Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion of our financial condition and results of operations for the years ended December 31, 2025, and 2024 should be read in conjunction with the financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form 10-K.
Corporate Background
The Company’s common stock is publicly traded on OTC Markets Over-the-Counter Venture Market (“OTCQB”), under the trading symbol: MNTR.
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 diverse operating and investment activities. These have included the acquisition of oil and gas partnerships, New York Stock Exchange gas trading company mini-tender offers, ATM ownership, facilities operations investment, cancer immunotherapy investment, equipment financing, intellectual property investment, litigation financing, investment in a dispute resolution company, our former facilities operations segment, 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, and uranium markets and 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.
Acquisitions and investments
Waste Consolidators, Inc.
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 had been a long-standing operation, but it no longer aligned with the Company’s central business focus in the energy sector. The $6,000,000 proceeds from the sale of our WCI shares paid to the Company in 2023 and 2024 provided the Company with seed capital to seek out new business opportunities in the classic energy space. of oil and gas, coal, uranium, and related businesses.
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 first serving as a placeholder while new energy positions are arranged. Although the energy sector declined, the gold investment did extraordinarily well. As a result, the Company progressively shifted to emphasize gold investment for profit and has begun to shift toward precious metals-oriented trading as a more profitable approach, including bullion, securities, and futures. 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:
On March 20, 2025, Mentor Capital, Inc. purchased an average of 0.0332439% oil and gas royalty interests in seven (7) producing horizontal wells and a royalty interest of approximately 0.15625% in two (2) non-producing mineral wells located in the Permian Basin situated in Howard County, Texas from Bluestem Royalty Partners, LP, a Texas limited partnership, for a total acquisition cost of $60,980. Prior to the Company’s purchase, average daily production in the last six months was approximately 5,252 BBLs and 5,580 MCF. Transfer of title to oil, gas, and mineral royalty interests and other interests in the name of Mentor Capital, Inc. was recorded on April 3, 2025 in Howard County, Texas by a certain Mineral and Royalty Deed effective March 1, 2025. Therefore, royalty payments owed to the Company commenced and were recognized as of March 1, 2025.
On March 25, 2025, Mentor Capital, Inc. purchased an overriding royalty interest of approximately 0.06% in seventy-one (71) producing oil and gas wells in a nearly 3.5 square mile pooled horizontal drilling project located in the Permian Basin situated in Martin County, Texas from Gatorex Holdings, LLC, a Texas limited liability company, for a total acquisition cost of $720,690. Prior to the Company’s purchase, average daily production in the last six months was approximately 16,572 BBLs and 37,496 MCF. Transfer of title to overriding royalty interests together with all interests in any units, bonuses, rents, royalties, and other benefits which may accrue in the name of Mentor Capital, Inc. was recorded on April 9, 2025 in Martin County, Texas by a certain Assignment of Overriding Royalty Interests effective April 1, 2025. Royalty payments owed to the Company commenced and were recognized effective April 1, 2025.
As of March 31, 2025, Mentor Capital, Inc. purchased royalty interests of approximately 0.050099% in forty-one (41) producing oil and gas wells in the Permian Basin situated in Martin County, Texas from Maven Royalty 2, LP, a Delaware limited partnership, for $588,229. Prior to the Company’s purchase, average daily production in the last six months was approximately 15,734 BBLs and 20,645 MCF. Transfer of title to all oil, gas, and associated liquid or liquefiable hydrocarbons, including royalty, overriding royalty, unit interest and mineral interests of whatever nature, in, on, and under that may be produced from or attributable to the property including royalty interests in the name of Mentor Capital, Inc. was recorded on April 9, 2025 in Martin County, Texas by a certain Mineral and Royalty Deed effective April 1, 2025. Therefore, royalty payments owed to the Company commenced and were recognized on April 1, 2025.
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 liabilities were $4,571 and $0 as of December 31, 2025, and 2024. Ad valorem taxes are 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.
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, whereby the Company purchased an additional SAFE at face value of $10,000, 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.
