0001615774-18-006232.txt : 20180705 0001615774-18-006232.hdr.sgml : 20180705 20180705063251 ACCESSION NUMBER: 0001615774-18-006232 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 44 CONFORMED PERIOD OF REPORT: 20180331 FILED AS OF DATE: 20180705 DATE AS OF CHANGE: 20180705 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Standard Metals Processing, Inc. CENTRAL INDEX KEY: 0000773717 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 840991764 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14319 FILM NUMBER: 18939478 BUSINESS ADDRESS: STREET 1: 611 WALNUT STREET CITY: GADSDEN STATE: AL ZIP: 35901 BUSINESS PHONE: 8889607347 MAIL ADDRESS: STREET 1: 611 WALNUT STREET CITY: GADSDEN STATE: AL ZIP: 35901 FORMER COMPANY: FORMER CONFORMED NAME: Standard Gold Holdings, Inc. DATE OF NAME CHANGE: 20130305 FORMER COMPANY: FORMER CONFORMED NAME: Standard Gold DATE OF NAME CHANGE: 20100113 FORMER COMPANY: FORMER CONFORMED NAME: PRINCETON ACQUISITIONS INC DATE OF NAME CHANGE: 19850802 10-Q 1 s111216_10q.htm FORM 10-Q

 

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

          QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2018

 

OR

 

          TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______ to _______

 

Commission file number 000-14319

 

STANDARD METALS PROCESSING, INC.

(Exact Name of Small Business Issuer as Specified in its Charter)

 

Nevada   84-0991764
(State or Other Jurisdiction of   (I.R.S. Employer Identification Number)
Incorporation or Organization)    

 

611 Walnut Street, Gadsden, Alabama 35901 

(Address of Principal Executive Offices)

 

(888) 960-7347

(Issuer’s Telephone Number, Including Area Code)

 

N/A 

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

 

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   No

 

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes   No

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
  Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act: ☐

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No

 

As of July 3, 2018, there were 129,497,423 shares of the Registrant’s common stock, par value $.001, outstanding. 

 

 

 

 

STANDARD METALS PROCESSING, INC. 

FORM 10-Q

FOR THE THREE MONTHS ENDED MARCH 31, 2018

 

TABLE OF CONTENTS

 

  Page
   
PART I - FINANCIAL INFORMATION  
     
ITEM 1 Financial Statements (unaudited) 4
     
  Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017 4
     
  Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2018 and 2017 5
     
  Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017 6
     
  Notes to Condensed Consolidated Financial Statements 7
     
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 15
     
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 21
     
ITEM 4. Controls and Procedures 21
     
PART II - OTHER INFORMATION  
     
ITEM 1. Legal Proceedings 22
     
ITEM 1A. Risk Factors 23
     
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 23
     
ITEM 3. Defaults Upon Senior Securities 24
     
ITEM 4. Mine Safety Disclosures 24
     
ITEM 5. Other Information 24
     
ITEM 6. Exhibits 24
     
SIGNATURES 25

 

2

 

 

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, 2017, as filed with the Securities and Exchange Commission (“SEC”) on June 8, 2018.

 

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.

 

3

 

 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

 

STANDARD METALS PROCESSING, INC. 

CONDENSED Consolidated Balance Sheets

 

   March 31,
2018
   December 31,
2017
 
   (unaudited)      
Assets          
Current assets:          
Cash  $5,401   $2,185 
Prepaid expenses related party        
Prepaid expenses   8,106    11,145 
Assets held for Sale   12,000    12,000 
           
Total current assets   25,507    25,330 
           
Shea Mining and Milling Assets   2,108,300    2,108,300 
Property, plant and equipment:          
Machinery and equipment   21,000    21,000 
Construction in progress   1,775,224    1,775,224 
    1,796,224    1,796,224 
Accumulated depreciation   (21,000)   (21,000)
Net property, plant and equipment   1,775,224    1,775,224 
Total Assets  $3,909,031   $3,908,854 
           
Liabilities and Shareholders’ Deficit          
Current liabilities:          
Senior secured promissory note payable, related party  $2,229,187   $2,229,187 
Promissory notes payable - related party   477,500    477,500 
Convertible Notes payable, net of Discount of $16,276 and $34,860 at March 31, 2018 and December 31, 2017   236,723    299,936 
Accrual for settlement of lawsuits   2,890,623    2,501,000 
Due to Wits Basin Precious Minerals Inc.   16,616    16,616 
Accounts payable   2,462,294    2,429,387 
Accrued interest - Related party $926,778 and $871,317 at March 31, 2018 and December 31, 2017   1,009,641    953,222 
Accrued expenses   855,045    855,045 
Accounts payable to related party   1,000    1,000 
           
