American Clean Resources Group, Inc 10-Q for FY2021 Q3
American Clean Resources Group, Inc. (ACRG)
About this 10-Q
American Clean Resources Group, Inc filed this 10-Q on November 12, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).
Headline figures
Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $271.77K
- compared with a net loss of $377.17K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
For the quarterly period ended
OR
For the transition period from _______ to _______
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the Registrant:
(1) 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 issuer was required to file such reports) and (2) has been subject to such filing requirements for
the past 90 days. Yes ☐
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of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such fi les).).
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| ☐ | Smaller reporting company | ||
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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 7(a)(2)(B) of the Securities Act: ☐
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As of November 12, 2021, there were
STANDARD METALS PROCESSING, INC.
FORM 10-Q
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
TABLE OF CONTENTS
i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-Q contains certain statements which are forward-looking in nature and are based on the current beliefs of our management as well as assumptions made by and information currently available to management, general trends in our operations or financial results, plans, expectations, estimates and beliefs. In addition, when used in this Form 10-Q, the words “may,” “could,” “should,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “predict” and similar expressions and their variants, as they relate to us or our management, may identify forward-looking statements. These statements reflect our judgment as of the date of this Form 10-Q with respect to future events, the outcome of which is subject to risks. We have attempted to identify, in context, certain of the factors that we believe may cause actual future experience and results to differ materially from our current expectations, which may have a significant impact on our business, operating results, financial condition or your investment in our common stock, as described in Part II, Item 1A entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission (“SEC”) on January 26, 2021.
Readers are cautioned that these forward-looking statements are inherently uncertain. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein.
We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made on related subjects in our subsequent periodic reports filed with the SEC on Forms 10-K, 10-Q and 8-K.
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
STANDARD METALS PROCESSING, INC.
CONDENSED Consolidated Balance Sheets
| September 30, 2021 | December 31, 2020 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Mining and mineral rights | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Shareholders’ Deficit | ||||||||
| Current liabilities: | ||||||||
| Senior secured promissory note payable, related party | $ | $ | ||||||
| Promissory notes payable - related party | ||||||||
| Convertible notes payable - related parties | ||||||||
| Accrual for settlement of lawsuits | ||||||||
| Accounts payable | ||||||||
| Accrued interest, including related party $ | ||||||||
| Total current liabilities | ||||||||
| Commitments and Contingencies (Note 6) | ||||||||
| Preferred stock, 50,000,000 shares authorized: | ||||||||
| Shareholders’ deficit: | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Shareholders’ deficit | $ | $ | ||||||
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
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STANDARD METALS PROCESSING, INC.
CONDENSED Consolidated STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Other income | ||||||||||||||||
| Derecognition of debt | ||||||||||||||||
| Loss on modification of options and warrants | ( | ) | ( | ) | ||||||||||||
| ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income (loss) before income tax provision | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax provision | ||||||||||||||||
| Net income (loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic net gain (loss) per common share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic weighted average common shares outstanding | ||||||||||||||||
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
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STANDARD METALS PROCESSING, INC.
CONDENSED Consolidated STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Nine Months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash flows provided by (used in) operating activities: | ||||||||
| Gain on derecognition of certain accounts payable | ( | ) | ( | ) | ||||
| Expenses paid directly by related party | ||||||||
| Expenses paid directly by exercise of options and warrants | ||||||||
| Loss on modification of options and warrants | ||||||||
| Changes in operating assets and liabilities - | ||||||||
| Prepaid expenses | ||||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued expenses | ||||||||
| Accrual for settlement of lawsuits | ||||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from exercise of stock options | ||||||||
| Net cash provided by financing activities | ||||||||
| (Decrease) Increase in cash | ||||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental cash flow disclosures | ||||||||
| Cash paid for interest cost | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||||||||
| Advances from related party used for settlement of liabilities | $ | $ | ||||||
| Expenses paid by exercise of options and warrants | $ | $ | ||||||
| Expenses prepaid by exercise of options and warrants | $ | $ | ||||||
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
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STANDARD METALS PROCESSING, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND
THE YEAR ENDED DECEMBER 31, 2020
| Common Stock | Accumulated | |||||||||||||||||||
| Shares | Amount | APIC | Deficit | Total | ||||||||||||||||
| Balance, December 31, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Reverse split restatement adjustment | ( | ) | ( | ) | ||||||||||||||||
| Restated balance, December 31, 2019 | ( | ) | ( | ) | ||||||||||||||||
| Shares issued on exercise of options | ||||||||||||||||||||
| Shares issued on exercise of warrants | ||||||||||||||||||||
| Loss on modification of options and warrants | --- | |||||||||||||||||||
| Net loss | --- | ( | ) | ( | ) | |||||||||||||||
| Balance at December 31, 2020 | ( | ) | ( | ) | ||||||||||||||||
| Net loss | --- | ( | ) | ( | ) | |||||||||||||||
| Balance at September 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
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STANDARD METALS PROCESSING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(unaudited)
NOTE 1 – NATURE OF BUSINESS
Standard Metals Processing, Inc. (“we,” “us,” “our,” “Standard Metals” or the “Company”) is an exploration stage company, incorporated in Nevada having offices in Gadsden, Alabama and through its subsidiary, a property in Tonopah, Nevada. The business plan is to purchase and install the equipment necessary to complete a facility on the Tonopah property to serve as a permitted custom processing toll milling facility (which includes an analytical lab, pyrometallurgical plant, and hydrometallurgical recovery plant).
