UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2024
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission
file number 000-55323
Mentor Capital, Inc.
(Exact name of registrant as specified in its charter)
(Address of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code (760) 788-4700
Securities
registered pursuant to Section 12(b) of the Act: N/A
Securities
registered pursuant to section 12(g) of the Act:
Common
Stock
(Title
of class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
☐ No ☒
Note
– Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange
Act from their obligations under those Sections.
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes
☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Yes
☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒
Smaller reporting Company ☒ Emerging growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
Yes
☐ No ☒
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Yes
☐ No ☒
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Yes
☐ No ☒
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐ No ☒
At
June 30, 2024, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value
of Common Shares held by non-affiliates of Mentor Capital, Inc. (based upon the closing sale price of such shares on OTCQB) was $1,373,789.
Shares of Common Stock held by each officer and director and each person who owns more than 10% or more of the outstanding Common Stock
have been excluded because these persons may be deemed to be affiliates. The determination of affiliate status for the purpose of this
calculation is not necessarily a conclusive determination for other purposes.
At
March 28, 2025, there were 21,686,105 shares of Mentor Capital, Inc.’s Common Stock outstanding and 11 shares of Series Q Preferred
Stock outstanding.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
report contains “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act
of 1995 and Section 21E of the Securities and Exchange Act 1934, as amended. All statements contained in this report other than
statements of historical fact, including statements regarding our future results of operations and financial position, our business
strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believe,”
“may,” “will,” “estimate,” “continue,” “anticipate,” “seek,”
“look,” “hope,” “intend,” “expect,” and similar expressions are intended to identify
forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about
future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term
and long-term business operations and objectives, acquisition plans, and financial needs. These forward-looking statements are
subject to a number of risks, uncertainties, and assumptions. For example, statements in this Form 10-K regarding the potential
future impact on the Company’s business and results of operations of inflation, interest rate increases, tax increases, tariff
increases, recession, climate regulation, economic sanctions, cybersecurity risks, evolving and sophisticated cyber-attacks and
other attempts to gain unauthorized access to our information technology systems, increased risk to oil markets, potential banking
crises, future weakness in the credit markets, increased rates of default and bankruptcy, political change, the war in Ukraine, the
Israel-Hamas war and the post-election change in the U.S. federal government’s administration on the Company’s business and
results of operations are forward-looking statements. These risks and uncertainties include but are not limited to, those described
in “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations:” Moreover, due to our past investments, or current involvement in oil, gas, coal, or uranium related
industry or other industries, we may be subject to heightened scrutiny and, as a result, our portfolio companies may be subject to
additional laws, rules, regulations, and statutes. It is not possible for our management to predict all risks, nor can we assess the
impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and
assumptions, the future events and trends discussed in this Form 10-K may not occur and actual results could differ materially and
adversely from those anticipated or implied in the forward-looking statements.
You
should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking
statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable,
we cannot guarantee future results, levels of activity, performance, or achievements. The Company assumes no obligation to revise or
update any forward-looking statements for any reason, except as required by law.
All
references in this Form 10-K to the “Company,” “Mentor,” “we,” “us,” or “our,”
are to Mentor Capital, Inc.
MENTOR
CAPITAL, INC.
TABLE
OF CONTENTS
Page
PART I
Item 1. Business. 3
Item 1A. Risk Factors. 6
Item IB. Unresolved Staff Comments. 12
Item 2. Properties. 13
Item 3. Legal Proceedings. 13
Item 4. Mines and Safety Disclosures. 14
PART II
Item 6. Reserved 16
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 28
Item 8. Financial Statements and Supplementary Data. 28
Item 9A. Controls and Procedures. 29
Item 9B. Other Information. 31
PART III
Item 10. Directors, Executive Officers and Corporate Governance. 31
Item 11. Executive Compensation. 36
Item 14. Principal Accounting Fees and Services. 39
PART IV
Item 15. Exhibits, Financial Statement Schedules. 40
SIGNATURES 41
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, 2024 and 2023,
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 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 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 has signaled a substantial return
to its energy roots, starting with a tracking investment in six New York Stock Exchange energy companies in the oil and gas, coal,
uranium, and pipeline markets. These six energy company stock holdings had a current combined stock value that equaled approximately
68.16% of the Company’s market capitalization at December 31, 2024.