Total current liabilities   10,178,629    9,762,893 
           
Commitments and Contingencies (Note 6)          
           
Preferred stock, 50,000,000 shares authorized:          
Series A, $.001 par value, 10,000,000 and 10,000,000 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively   10,000,000    10,000,000 
           
Shareholders’ deficit:          
Common stock, $0.001 par value, 500,000,000 shares authorized: 127,195,559 issued and 122,195,559 outstanding at March 31, 2018 and 124,501,581 issued and 119,501,581 outstanding  at December 31, 2017, respectively   122,196    119,502 
Additional paid-in capital   87,384,754    87,201,267 
Accumulated deficit   (103,776,548)   (103,174,808)
Total shareholders’ deficit   (16,269,598)   (15,854,039)
Total Liabilities and Shareholders’ deficit  $3,909,031   $3,908,854 

 

The accompanying footnotes are in integral part of these unaudited condensed consolidated financial statements.

 

4

 

 

STANDARD METALS PROCESSING, INC.

CONDENSED Consolidated STATEMENTS OF OPERATIONS 

(Unaudited)

 

   Three months ended 
   March 31, 2018   March 31, 2017 
         
Revenues  $   $ 
           
Operating expenses:          
General and administrative   50,237    69,629 
           
Total operating expenses   50,237    69,629 
Loss from operations   (50,237)   (69,629)
           
Other income (expense):          
Other income   1,825    2,354 
Interest expense, including related party of $55,461   (497,745)   (48,243)
Amortization of debt discount   (55,583)   (67,863)
           
Total other income (expense)   (551,503)   (113,752)
Loss before income tax provision   (601,740)   (183,381)
           
Income tax provision        
Net loss  $(601,740)  $(183,381)
           
Basic net loss per common share  $(0.00)  $(0.00)
           
Basic weighted average common shares outstanding   121,327,499    117,328,622 

 

The accompanying footnotes are in integral part of these unaudited condensed consolidated financial statements.

 

5

 

 

STANDARD METALS PROCESSING, INC.

CONDENSED Consolidated STATEMENTS OF CASH FLOWS 

(Unaudited)

 

   For the Three months ended 
   March 31, 2018   March 31, 2017 
Cash flows from operating activities:          
Net loss  $(601,740)  $(183,381)
Adjustments to reconcile net loss to cash flows used in operating activities:          
Amortization of debt issuance costs   55,583    67,863 
Changes in operating assets and liabilities:          
Prepaid expenses   3,039    12,895 
Accounts payable   33,907    (10,649)
Accrued expenses   59,804    59,804 
Accrual for settlement of lawsuits   389,623     
           
Net cash used in operating activities   (59,784)   (53,468)
           
Cash flows from financing activities:          
Proceeds from convertible debentures   63,000    85,000 
           
Net cash provided by financing activities   63,000    85,000 
           
Increase in cash   3,216    31,532 
Cash, beginning of period   2,185    1,326 
Cash, end of period  $5,401   $32,858 
           
Supplemental cash flow disclosures          
Cash paid for interest cost  $14,101   $1,177 
Income taxes paid  $   $ 
           
Supplemental Disclosure of Non-Cash Investing and Financing Activities:          
Debt discount on convertible notes payable  $38,000   $ 
Conversions of convertible debt and accrued interest into common stock  $148,181   $60,175 
Accrual for settlement of lawsuits paid through issuance of convertible note payable  $   $35,000 

 

The accompanying footnotes are in integral part of these unaudited condensed consolidated financial statements.

 

6

 

 

STANDARD METALS PROCESSING, INC.

Notes to Condensed Consolidated Financial Statements 

For the Three Months Ended March 31, 2018

(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 equipment and build a facility on the Tonopah property to serve as a permitted custom processing toll milling facility (which includes an analytical lab, pyrometallugircal 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 three months ended March 31, 2018, the Company had a net loss of approximately $602,000. At March 31, 2018, the Company had an accumulated deficit of approximately $103,777,000 and a working capital deficit of approximately $10,153,000. The Company’s ability to continue as a going concern is dependent on their ability to raise the required additional capital or debt financing to meet short and long-term operating requirements. During the three months ended March 31, 2018, the Company received net cash proceeds of $63,000 from the convertible promissory notes payable. 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 could 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. 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 Tonopah Milling and Metals Group, Inc. and its wholly-owned subsidiaries Tonopah Custom Processing, Inc., and Tonopah Resources, Inc. All significant intercompany transactions, accounts and balances have been eliminated in consolidation.

