Item 1A. Risk Factors. 7
Item IB. Unresolved Staff Comments. 13
Item 1C. Cybersecurity. 13
Item 2. Properties. 14
Item 3. Legal Proceedings. 14
Item 4. Mines and Safety Disclosures. 15
PART II
Item 6. Reserved 17
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 29
Item 8. Financial Statements and Supplementary Data. 29
Item 9A. Controls and Procedures. 31
Item 9B. Other Information. 32
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 32
PART III
Item 10. Directors, Executive Officers and Corporate Governance. 32
Item 11. Executive Compensation. 37
Item 14. Principal Accounting Fees and Services. 40
PART IV
Item 15. Exhibits, Financial Statement Schedules. 40
SIGNATURES 42
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 to Company approved requesting shareholders and 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, 2025 and 2024,
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 are targeted to make 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 operating investment partnership in Silicon Valley, by the current CEO in 1985. The operating 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 in phases
to San Diego, California in 1999, 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 is opportunistic and maintains its diverse operating and investment activities. These included 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 signaled a substantial return to its energy roots,
starting with stock purchases in several energy companies in the oil and gas, coal, uranium markets, purchases of fractional, non-operating
royalty interests in producing oil and gas properties operating in West Texas and is utilizing gold as a placeholder until new energy
investments are arranged.
On
October 4, 2023, we sold and completely divested our majority controlling 51% interest in Waste Consolidators Inc.
(“WCI”), our former facilities operations segment. The $6,000,000 proceeds plus $60,000 interest from the sale of our
WCI shares paid to the Company in 2023, and 2024 provided the Company with capital to seek out new business opportunities in the
classic energy space of oil and gas, coal, uranium, and related businesses, which, utilizing gold as a transitioning mechanism, are
Mentor Capital, Inc.’s focus.
Mentor
Capital, Inc.
The
Company’s target industry focus includes the classic energy sectors of oil, gas, coal, uranium, and related ventures, with gold
investment serving as a placeholder while new energy positions are arranged. Additionally, the Company has residual investments in legal
dispute resolution services, collecting on an annuity-like financing, and the collection of a judgment that it intends to continue to
pursue. In 2023, the Company initially signaled a substantial return to its energy roots, starting with a tracking investment in New
York Stock Exchange energy companies in the oil and gas, coal, and uranium industries.
In
March 2025, the Company acquired three fractional, non-operating royalty interests in oil and gas properties covering approximately one-hundred
twenty-one (121) wells in the Spraberry Field of the Permian Basin in West Texas, through related public auctions for total consideration
of $1,369,899 as follows:
The
Company’s three (3) fractional royalty interests entitle the Company to receive a proportional share of revenues generated from
the production of hydrocarbons from the underlying property, without incurring any operating or production costs. Working interest owners
of our royalty interests operating the wells will participate in and bear the costs of operation and development.
Royalty
revenue over approximately eight months of operation was $166,811 and $0 for the twelve months ended December 31, 2025 and
2024.
Accrued
royalty income and incurred severance taxes are estimated and recognized in the month oil is produced, when royalty income is earned.
The difference between accrued royalty income and the amount received is adjusted when royalty payments are received.
Accrual
of estimated royalty income was $26,000 and $0 as of December 31, 2025 and 2024, respectively, which represent the Company’s
estimated receivables for approximately two months. Royalty payments received were $140,811 and $0 for the twelve months ended
December 31, 2025 and 2024, which represent a portion of the royalty income earned by the Company in November and December 2025.
Actual and estimated severance taxes were approximately 5.10% of actual and accrued royalty income at the twelve months ended
December 31, 2025. The difference between the estimated incurred severance tax liability and the amount paid is adjusted upon the
Company’s receipt of royalty statements. The Company monitors changes in market conditions, commodity prices, production
volumes, and other factors, which may materially impact the recoverability of our royalty interests.
Ad
valorem tax liability was $4,571 and $0 as of December 31, 2025, and 2024. This liability is assessed according
to value by the county assessor in the locality where our royalty interests are located, in accordance with local and state law.
The
Company also maintains a gold investment and short-term treasury exchange-traded funds for the purpose of facilitating investment into
the Company to support potential future energy acquisitions and to collect low-risk interest to offset inflation, respectively.