The Company plans to perform permitted custom processing toll milling which is a process whereby mined material is crushed and ground into fine particles to ease the extraction of any precious minerals contained therein, such as minerals in the gold, silver, and platinum metal groups. Custom milling and refining can include many different processes that are designed specifically for each ore load and to maximize the extraction of precious metals from carbon or concentrates. These toll processing services also distill, dry, mix, or mill chemicals and bulk materials on a contractual basis and provide a chemical production outsourcing option for industrial companies, which lack the expertise, capacity, or regulatory permits for in-house production.
We are required to obtain several permits before we can begin construction of a small-scale mineral processing facility to conduct permitted processing toll milling activities and construction of the required additional buildings and well relocation necessary for us to commence operations.
Going Concern
The accompanying condensed consolidated financial statements have been
prepared in conformity with accounting principles generally accepted in the United States of America, assuming we will continue as a going
concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the nine months
ended September 30, 2021, the Company had a net loss of $
Management believes that private placements of equity capital and/or additional debt financing will be needed to fund our long-term operating requirements. The Company may also encounter business endeavors that require significant cash commitments or unanticipated problems or expenses that could result in a requirement for additional cash. If the Company raises additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our current shareholders would likely be reduced, and such securities might have rights, preferences, or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of prospective business endeavors or opportunities, which could significantly and materially restrict our operations. We are continuing to pursue external financing alternatives to improve our working capital position, however, if the Company is unable to obtain the necessary capital, the Company may have to cease operations.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Standard Metals Processing, Inc., and its wholly owned subsidiary Aurielle Enterprises Inc. (f/k/a Tonopah Milling and Metals Group, Inc.) (“AE”) and its wholly owned subsidiaries Tonopah Custom Processing, Inc., (“TCP”) and Tonopah Resources, Inc. (“TR”) All significant intercompany transactions, accounts and balances have been eliminated in consolidation.
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Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all the information and footnotes required by US GAAP for complete financial statements. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2020 filed January 26, 2021. In the opinion of management, all adjustments (consisting of normal recurring adjustments unless otherwise indicated) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year as a whole.
Reclassification of Prior Year Presentation
Certain prior period balance sheet amounts of accounts payable and accrued expenses have been reclassified for consistency with the current year balance sheet presentation. These reclassifications had no effect on previously reported consolidated financial condition, results of operations, cash flows, and shareholders’ deficit.
Mineral Properties
Mineral property acquisition costs are recorded at cost and are deferred until the viability of the property is determined. No properties have produced operating revenues at this time. Exploration, mineral property evaluation, option payments, related acquisition costs for mineral properties acquired under an option agreement, general overhead, administrative and holding costs to maintain a property on a care and maintenance basis are expensed in the period they are incurred. When reserves are determined for a property and a bankable feasibility study is completed, subsequent exploration and development costs on the property would be capitalized. If a project were to be put into production, capitalized costs would be amortized on the unit of production basis.
Management reviews the net carrying value of each mineral property as changes may materialize with a property or at a minimum, on an annual basis. Where information and conditions suggest impairment, estimated future net cash flows from each property are calculated using estimated future prices, proven and probable reserves and value beyond proven and probable reserves, and operating, capital and reclamation costs on an undiscounted basis. If it is determined that the future cash flows are less than the carrying value, a write-down to the estimated fair value is made with a charge to operations for the period. Where estimates of future net cash flows are not available and where other conditions suggest impairment, management assesses if the carrying value can be recovered.
Management’s estimates of gold prices, recoverable reserves, probable outcomes, operating capital, and reclamation costs are subject to risks and uncertainties that may affect the recoverability of mineral property costs.
The
Company does not own any mining claims. It owns tailings located on the Tonopah property and the rights to certain tailings located in
Manhattan, Nevada. The Company has not disturbed or processed any of this material, but recently authorized GPR to oversee an examination
of the economic feasibility of processing the tailings to reclaim their residual content of valuable metals in
exchange for the exclusive right to process the tailings should their economic assessment prove positive. In addition, the Company
and Sustainable Metal Solutions, LLC (“SMS”), an affiliate of GPR, agreed to form a joint venture into which the Company will
contribute the solar energy rights attributable to its
Impairment of Long-Lived Assets and Long-Lived Assets
The Company will periodically evaluate the carrying value of long-lived assets to be held and used, including but not limited to, mineral properties, mine tailings, mine dumps, capital assets and intangible assets, when events and circumstances warrant such a review and at least annually. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost of disposal.
Use of Estimates
Preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
6
Revenue Recognition and Deferred Revenue
As of September 30, 2021, the Company has not recognized any revenues from custom permitted processing toll milling. If we achieve revenue generation, the Company plans to report such revenues consistent with ASC Topic 606.
Income Taxes
Income taxes are accounted for based upon an asset and liability approach. Accordingly, deferred tax assets and liabilities arise from the difference between the tax basis of an asset or liability and its reported amount in the financial statements. Deferred tax amounts are determined using the tax rates expected to be in effect when the taxes will be paid or refunds received, as provided under currently enacted tax law. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense or benefit is the tax payable or refundable, respectively, for the period plus or minus the change in deferred tax assets and liabilities during the period.
