of proceeds received from exercised warrants may be limited by the general status of the
economy and the price per share of our regular shares of Common Stock. Warrant holders are more likely to exercise warrants at $0.02
per warrant share if the shares of our Common Stock are priced above $0.02 per share. The greater the share price and the longer the
Company’s Common Stock share price is above $0.02, the more likely warrant holders will be willing to exercise their
warrants.
On
February 9, 2015, in accordance with Section 1145 of the United States Bankruptcy Code and the Company’s Third Amended Plan of
Reorganization (“Plan of Reorganization”), the Company announced a minimum 30 day partial redemption of up to 1% of the already
outstanding Series D warrants to provide for the court specified redemption mechanism for warrants not exercised timely by the original
holder or their estates. Company designees that applied during the 30 days paid 10 cents per warrant to redeem the warrant and then exercised
the Series D warrant to purchase a share of the Company’s Common Stock at the court-specified formula of not more than one-half
of the closing bid price on the day preceding the 30 day exercise period. In successive months, the authorized partial warrant redemption
amount was recalculated, and the redemption offer repeated according to the court formula. In the Company’s October 7, 2016 press
release, Mentor stated that the 1% redemptions which were formerly priced on a calendar month schedule would subsequently be initiated
and priced on a random date schedule after the prior 1% redemption was completed to prevent potential third-party manipulation of share
prices at month-end. The periodic partial redemptions could continue to be recalculated and repeated until such unexercised warrants
are exhausted, or the partial redemption is otherwise paused or truncated by the Company. For the years ended December 31, 2023 and 2022,
no warrants were redeemed.
The
Bankruptcy Court approved Plan of Reorganization allows all the warrants and shares that are issued upon exercise of the warrants to
trade freely under an exemption provided by Section 1145 of the United States Bankruptcy Code. We received an SEC “No Comment”
letter and our Plan of Reorganization was confirmed January 11, 2000. The SEC’s letter is not and should not be interpreted as
approval of the Company’s Disclosure Statement or Plan of Reorganization.
Developments
Our
general business operations are intended to provide management consultation and headquarters functions, especially with regard to
funding, accounting, and audits, for our majority-owned subsidiaries, which makes up most of our holdings. We monitor our less than
majority positions for value and investment security. Management also spends considerable effort reviewing possible acquisition
candidates on an ongoing basis.
The
Company was originally founded as an investment partnership in Silicon Valley, by the current CEO in 1985. The partnership acquired a
salsa factory, bakery, trucking company, tortilla chip plant, and an athletic club chain. The former investment partnership was incorporated
under the laws of the State of California on July 29, 1994 and on September 12, 1996, the Company’s offering statement was qualified
under Regulation A of the Securities Act of 1933 and began to trade its shares publicly. The Company relocated to San Diego, California,
and contracted to provide financial assistance and investment in small businesses. On September 24, 2015, the Company redomiciled from
California to Delaware by merging the California Mentor Capital, Inc. corporation into a newly formed Delaware entity, Mentor Capital,
Inc. Following the merger, the Company is governed under the laws of the State of Delaware. In September 2020, Mentor relocated its corporate
office from San Diego, California, to Plano, Texas.
In
the public arena, the Company continues its diverse investment activities. These include the acquisition of oil and gas partnerships,
New York Stock Exchange gas trading company mini-tender offers, ATM ownership, 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. These five energy company stock holdings had a current combined stock value that equaled approximately 40% of the
Company’s market capitalization at December 31, 2023.
Discontinued
Operation – Facilities Operations Segment
On October 4, 2023, we sold and completely divested our majority controlling
51% interest in Waste Consolidators Inc. (“WCI”), our facilities operations segment, that provides waste management and disposal
services, including waste consolidation, bulk item pickup, general property maintenance, and one-time clean-up services to business park
owners, governmental centers, and apartment complexes in Phoenix, Austin, San Antonio, Houston, and Dallas. Following the sale, the Company
received no new income from WCI and had no further involvement or continuing influence over its operations. WCI is now reported as a discontinued
operation. WCI has been a long-standing investment, but it no longer aligns with the Company’s central business focus in the energy
sector. The proceeds from the sale of our WCI shares provided the Company with capital to seek out new business opportunities in the classic
energy space.
Electrum
Partners, LLC
Electrum
Partners, LLC (“Electrum”) is a Nevada-based consulting, investment, and management company. On November 18, 2022,
Mentor received $459,990 from Electrum in a consolidated settlement of one equity, one recovery purchase, and two secured capital agreements.
See Note 10 to the consolidated financial statements.