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 to hold interests related to patent rights. Since its inception, MCIP held interests related to patent rights. On October 24,
2023, the Company divested Mentor IP, LLC’s intellectual property and licensing rights related to a certain United States and Canadian
patent. The Company received no payment for its divestment.
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 $83,756, 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, 2025 and 2024, the SAFE Purchase Amount was $93,756. 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, 2025.
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”). It now holds a related settlement and
$2,539,591 judgment receivable plus interest receivable of $628,985 at December 31, 2025 in favor of the Company and Partner I. 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. The finance leases resulting from this investment have been fully impaired, due to circumstances described in Note 9 to the consolidated
financial statements. During the years ended December 31, 2025 and 2024, Mentor withdrew no capital from Partner I.
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, which was paid off by a final payment of $245,369 on
September 28, 2022. During the years ended December 31, 2025 and 2024, Mentor withdrew no capital from Partner II.
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.
Ally
Waste Services, LLC
On
October 4, 2023, in connection with the sale of the Company’s 51% ownership interest in WCI, 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% interest per annum. The $1,000,000 initial principal face amount of the note, plus accrued interest of
$60,000, was paid by Ally on October 4, 2024.
Overview
The
Company maintains an opportunistic acquisition focus. It sold its former legacy investment in the former facilities operations segment
and continues looking to expand into operating segments of the classic energy markets of oil, gas, coal, uranium, and related businesses.
In 2023, the Company initially 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. In March 2025, the Company acquired three fractional,
non-operating royalty interests in oil and gas properties covering approximately one hundred twenty-one (121) wells in the Spraberry
Field of the Permian Basin in West Texas, through public auctions for total consideration of $1,369,899. The royalty interests entitle
the Company to receive a proportional share of revenues generated from the production of hydrocarbons from the underlying property, without
incurring any operating or production costs. The Company also maintains a gold investment and short-term treasury exchange-traded funds
for the purpose of facilitating investments into the Company to support potential future energy acquisitions and to collect low-risk
interest to offset inflation, respectively.
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
Mentor
and its subsidiaries combined have two full-time corporate office employees. The corporate office employees have relied heavily on management and audit committee reviews, payroll, tax, facilities, corporate counsel, and other professional support to provide administrative support for MCIP, Partner I, Partner II, and TWG operations, and for the Company’s classic energy business.
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 filings, 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.
We may incur material expenses or delays in financings or SEC
filings due to the dismissal of our former auditor BF Borgers, the transition to Spicer Jeffries and associated reaudits, followed in
the next year by the purchase of Spicer Jeffries by a third auditing firm, Cherry Bekaert. Our stock price, expenses, delayed reporting,
and access to the capital markets may all be affected.
As
a public company, we are required to file annual and quarterly financial statements with the Securities and Exchange Commission
which are audited or reviewed, as applicable, by independent registered public accountants who are PCAOB-registered, and permitted
to appear and practice before the Securities and Exchange Commission. Our access to the capital markets and our ability to make
timely filings with the Securities and Exchange Commission will depend on having financial statements re-audited and re-reviewed by
independent registered public accountants who are PCAOB-registered and permitted to appear and practice before the Securities and
Exchange Commission. In addition, we may experience delays in working with potential acquisition targets or lenders until our
financial statements are re-audited and reviewed by a new auditor and our next purchasing auditor. As a result, we may encounter delays, additional audit expenses,
and other material costs due to our inability to rely on our previously reviewed and audited financial statements due to the
dismissal of BF Borgers and the following purchase of Spicer Jeffries by Cherry Bekaert. Any resulting delay in accessing or inability to access the public capital markets could be disruptive to
our operations and could affect the price and liquidity of our securities. Any negative news about the proceedings against BF
Borgers may also adversely affect investor confidence and public perception of the Company. All of these factors could materially
and adversely affect our business, the market price of our common stock, and our ability to access the capital markets.
Variable
financial conditions can be challenging.
Securing
additional sources of financing to enable us to increase 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 larger new companies.
Mentor
will continue to attempt to raise capital resources from related and unrelated parties through the sale of preferred and common stock
equity and debt. Management’s plans further include monetizing existing mature business projects and increasing revenues through
acquisition, investment, and organic growth.
A
failure to obtain financing could prevent us from executing our business plan.