 

7

 

 

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 of 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, 2017 filed June 8, 2018. 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 three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year as a whole.

 

Shea Mining and Milling Assets

 

The Company recorded the estimated fair value of the Shea Mining and Milling assets as an aggregate amount on the condensed balance sheets. The assets include the mine tailings and dumps, the land, water rights and the milling facility (the buildings and equipment). None of the assets have been put into production, nor has the Company performed any repair or updates to any of the equipment or buildings. As such, the Company will continue to classify them under a single listing.

 

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 depleted 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 loss 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 some tailings located in Manhattan, Nevada. The Company has not disturbed or processed any of this material and does not intend to do so in the foreseeable future.

 

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 to dispose.

 

8

 

 

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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Revenue Recognition and Deferred Revenue

 

As of March 31, 2018, the Company has not recognized any revenues from custom permitted processing toll milling.

 

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 actually 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 December 31, 2017 and 2016. The Company recognizes interest and penalties on unrecognized tax benefits as well as interest received from favorable tax settlements within income tax expense.

 

On December 22, 2017, the President of the United States signed and enacted into law H.R. 1 (the “Tax Reform Law”). The Tax Reform Law, effective for tax years beginning on or after January 1, 2018, except for certain provisions, resulted in significant changes to existing United States tax law, including various provisions that are expected to impact the Company. The Tax Reform Law reduces the federal corporate tax rate from 34% to 21% effective January 1, 2018. The Company will continue to analyze the provisions of the Tax Reform Law to assess the impact on the Company’s consolidated financial statements.

 

Recent Accounting Standards

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for annual reporting periods for public business entities beginning after December 15, 2017, including interim periods within that reporting period. The new standard permits the use of either the retrospective or cumulative effect transition method. The Company adopted ASU 2014-09 in the three months ended March 31, 2018, and as there have been no revenues to date, the adoption did not have a material impact on the Company’s financial position or results of operations, and no transition method was necessary upon adoption.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning January 1, 2019, and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. The Company is currently evaluating the timing of adoption and the potential impact of this standard, but as the Company does not have any significant leases, it does not expect it to have a material impact on its financial position or results of operations.

 

9

 

 

During the period ended March 31, 2018 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.

 

Management’s Evaluation of Subsequent Events

 

The Company evaluates events that have occurred after the balance sheet date of March 31, 2018, through the date which the consolidated financial statements were issued. Based upon the review, other than described in Note 9 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements.

 

NOTE 3 – PROPERTY, PLANT AND EQUIPMENT

 

The Company is preparing 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 our 21,875 square foot building and servicing and drilling various wells for our future operations.

 

Components of our property, plant and equipment are as follows:

 

   March 31,
2018
   December 31,
2017
 
Equipment  $21,000   $21,000 
Construction in Progress   1,775,224    1,775,224 
Less accumulated depreciation   (21,000)   (21,000)
   $1,775,224   $1,775,224 

 

NOTE 4 – CONVERTIBLE NOTES PAYABLE

 

In January 2018 the Company issued three convertible promissory notes in the principal amounts of $8,000, $40,000 and $15,000. The notes are due one year from date of issuance and accrue interest at 6%. The notes are convertible into common shares of the Company at a conversion price of $0.05, with no adjustments to the conversion price. The conversion feature meets the definition of conventional convertible debt and therefore qualifies for the scope exception in Accounting Standards Codification (“ASC”) 815-10-15-74(a) and would not be bifurcated and accounted for separately as a derivative liability. The Company analyzed the conversion feature under ASC 470-20, “Debt with conversion and other options”, and based on the market price of the common stock of the Company on the date of funding as compared to the conversion price, determined there was a $38,000 beneficial conversion feature to recognize, which will be amortized over the term of the note using the effective interest method. Amortization expense of $33,833 was recognized related to these discounts in the three months ended March 31, 2018, including the accelerated amortization upon conversion of two of these notes, as discussed below.