Mentor
IP, LLC
On
April 18, 2016, the Company formed Mentor IP, LLC (“MCIP”), a South Dakota limited liability company and wholly owned subsidiary
of Mentor. MCIP held interests related to patent rights for an — 80% / 20% domestic and 50% / 50% foreign economic interest with
R. L. Larson for vape pens under the provisions of United States patent law and the Patent Cooperation Treaty of 1970, as
amended. Patent application and maintenance fees have been expensed when paid and there were no assets related to the MCIP patents represented
on the condensed consolidated financial statements at December 31, 2023 and December 31, 2022. On October 24, 2023, the Company divested
Mentor IP, LLC’s intellectual property and licensing rights related to the United States and the Canadian patent associated with vape
pens. The Company received no payment for its divestment. Patent application national
phase maintenance fees were expensed when paid and there were no assets related to MCIP patents represented on the consolidated financial
statements at December 31, 2023 and 2022. Activity had been limited to payment of patent application maintenance fees in Canada.
NeuCourt,
Inc.
NeuCourt,
Inc. (“NeuCourt”) is a Delaware corporation that is developing a technology that is expected to be useful to the dispute
resolution industry.
On July 15, 2022, the Company and NeuCourt
entered into an Exchange Agreement whereby the Company’s outstanding convertible promissory notes and accrued interest, in an
aggregate net amount of $83,755.99, was exchanged for a Simple Agreement for Future Equity (“SAFE”) in equal face value. On
January 20, 2023, the Company and NeuCourt entered into a SAFE Purchase Agreement, increasing the Company’s aggregate SAFE
Purchase Amount to $93,756. At December 31, 2023 and 2022, the SAFE Purchase Amount was $93,756 and $83,756, respectively. See Note
7.
On
December 21, 2018, the Company purchased 500,000 shares of NeuCourt Common Stock, approximately 6.13% of the issued and outstanding NeuCourt
shares at December 31, 2023.
Mentor
Partner I, LLC
Mentor
Partner I, LLC (“Partner I”) was reorganized under the laws of the State of Texas in February 2021. Partner I originally
held the contractual rights to lease payments from G FarmaLabs Limited (“G Farma”), and now the related settlement and
judgment. In 2018, Mentor contributed $996,000 of capital to Partner I to facilitate the purchase of manufacturing equipment to be
leased from Partner I by G Farma and related entities (collectively, the “G Farma Entities”), under a Master Equipment Lease Agreement dated January 16,
2018, as amended. Partner I acquired and delivered manufacturing equipment as selected by G Farma Entities under sales-type finance
leases. During the years ended December 31, 2023 and 2022, Mentor withdrew no capital from Partner I. Partner I did not have any
sales revenue for the years ended December 31, 2023 or 2022. There was no interest income recognized from Partner I finance leases
for the years ended December 31, 2023 and 2022. The finance leases resulting from this investment have been fully impaired as of
December 31, 2023 and 2022, due to circumstances described in Note 9 to the consolidated financial statements.
Mentor
Partner II, LLC
Mentor
Partner II, LLC (“Partner II”) was reorganized under the laws of the State of Texas in February 2021. Partner II
originally held the contractual rights to lease payments from Pueblo West Organics, LLC (“Pueblo West”) which was paid
off on September 28, 2022. On February 8, 2018, Mentor contributed $400,000 to Partner II to facilitate the purchase of
manufacturing equipment to be leased from Partner II by Pueblo West, under a Master Equipment
Lease Agreement, dated February 11, 2018. On March 12, 2019, Mentor agreed to use Partner II earnings of $61,368 to facilitate the
purchase of additional manufacturing equipment to Pueblo West under a Second Amendment to the lease. On September 27, 2022, Pueblo
West exercised its lease prepayment option and purchased the manufacturing equipment for $245,369. On September 28, 2022 Partner II
transferred full title to the equipment to Pueblo West. See Note 10 to the condensed consolidated financial statements. During the
years ended December 31, 2023 and 2022, Mentor withdrew capital of $0 and $326,893, respectively, from Partner II. During the year
ended December 31, 2023 and 2022, Partner II recognized finance revenue of $0 and $37,659, respectively. See Note 9.
TWG,
LLC
On
October 4, 2022, the Company formed TWG, LLC (“TWG”), a Texas limited liability company, as a wholly owned subsidiary of
Mentor in order to prepare to fulfill certain February 16, 2022 modification agreement performance obligations related to installment
payments the Company receives from a non-affiliated party.
Overview
The Company maintains a diverse and opportunistic acquisition focus. It
sold its former legacy investment in the former facilities operations segment and continues looking to expand into the classic energy
markets of oil, gas, coal, uranium, and related markets.
The
Company continually works to identify potential acquisitions and investments. While evaluating whether an acquisition may be in the best
interests of the Company and its shareholders, no transaction will be announced until that transaction is certain.
Competition
We
face formidable competition in every aspect of our business. There are many companies that are interested in investing in target companies,
similar to our energy focus, and many of them are well-funded companies.