Accounting guidance requires the recognition of a financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company believes its income tax filing positions and deductions will be sustained upon examination and accordingly, no reserves, or related accruals for interest and penalties have been recorded at September 30, 2021 and December 31, 2020. The Company recognizes interest and penalties due on unrecognized tax benefits as well as interest receivable from favorable tax settlements within income tax expense.
Recent Accounting Standards
In December 2019, the FASB issued ASU 2019-12, Income Taxes-Simplifying the Accounting for Income Taxes ("ASU 2019-12"). Among other items, the amendments in ASU 2019-12 simplify the accounting treatment of tax law changes and year-to-date losses in interim periods. An entity generally recognizes the effects of a change in tax law in the period of enactment, however, there is an exception for tax laws with delayed effective dates. Under current guidance, an entity may not adjust its annual effective tax rate for a tax law change until the period in which the law is effective. This exception was removed under ASU 2019-12, thereby providing that all effects of a tax law change are recognized in the period of enactment, including adjustment of the estimated annual effective tax rate. Regarding year-to-date losses in interim periods, an entity is required to estimate its annual effective tax rate for the full fiscal year at the end of each interim period and use that rate to calculate its income taxes on a year-to-date basis. However, current guidance provides an exception that when a loss in an interim period exceeds the anticipated loss for the year, the income tax benefit is limited to the amount that would be recognized if the year-to-date loss were the anticipated loss for the full year. ASU 2019-12 removes this exception and provides that, in this situation, an entity would compute its income tax benefit at each interim period based on its estimated annual effective tax rate. ASU 2019-l2 is effective for fiscal years beginning after December 15, 2020, including interim periods within those annual periods Early adoption is permitted. The Company is currently evaluating the effect that this update will have on its consolidated financial statements and related disclosures.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, and ASU 2019-05 (collectively, "Topic 326"). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. The Company will be required to adopt this ASU for financial years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of topic 326 is not expected to have a material effect on the Company’s consolidated financial statements and financial statement disclosures.
During the nine months ended September 30, 2021 and through the date of this filing, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.
NOTE 3 – MINING AND MINERAL RIGHTS
The Company previously prepared
the Tonopah property site for the construction of a permitted custom processing toll milling facility including grading the land, installing
fencing, and working with contractors for a planned
The Company has continued to assess the realizability of its mining and mineral rights. Based on an assessment the Company conducted in January 2021, the Company believes the carrying value of the rights recorded on its books is not impaired. However, the Company determined that its land, mineral rights, and water rights are inseparable and depend on each other in value creation. Accordingly, during the year ended December 31, 2018, the Company combined the carrying value of the assets to present more clearly their intended use together.
7
NOTE 4 – CONVERTIBLE NOTES PAYABLE
On March 16, 2020, the Company
executed a Line of Credit (“LOC”) with Granite Peak Resources, LLC (“GPR”), a related party, evidenced by a convertible
promissory note. On July 12, 2021,
The LOC is for funding operating
expenses critical to the Company’s redirection and all requests for funds may be approved or disapproved in GPR’s sole discretion.
The LOC bears interest at
Including
the foregoing advances under the LOC, there was $
NOTE 5 – SHAREHOLDERS’ DEFICIT
Common Stock – Reverse Split
On April 6, 2021, holders of a majority of the Company’s common stock authorized a 1 for 50 reverse stock split of the Company’s common stock, with all fractional shares rounded to the nearest whole share, as of April 12, 2021 (the “Record Date”). This action was taken in accordance with the Nevada Revised Statutes (“NRS”), Sections 78.315 and 78.320, however, a complete Information Statement has been mailed to all shareholders as of the Record Date. The outstanding shares and per share amounts in the accompanying consolidated condensed financial statements previously reported prior to the Record Date have been adjusted to give effect to the afore mentioned reverse split.
Common Stock - Option Grants
The Company recorded no compensation
expense for the nine months ended September 30, 2021 and 2020. As of September 30, 2021, there was $
The Company did not grant
any options during the nine months ended September 30, 2021, and
Common Stock Purchase Warrants
For warrants granted to non-employees in exchange for services, the Company recorded the fair value of the equity instrument using the Black-Scholes pricing model unless the value of the services is more reliably measurable.
The Company did not grant
any warrants during the nine months ended September 30, 2021 and no warrants were exercised, none expired, and none were cancelled. At
September 30, 2021 there were
The aggregate intrinsic value
of the
8
The following table summarizes information about the Company’s stock purchase warrants outstanding at September 30, 2021.
| Number | Weighted Average Exercise Price | Range of Exercise Price | Weighted Remaining Contractual Life (1) | |||||||||||||
| Outstanding at December 31, 2019 | $ | $ | . | |||||||||||||
| Granted | ||||||||||||||||
| Cancelled or expired | ||||||||||||||||
| Exercised | ||||||||||||||||
| Outstanding and exercisable at December 31, 2020 | | |||||||||||||||
| Granted | ||||||||||||||||
| Cancelled or expired | ||||||||||||||||
| Outstanding and exercisable at September 30, 2021 | $ | $ | | | ||||||||||||
| (1) |
NOTE 6 – COMMITMENTS AND CONTINGENCIES
Legal Matters
Stephen E. Flechner v. Standard Metals Processing, Inc.