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 had been a long-standing investment, but it no longer aligned with the Company’s central business
focus in the operating energy sector. The proceeds from the sale of our WCI shares has provided the Company with capital to seek out
new business opportunities in the classic energy space.
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. 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. Patent application and 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, 2024 and 2023. 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 $83,756, 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, 2024 and 2023, 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, 2024.
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 $375,025 at December 31, 2024 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. During the years ended December 31, 2024 and 2023, Mentor withdrew no capital from Partner
I. Partner I did not have any sales revenue for the years ended December 31, 2024 or 2023. There was no interest income recognized
from Partner I finance leases for the years ended December 31, 2024 and 2023. The finance leases resulting from this investment have
been fully impaired as of December 31, 2024 and 2023, 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 in full to Partner
II 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. During
the years ended December 31, 2024 and 2023, Mentor withdrew no capital from Partner II. During the year ended December 31, 2024 and 2023,
Partner II recognized finance revenue of $0.
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 operating segments of 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. 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, for MCIP, Partner I, Partner II, and TWG operations, and for the Company’s classic energy business.
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 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.
Our
auditor has changed.
On
May 3, 2024, the Securities and Exchange Commission (the “SEC”) entered an Order Instituting Public Administrative
and Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Sections 4C and 21C of the Securities Exchange
Act of 1934 and Rule 102(e) of the SEC’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist
Order (the “Order”) whereby the Company’s then auditor, BF Borgers CPA PC (“BF Borgers”) was banned from
appearing or practicing before the SEC as an accountant. On May 3, 2024, the SEC issued a Staff Statement on Issuer Disclosure
and Reporting Obligations in Light of Rule 102(e) Order against BF Borgers CPA PC (“Staff Statement”) which stated that BF
Borgers is no longer permitted to appear or practice before the Securities and Exchange Commission. As a result of the Order and the
Staff Statement, Form 10-K and Form 10-Q filings filed on or after May 3, 2024 may not present financial information that has been reviewed
by BF Borgers. Annual and quarterly periods presented in the Company’s annual and quarterly reports must be reviewed by the Company’s
new independent registered public accountant who is qualified, PCAOB-registered, and permitted to appear or practice before the Securities
and Exchange Commission. In light of the Order, the Audit Committee dismissed BF Borgers as our independent registered public accounting
firm on May 8, 2024. On May 15, 2024, the Company’s audit committee and Board of Directors unanimously approved the engagement
of Spicer Jeffries LLP as the Company’s independent registered public accountant, effective immediately at that time.
We
may incur material expenses or delays in financings or SEC filings due to the dismissal of BF Borgers and our stock price and access
to the capital markets may 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. 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. 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.
Prior
to the profitable October 4, 2023 sale of our discontinued operation we experienced cash flow challenges. 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 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 future 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 28 years and approximately 9 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, 2024, the Company had 21,686,105 outstanding shares of its Common Stock trading at approximately $0.076. 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 2024 or in fiscal
year 2023.
Our
business model is to partner with or acquire other companies.
We
aim to find energy businesses whose products, managers, technology, or other factors that 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 14.48% of the outstanding shares of the Company’s Common Stock on a fully diluted basis.
As
of March 28, 2025, Mr. Billingsley owned approximately 8.38% 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
14.48% 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:
●
sales, sales cycle, and market acceptance or rejection of the energy products and services by entities in which we’ve invested;
●
our ability to engage with partners who are successful in their markets;
●
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 property, our competitive position would be adversely affected.
We
and our partners and subsidiaries intend to rely on contracts and agreements to protect our property rights. If we, or our affiliates
and partners, fail to protect property 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 inflation, interest rate increases, tariff increases,
recession, climate regulation, economic sanctions, potential banking crises, cybersecurity risks, evolving and sophisticated
cyber-attacks and other attempts to gain access to our information technology systems, the war in Ukraine, the Israel-Hamas war, the
post-election change in the U.S. federal government’s administration, product and labor shortages, increased risk to oil and energy
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 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