If, prior to termination, conversion, or expiration of the SAFE, NeuCourt sells a series of preferred stock (“Equity Preferred Stock”) to investors in an equity financing raising not less than $500,000, Mentor’s SAFE shall be converted into shares equal to the Purchase Amount divided by the lessor of (x) the price per share of the Equity Preferred Stock multiplied by the Discount Rate and (y) the price per share equal to the Valuation Cap divided by the number of outstanding shares of NeuCourt on a fully diluted, as-converted basis (“Conversion Shares”). The Conversion Shares shall consist of (a) the number of shares of Equity Preferred Stock equal to the Purchase Amount divided by the price per share of the Equity Preferred Stock (“Preferred Stock”) and (b) the number of shares of common stock equal to the Conversion Shares minus the Preferred Stock.
The SAFE will expire and terminate upon the earlier to occur of (i) conversion and (ii) repayment. The SAFE may be repaid by NeuCourt upon sixty (60) days prior notice (“Repayment Notice”) to the Company unless the Company elects during that period to convert the SAFE.
If NeuCourt does not close an equity financing round raising $500,000 or more prior to expiration or termination of the SAFE, the Company may elect to convert the SAFE into the number of shares of a to-be-created series of preferred stock equal to the (x) Purchase Amount divided by (y) the Valuation Cap divided by the number of outstanding shares of NeuCourt on a fully diluted, as-converted basis (“Default Conversion”). Additionally, if NeuCourt experiences a change of control, initial public offering, ceases operations, or enters into a general assignment for the benefit of its creditors, prior to conversion, termination, or expiration of the SAFE, the Company will receive the greater of (a) a cash payment equal to the Purchase Amount and (b) the value of the shares issuable on Default Conversion.
G FarmaLabs Limited
On March 17, 2017, the Company entered into a Notes Purchase Agreement with G FarmaLabs Limited, a Nevada corporation (“G Farma”). Under the Agreement, the Company purchased two secured promissory notes from G Farma in an aggregate principal face amount of $500,000. Since the initial investment, the Company made several additional investments in G Farma. Addenda II through VIII increased the aggregate investment amount to $1,110,000. G Farma has not made scheduled payments on the notes receivable since February 19, 2019. See Note 8 to the consolidated financial statements.
On September 6, 2018, the Company entered into an Equity Purchase and Issuance Agreement with G FarmaLabs Limited, G FarmaLabs DHS, LLC, GFBrands, Inc., Finka Distribution, Inc., and G FarmaLabs, WA, LLC under which Mentor was supposed to receive equity interests in the G Farma Equity Entities and their affiliates (together the “G Farma Equity Entities”) equal to 3.75% of the G Farma Equity Entities interests. On March 4, 2019, Addendum VIII increased the G Farma Equity Entities’ equity interest to which Mentor is immediately entitled to 3.843% and added Goya Ventures, LLC as a G Farma Equity Entity. We have fully impaired the equity investment with these entities, formerly valued at $41,600. See Note 8 to the consolidated financial statements.
On February 22, 2019, the City of Corona Building Department closed access to G Farma’s corporate location; the Company was not informed by G Farma of this incident until March 14, 2019. On April 24, 2019, the Company was notified that certain G Farma assets at its corporate location, including approximately $427,804 of equipment leased by G Farma Entities from Mentor Partner I, LLC, under a Master Equipment Lease Agreement, were impounded. See further description under Mentor Partner I, LLC, below, and Note 9 to the consolidated financial statements.
This event severely impacted G Farma’s ability to pay amounts due the Company in the future and led the Company, in the quarter ended March 31, 2019, to fully impair G Farma notes receivable of $1,045,051 and fully impair the Company’s 3.843% equity interest in G Farma Equity Entities, formerly valued at $41,600. See Note 8 to the consolidated financial statements.
Following the initiation of an action against the G Farma Lease Entities and their guarantors (collectively, the “G Farma Entities”) in California Superior Court for Marin County, the Company and Mentor Partner I and the G Farma Entities entered into a settlement agreement on August 27, 2021, whereby the G Farma Entities were to pay the Company an aggregate of $500,000. The G Farma Entities made a handful of payments and then ceased the performance of their settlement obligations.
