Shareholder Updates

July 13, 2011
Warrant Designees

In accordance with the Section 1145 US Code order with associated SEC “No Comment” letter, Mentor Capital management has a fiduciary duty to allow for alternative designees to redeem warrants in the case they are not exercised by the original holder.  Shareholders interested in being back-up designees should contact the company for that possible arrangement.  Many long-time shareholders are aware of the warrant processes.  If you are uncertain of the warrant, designee and redemption process you should call management to not miss a significant economic event.  If you are a shareholder who does not have warrants, you should absolutely contact management at (760) 788 – 4700 to receive a full explanation.

April 29, 2011
2011 Long-Term Cancer Equity Funding Program

Mentor Capital’s goal is to accelerate the development of cancer cures by funding the most promising new treatments and cancer fighting companies. Warrant holders and socially responsible investors who buy MNTR shares on the market are indirectly helping Mentor to speed the delivery of cancer solutions to medicine and society. Mentor focuses its equity at the financially under served drug development gap between non-profit drug discovery and big-Pharma sales. Mentor is uniquely structured to provide guided cancer financing support because it has 27 Million freely tradable warrants that are numerically only 7% diluted by its 2 Million shares. At current strike prices these warrants would raise $125 Million for the cancer fight.

In order to match up the $125 Million in planned funding to the leading cancer companies, Mentor has launched its 2011 Long-Term Cancer Equity Funding Program. Mentor management screens the medical technology of cancer fighting companies. It offers to purchase shares directly from the larger pace-setting public anti-cancer firms. Mentor may also fund, acquire and/or incubate the best smaller private cancer fighting companies. Cancer shares purchased are deposited with a law firm. As cancer related shares build, other things being equal, that will cause the exercise in warrants. The warrant proceeds are paid out pro rata to the cancer companies on a monthly basis until each investment receivable is paid off. The ultimate Mentor goal is to acquire $125 Million in growing cancer company shares from approximately fifteen leading edge firms and in a balanced fashion provide $125 Million in crucially needed cancer drug development funding.

The Mentor Capital structure is unique and has extreme flexibility that allows management a number of tools to increase the likelihood of timely funding. The following scenario is one out of a range of possible approaches. It is forward looking and the forward looking exemption from liability is invoked, herein. The example is used to outline some of the mechanisms available to management. Management created the capital structure and received an SEC “no comment” letter and approval under USC 1145. As such, MNTR management is well versed in the nuances of the formation documents that allow MNTR to proceed along funding paths that are most beneficial to all parties.

Detailed example scenario:

1. In this example scenario, Mentor acquires its first cancer related assets in May of 2011.  MNTR screens down and then makes executive contact with approximately one new cancer company per week starting with the Cancer Immunotherapy Index companies.  Approximately one company per month or two sells shares to MNTR under the Long-Term Equity Funding Contract.  Over an 18 month period shares of approximately 15 cancer related companies are acquired.
2. Because MNTR has only 2 Million shares outstanding, the early addition of even $1 Million in assets impacts  the share price. 
3. The 2 Million series A warrants are reduced in its strike price to some in-the-money number and 66 days are given to complete the exercise.  (The unexercised series A warrants may be exercised by company designees - usually shareholders - that so request by paying 10 cents to the holder through MNTR).  Any finally unexercised series A warrants will roll up and become additional series B warrants.
4. 8 Million series B warrants will be called soon after the A’s on a 45 day notice and unexercised B warrants may be reassigned and exercised as above. 
5. Proceeds from the exercise of the 10 Million series A & B warrants that are exercised are dispersed  pro rata  to participating cancer companies.
6. Unexercised series B warrants roll up and become series D warrants with a $7 per share strike price. 
7. MNTR management holds approximately one million series C warrants at a strike price of 65 cents on account of earlier surrendering approximately 50% of company equity to fund legal requirements.
8. Other than the management warrants, at this point, all warrants will be at $7 per share, and should generate in excess of $125 Million if exercised at that price.  To facilitate an extension of the persons involved in the cancer funding, MNTR has discussed with our original MNTR share market maker their filing a 15(c)2-11 and making a market for the warrants.
9. To bring the $7 warrants into the money, and prepare for NASDAQ, the company conducts a reverse split with an $8 or higher target.    e.g.  If a holder had 8,000 shares at  $2 = $16,000 the reverse could give them 2,000 shares at $8 = $16,000.  There is no change to the value and a 2% holder pre-split remains a 2% holder post-split.  Note: The warrants have a non-dilutive quality approved by the courts under 1145, and already subject to historic review by the SEC who issued a no comment letter, FINRA who reviewed and approved trading and DTCC who effected an earlier reverse split.  That is, a reverse split of the shares specifically does not affect the exercise price of the warrants.  (See footnote page 50, Section 1145 Disclosure Statement).  All original shareholders hold warrants.  Any new shareholder may become a company designee to act as a substitute exercisor of warrants, by contacting the company with that inquiry, and if such warrants are available under the rules commented on by the SEC and as ruled on by the court in the original warrant formation.  For emphasis: NOTE THAT A CONTEMPLATED REVERSE SPLIT OF THE STOCK WILL NOT IMMEDIATELY AFFECT THE PERCENTAGE OF ANY SHAREHOLDER’S HOLDINGS.  HOWEVER, THE WARRANT STRIKE PRICE IS SPECIFICALLY NOT AFFECTED BY THE REVERSE.  THIS NON-DILUTIVE CHARACTERISTIC WILL BRING OUTSTANDING WARRANTS INTO THE MONEY.  THAT WILL EQUALLY SHIFT VALUE FROM SHAREHOLDERS’ SHARES OVER INTO THEIR WARRANTS. ANY SHAREHOLDER THAT DOES NOT HOLD WARRANTS SHOULD CONTACT THE COMPANY BEFORE OR AT THE TIME OF THE REVERSE TO SEE IF THEY MAY ALSO COME TO HOLD WARRANTS AS A COMPANY DESIGNEE AND EQUALLY CAPTURE THIS SHIFT IN VALUE. 
10. Post-split Mentor will have a simplified structure.  There will be shares at a post-split target of $8 and warrants at a strike price of $7.  The shares represent the value of the cancer assets already paid for at that time. 
11. Mathematically, if the value of the cancer shares do not decline nor increase, and the BID/ASK spread is not too large, efficient market theory would forecast that all warrants would be exercised at $7.00 and the share price would be bounded between $7 and $8 per share.
12. The market is often inefficient, but one would expect appreciation if the cancer shares increase in value and a decrease in the MNTR share price if the cancer shares decreased in value. In addition, though, there are other logical and emotional reasons that would result in volatility or an unexpected increase or decrease in the MNTR share price.
13. If the MNTR share price irrationally increases, funding will proceed more easily.
14. If the MNTR share price decreases for any reason, management has the option to decrease the strike price on the warrants. 
15. Again, mathematically, if the share price at perhaps a lowered, $6.51/sh represents the fair value of the cancer assets, then if all the remaining warrants were set to $5.51/sh then efficient market theory would forecast that all warrants would be exercised at $5.51 and the share price would be bound within the dollar range of $5.51 to $6.51/sh.
16. However, if the warrant strike price is reduced enough, less than $125 Million will be raised.  In that exception case, the residual cancer shares that represent the unpaid portion of MNTR’s investment payable would be returned to the cancer company by the law firm holding them.
17. The Long-Term Equity Contract structure is set up to pay off the quickly growing cancer firms first.  The returned shares would, by contract, then be mostly from the slower growing cancer firms.

Only management need be in command of these many steps and it is. For the warrant holder, exercise will be noticed when the warrants are in the money. For the regular shareholder, a reverse-split does not affect value. 2% = 2% and $16,000 = $16,000. Any shareholder interested in being a company designee to receive unexercised in the money warrants should contact the company. Cancer companies may recognize that this is a very flexible structure to deliver their share of $125 Million in cancer shares.

The above extended example is intended to best illustrate the various tools and approaches available to MNTR management. This teaching example will not be updated as circumstances change over time, but various aspects may well be used by management to maximize shareholder value as our cancer funding program evolves.

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