Employees
Continuing
Operation
Mentor
and its subsidiaries combined have two full-time corporate office employees. After Mentor relocated its corporate office from San Diego,
California, to Plano, Texas in September 2020 it began working with outside professional consultants as needed. The corporate office
employees have relied heavily on outside CPA, payroll, tax, facilities, corporate counsel, and other professional support to provide
administrative support for its discontinued operation, MCIP, Partner I, Partner II, and TWG operations, and the energy sector.
Discontinued
Operation
Prior
to its sale on October 4, 2023, our discontinued operation had approximately 66 full-time employees in Phoenix, Arizona, 19 full-time
employees in San Antonio and Austin, Texas, 2 full-time employees in Houston, Texas, and 2 full-time employees in Dallas, Texas.
Available
Information About Registrant
We
have voluntarily registered our securities under Section 12(g) of the Securities Exchange Act of 1934, and such registration became effective
January 19, 2015. Since that date, we have filed quarterly, annual, and current reports with the Securities and Exchange Commission (“SEC”).
The
SEC maintains an Internet site containing reports, proxy and information statements, and other information regarding issuers that file
electronically with the SEC at http://www.sec.gov.
Our
periodic reports and other required disclosures are available at our company website located at: www.MentorCapital.com.
Item
1A. Risk Factors.
In
addition to other information in this Annual Report on Form 10-K, the following risk factors should be carefully considered in evaluating
our business since it operates in a highly challenging and complex business environment that involves numerous risks, some of which are
beyond our control. The following discussion highlights a few of these risk factors, any one of which may have a significant adverse
impact on our business, operating results, and financial condition.
As
a result of the risk factors set forth below and elsewhere in this Form 10-K, and the risks discussed in our Rule 15c2-11, previous quarterly
reports on Form 10-Q, and other publicly disclosed submissions, actual results could differ materially from those projected in any forward-looking
statements.
We
face significant risks, and the risks described below may not be the only risks we face. Additional risks that we do not know of or that
we currently consider immaterial may also impair our business operations. If any of the events or circumstances described in the following
risks actually occurs, our business, financial condition or results of operations could be harmed, and the trading price of our Common
Stock could decline.
Variable
financial conditions can be challenging.
Management
has noted challenging financial conditions. During the years ended December 31, 2023 and 2022, we experienced significant cash flows
challenges prior to our sale of our discontinued operation. Securing additional sources of financing to enable us to continue
investing in our target markets will be difficult, and there is no assurance of our ability to secure such financing. A failure to
obtain additional financing, or to continue to generate capital from the sale of operating businesses and assets, or to generate
positive cash flow from operations could prevent us from continuing to seek out and invest in new companies.
Mentor
will continue to attempt to raise capital resources from both related and unrelated parties. Management’s plans include monetizing
existing mature business projects and increasing revenues through acquisition, investment, and organic growth. Management anticipates
funding new activities by raising additional capital through the sale of equity securities and debt.
A
failure to obtain financing could prevent us from executing our business plan.
We
anticipate that current cash resources and opportunities will be sufficient for us to execute our business plan for five years after the
date these financial statements are issued. We believe that securing substantial additional sources of financing is possible, but there is no assurance of our
ability to secure such financing. A failure to obtain additional financing could prevent us from making necessary expenditures for advancement
and growth to partner with businesses and hire additional personnel. If we raise additional financing by selling equity, or convertible
debt securities, the relative equity ownership of our existing investors could be diluted, or the new investors could obtain terms more
favorable than previous investors. If we raise additional funds through debt financing, we could incur significant borrowing costs and
be subject to adverse consequences in the event of a default.
Management
voluntarily transitioned to a fully reporting company and spends considerable time meeting the associated reporting obligations.
Management
operated Mentor Capital, Inc. as a non-reporting public company for over 26 years and eight years ago voluntarily transitioned to
reporting company status subject to financial and other SEC-required disclosures. Prior to such voluntary transition, management had
not been required to prepare and make such required disclosures. As a reporting company, we may be subject to the Securities and
Exchange Act, as amended (“Exchange Act”), the Sarbanes-Oxley Act, the Dodd-Frank Act, and other securities rules and
regulations. If we were listed on an Exchange, we would be subject to the rules of the Exchange on which we were listed. The
Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and
operating activities. Preparing and filing periodic reports imposes a significant expense, time, and reporting burden on management.
This distraction can divert management from its operation of the business to the detriment of core operations.
Investors
may suffer risk of dilution following exercise of warrants for cash.