In February 2023, the Company and Mentor Partner I sought entry of a stipulated judgment against the G Farma Entities. On July 11, 2023, the Court entered judgment against the G Farma Entities and in favor of Mentor and Partner I in the amount of $2,539,597, which is comprised of $2,494,450 of principal (calculated as the aggregate settlement amount, less payments made by the G Farma Entities, plus an additional $2,000,000 in default principal) 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 full reserve on the unpaid notes receivable balance and collections of the unpaid lease receivable balance due to the long history of uncertain payments from G Farma and the G Farma Settlors. Payments from G Farma and G Farma Settlors will be recognized in Other Income as they are received. No recovery payments were included in other income in the consolidated financial statements for the year ended December 31, 2025 and 2024, respectively. No payments have been received from the G Farma Entities since October 11, 2022. The $2,539,597 judgment and interest receivable of $628,985 at December 31, 2025 is fully reserved pending the outcome of the Company’s collection process. See Notes 8, 9, and 17.
Mentor Partner I, LLC
Mentor Partner I, LLC (“Partner I”) was reorganized as a limited liability company under the laws of the State of Texas as of February 17, 2021. Partner I was formed as a wholly owned subsidiary of Mentor for the purpose of acquisition and investment. 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 FarmaLabs Limited (“G Farma”) under a Master Equipment Lease Agreement dated January 16, 2018, as amended. During the years ended December 31, 2025 and 2024, Mentor withdrew no capital from Partner I. Partner I acquired and delivered manufacturing equipment as selected by G Farma and its related entities under sales-type finance leases. Partner I did not have any equipment sales revenue for the years ended December 31, 2025 or 2024.
In 2020, the Company repossessed leased equipment under G Farma’s control with a cost of $622,669 and sold it to the highest offerors for net proceeds of $249,481 after shipping and delivery costs. Net sales proceeds were applied against the finance lease receivable.
On July 11, 2023, the Court entered judgment against the G Farma Entities in favor of Mentor and Partner I in the amount of $2,539,597. The judgment also accrues post-judgment interest at the rate of 10% from July 11, 2023 until such time as the judgment is paid in full. Collection is uncertain at this time. The remaining finance lease receivable balance is fully impaired at December 31, 2025 and 2024. See Notes 9 and 17 to the consolidated financial statements.
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. See Note 5.
Liquidity and Capital Resources
The Company’s future success is dependent upon its ability to make a return on its acquisitions and investments to generate positive cash flow and to obtain sufficient capital from non-portfolio-related sources. The Company currently has enough cash to effectuate its business plans for the next four years. Management believes they can raise additional funds to support their business plan and develop a successful operating company.
Critical Accounting Policies
Basis of presentation
The accompanying consolidated financial statements and related notes include the activity of subsidiaries in which a controlling financial interest is owned. The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Significant intercompany balances and transactions have been eliminated in consolidation.
Certain amounts from the prior year have been reclassified to conform with the current year’s presentation.
As shown in the accompanying financial statements, the Company has a significant accumulated deficit of ($9,601,431) as of December 31, 2025. On October 4, 2023, the Company received significant profit on the sale of its former majority owned subsidiary, although negative cash flows from operations continue. 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 a total consideration of $1,369,899. The royalty interests entitle the Company to receive a proportional share of revenues generated from the future production of hydrocarbons from the underlying properties, without incurring any operating or production costs in the future. See Note 10.
Ongoing capital formation
The Company will endeavor to raise additional capital to fund its acquisitions from both related and unrelated parties to generate increasing growth and revenues. The Company has 4,250,000 Series D warrants outstanding, and the Company has reset the exercise price to $0.02 per share, which is below the current market price. The Company may reverse split the stock to raise the stock price to a level further above the warrant exercise price. The warrants are specifically not affected and do not split with the shares in the event of a reverse split. These consolidated financial statements do not include any adjustments that might result from repricing the outstanding warrants.
Management’s plans include increasing revenues through acquisition, investment, and organic growth. Management anticipates funding new activities by raising additional capital through the sale of Series Q Preferred Stock, other equity securities, and debt.
Segment reporting
The Company has determined that there are currently two reportable segments: 1) the Company’s energy segment and 2) the Company’s historic residual operations segment. 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.
Use of estimates
The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates, assumptions, and judgments that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of our consolidated financial statements, and the reported amount of revenues and expenses during the reporting period.