 

On January 29, 2018, five of the outstanding convertible promissory notes payable entered into in the year ending December 31, 2017 and two of the January 2018 convertible promissory notes payable, totaling principal of $144,796 and accrued interest of $3,385, were converted into 2,693,978 shares of restricted common stock, at conversion prices ranging from $0.025 to $0.075. Upon conversion the related unamortized debt discount of $46,250 (including the $33,833 mentioned previously) was immediately expensed. After conversion there was $$253,000 of principal and $8,667 of accrued interest outstanding on the convertible debentures, and a related unamortized discount of $16,276.

 

10

 

 

In the year ended December 31, 2011, the Company issued three Convertible promissory notes totaling $175,000, with an interest rate of 6%, and are convertible at $0.50 per share. As of March 31, 2018, all of these Notes are past due, and the original terms apply in the default period. Accrued interest on these notes totaled $70,790 and $68,165 at March 31, 2018 and December 31, 2017, respectively.

 

NOTE 5 – SHAREHOLDERS’ EQUITY

 

Common Stock - Convertible promissory notes conversion

 

On January 29, 2018, five of the outstanding convertible promissory notes payable entered into in the year ending December 31, 2017 and two of the January 2018 convertible promissory notes payable, totaling principal of $144,796 and accrued interest of $3,385, were converted into 2,693,978 shares of restricted common stock, at conversion prices ranging from $0.025 to $0.075. (Note 4)

 

Option Grants

 

The Company uses the Black-Scholes pricing model as a method for determining the estimated fair value for stock awards. Compensation expense for stock awards is recognized on a straight-line basis over the vesting period of service awards and for performance-based awards, the Company recognizes the expense when the performance condition is probable of being met.

 

The Company reviews its current assumptions on a periodic basis and adjusts them as necessary to ensure an accurate valuation. The risk-free interest rate is based on the Federal Reserve Board’s constant maturities of the U.S. Treasury bond obligations with terms comparable to the expected life of the options at their issuance date. The Company uses historical data to estimate expected forfeitures, expected dividend yield, expected volatility of the Company’s stock and the expected life of the options.

 

The Company recorded no compensation expense for the three months ended March 31, 2018 and 2017. As of March 31, 2018, there was $0 in unrecognized compensation expense.

 

The Company did not grant any options during the three months ended March 31, 2018, and no options were exercised, expired, or were cancelled. There are no unvested options as of March 31, 2018.

 

The following tables summarize information about stock options outstanding and exercisable:

 

    Options Outstanding and Exercisable at March 31, 2018  
Range of
Exercise Prices
  Number
Outstanding
    Weighted
Remaining
Contractual
Life
  Weighted
Average
Exercise
Price
    Aggregate
Intrinsic
Value(1)
 
$0.40 to $0.60     5,276,223     2.6 years   $ 0.46     $  
$0.61 to $1.00     9,800,000     2.5 years   $ 0.67     $  
$1.01 to $1.50     14,500,000     2.6 years   $ 1.25     $  
$1.51 to $2.25     3,000,000     3.1 years   $ 1.63     $  
$0.40 to $2.25     32,576,223     2.6 years   $ 0.98     $  

 

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 three months ended March 31, 2018, and no warrants were exercised, expired, or were cancelled. As of March 31, 2018 there were 6,125,640 warrants outstanding, with exercise prices ranging from $0.20 to $1.23, a weighted exercise price of $0.77 and a weighted remaining contractual life of 2 years.

 

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The aggregate intrinsic value of the 6,125,640 outstanding and exercisable warrants at March 31, 2018 and December 31, 2017 was $0. The intrinsic value is the difference between the closing stock price on March 31, 2018 and December 31, 2017 and the exercise price, multiplied by the number of in-the-money warrants had all warrant holders exercised their warrants on March 31, 2018 or December 31, 2017.

 

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 Standard Metals 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, Standard Metals filed an Answer and a Motion to Dismiss or, Alternatively, to Stay or Transfer the action to the United States District Court for the Northern District of Alabama, Middle Division. On January 16, 2015, Standard Metals filed a Motion for Summary Judgment. On January 23, 2015, the Court issued an Order granting in part and denying in part Standard Metals’ Motion to Dismiss or, Alternatively, to Stay or Transfer the action to the United States 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 Standard Metals’ 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 United Stated 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 judgement, through March 31, 2018, for a total of approximately $395,000, included in the Accrual for settlement of lawsuits in the accompanying condensed consolidated balance sheet.