On April 29, 2014, Stephen
E. Flechner filed suit in the United States District Court for the District of Colorado against Standard Metals Processing, Inc. alleging
that the Company had refused to allow him to exercise stock options granted to him pursuant to a Stock Option Agreement, dated April 1,
2010, and a second Stock Option Agreement, dated January 21, 2011. On June 12, 2014, the Company filed an Answer and a Motion to Dismiss
or, Alternatively, to Stay or Transfer the action to the U.S. District Court for the Northern District of Alabama, Middle Division. On
January 16, 2015, the Company filed a Motion for Summary Judgment. On January 23, 2015, the Court issued an Order granting in part and
denying in part the Company’s Motion to Dismiss or, Alternatively, to Stay or Transfer the action to the U.S. District Court for
the Northern District of Alabama, Middle Division. The Court in its Order stayed further proceedings in Colorado pending the issuance
of orders by the Alabama court. Thereafter, on January 26, 2015, the Court issued an Order vacating the February 20, 2015 Trial Preparation
Conference and the March 9, 2015 Bench Trial. On March 23, 2015, the Court issued an Order denying the Company’s Motion for Summary
Judgment. On March 30, 2015, Flechner filed a Motion to Lift the Stay. On March 31, 2015, the Court issued an Order granting Flechner’s
Motion to Lift the Stay. On April 6, 2015, the Court issued an Order scheduling a Bench Trial for July 29, 2015. On April 9, 2015, Flechner
filed a Motion for Reconsideration of the Court’s March 23, 2015 Order Denying Flechner’s Motion to Enforce the Confidential
Settlement Agreement to Settle Certain Issues. On May 1, 2015, the Court issued an Order Granting Flechner’s Motion to Enforce the
Confidential Settlement Agreement to Settle Certain Issues. On August 12, 2015 the U.S. District Court for the District of Colorado issued
a judgment in favor of Stephen E. Flechner for $
NOTE 7 – related party TRANSACTIONS
During March 2019, the Company
was informed that a change of control of the Company had occurred. Granite Peak Resources, LLC, through its members, including Pure Path
Capital Management LLC (“GPR”) acquired
9
GPR also acquired the senior
secured creditor position previously held by Pure Path Capital Group LLC (the “Senior Secured Note”), which includes a $
As further detailed in Note
4, in March 2020,
Although the LOC is for funding
operating expenses critical to the Company’s redirection and the resolution of certain creditors’ claims under GPR’s
sole discretion, neither GPR nor the Company can give any assurances that such creditors or claimants may be amicably resolved. As of
the date of this filing, GPR is the beneficial owner of
On February 11, 2015,
NOTE 8 – EARNINGS (LOSS) PER SHARE
Basic net loss per common share is computed by dividing net loss applicable to common shareholders by the weighted average number of common shares outstanding during the periods presented. Diluted net loss per common share is determined using the weighted average number of common shares outstanding during the periods presented, adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise of options, warrants and conversion of convertible debt. In periods where losses are reported, the weighted average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.
At September 30, 2021 the
weighted average shares from stock options of -
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following management discussion and analysis of financial condition and results of operations should be read in connection with the accompanying unaudited condensed financial statements and related notes thereto included elsewhere in this report and the audited consolidated financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended December 31, 2020, as filed with the SEC on January 26, 2021.
Cautionary Notice Regarding Forward Looking Statements
Readers are cautioned that the following discussion contains certain forward-looking statements and should be read in conjunction with the “Special Note Regarding Forward-Looking Statements” appearing at the beginning of this Quarterly Report.
The information contained in this Item 2 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.
As used in this Quarterly Report on Form 10-Q and unless otherwise indicated, the terms “Company,” “we,” “us,” and “our” refer to Standard Metals Processing, Inc. and our wholly owned subsidiary, Aurielle Enterprises Inc. (“AE”), and AE’s wholly owned subsidiaries Tonopah Custom Processing, Inc. (“TCP”) and Tonopah Resources, Inc. (“TR”). Unless otherwise specified, all dollar amounts are expressed in United States dollars.
Corporate History
We were incorporated in the State of Colorado on July 10, 1985 and re-domiciled in Nevada in March 2013. In 2011, we closed a series of transactions, whereby we acquired certain assets of Shea Mining & Milling, LLC, which assets include land, buildings, a dormant milling facility, abandoned milling equipment, water permits, mine tailings, mine dumps and the assignment of a note payable, a lease and a contract agreement with permits. We completed the Shea Exchange Agreement in order to offer toll milling services of precious minerals. Toll milling is a process whereby mined material is crushed and ground into fine particles to ease the extraction of any precious minerals contained therein, such as gold, silver, and platinum group metals. Custom milling and refining can include many different processes to extract precious metals from carbon or concentrates. These toll-processing services also distill, dry, mix, or mill chemicals and bulk materials on a contractual basis and provide a chemical production outsourcing option for industrial companies which lack the expertise, capacity, or regulatory permits for in-house production.
Overview of the Company
We have an office in Gadsden, Alabama and, through a subsidiary, a property in Tonopah, Nevada. Our business plan is to purchase equipment and build a facility on the Tonopah property to serve as a permitted custom processing toll milling facility which includes an analytical lab, pyrometallurgical plant, and hydrometallurgical recovery plant. We are required to obtain several permits before we can begin construction of a small-scale mineral processing facility and the required additional buildings to conduct permitted processing toll milling activities and commence operations.