Significant estimates relied upon in preparing these consolidated financial statements include revenue recognition, accounts and notes receivable reserves, expected future cash flows used to evaluate the recoverability of long-lived assets, estimated fair values of long-lived assets used to record impairment charges related to investments, goodwill, intangible assets, amortization periods, accrued expenses, and recoverability of the Company’s net deferred tax assets and any related valuation allowance.
Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from management’s estimates if past experience or other assumptions do not turn out to lead to substantially accurate predictions.
Recent Accounting Standards
From time to time, the FASB, or other standards-setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standard Codifications (“ASCs”) are communicated through the issuance of an Accounting Standards Update (“ASU”). Unless otherwise discussed, we believe that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on our consolidated financial statements upon adoption.
Segment Reporting: Improvements to Reportable Segment Disclosures - In November 2023, the FASB issued Accounting Standards Update ASU 2023-07, “ Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ,” updates ASC 280 to expand annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. We adopted ASU 2023-07 in fiscal year 2024. See Note 18.
Income Taxes: Improvements to Income Tax Disclosures - In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topics 740): Improvements to Income Tax Disclosures ,” which updates ASC 740 to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. We adopted ASU 2023-09 in fiscal year 2025. See Note 19.
Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses - In November 2024, the FASB issued ASU 2024-03, “ Income Statement: Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) ,” which adds ASC 220-40 to expand disclosure requirements related to entity expenses. Upon adoption, entities will be required to disclose a disaggregation of certain expense categories included within the expense captions on the face of the income statement within the notes to the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.
Interim Reporting: Narrow-Scope Improvements - In December 2025, the FASB issued ASU 2025-11 “Interim Reporting (Topic 270)” to improve the navigability of required interim disclosures and clarify when such guidance is applicable. ASU 2025-11 provides additional guidance on the disclosures required in interim reporting periods and adds a principle to Topic 270 requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, and interim periods within fiscal years beginning after December 15, 2028. Early adoption is permitted. The ASU will be adopted by the Company upon the ASU effective date. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.
Codification Improvements - In December 2025, the FASB issued ASU 2025-12 “ Codification Improvements ,” which includes updates to thirty-three Codification entries across a broad range of Topics, arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. ASU 2025-12 is effective for fiscal years beginning after December 15, 2026, and for interim reporting periods within those annual periods. Early adoption is permitted. The ASU will be adopted by the Company upon the ASU effective date. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.
Concentrations of cash
The Company maintains its cash and cash equivalents in money market and bank deposit accounts, which at times may exceed federally insured Federal Deposit Insurance Corporation limits. The Company has not experienced any losses in such accounts, nor does the Company believe it is exposed to any significant credit risk on cash and cash equivalents. The Company will continue to monitor its accounts and the banking sector for potential financial institution risk.
Cash and cash equivalents
The Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. The Company had no short-term debt securities as of December 31, 2025 and 2024.
Accounts receivable
Accounts receivable consist of trade accounts arising in the normal course of business and are classified as current assets and carried at original invoice amounts less an estimate for doubtful receivables based on historical losses as a percent of revenue in conjunction with a review of outstanding balances on a quarterly basis. The estimate of allowance for doubtful accounts is based on the Company’s bad debt experience, market conditions, and aging of accounts receivable, among other factors. If the financial condition of the Company’s customers deteriorates, resulting in the customer’s inability to pay the Company’s receivables as they come due, additional allowances for doubtful accounts will be required. At December 31, 2025 and 2024, the Company had no allowance for doubtful normal course receivables.
The guidance under ASC Topic 326, “ Financial Instruments - Credit Losses ,” impacts the impairment model for certain financial assets by requiring a current expected credit loss (“CECL”) methodology to estimate expected credit losses over the entire life of the financial asset. Under the guidance, the Company has the ability to determine that there are no expected credit losses in certain circumstances based on the credit quality of the customer.