 

Midwest Investment Partners, LLC v. Standard Metals Processing, Inc.

 

On March 17, 2014, Midwest Investment Partners, LLC filed suit against Standard Metals Processing, Inc. in Vanderburgh County Superior Court, Vanderburgh, Indiana, alleging that Standard Metals had wrongfully refused to remove a transfer restriction on Midwest’s shares of Standard Metals stock pursuant to Rule 144 of the Securities Act. On March 27, 2014, Standard Metals filed a Notice of Removal of a Civil Action requesting that the case proceed in the United States District Court for the Southern District of Indiana, Evansville Division as an action properly removed pursuant to 28 U.S.C. §§ 1441 (a) and (b). On April 15, 2014, Standard Metals served and filed its Answer and Affirmative Defenses to Plaintiff’s Complaint and Demand for Jury Trial. On November 26, 2014, Standard Metals filed a Motion for Summary Judgment. On February 11, 2015, the Court issued an Order granting Standard Metals’ Motion for Summary Judgment and entered a Final Judgment in favor of Standard Metals and terminating the action. As of March 31, 2018, and through the date of this filing, $85,000 has been paid on this settlement.

 

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NOTE 7 – RELATED PARTY TRANSACTIONS

 

Pure Path Management Company, LLC (“Pure Path”) is currently the beneficial owner of 18% of the outstanding common stock of the Company.

 

During the Company’s acquisition of the Shea assets in 2011, Pure Path purchased the Loan Modification Agreement and the NJB Forbearance Agreement directly from NJB Mining, Inc. In connection with the assignment of a forbearance agreement the Company and Pure Path executed an Agreement in Principle setting forth terms of the forbearance agreement (collectively the “Pure Path Agreements”). Pursuant to the Pure Path Agreements, Pure Path was to receive participation payments to be received on a quarterly basis for seven years after the final closing at a rate of 5% of adjusted gross revenue as such terms are defined in the Pure Path Agreements, past and future consulting fees for approximately $1,150,000, collection remedies and legal proceedings against the Company including foreclosure on the Deed of Trust, registration rights, rights of first refusal, tag along rights, preemptive rights, exclusive worldwide rights pertaining to financing and joint ventures, and other negative covenants regarding approval of corporate actions.

 

Pursuant to the Settlement and Release Agreement executed October 10, 2013 with the Company, Pure Path relinquished the foregoing rights and obligations owed to it and agreed to forbear collection remedies and legal proceedings against the Company including foreclosure on the Deed of Trust, and, in connection with the settlement and release of various debts of approximately $1,500,000 and the consulting fees owed by the Company, the Company issued 27,000,000 restricted shares and a Promissory Note (the “Pure Path Note”) for an amount of up to $2,500,000 with a beginning principal balance of $1,933,345 bearing interest of 8% per year for the current balance of the amounts owed under the Pure Path Agreements. The outstanding principal balance on the Pure Path Note was $2,229,187 as of both March 31, 2018 and December 31, 2017, with related accrued interest of $815,024 and $768,982, respectively.

 

On February 11, 2015, the Company issued an unsecured promissory note (the “Note”) to Tina Gregerson Family Properties, LLC, an entity controlled by a former director of the Company. The Note for up to $750,000 was provided in tranches. Maturity of each tranche is one year from the date of receipt. Interest accrues at 8% per annum on each tranche. Under the terms of the Note, the Company received $477,500. The Note is in default.

 

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.

 

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At March 31, 2018, the weighted average shares from stock options of 32,576,223, warrants of 6,125,640 and Convertible Promissory note shares of approximately 1,635,000 were excluded from the diluted weighted average common share calculation due to the antidilutive effect such shares would have on net loss per common share.

 

NOTE 9 – SUBSEQUENT EVENTS

 

On June 14, 2018, the Company entered into a convertible promissory note in the principal amount of $10,000. The note is due December 29, 2018, and accrues interest at 6%. The note is convertible into common shares of the Company at a conversion price of $0.025, with no adjustments to the conversion price. The note was in exchange for $91,463 included in accounts payable, that the noteholder purchased from a vendor on December 29, 2017. Upon conversion of the note into 411,046 common shares of the Company, also on June 14, 2018, the noteholder signed a debt settlement and release agreement for the outstanding accounts payable, resulting in a gain on settlement to be recognized in the six months ending June 30, 2018, of $81,463.