As
of December 31, 2023, the Company had 24,686,105 outstanding shares of its Common Stock trading at approximately $0.062. As of the same
date, the Company also had 4,250,000 outstanding Series D warrants exercisable for shares of Common Stock at $0.02 per share. These Series
D warrants do not have a cashless exercise feature. The Company anticipates that the warrants may be increasingly exercised anytime the
per share price of the Company’s Common Stock is greater than $0.24 per share. Exercise of these Series D warrants may result in
immediate and potentially substantial dilution to current holders of the Company’s Common Stock. In addition, the Company has 413,512
outstanding Series H warrants with a per share exercise price of $7.00 held by an investment bank and its affiliates. These $7.00 Series
H warrants include a cashless exercise feature. Current and future shareholders may suffer dilution of their investment and equity ownership
if any of the warrant holders elect to exercise their warrants.
Beginning
on February 9, 2015, in accordance with Section 1145 of the United States Bankruptcy Code and in accordance with the Company’s
court-approved Plan of Reorganization, the Company announced that it would allow for partial redemption of up to 1% per month of the
outstanding Series D warrants to provide for the court specified redemption mechanism for warrants not exercised timely by the original
holder or their estates. Company designees that apply during the redemption
period must pay 10 cents per warrant to redeem the warrants and then exercise the Series D warrant to purchase a share of the Company’s
Common Stock. The 1% partial redemption
may continue to be periodically repeated according to the court formula until such unexercised warrants are exhausted
or the partial redemption is otherwise suspended or truncated by the Company. Existing shareholders may suffer dilution if any warrants
are exercised as a result of the Company’s partial redemption offering. There were no warrant redemptions in 2023 or 2022.
Our
business model is to partner with or acquire other companies.
We
aim to find businesses whose products, managers, technology, or other factors we like and acquire or invest in those businesses.
While we are open to investing in a diverse portfolio of entities across the energy sector, there is no certainty that we will find
suitable partners or that we will be able to engage in transactions on advantageous terms with the partners we identify. There is
also no certainty that we will be able to consummate future transactions on favorable terms, or any new transaction at all. To date,
several of our acquisitions/investments have not turned out well for us.
We
may have to work harder to introduce rigor in our transactions.
Many
of the people and entities with whom we engage may not be used to operating in business transactions in a public environment. Therefore,
in order to discharge our fiduciary and disclosure obligations we may have to work harder to satisfy good business practices. Entities
and persons operating in private industry may be unaccustomed to entering into lengthy written agreements or keeping financial records
according to GAAP. Additionally, entities and persons with whom
we had engaged may not pay particular attention to the obligations including their obligations associated with employee retention tax
credit and economic injury disaster loan programs with which they have agreed in written contracts. We have experienced or may experience
differences of this manner with several different entities with whom we do business, including several entities which failed to comply
with common law contractual obligations, which led us into litigation and other legal remedies.
We
depend on our key personnel and may have difficulty attracting and retaining the skilled staff and outside professionals we need to execute
our growth plans.
Our
success will be dependent largely upon the personal efforts of our Chief Executive Officer, Chet Billingsley. The loss of Mr. Billingsley
could have a material adverse effect on our business and prospects. Currently, we have two full-time employees, and we substantially
rely on the services provided by outside professionals. To execute our plans, we will have to retain our current employees and work with
outside professionals that we believe will help us achieve our goals. Competition for recruiting and retaining highly skilled employees
with technical, management, marketing, sales, product development, and other specialized training is intense. We may not be successful
in employing and retaining such qualified personnel. Specifically, we may experience increased costs in order to retain skilled employees.
If we are unable to retain experienced employees and the services of outside professionals as needed, we may be unable to execute our
business plan.
Founder
and CEO Chet Billingsley, along with other members of the Company’s Board of Directors, have considerable control over the company
through their aggregate ownership of 14.23% of the outstanding shares of the Company’s Common Stock on a fully diluted basis.
As
of March 28, 2024, Mr. Billingsley owned approximately 7.51% of the outstanding shares of the Company’s Common Stock on a fully
diluted basis. Together with other members of the Company’s Board of Directors, the management of the Company owns approximately
14.23% of the outstanding shares of the Company’s Common Stock on a fully diluted basis. Mr. Billingsley holds 47,274 Series D
warrants, exercisable at $0.02 per share. Robert Meyer, David Carlile, and Lori Stansfield, directors of the Company, hold an aggregate
of 631,455 Series D warrants exercisable at $0.02 per share. Due to the large number of shares of Common Stock owned by Mr. Billingsley
and the directors of the Company, management has considerable ability to exercise control over the Company and matters submitted for
shareholder approval, including the election of directors and approval of any merger, consolidation or sale of substantially all of the
assets of the Company. Additionally, due to his position as CEO and Chairman of the Board, Mr. Billingsley has the ability to control
the management and affairs of the Company. The Company’s directors and Mr. Billingsley owe a fiduciary duty to our shareholders
and must act in good faith in a manner each reasonably believes to be in the best interests of our shareholders. As shareholders, Mr.