The allowance for credit losses is based on the Company’s expectation of the collectability of the financial instruments carried at amortized costs, including arrangement fees and other receivables, using the CECL framework. The Company’s expectation is that the credit risk associated with receivables is that the client with which it may conduct business is unable to fulfill its contractual obligation. In such instance, management would monitor the credit risk of clients, and currently, there is not a foreseeable expectation of an event or change that could result in the arrangement fee receivables being unpaid based on individual facts and circumstances. The Company considers factors such as historical experience, credit quality, age of balances, and current and future economic conditions that may affect the Company’s expectation of the collectability in determining the allowance for credit losses if such an arrangement became applicable. The Company’s royalty receivable is subject to ASC 326-20 “ Financial Instruments—Credit Losses—Measured at Amortized Cost ,” as a financial asset measured at amortized cost, but based on the Company’s evaluation of expected credit losses (considering counterparties, collection history, timing of payments, and other relevant factors), expected are insignificant and no allowance is recorded.
Investments in securities at fair value
Investment in securities consists of debt and equity securities reported at fair value. Under ASU 2016-01, “ Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities ,” the Company elected to report changes in the fair value of equity investment in realized and unrealized investment gains (losses), net.
Investment in gold at cost
The Company holds gold bullion as part of its investment strategy initially to preserve capital and hedge against inflationary risks. The Company’s investment strategy has shifted towards commodity futures trading as an integrated part of its portfolio involving gold bullion, gold bullion-backed securities, and futures trading in gold, silver, oil, and gas. Gold bullion is classified as an indefinite-lived nonfinancial asset and is accounted for under a cost model. Gold bullion is initially recorded at acquisition cost and subsequently measured at the lower of cost or net realizable value. The Company evaluates the carrying value of gold bullion for impairment on a periodic basis and recognizes losses when the market value declines below cost. Any such impairment losses are recognized in earnings and are not reversed for subsequent recoveries in value. Fair value measurements, when performed for impairment testing, are determined in accordance with ASC 820 “ Fair Value Measurement. ” Realized gains or losses are recognized in earnings upon sale of the gold bullion and are measured as the difference between the proceeds received and the carrying amount of the asset.
Note receivable
The Company had a one-year subordinated note receivable from Ally Waste Services, LLC that was recorded at the principal face amount of $1,000,000 plus accrued interest of $15,000 at December 31, 2023. The note matured on October 4, 2024, and bore interest at 6% per annum from October 4, 2023, to October 4, 2024, at which time the note was due and payable to Mentor. 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.
Long term investments
The Company’s investments in entities where it is a minority owner and does not have the ability to exercise significant influence are recorded at fair value if readily determinable. If the fair market value is not readily determinable, the investment is recorded under the cost method. Under this method, the Company’s share of the earnings or losses of such investee company is not included in the Company’s financial statements. The Company reviews the carrying value of its long-term investments for impairment each reporting period as well as for adjustments related to observable price changes in orderly transactions .
Investments in debt securities
At December 31, 2025 and 2024, the Company held no investments in debt securities.
Property and equipment
Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed on the declining balance method over the estimated useful lives of various classes of property. The estimated lives of the property and equipment are generally as follows: computer equipment, 3 years to 5 years; furniture and equipment, 7 years; and vehicles and trailers, 4 years to 5 years. Depreciation is included in selling, general and administrative costs in the consolidated income statements.
Expenditures for major renewals and improvements are capitalized, while minor replacements, maintenance, and repairs, which do not extend the asset lives, are charged to operations as incurred. Upon sale or disposition, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. The Company continually monitors events and changes in circumstances that could indicate that the carrying balances of its property and equipment may not be recoverable in accordance with the provisions of ASC 360, “Property, Plant, and Equipment.” When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. See Note 6.
The Company reviews intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. Conditions that may indicate impairment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset, a product recall, or an adverse action or assessment by a regulator. If an impairment indicator exists, we test the intangible asset for recoverability. For purposes of the recoverability test, we group our amortizable intangible assets with other assets and liabilities at the lowest level of identifiable cash flows if the intangible asset does not generate cash flows independent of other assets and liabilities. If the carrying value of the intangible asset (asset group) exceeds the undiscounted cash flows expected to result from the use and eventual disposition of the intangible asset (asset group), the Company will write the carrying value down to the fair value in the period identified.