 

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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, 2017, as filed with the SEC on June 8, 2018.

 

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, Tonopah Milling and Metals Group, Inc. (“TMMG”), and TMMG’s wholly-owned subsidiaries Tonopah Custom Processing, Inc. (“TCP”) and Tonopah Resources, Inc. 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. In 2011, we closed a series of transactions, whereby we acquired certain assets of Shea Mining & Milling, LLC (“Shea Mining”), 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.

 

The Company re-domiciled in Nevada from Colorado in March 2013. We determined that, due to a lack of connection to Colorado, it was in the best interest of the Company to move its domicile to Nevada.

 

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Overview of the Company

 

We have offices in Gadsden, Alabama and, through TCP, a property in Tonopah, Nevada. Our business plan is to purchase equipment and build a facility on our TCP property to serve as a permitted custom processing toll milling facility which includes an analytical lab, pyrometallugircal 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.

 

Water Pollution Control Permit with Nevada Department of Environmental Protection

 

Through the Company’s wholly owned subsidiary, Tonopah Custom Processing, Inc. (“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 AutoCad 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 the preparation of the 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 Pure Path Management Company, LLC (a related party) and its related entities including, but not limited to, Aurum, LLC and Calais Resources, Inc.

 

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Products and Services

 

We seek 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.

 

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 with badly needed 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 badly 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 particular tailings came from. This eliminates the need for the Company to dispose of those tailings.

 

Results of Operation

 

Comparison of the Three Months Ended March 31, 2018 to the Three Months Ended March 31, 2017

 

Revenues

 

We had no revenues from any operations for the three months ended March 31, 2018 and 2017. 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 $50,237 for the three months ended March 31, 2018 as compared to $69,629 for the same period in 2017. For the three months ended March 31, 2018, the majority of general and administrative expense was for professional fees and general office expenses. In the three months ended March 31, 2017, the majority of expenses were relatively the same. We anticipate that that certain operating expenses will increase for fiscal 2018 as we continue to build the infrastructure to proceed with permitted custom processing toll milling services.

 

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Other Income and Expenses

 

We receive monthly payments of from $608 per month from American Tower Corporation for a cellular tower located on our Tonopah land.

 

Interest expense for the three months ended March 31, 2018 was $497,745, compared to $48,243 for the respective period in 2017. $395,000 of the interest expense in 2018 relates to interest accrued in connection with the Flechner judgement. The Company recognized the daily interest due from the date of the August 28, 2015 judgement, through March 31, 2018. The remaining interest expense in 2018 and the 2017 amounts relate primarily to the interest due at rates ranging from 6% to 8% on our notes payable: (i) the $2,500,000 secured, convertible promissory note issued to an accredited investor, (ii) the convertible notes payable; and (iii) the notes with Tina Gregerson Family Properties, LLC, an entity controlled by a former director and officer of the Company. The convertible notes payable increased by approximately $67,000 as of March 31, 2018 as compared to the same period in 2017, resulting in increased interest expense in 2018. Additionally, included in interest expense for the three months ended March 31, 2018 is approximately $29,000 of finance charges on legal bills.

 

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 the issuance of convertible debt during the three months ended March 31, 2018 and 2017. 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 approximately $10,153,000 at March 31, 2018. Cash was $5,401 at March 31, 2018, as compared to cash of $2,185 at December 31, 2017.

 

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 $20,000 per month. Above the basic operational expenses, we estimate that we need approximately $5.000.000 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

 

In January 2018 the Company issued three convertible promissory notes in the principal amounts of $8,000, $40,000 and $15,000. The notes are due one year from date of issuance and accrue interest at 6%. The notes are convertible into common shares of the Company at a conversion price of $0.05, with no adjustments to the conversion price.

 

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 March 31, 2018 of approximately $103,777,000, and a working capital deficit of approximately $10,153,000, 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. 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 in order 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 as a result of ongoing financing discussions with third party investors and existing shareholders.

 

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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 could 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 could significantly and materially restrict its future plans for developing its business and achieving commercial revenues. If the Company is unable to obtain the necessary capital, the Company may have to cease operations.