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Water Pollution Control Permit with Nevada Department of Environmental Protection
Through the Company’s wholly owned subsidiary, TCP, a Water Pollution Control Permit (“WPCP”) Application was filed with the Nevada Department of Environmental Protection (“NDEP”) Bureau of Mines and Mining Reclamation (“BMMR”) for the approval of the permits necessary for a small-scale mineral processing facility planned for the Tonopah property. The plant will perform laboratory testing, pilot testing, and custom processing of precious metal ores and concentrates from mining industry clients. Processing of ore materials will employ standard mineral processing techniques including gravity concentration, froth flotation and chemical leaching and carbon stripping.
The WPCP must be approved prior to commencing the planned construction of our processing plant in Tonopah, Nevada.
In connection with our WPCP application, NDEP suggested that we take the following actions: (i) retain a Nevada Certified Environmental Manager (“CEM”), (ii) perform Meteoric Profile II water testing on ground water directly below the mill as well as surrounding wells located off site, and (iii) determine baseline values of water using the Meteoric Profile II results. NDEP regulations require that the Company delay any new construction planned for “metal extraction” until after the permits are in place.
Advanced Surveying & Professional Services, a Professional Land Surveyor (“PLS”), completed surveys and testing of the Tonopah property required for the application of our required permits. After completion of the survey, it was determined the property is 1,186 acres. The scope of work the PLS completed includes: (i) setting a total of 19 permanent monuments at angle points along lines, (ii) setting eight permanent monuments locating US Hwy 95, (iii) recording a professional map indicating longitude and latitude for all corners, and (iv) providing a digital map accessible in Auto Cad software.
Site Preparation
We have completed the initial grading of specific designated areas on the 40 undisturbed acres of land including clearing all vegetation, removing of all scrap metal, and the excavation of the building pad for preparation of our planned new 21,875 square foot processing plant and have completed the removal of all the extra and unnecessary materials and old equipment that has accumulated on the land. We have also refurbished a trailer that will act as our construction office.
Business Plan
The Company is reexamining its next steps for developing a processing facility. In an effort to move the Company’s business plan forward, the Company may evaluate opportunities to acquire, license, or joint venture with other parties involved in toll milling, processing, or mining related activities, which may include GPR and its affiliated entities including, but not limited to, Sustainable Metal Solutions, LLC (“SMS”), NovaMetallix, Inc. (“NMX”), Remedy Environmental LLC, and Black Bear Natural Resources, LTD.
On March 27, 2020, the Company engaged NMX, a subsidiary of SMS, to conduct a study of the quantity and quality of our historic mine tailings, and the economic feasibility of processing them to reclaim their residual content of valuable metals. NMX, a firm comprised of highly qualified mining, geological and metallurgical engineering professionals, is the leading force in the rapidly developing field of sustainable metals. NMX has agreed to conduct the study of the Company’s tailings at GPR’s cost and expense in exchange for the exclusive right to process the tailings should their economic assessment prove positive. The terms of such processing to be mutually agreed upon in the future based on the results of the assessment.
On April 17, 2020, the Company and SMS, agreed to form a joint venture styled Esmeralda Renewal Energy Zone, LLC (“EREZ”). The Company has agreed to contribute the solar energy rights attributable to its 1,087 acres to EREZ in exchange for SMS’s agreement to develop, manage and underwrite the EREZ venture.
Products and Services
We plan to establish ourselves as a custom processing and permitted toll milling service provider. Our business plan is to build a facility on our Tonopah property, which includes an analytical lab, pyrometallurgical, and hydrometallurgical recovery plant.
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The Company’s intention is to become a full service permitted custom toll milling and processing company that facilitates the extraction of precious and strategic minerals from mined material. The Company is in the process of obtaining the permits needed for construction and operation of our permitted custom processing toll milling facility with state-of-the-art equipment capable of processing gold, silver, and platinum metal groups. Many junior miners do not have the capital or the ability to permit a processing facility, yet they have a large supply of mined material that requires milling be performed. It is often cost prohibitive or impractical for these mine operators to send their materials to processing mills owned by the large mining companies, or to other customers sorely needing milling and processing services.
While Nevada has a historic role as a mining center with good proximate geology and ample mined product, very little custom processing toll milling capacity remains in the state. During the last several decades, other processing facilities have been shuttered due to high costs of regulations and the vertical integration of milling within large mining companies leaving junior miners with few options for local milling services. As a result, we are in a unique position among processing facilities because we are capable of true permitted custom processing. We have the only ball mill located within a custom toll milling facility within 300 miles allowing us to serve miners in the western United States, Canada, Mexico, and Central America.
Many junior miners are undercapitalized, have limited access to capital markets and have a large supply of mined material that requires milling be performed. Many large mining companies reserve their milling capacity for their inventory, which does not make providing third party services worthwhile. This provides the Company with an opportunity to provide these potential customers with dearly needed milling and processing services. Some of our mining customers will be able to take their tailings (the material left over after the desired minerals have been extracted) from the material they deposited with the Company and put it back in the exact same mines those tailings initially came from. Thereby eliminating the need for the Company to store or dispose of their voluminous remains.