Intangible assets
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 a total consideration of $1,369,899. The Company’s ownership in various non-operating royalty interests that result in a future economic benefit in the form of royalty payments following production are classified as intangible assets in accordance with ASC 350, “ Intangibles – Goodwill and Other .” The Company determined that the royalty interests have an estimated useful life of ten years, which is not uncommon in the oil and gas industry. Our royalty interests are amortized on a straight-line basis over an estimated useful life of ten years. Undiscounted cash flows are used for the recoverability test. Discounted cash flows are used to determine fair value if impairment is triggered. The Company’s royalty interests are analyzed in comparison to net present value calculated by using a 10% discount rate ceiling for impairment at least annually or if events or changes in circumstances indicate the asset may be significantly impaired. As of December 31, 2025, the total carrying value of all royalty interests taken together was $1,266,648, which was calculated as the beginning balance of our royalty interests of $1,369,899, less accumulated amortization of $103,251 at December 31, 2025. No indicators of were identified during the twelve months ended December 31, 2025. See Note 10.
Long-lived assets impairment assessment
In accordance with the FASB Accounting Standards Codification (“ASC”) 350, “ Intangibles - Goodwill and Other ,” we regularly review the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. The carrying value and ultimate realization of these assets are dependent upon our estimates of future earnings and benefits that we expect to generate from their use. If our expectations of future results and cash flows are significantly diminished, intangible assets and other long-lived assets may be impaired, and the resulting charge to operations may be material. When we determine that the carrying value of intangibles or other long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, we use the projected undiscounted cash flow method to determine whether an impairment exists and then measure the impairment using discounted cash flows.
Revenue recognition
Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to government authorities.
For each finance lease, the Company recognized as a gain the amount equal to (i) the net investment in the finance lease less (ii) the net book value of the equipment at the inception of the applicable lease. At lease inception, we capitalize the total minimum finance lease payments receivable from the lessee, the estimated unguaranteed residual value of the equipment at lease termination, if any, and the initial direct costs related to the lease, less unearned income. Unearned income is recognized as finance income over the term of the lease using the effective interest rate method.
The Company, through its subsidiaries, has been the lessor of manufacturing equipment subject to leases under master leasing agreements. The leases contain an element of dealer profit and lessee bargain purchase options at prices substantially below the subject assets’ estimated residual values at the exercise date for the options. Consequently, the Company classified the leases as sales-type leases (the “finance leases”) for financial accounting purposes. For such finance leases, the Company reports the discounted present value of (i) future minimum lease payments (including the bargain purchase option, if any) and (ii) any residual value not subject to a bargain purchase option as a finance lease receivable on its balance sheet and accrues interest on the balance of the finance lease receivable based on the interest rate inherent in the applicable lease over the term of the lease. For each finance lease, the Company recognized revenue in an amount equal to the net investment in the lease and cost of sales equal to the net book value of the equipment at the inception of the applicable lease.
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. 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. Working interest owners operating the wells will participate in and bear the costs of operation and development. Accrued royalty income is estimated and recognized in the month it is produced. The difference between accrued royalty income and the amount received is adjusted when royalty payments are paid. Therefore, our royalty income accruals are subject to revision. The performance or lack of performance of third-party producers who send royalty payments to the Company, weather conditions, the accuracy of historical check stub and well volume data from the energy professionals upon which our estimates rely, production levels and actual volumes, and prices of oil and natural gas sales may materially impact our royalty income receivable amounts. The Company monitors changes in market conditions, commodity prices, production volumes, and other factors that may materially impact the recoverability of our royalty interests. The Company has the right to receive royalty interest payments once production has occurred, at which point payment is unconditional. The Company’s receipt of royalty interest payments is not attached to any performance obligation that the Company must perform, such as the delivery of goods or services in order to receive payment from a customer. Therefore, the Company’s ownership of royalty interests is not a contractual asset or liability under ASC 606, “ Revenue from Contracts with Customers .”
Basic and diluted income (loss) per common share
We compute net income or loss per share in accordance with ASC 260, “ Earnings Per Share .” Under the provisions of ASC 260, basic net income or loss per share includes no dilution and is computed by dividing the net income or loss available to common stockholders for the period by the weighted average number of shares of Common Stock outstanding during the period. Diluted net income or loss per share takes into consideration shares of Common Stock outstanding (computed under basic net income or loss per share) and potentially dilutive securities that are not anti-dilutive.