Billingsley and the other directors are entitled to vote their shares in their own interests, which may not always be in the interests
of our shareholders generally.
There
is a limited market for our Common Stock.
Our
Common Stock is not listed on any exchange and trades on the OTC Markets OTCQB system. As such, the market for our Common Stock is limited
and is not regulated by the rules and regulations of any exchange. Freely trading shares of even fully reporting OTCBQ
companies receive careful scrutiny by brokers who may require legal opinion letters, proof of consideration, medallion guarantees, or
expensive fee payments before accepting or declining share deposits. Further, the price of our Common Stock and its volume in the market
may be subject to wide fluctuations. Our stock price could decline regardless of our actual operating performance, and stockholders could
lose a substantial part of their investment as a result of industry or market-based fluctuations. Our stock may trade relatively thinly.
If a more active public market for our stock is not sustained, it may be difficult for stockholders to sell shares of our Common Stock.
Because we do not now pay cash dividends on our Common Stock, stockholders may not be able to receive a return on their shares unless
they are able to sell them. The market price of our Common Stock will likely fluctuate in response to a number of factors, including
but not limited to the following:
●
sales, sales cycle, and market acceptance or rejection of our affiliates’ products;
●
our ability to engage with partners who are successful in selling products;
●
economic conditions within our markets;
●
the timing of announcements by us or our competitors of significant products, contracts or acquisitions or publicity regarding actual
or potential results or performance thereof;
●
domestic and international economic, business, and political conditions;
●
justified or unjustified adverse publicity; and
●
proper or improper third-party short sales or other manipulation of our stock.
We
have a long business and corporate existence.
We
began in Silicon Valley in 1985 as a limited partnership and operated as Mentor Capital, LP until we incorporated in California in 1994. We were privately owned until September 1996; at which time our Common Stock began trading on the
Over The Counter Pink Sheets. Our merger and acquisition and business development activities have spanned many business sectors, and
we went through a bankruptcy reorganization in 1998. In late 2015, we reincorporated under the laws of the State of Delaware. We have
operated in several different industries over our existence but do not have brand recognition within any one industry.
General
Risk Factors
Our
actual results could differ materially from those anticipated in our forward-looking statements.
This
Form 10-K contains forward-looking statements within the meaning of the federal securities laws that relate to future events or future
financial performance. When used in this report, you can identify forward-looking statements by terminology such as “believes,”
“anticipates,” “seeks,” “looks,” “hopes,” “plans,” “predicts,”
“expects,” “estimates,” “intends,” “will,” “continue,” “may,”
“potential,” “should” and similar expressions. These statements are only expressions of expectation. Our actual
results could, and likely will, differ materially from those anticipated in such forward-looking statements as a result of many factors,
including those set forth above and elsewhere in this report and including factors unanticipated by us and not included herein. Although
we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, levels
of activity, performance, or achievements. Neither we nor any other person assumes responsibility for the accuracy and completeness of
these statements. Accordingly, we caution readers not to place undue reliance on these statements. Where required by applicable law,
we will undertake to update any disclosures or forward-looking statements.
If
we are unable to protect our intellectual property, our competitive position would be adversely affected.
We
and our partners and subsidiaries intend to rely on patent protection, trademark and copyright law, trade secret protection and confidentiality
agreements with our employees and others to protect our intellectual property. Despite our precautions, unauthorized third parties may
copy our, and our affiliates’ and partners’, products and services or reverse engineer or obtain and use information that
we regard as proprietary. In addition, the laws of some foreign countries do not protect proprietary rights to the same extent as do
the laws of the United States. Our means of protecting our, and our affiliates’ and partners’, proprietary rights may not
be adequate, and third parties may infringe or misappropriate our, and our affiliates’ and partners’, patents, copyrights,
trademarks, and similar proprietary rights. If we, or our affiliates and partners, fail to protect intellectual property and proprietary
rights, our business, financial condition, and results of operations would suffer. We believe that neither we nor our affiliates and
partners infringe upon the proprietary rights of any third party, and no third party has asserted an infringement claim against us. It
is possible, however, that such a claim might be asserted successfully against us in the future. We may be forced to suspend our operations
to pay significant amounts to defend our rights, and a substantial amount of the attention of our management may be diverted from our
ongoing business, all of which would materially adversely affect our business.
We
face rapid change.
The
market for our partners’ and subsidiaries’ products and services is characterized by rapidly changing laws, technologies,
and the introduction of new products and services. We believe that our future success will depend in part upon our ability to invest
in companies that develop and enhance products and services offered in the energy
and dispute resolution industries. There can be no assurance that our partners and subsidiaries will be able to develop and introduce
new products and services or enhance initial products in a timely manner to satisfy customer needs, achieve market acceptance or address
technological changes in our target markets. Failure to develop products and services and introduce them successfully and in a timely
manner could adversely affect our competitive position, financial condition, and results of operations.