Results of Operation
Comparison of Three and Nine Months Ended September 30, 2021, to Three and Nine Months Ended September 30, 2020
Revenues
We had no revenues from any operations for the three and nine months ended September 30, 2021, and 2020. Furthermore, we do not anticipate any significant future revenue until we have sufficiently funded construction and begin operations.
General and Administrative Expenses
General and administrative expenses were $101,090 and $595,415 for the three and nine months ended September 30, 2021, respectively, compared to $106,058 and $222,862, respectively for the same periods in 2020. The increases for the three and nine months ended September 30, 2021, were principally the result of increased engineering and development expenses associated with evaluating future uses of the Company’s property. During the three and nine months ended September 30, 2020, the $106,058 and $222,862 totals related principally to continuance of nominal accounting, legal, and office expenses consistent with modest funding. We anticipate that operating expenses will increase for fiscal 2021 as we continue to assess the Company’s future.
Other Income and Expenses
We receive monthly lease payments of from American Tower Corporation for a cellular tower located on our Tonopah land. As such Other Income for the three and nine months ended September 30, 2021, was $2,098 and $6,296, respectively, compared to $2,099 and $6,296, respectively, for the same periods in 2020. Additionally, the Company periodically reviews outstanding claims that have not been satisfactorily resolved. In some instances, these claims remain outstanding beyond their statutory limit on collection and are written off. Gain on derecognition of debt for the three and nine months ended September 30, 2021, was $2,421, and $29,353, respectively, compared to $0 and $115,424, respectively for the same periods in 2020.
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Interest expense for the three and nine months ended September 30, 2021, was $175,197 and $509,449, respectively, compared to $157,493 and $362,357, respectively for the same periods in 2020. The increases in 2021, are consistent with the higher level of borrowings during 2021.
Liquidity and Capital Resources
Liquidity is a measure of an entity’s ability to secure enough cash to meet its contractual and operating needs as they arise. We have funded our operations and satisfied our capital requirements through increases in convertible debt pursuant to our LOC during the three and nine months ended September 30, 2021, and 2020. We do not anticipate generating sufficient net positive cash flows from our operations to fund the next twelve months. We had a working capital deficit of $11,239,169 at September 30, 2021. Cash was $2,120 at September 30, 2021, as compared to cash of $1,199 at December 31, 2020.
Our cash reserves will not be sufficient to meet our operational needs and thus, we need to raise additional capital to pay for our operational expenses and provide for capital expenditures. Our basic operational expenses are currently estimated at approximately $120,000 per month. Above the basic operational expenses, we estimate that we need approximately $10,000,000 to begin limited toll milling operations. If we are not able to raise additional working capital, we may have to cease operations altogether.
Recent Financings
On March 16, 2020, the Company executed a Line of Credit (“LOC”) with GPR, a related party, evidenced by a convertible promissory note. On July 12, 2021 the LOC availability was increased from $2,500,000 to $5,000,000; its maturity extended from March 16, 2023 to March 16, 2025; GPR’s right to increase the LOC by another $1,000,000 and extend two additional years was increased to $5,000,000 with an extension for an additional five years, and GPR agreed to forebear exercising its foreclosure rights under its defaulted Senior Secured Note and accrued interest of $3,647,532 at June 30, 2021 until December 31, 2021. In exchange for the foregoing accommodations the Company revised GPR’s price at which the LOC can be converted to common stock from $2.00 to $1.65 per share. Disclosure of the common share equivalent of GPR’s LOC and accrued interest has been revised accordingly.
The LOC bears interest at 10% per annum and is secured by the real and personal property and pledged securities GPR already has under lien. The LOC is for funding operating expenses critical to the Company’s redirection and all requests for funds may be approved or disapproved in GPR’s sole discretion. During the three and nine months ended September 30, 2021, GPR advanced $490,255 and $580,828, respectively, to pay directly on the Company’s behalf, certain administrative costs as well as engineering and development expenses to assess the future uses of the Company’s real property. During the three and nine months ended September 30, 2020, GPR advanced $84,643 and $190,665, respectively, which it used to pay directly certain of the Company’s providers of administrative expenses. The advances were made by GPR, a related party, pursuant to the terms of the LOC.
Going Concern
The condensed consolidated financial statements contained in this quarterly report on Form 10-Q have been prepared assuming that the Company will continue as a going concern. The Company has accumulated losses from inception through the period ended September 30, 2021, of $105,419,617, and a working capital deficit of $11,239,169, as well as negative cash flows from operating activities. Presently, the Company does not have sufficient cash resources to meet its debt obligations in the twelve months following the date of this filing. In addition, virtually all the Company’s assets are encumbered or pledged under senior secured debt owned by GPR, a related party, in the aggregate amount of $5,441,750, including interest of $1,834,638 at September 30, 2021. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is in the process of evaluating various financing alternatives to finance its capital requirements, as well as for general and administrative expenses. These alternatives include raising funds through public or private equity markets and either through institutional or retail investors. Although there is no assurance that the Company will be successful with its fund-raising initiatives, management believes that the Company will be able to secure the necessary financing providing it is successful in resolving its liabilities and other claims with its unsecured creditors and GPR’s assistance.
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The consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent on its ability to obtain additional financing as may be required and ultimately to attain profitability. If the Company raises additional funds through the issuance of equity, the percentage ownership of current shareholders would likely be reduced, and such securities might have rights, preferences or privileges senior to the rights, preferences, and privileges of the Company’s common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of prospective business endeavors or opportunities, which would significantly and materially restrict its future. If the Company is unable to resolve the claims of its unsecured creditors, the Company may have to cease operations.