We
anticipate that current cash resources and opportunities without new inflows would be sufficient for us to execute our business plan
for four 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 substantial expenditures for advancement and growth to partner with businesses and hire additional personnel. If we raise
additional future 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 29 years and approximately 10 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, 2025, the Company had 21,683,189 outstanding shares of its Common Stock trading at approximately $0.08 per share. 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 at lower than the then market price.
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. On October 7, 2016, the Company announced that the 1% redemptions which were formerly priced on a calendar month
schedule would subsequently be initiated and priced on a random date to be scheduled after the prior 1% redemption is complete to prevent
potential third-party manipulation of share prices during the pricing period at month-end. 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 at a maximum of one-half of the closing bid price on the day preceding the 1% partial redemption. The 1% partial redemption
may continue to be periodically recalculated and repeated according to the court formula until such unexercised warrants are exhausted,
or the partial redemption is otherwise suspended or truncated by the Company. There were no warrant redemptions during 2025 or in fiscal
year 2024.
We
may be unable to collect on oil and gas royalty interests in the form of oil and gas royalty payments or amounts owed
to us may be reduced due to external market conditions, regulatory changes, or the performance of third-party oil and gas operators.
We
may be unable to collect on oil and gas royalty interests owed to us due to a failure of third-party producers to properly send
royalty payments to us, or we may experience delays in payments or mistakes in the amounts sent to us. Further, our anticipated
royalty payment amounts may decrease due to declines in production levels on properties in which we have mineral and royalty
interests or changes in supply and demand levels for oil, gas, and natural gas. Our royalty interests may also be impacted by
negative market and trade conditions that may affect the demand for oil, gas, and natural gas, which would impact prices for those
commodities. We may be impacted by actions taken by the members of the Organization of the Petroleum Exporting Countries
(“OPEC”) and Russia that affect the production and pricing of oil, as well as other domestic and global political,
economic, or diplomatic developments, including regional supply and demand factors and delays of production that may be caused by
governmental or state orders, rules, or regulations that impose production limits on such acreage including federal, state, and
legislative initiatives relating to hydraulic fracturing. Our anticipated royalty interest payments may be decreased due to risks
related to climate change. Restrictions on the use of water, including limits on the use of produced water by operators and a
moratorium on new produced water well permits recently imposed by the Texas Railroad Commission in an effort to control induced
seismicity in the Permian Basin could affect our royalty payments. Future royalty revenue may also be affected by significant
declines in prices for oil, natural gas, or natural gas liquids, which, if significant, may require significant impairment of our
royalties. Third party operators may be impacted by changes in U.S. energy, environmental, monetary and trade policies and
conditions in the capital, financial and credit markets, including the availability and pricing of capital for their drilling and
development operations, or they could face changes in availability or cost of rigs, equipment, raw materials, supplies and oilfield
services, or a lack of or disruption in access to adequate and reliable transportation, processing, storage and other facilities
impacting operators, including severe weather conditions and natural disasters.
One part of our
business model is to partner with or acquire other companies.
We
aim to find energy businesses whose products, managers, technology, or other factors we like and then 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 maintain 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 have paid 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 in this manner with several different entities with
whom we do business, including several entities that 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 who 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 18.45% of the outstanding shares of the Company’s Common Stock on a fully diluted basis.
As
of March 27, 2026, Mr. Billingsley owned approximately 12.35% 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
18.45% 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. Marcia Meyer, and Lori Stansfield, directors of the Company, hold an aggregate of 628,955 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 are required to 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 OTCQB companies like
ours 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:
● our ability to engage with partners who are successful in their markets;
● economic conditions within our markets;
● 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 are opportunistic and 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 royalty interests and property, our competitive position would be adversely affected.
We
and our partners and subsidiaries intend to rely on contracts and agreements with third parties to protect our property rights. If we,
or our affiliates and partners, fail to protect property rights, including our royalty interest rights, our business, financial condition,
and results of operations would suffer. In the future, we may be forced 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, political climate,
technologies, and the introduction of new products and services. We believe that our future success will depend in part upon our ability
to work with 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 execute products and services or enhance initial products
in a timely manner to apply and satisfy customer needs, achieve market acceptance or address changes in our target markets. Failure to
apply and 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 may 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 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 in sensitive ways. We may become the subject of litigation alleging that our
partners’ and affiliates’ products were pollutive, 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 money printing, inflation, interest rate fluctuations,
fluctuations in gold prices, tariff increases, fluctuations in exchange rates, challenges in raising capital, supply chain
disruptions, recession, climate regulation, economic sanctions, potential banking or currency crises, asset confiscation, theft,
cybersecurity risks, evolving and sophisticated cyber-attacks and other attempts to gain access to our information technology
systems, the war in Ukraine, the conflicts in the Middle-East, the U.S. confrontation in Venezuela, and other potential
international conflicts, reoccurring election-related changes in the U.S. federal government, product and
labor shortages, increased risk to oil and energy markets, market conditions and monetization that could impact the price of gold,
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, political, and military situations, 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 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. Our involvement in the classic energy sector may draw political or
regulatory scrutiny even if our actions are entirely legal and beneficial to society. Also, we may have difficulties in securing
additional financing in the energy sector.