If
we experience rapid growth, we will need to manage such growth well.
We
may experience substantial growth in the size of our staff and the scope of our operations, resulting in increased responsibilities for
management. To manage this possible growth effectively, we will need to continue to improve our operational, financial and management
information systems, will possibly need to create departments that do not now exist, and hire, train, motivate and manage a growing number
of staff. Due to a competitive employment environment for qualified accounting, technical, marketing, and sales personnel, we expect
to experience difficulty in filling our needs for qualified personnel. There can be no assurance that we will be able to effectively
achieve or manage any future growth, and our failure to do so could delay product development cycles and market penetration or otherwise
have a material adverse effect on our financial condition and results of operations.
We
could face product liability risks and may not have adequate insurance.
Our
partners’ and affiliates’ products may be used for sensitive purposes. We may become the subject of litigation
alleging that our partners’ and affiliates’ products were ineffective or unsafe. Thus, we may become the target of lawsuits
from injured or disgruntled customers or other users. We intend to, but do not now, carry product and liability insurance, but in the
event that we are required to defend more than a few such actions, or in the event we are found liable in connection with such an action,
our business and operations may be severely and materially adversely affected.
Failure
to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse
effect on our stock price.
Section
404 of the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC require annual management assessments of the effectiveness
of our internal control over financial reporting. If we fail to adequately maintain compliance with, or maintain the adequacy of, our
internal control over financial reporting, as such standards are modified, supplemented or amended from time to time, we may not be able
to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with
Section 404 of the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC. If we cannot favorably assess our internal
controls over financial reporting, investor confidence in the reliability of our financial reports may be adversely affected, which could
have a material adverse effect on our stock price.
We
have indemnified our officers and directors.
We
have indemnified our officers and directors against possible monetary liability to the maximum extent permitted under California and
Delaware law. The managers of Mentor Partner I, LLC, Mentor Partner II, LLC, and TWG, LLC have been indemnified to the maximum extent
permitted under Texas law.
The
worldwide economy could impact the company in numerous ways.
The
effects of negative worldwide economic events, such as the impact of inflation, interest rate increases, tariff increases, recession,
potential banking crises, cybersecurity risks, evolving and sophisticated cyber-attacks and other attempts to gain access to our information
technology systems, the outbreak of war in Ukraine, the Israel-Hamas war, product and labor shortages, increased risk to oil markets,
and a global economic slowdown may cause disruptions and extreme volatility in global financial markets, increased rates of default and
bankruptcy, political change, impact levels of consumer spending, and may impact our business, operating results, or financial condition.
The ongoing worldwide economic situation, future weakness in the credit markets, and significant liquidity problems for the financial
services industries may also impact our financial condition in a number of ways. For example, current or potential customers may delay
or decrease spending with us, or our partners and affiliates may not pay us, or our partners or affiliates may delay paying us or our
partners or affiliates for previously purchased products and services. Also, we may have difficulties in securing additional financing.
Item
1B. Unresolved Staff Comments.
None.
Item
1C. Cybersecurity.
We
have not experienced a material cybersecurity incident that has jeopardized the confidentiality, integrity, or availability of information
systems or information residing in such information systems as defined under 17 C.F.R. § 229.106(a). If such an incident were to
occur, we would work expeditiously to mitigate our damages as soon as such an incident is detected by implementing our risk management
and cybersecurity plan in concert with our established cybersecurity response team. A cybersecurity incident would be reported to the
Company’s Chairman of the Board and our general counsel, who would determine whether such incident or event was material. If such
an incident or event is material, it would be reported to our Board of Directors and Audit Committee.
The
Company maintains cybersecurity risk management, disaster readiness, and business continuity plans to anticipate potential threats
and mitigate the probability of cybersecurity risks by establishing alerts, preemptive measures, and cybersecurity response
protocols. We have set up information technology risk management alert programs that are routinely received and reviewed by
management and our information technology professionals. We have implemented protocols and procedures to protect the privacy,
safety, and security of our data and information technology. We routinely assess our cybersecurity risk while working in
consultation with our information technology professionals. In addition to alerts, our information technology professionals provide
risk management monitoring and support along with twenty-four-hour dedicated support for the Company. They possess expertise across
multiple industries, including support of Department of Defense contractors in the United States. The Company does not share
confidential information with third parties unless required by law. In such instances, the Company utilizes encryption methods to
protect confidential information. The Company ensures that such information is given to such third parties in a responsible manner
that would not disclose such confidential information to unintended recipients. Due to the nature of the Company’s operations,
the instance of the Company’s receipt of confidential information is minimal, infrequent, and immaterial.