Working Capital Deficiency
| September 30, 2021 | December 31, 2020 | |||||||
| Current assets | $ | 2,120 | $ | 36,646 | ||||
| Current liabilities | 11,241,289 | 10,206,600 | ||||||
| Working capital deficiency | $ | (11,239,169 | ) | $ | (10,169,954 | ) | ||
The balance and components of current assets are consistent between periods. The increase in current liabilities is primarily due to accrual of interest on settlement of lawsuits, creditor claims, and notes due related parties.
Cash Flows
Nine Months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Net cash provided by (used in) operating activities | $ | 921 | $ | (11,129 | ) | |||
| Net cash provided by financing activities | --- | 11,500 | ||||||
| Increase (Decrease) in cash | $ | 921 | $ | 371 | ||||
Operating Activities
Net cash provided (used) by operating activities was $921 and $(11,129) for the nine months ended September 30, 2021 and 2020, respectively. Cash was provided by operating activities during both periods primarily due to payments advanced under the LOC for operating expenses offset by net changes in accrued liabilities.
Financing Activities
For the nine months ended September 30, 2021, and 2020, net cash provided (used) by financing activities was $921 and $(11,129), respectively.
Off-Balance Sheet Arrangements
During the nine months ended September 30, 2021, we did not engage in any off-balance sheet arrangements as defined in item 303(a)(4) of the SEC’s Regulation S-K.
Effects of Inflation
We do not believe that inflation has had a material impact on our business, revenues or operating results during the periods presented.
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Critical Accounting Policies and Estimates
Our significant accounting policies are more fully described in the notes to our financial statements included herein for the nine months ended September 30, 2021, and in the notes to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. We believe that the accounting policies below are critical for one to fully understand and evaluate our financial condition and results of operations.
Impairment of Long-lived Assets
We review our property and mining and mineral rights subject to amortization and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset class may not be recoverable. Indicators of potential impairment include: an adverse change in legal factors or in the business climate that could affect the value of the asset; an adverse change in the extent or manner in which the asset is used or is expected to be used, or in its physical condition; and current or forecasted operating or cash flow losses that demonstrate continuing losses associated with the use of the asset. If indicators of impairment are present, the asset is tested for recoverability by comparing the carrying value of the asset to the related estimated undiscounted future cash flows expected to be derived from the asset. If the expected cash flows are less than the carrying value of the asset, then the asset is considered to be impaired and its carrying value is written down to fair value, based on the related estimated discounted cash flows. During the prior year, however, we decided to combine the carrying value of our mining and mineral assets as they are inseparable and depend upon each other in value creation. There were no impairment charges in the nine months ended September 30, 2021. See Note 3.
Recent Accounting Standards
In December 2019, the FASB issued ASU 2019-12, Income Taxes-Simplifying the Accounting for Income Taxes ("ASU 2019-12"). Among other items, the amendments in ASU 2019-12 simplify the accounting treatment of tax law changes and year-to-date losses in interim periods. An entity generally recognizes the effects of a change in tax law in the period of enactment, however, there is an exception for tax laws with delayed effective dates. Under current guidance, an entity may not adjust its annual effective tax rate for a tax law change until the period in which the law is effective. This exception was removed under ASU 2019-12, thereby providing that all effects of a tax law change are recognized in the period of enactment, including adjustment of the estimated annual effective tax rate. Regarding year-to-date losses in interim periods, an entity is required to estimate its annual effective tax rate for the full fiscal year at the end of each interim period and use that rate to calculate its income taxes on a year-to-date basis. However, current guidance provides an exception that when a loss in an interim period exceeds the anticipated loss for the year, the income tax benefit is limited to the amount that would be recognized if the year-to-date loss were the anticipated loss for the full year. ASU 2019-12 removes this exception and provides that, in this situation, an entity would compute its income tax benefit at each interim period based on its estimated annual effective tax rate. ASU 2019-l2 is effective for fiscal years beginning after December 15, 2020, including interim periods within those annual periods Early adoption is permitted. The Company is currently evaluating the effect that this update will have on its consolidated financial statements and related disclosures.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, and ASU 2019-05 (collectively, "Topic 326"). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. The Company will be required to adopt this ASU for financial years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of topic 326 is not expected to have a material effect on the Company’s consolidated financial statements and financial statement disclosures.
During the nine months ended September 30, 2021, and through the date of this filing, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not Applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (who is our Principal Executive Officer) and our Chief Financial Officer and Treasurer (who is our Principal Financial Officer and Principal Accounting Officer), of the effectiveness of the design of our disclosure controls and procedures (as defined by Exchange Act Rules 13a-15(e) or 15d-15(e)) as of June 30, 2021 pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2021 in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. This conclusion is based on findings that constituted material weaknesses. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s interim financial statements will not be prevented or detected on a timely basis.
In performing the above-referenced assessment, management identified the following deficiencies in the design or operation of our internal controls and procedures, which management considers to be material weaknesses:
(i) Lack of Formal Policies and Procedures. We utilize a third-party independent contractor for the preparation of our financial statements. Although the financial statements and footnotes are reviewed by our management, we do not have a formal policy to review significant accounting transactions and the accounting treatment of such transactions. The third-party independent contractor is not involved in the day to day operations of the Company and may not be provided information from management on a timely basis to allow for adequate reporting/consideration of certain transactions.