Shareholders,
directors, partners, professionals, and employees may disagree with management’s plan and direction for the Company.
In
any organization, some individuals will have differing views on the best approach that the Company should follow to optimize results.
These differences can sometimes even evolve into personal conflicts that are a distraction to management. With over four decades of senior
management experience current leadership has rarely but occasionally encountered these sorts of diverging opinions as to how the Company
should proceed. Disagreements of this nature have recently been addressed but may again continue or reappear in the future and randomly
over time.
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 an 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, and the material aspects of
the incident would be reported on Form 8-K.
The
Company maintains cybersecurity risk management, disaster readiness, and business continuity protocols to anticipate potential threats
and mitigate the probability of cybersecurity risks by establishing alerts, preemptive measures, and cybersecurity responses. 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 outside third parties unless required by law or necessary
for compliance purposes. 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 protocols are 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. She authored and implemented the
firm’s disaster readiness and business continuity protocols and managed the firm’s information technology operations prior
to implementation of these similar risk management protocols at the Company in consultation with information technology cybersecurity
experts for the purpose of mitigating the Company’s risk and ensuring best practices. Our assistant corporate secretary is responsible
for reporting known 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
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.
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
combined 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.
Item
3. Legal Proceedings.
G
FarmaLabs Limited
On
August 27, 2021, the Company and Mentor Partner I, LLC 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 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 $628,985 as of December 31, 2025, is fully
reserved pending the outcome of the Company’s collection process. We will continue to pursue collection from the G Farma Settlors
over time.
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
annual installment payments of $117,000 for 11 years through 2026, totaling $1,287,000 in exchange for 757,059 shares of Mentor Common
Stock obtained through the exercise of 757,059 Series D warrants at $1.60 per share plus a $0.10 per warrant redemption price.
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 or net present value of $0.78 per share, the then current share price closing.
The discount is being amortized monthly to interest over the 11-year term of the agreement. In the fourth quarter of 2020, we were notified
that due to the effect of COVID-19, we might not receive the 2020 installment or the full 2021 installment. Based on management’s
collection estimates, we recorded an investment loss of ($139,148) on the investment in account receivable at December 31, 2020. In 2021,
the Company re-evaluated estimated collections and recorded an investment gain of $22,718. Subsequently, on February 15, 2022, the terms
of the investment were modified, resulting in an additional loss of ($41,930). The loss of ($41,930) and gain of $22,718 were reflected
in Other Income on the consolidated income statement for the years ended December 31, 2022 and 2021, respectively.
On
January 10, 2023, the Company received the 2023 annual installment payment of $117,000. Three additional $117,000 annual installment
payments were due in early 2024, 2025, and 2026. The 2024 and 2025 annual installment payments have not been received.
On
June 11, 2024, our investment in account receivable was impaired by $250,208. The $250,208 impairment consisted of the Company’s
estimate of the reduction of $287,200 purchased receivable offset by a ($36,992) purchased receivable discount. The Company’s recognition
of an impairment loss due to the uncertainty of collection does not diminish its contractual rights to collect the full amounts due pursuant
to the contract. For the years ended December 31, 2025 and 2024, $0 and $9,559 of discount amortization are included in interest income.
The
Company has been notified by the originating third-party payor of the $1,287,000 account receivable that the Company purchased from
the former payee that in or about December 2025 the third-party payor intends to deposit a $180,000 payment with the
Superior Court of California, County of Fresno, in an interpleader action through which Mentor and the former payee can
resolve ownership of the $180,000. The Company intends to continue vigorously pursuing payment of the annual payments and associated
amounts owed through available legal means.
Item
4. Mine Safety Disclosures.
Not
applicable.
PART