Our
cybersecurity disaster readiness plan is implemented and managed by our assistant corporate secretary, who reports to the Chairman of
the Board of Directors. Management oversees our cybersecurity risk and our disaster recovery and business continuity plan in order to
consider, mitigate, and plan for the preemption of cybersecurity risks that may arise. Our assistant corporate secretary was formerly
responsible for information technology, risk management, and cybersecurity at an Am Law 100 law firm in San Diego. She authored and implemented
the firm’s disaster readiness and business continuity protocols and managed the firm’s information technology operations
prior to her implementation of these similar risk management protocols at the Company in consultation with cybersecurity experts for
the purpose of mitigating the Company’s risk and ensuring best practices. Our assistant corporation secretary is responsible for
reporting risks and incidents relating to cybersecurity threats, including compliance with disclosure requirements, to the Chairman of
the Board and our general counsel for consideration. The Chairman of the Board determines the necessity of discussing cyber risks. Material
incidents would be reported to the Board of Directors and the Audit Committee.
The
Company’s business strategy, results of operations, and financial condition have not been materially affected by risks from cybersecurity
threats, and we have not experienced any material cybersecurity incidents. Our ability to manage our cybersecurity risks does not allow
us to predict our cybersecurity vulnerability to ordinary, novel, or sophisticated cyber-attacks and cyber warfare threats in the future.
As a result, we cannot provide future assurances that we will not be materially affected by cybersecurity risks or material cybersecurity
incidents in the future. For more information on the risks that the Company faces, including cybersecurity-related risks, see our Item
1A Risk Factors section of this Annual Report on Form 10-K.
Item
2. Properties.
Continuing
Operations
Mentor
rented 2,000 square feet of office space for $2,990 per month under a one-year lease in San Diego, California, which expired in September
2020. Mentor relocated to Plano, Texas, in September 2020 and now reimburses facilities costs of $2,456 per month to the property owners,
the Billingsley family. Reimbursable facilities costs have not increased since 2020. The Company does not pay rent. The Company’s
San Diego rent and facilities costs formerly totaled $4,408 per month.
MCIP,
Partner I, Partner II, and TWG office and administrative support are provided by Mentor in its Plano, Texas corporate offices.
Discontinued
Operation
Our
discontinued operation and former facilities segment, Waste Consolidators, Inc. (“WCI”), managed our former Arizona and Texas
operations from Phoenix, Arizona, where it leased 5,603 square feet of office and warehouse space pursuant to a Multi-Lessee Industrial
Net Lease effected September 15, 2022, for an initial lease term of sixty-one months commencing on October 1, 2022. The monthly base
rent was $5,603 for the period October 1, 2022, to September 30, 2023. On October 1, 2022, our discontinued operation also paid its monthly
pro rata share (3.89% of total rental square footage estimated at $1,289 per month or $0.23 per square foot per month) of the
annual common area operating expenses and common area improvements incurred by the landlord. Previously, our discontinued operation managed
its Arizona and Texas business from Tempe, Arizona, where it leased approximately 3,000 square feet of office and warehouse space for
$2,200 per month under an operating lease that expired in January 2021 and was amended February 18, 2021, to extend the lease through
February 2023. The monthly rent under the extended lease was $2,350 per month for the first year of the lease and $2,500 per month for
the second year of the lease. On January 1, 2022, our discontinued operation also paid its monthly pro rata share (1.90% of total
rentable square footage) of the common area operating expenses increase over the common area operating expenses incurred by the landlord
in the calendar year 2021. On October 4, 2023, the Company sold its 51% equity interest in WCI. See Note 3.
Item
3. Legal Proceedings.
G
FarmaLabs Limited
On
August 27, 2021, the Company and Mentor Partner I settled certain litigation with G FarmaLabs Limited, a Nevada corporation, and certain
of its affiliates (the “G Farma Settlors”). The G Farma Settlors partially performed, and then breached, the Settlement Agreement.
Consequently, in February 2023, the Company and Mentor Partner I filed
a Request for Entry of Judgment seeking entry of a stipulated judgment against the G Farma Settlors for (1) the remaining unpaid settlement
amount of $494,450 promised, all accrued and unpaid interest thereon, and an additional $2,000,000 principal amount as agreed in the Settlement
Agreement, (2) the Company’s incurred costs, and (3) attorneys’ fees paid by the Company to obtain the judgment. On July 11,
2023, the Court entered judgment against the G Farma Settlors and in favor of Mentor and Partner I in the amount of $2,539,597, which
is comprised of $2,494,450 principal (calculated as the aggregate settlement amount, less payments made by the G Farma Settlors, plus
the default addition) plus accrued and unpaid interest of $40,219, costs of $1,643, and attorneys’ fees of $3,285 incurred by Mentor
and Mentor Partner I in connection with obtaining the judgment. 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
Company has retained the 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 recovered will be reported as Other income in
the consolidated income statements. The $2,539,597 judgment and interest receivable of $120,370 for the twelve months ended December
31, 2023, is fully reserved pending the outcome of the Company’s collection process. See Notes 8, 9, and 18 to this Annual Report
and Notes 8, 9, and 20 to the Company’s Annual Report for the period ended December 31, 2022, on Form 10-K filed with the Securities
and Exchange Commission on March 28, 2023. We will continue to pursue collection from the G Farma Settlors over time.