(ii) Audit Committee and Financial Expert. We do not have a formal audit committee with a financial expert, and thus we lack the board oversight role within the financial reporting process.
(iii) Insufficient Resources. We have insufficient quantity of dedicated resources and experienced personnel involved in reviewing and designing internal controls. As a result, a material misstatement of the interim and annual financial statements could occur and not be prevented or detected on a timely basis.
(iv) Entity Level Risk Assessment. We did not perform an entity level risk assessment to evaluate the implication of relevant risks on financial reporting, including the impact of potential fraud related risks and the risks related to non-routine transactions, if any, on internal control over financial reporting. Lack of an entity-level risk assessment constituted an internal control design deficiency which resulted in more than a remote likelihood that a material error would not have been prevented or detected and constituted a material weakness.
Our management feels the weaknesses identified above have not had any material effect on our financial results. However, we are currently reviewing our disclosure controls and procedures related to these material weaknesses, and expect to implement changes in the near term, as resources permit, to address these material weaknesses. Our management will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds permit.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the nine months ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
Stephen E. Flechner v. Standard Metals Processing, Inc.
On April 29, 2014, Stephen E. Flechner filed suit in the United States District Court for the District of Colorado against Standard Metals Processing, Inc. alleging that the Company had refused to allow him to exercise stock options granted to him pursuant to a Stock Option Agreement, dated April 1, 2010, and a second Stock Option Agreement, dated January 21, 2011. On June 12, 2014, the Company filed an Answer and a Motion to Dismiss or, Alternatively, to Stay or Transfer the action to the U.S. District Court for the Northern District of Alabama, Middle Division. On January 16, 2015, the Company filed a Motion for Summary Judgment. On January 23, 2015, the Court issued an Order granting in part and denying in part the Company’s Motion to Dismiss or, Alternatively, to Stay or Transfer the action to the U.S. District Court for the Northern District of Alabama, Middle Division. The Court in its Order stayed further proceedings in Colorado pending the issuance of orders by the Alabama court. Thereafter, on January 26, 2015, the Court issued an Order vacating the February 20, 2015 Trial Preparation Conference and the March 9, 2015 Bench Trial. On March 23, 2015, the Court issued an Order denying the Company’s Motion for Summary Judgment. On March 30, 2015, Flechner filed a Motion to Lift the Stay. On March 31, 2015, the Court issued an Order granting Flechner’s Motion to Lift the Stay. On April 6, 2015, the Court issued an Order scheduling a Bench Trial for July 29, 2015. On April 9, 2015, Flechner filed a Motion for Reconsideration of the Court’s March 23, 2015 Order Denying Flechner’s Motion to Enforce the Confidential Settlement Agreement to Settle Certain Issues. On May 1, 2015, the Court issued an Order Granting Flechner’s Motion to Enforce the Confidential Settlement Agreement to Settle Certain Issues. On August 12, 2015 the U.S. District Court for the District of Colorado issued a judgment in favor of Stephen E. Flechner for $2,157,000. An amended final judgment was ordered in adjudication of the Complaint by the U.S. District Court for the District of Colorado (the “Court”) on August 28, 2015 in favor of Flechner in the amount of $2,157,000, plus interest through the date of judgment of $235,246, plus interest of $472.76/day from August 28, 2015 until paid in full. The Company, in good faith anticipation of a settlement did not appeal the judgment and therefore, the Company’s notice of appeal was dismissed on November 17, 2015. This judgment is now non-appealable. The Company has recognized the daily interest due from the date of the August 28, 2015 judgment through September 30, 2021, totaling $1,094,439, resulting in a total amount of $3,486,685 being included in the Accrual for settlement of lawsuits relating to this matter in the accompanying September 30, 2021 condensed consolidated balance sheet.
ITEM 1A. RISK FACTORS
As a smaller reporting company, we are not required to provide the information required by this Item. We note, however, that an investment in our common stock involves a number of very significant risks. Investors should carefully consider the risk factors included in the “Risk Factors” section of our Annual Report on Form 10-K for our fiscal year ended December 31, 2020 as filed with SEC on January 26, 2021, in addition to other information contained in such Annual Report and in this Quarterly Report on Form 10-Q, in evaluating the Company and our business before purchasing shares of our common stock. The Company’s business, operating results and financial condition could be adversely affected due to any of those risks.
Item 2. Unregistered Sales of Equity Securities and Use Of Proceeds
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
|
Exhibit Number |
Description | |
| (31) | Rule 13a-14(a)/15d-14(a) Certifications | |
| 31.1* | Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer | |
| 31.2* | Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer and Principal Accounting Officer | |
| (32) | Section 1350 Certifications | |
| 32.1* | Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer | |
| 32.2* | Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Accounting Officer | |
| (101)* | Interactive Data Files | |
| 101.INS* | Inline XBRL Instance Document. | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| * | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| STANDARD METALS PROCESSING, INC. | ||
| By: | /s/ J. Bryan Read | |
| J. Bryan Read | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: November 12, 2021 | ||
| By: | /s/ Sharon Ullman | |
| Sharon Ullman | ||
| Chief Financial Officer | ||
|
(Principal Financial Officer and Principal Accounting Officer) | ||
| Date: November 12, 2021 | ||
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