Outstanding warrants that had no effect on the computation of dilutive weighted average number of shares outstanding as their effect would be anti-dilutive were approximately 4,250,000 and 4,250,000 as of December 31, 2025 and 2024, respectively. Earnings for the twelve months ended December 31, 2025 and 2024 were negative and the inclusion of the computational effect of the 3,188,826 and 3,128,628 common share equivalents from the warrants would be anti-dilutive, so no dilution effect was included for the period ending December 31, 2025 and 2024, for the 4,250,000 potentially dilutive warrants then outstanding.
Assumed conversion of Series Q Preferred Stock into Common Stock would be anti-dilutive as of December 31, 2025 and 2024 and is not included in calculating the diluted weighted average number of shares outstanding.
Income taxes
The Company accounts for income taxes in accordance with accounting guidance now codified as FASB ASC 740, “ Income Taxes ,” which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.
The Company applies the provisions of ASC 740, “ Accounting for Uncertainty in Income Taxes. ” The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition, classification, interest, and penalties, accounting in interim periods, disclosure, and transition. The Company utilizes a two-step approach to recognizing and measuring uncertain tax positions (tax contingencies). The first step evaluates the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that we will sustain the position on audit, including resolution of related appeals or litigation processes. The second step measures the tax benefit as the largest amount of more than 50% likely of being realized upon ultimate settlement. The Company did not identify any material uncertain tax positions on returns that have been filed or that will be filed. The Company did not recognize any interest or penalties for unrecognized tax provisions during the years ended December 31, 2025 and 2024, nor were any interest or penalties accrued as of December 31, 2025 and 2024. To the extent the Company may accrue interest and penalties, it elects to recognize accrued interest and related to unrecognized tax provisions as a component of income tax expense.
Fair value measurements
The Company adopted ASC 820, “ Fair Value Measurement,” which defines fair value as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs.
The Fair Value Measurements and Disclosure Topic establishes a fair value hierarchy, which prioritizes the valuation inputs into three broad levels. These three general valuation techniques that may be used to measure fair value are as follows: Market approach (Level 1) – which uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Prices may be indicated by pricing guides, sale transactions, market trades, or other sources. Cost approach (Level 2) – which is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost); and the Income approach (Level 3) – which uses valuation techniques to convert future amounts to a single present amount based on current market expectations about the future amounts (including present value techniques, and option-pricing models). Net present value is an income approach where a stream of expected cash flows is discounted to a single current value at an appropriate market interest rate.
The carrying amounts of cash, accounts receivable, prepaid expenses and other current assets, accounts payable, customer deposits, and other accrued liabilities approximate their fair value due to the short-term nature of these instruments.
The fair value of available-for-sale investment securities is based on quoted market prices in active markets.
The fair value of certain convertible notes receivable and accrued interest, which were exchanged for a SAFE security investment, is carried at cost as a long-term investment.
The fair value of the investment in account receivable is based on the net present value of calculated interest and principal payments. The carrying value approximates fair value as interest rates charged are comparable to market rates for similar investments.
The fair value of notes receivable is based on the net present value of calculated interest and principal payments. The carrying value approximates fair value as interest rates charged are comparable to market rates for similar notes.
The fair value of long-term notes payable is based on the net present value of calculated interest and principal payments. The carrying value of long-term debt approximates fair value due to the fact that the interest rate on the debt is based on market rates.
Results of Operations for the year ended December 31, 2025 compared to the year ended December 31, 2024:
Revenues
We had accrued and actual revenue of $166,811 and gross profit of $166,811 for the year ended December 31, 2025, versus revenue of $0 and gross profit of $0 for the year ended December 31, 2024, an increase in revenue of $166,811 and an increase in gross profit of $166,811.
Selling, general, and administrative expenses
Our selling, general, and administrative expenses, including severance and ad valorem taxes, for the year ended December 31, 2025, were $793,444, compared with $780,212 for the year ended December 31, 2024, an increase of $13,232, or 1.70%. The increase was due to an increase in amortization expense of $103,251, an increase in severance and ad valorem taxes of $13,050, an increase in officer accrued benefits of $11,985, an increase in employee benefits of $5,561, an increase in administrative expenses of $2,110, an increase in insurance expenses of $307, an increase in officer salary and payroll tax expense of $200, an increase in advertising and promotion expense of $145, offset by a decrease in professional service fees of ($102,885), a decrease in board of directors fees of ($17,500), a decrease in employee salary and payroll tax expense of ($2,132), a decrease in travel related expenses of ($550), and a decrease in depreciation expense of ($310).