Item
4. Mine Safety Disclosures.
Not
applicable.
PART
II
Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.
Our
shares of Common Stock are traded on the Over-The-Counter OTCQB The Venture Market (“OTCQB”) under the symbol “MNTR”.
The
following table sets forth, for the periods indicated, the high and low sales prices for our Common Stock as reported on the OTC Markets.
This information reflects inter-dealer prices without retail mark-up, markdown, or commission and may not represent actual transactions.
High Low
Holders
As
of December 31, 2023, there were approximately 6,185 registered holders of record of our Common Stock. As of December 31, 2023, we had
a total of 24,686,105 shares of Common Stock issued and outstanding, 11 shares of Series Q Preferred Stock issued and outstanding, 4,250,000
Series D warrants outstanding, which are exercisable for 4,250,000 shares of Common Stock, and 413,512 Series H warrants outstanding
which are exercisable for 413,512 shares of Common Stock.
Dividend
Policy
We have not declared or paid cash dividends or made distributions in the
past although we may pay cash dividends or make distributions in the future on preferred and common shares.
Issuer
Purchases of Equity Securities
On
August 8, 2014, the Company announced that it was initiating the repurchase of 300,000 shares of its Common Stock (approximately 2%
of the Company’s common shares outstanding at that time). A total of 44,748 shares were repurchased between August 8, 2014 and
September 9, 2015. As of December 31, 2023, and 2022, 300,000 and 44,748 shares have been repurchased, respectively and a total of
300,000 shares have been retired. From January 1, 2023 to December 31, 2023, Mentor repurchased the following shares of Common
Stock:
(1)
On October 14, 2023, the Board of Directors of the Company approved a stock repurchase plan for a total repurchase amount not to
exceed $200,000.
On October 14, 2023, the Board of Directors of the Company approved a stock
repurchase plan authorizing the Company to repurchase up to 3,000,000 shares of the Company’s common stock at no more than 12.5
cents per share for a total repurchase amount not to exceed $200,000. As of December 31, 2023, no shares have been repurchased.
Equity
Compensation Plan
Mentor
does not currently have an equity compensation plan in place and does not intend to create such a plan in the near future.
Recent
Sales of Unregistered Securities
On December 14, 2023, our Chief Executive Officer, Chet Billingsley, exercised
2,000,000 Series D warrants at $0.02 per share. Mr. Billingsley paid the Company $40,000 in cash. This increased Mr. Billingsley’s
share ownership by 2,000,000 common shares, increased the Company’s outstanding shares of common stock to 24,686,105, and decreased
the Company’s outstanding Series D warrants to 4,250,000.
On January 11, 2022,
our Chief Executive Officer, Chet Billingsley, exercised 87,456 Series B warrants and 2,954 Series D warrants at $0.11 per share and $1.60 per share, respectively.
Mr. Billingsley paid the Company $14,347 in cash.
The sale of 2,000,000 and 90,410 shares of common stock through the exercise
of Series B and Series D warrants were made in reliance on 11 U.S.C. § 1145 and Section 3(a)(7) of the Securities Act of 1933, as
amended.
Other
than as stated above, there have been no other unregistered securities sold within the past three years.
Item
6. [Reserved]
Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The
following discussion of our financial condition and results of operations for the years ended December 31, 2023, and 2022 should be read
in conjunction with the financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form
10-K.
We sold our majority ownership interest in Waste Consolidators, Inc. (“WCI”)
on October 4, 2023, resulting in the elimination of our facilities operations segment at that time. 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
and assets and liabilities for this segment are excluded from the Company’s continuing operations on December 31, 2023, and for
all prior periods of comparison and are presented as a discontinued operation in this report.
Corporate
Background
Beginning
September 2008, after the name change back to Mentor Capital, Inc., the Company’s common stock traded publicly under the trading
symbol OTC Markets: MNTR and after February 9, 2015, as OTCQB: MNTR and after August 6, 2018, under the trading symbol OTCQX: MNTR and
after May 1, 2020, under the trading symbol OTCQB: MNTR.
In 2009, the Company began focusing its investing activities on leading-edge