Other income and expense
Other income and expenses, net, totaled $56,957 for the year ended December 31, 2025, compared to ($43,964) for the year ended December 31, 2024, an increase of $100,921. The increase was due to a $250,208 increase in loss on investments, a $201,269 increase in unrealized gain on investment in primarily gold-based securities, and a $26 increase in other income, offset by a decrease in realized loss on investments of ($221,151), and a decrease in interest income of ($129,432).
Net results
The net result for the year ended December 31, 2025, was a net loss attributable to Mentor of ($574,119) or ($0.026) per Mentor common share compared to a net loss attributable to Mentor of ($839,505) or ($0.036) per Mentor common share for the year ended December 31, 2024. The Company will continue to look for acquisition opportunities to expand its portfolio, ideally with companies that are positive for operating revenue or have the potential to become positive for operating revenue.
Changes in cash flows
At December 31, 2025, we had cash of $49,193 and working capital of $1,439,870. Operating cash outflows during 2025 were ($497,071), outflows from investing activities were ($1,635,856), and outflows from financing activities were ($1). We are evaluating various options to raise additional funds, including equity and debt. See discussion of cash flow changes under the next section, Liquidity, and Capital Resources.
Liquidity and Capital Resources
Since our reorganization, we have raised capital through warrant holder exercise of warrants to purchase shares of Common Stock. At December 31, 2025, we had cash of $49,193 and working capital of $1,439,870. Operating cash outflows in the year ended December 31, 2025, were ($497,071), including net income loss of ($574,119), depreciation and amortization of ($3,445), accumulated amortization of royalty interests of $103,251, gain on investments in securities, at fair value of ($15,107), royalty income receivable of ($26,000), prepaid expenses and current assets of ($1,052), accounts payable of ($2,805), accrued expenses of ($4,021), and accrued salary, retirement, and benefits of related party of $26,227.
Net cash outflows in 2025 from investing activities were ($1,635,856), including ($614,830) purchase of investment securities, ($516,346) purchase of investment in gold, $871,211 proceeds from investment securities sold, ($1,369,899) acquisition of royalty interests in the Permian Basin, and ($5,992) purchases of property and equipment.
Net outflows from financing activities in 2025 were ($1), as ($1) paid in capital for Company stock cancellations by an outside stockholder.
We will seek to raise additional funds through financing, additional collaborative relationships, or other arrangements to increase revenues to support positive cash flow. We believe our existing available resources and opportunities are sufficient to satisfy our funding requirements for four years. Internal sources of liquidity include our ability to immediately convert to cash some or all of our investment in securities valued at $879,208 at December 31, 2025, and our ability to immediately convert to cash our investment in gold held at cost at a carrying value of $516,346 and estimated at fair value based on quoted market prices at $683,527 as of December 31, 2025. External liquidity sources include royalty revenue from our oil and gas royalty interests in the Permian Basin valued at $1,266,648 at December 31, 2025. Material unused sources of liquid assets are the potential sale of our oil and gas royalty interests held in the Permian Basin.
In addition, on February 9, 2015, in accordance with Section 1145 of the United States Bankruptcy Code and the Company’s court-approved Plan of Reorganization, the Company announced a minimum 30-day partial redemption of up to 1% (approximately 90,000) 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. In the Company’s October 7, 2016 press release, Mentor stated that the 1% redemptions, which were formerly on a calendar month schedule, would subsequently be initiated on a random date schedule after the prior 1% redemption is completed to prevent potential third-party manipulation of share prices at month-end. The periodic partial redemptions may continue, at the Company’s discretion, to be recalculated and repeated until such unexercised warrants are exhausted or the partial redemption is otherwise truncated by the Company.
There were no warrant redemptions in 2025 or 2024.
Disclosure About Off-Balance Sheet Arrangements
We do not have any transactions, agreements, or other contractual arrangements that constitute off-balance sheet arrangements.