 

Working Capital Deficiency

 

   March 31,
2018
   December 31,
2017
 
Current assets  $25,507   $25,330 
Current liabilities   10,178,629    9,762,893 
Working capital deficiency  $(10,153,122)  $(9,737,563)

 

The balance and components of current assets are fairly consistent between periods. The increase in current liabilities is primarily due to an increase in the accrual for settlement of lawsuits for accrued interest of $395,000, offset by payments of $5,000, as well as the increase of convertible debt balances as a result of new convertible debt of $63,000 and the amortization of debt discounts during the three months ended March 31, 2018, offset by conversions of $148,181.

 

Cash Flows

 

  

Three Months Ended

March 31,

 
   2018   2017 
Net cash used in operating activities  $(59,784)  $(53,468)
Net cash provided by financing activities   63,000    85,000 
Increase in cash  $3,216   $31,532 

 

Operating Activities

 

Net cash used in operating activities was $59,784 for the three months ended March 31, 2018. Cash used in operating activities during the three months ended March 31, 2018 was primarily due to payments for professional services of approximately $32,000 and $5,000 on the lawsuit settlement. Additionally, the net loss of $601,740 offset by amortization of debt discounts and an increase in accounts payable and accrued expenses, including the $395,000 for accrued interest on the accrual for settlement of lawsuits.

 

Net cash used in operating activities was $53,468 for the three months ended March 31, 2017, primarily due to payments of $35,000 on a lawsuit settlement, as well as a net loss of $183,381, offset by the amortization of debt discounts and an increase accrued expenses.

 

Financing Activities

 

For the three months ended March 31, 2018, net cash provided by financing activities was $63,000, which was from the issuance of short term convertible debt notes.

 

For the three months ended September 30, 2016, net cash provided by financing activities was $85,000 from the issuance of convertible debt notes, $25,000 of which was converted during March of 2017.

 

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Off-Balance Sheet Arrangements

 

During the three months ended March 31, 2018, 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.

 

Critical Accounting Policies and Estimates

 

Our significant accounting policies are more fully described in the notes to our financial statements included herein for the quarter ended March 31, 2018 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, 2017. 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 are reviewing the property and equipment, intangible assets 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. There were no impairment charges in the three months ended March 31, 2018.

 

Recent Accounting Standards

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for annual reporting periods for public business entities beginning after December 15, 2017, including interim periods within that reporting period. The new standard permits the use of either the retrospective or cumulative effect transition method. The Company adopted ASU 2014-09 in the three months ended March 31, 2018, and as there have been no revenues to date, the adoption did not have a material impact on the Company’s financial position or results of operations, and no transition method was necessary upon adoption.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning January 1, 2019 and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. The Company is currently evaluating the timing of adoption and the potential impact of this standard, but as the Company does not have any significant leases, it does not expect it to have a material impact on its financial position or results of operations.

 

During the period ended March 31, 2018 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 March 31, 2018 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 March 31, 2018 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, in order 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.

 

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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 quarter ended March 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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 Standard Metals 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, Standard Metals filed an Answer and a Motion to Dismiss or, Alternatively, to Stay or Transfer the action to the United States District Court for the Northern District of Alabama, Middle Division. On January 16, 2015, Standard Metals filed a Motion for Summary Judgment. On January 23, 2015, the Court issued an Order granting in part and denying in part Standard Metals’ Motion to Dismiss or, Alternatively, to Stay or Transfer the action to the United States 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 Standard Metals’ 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. Standard Metals Processing, Inc. intends to continue to vigorously defend against claims by Steven E. Flechner. On August 12, 2015 the United Stated 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 judgement, through March 31, 2018, for a total of approximately $395,000, included in the Accrual for settlement of lawsuits in the accompanying condensed consolidated balance sheet.

 

Midwest Investment Partners, LLC v. Standard Metals Processing, Inc.

 

On March 17, 2014, Midwest Investment Partners, LLC filed suit against Standard Metals Processing, Inc. in Vanderburgh County Superior Court, Vanderburgh, Indiana, alleging that Standard Metals had wrongfully refused to remove a transfer restriction on Midwest’s shares of Standard Metals stock pursuant to Rule 144 of the Securities Act. On March 27, 2014, Standard Metals filed a Notice of Removal of a Civil Action requesting that the case proceed in the United States District Court for the Southern District of Indiana, Evansville Division as an action properly removed pursuant to 28 U.S.C. §§ 1441 (a) and (b). On April 15, 2014, Standard Metals served and filed its Answer and Affirmative Defenses to Plaintiff’s Complaint and Demand for Jury Trial. On November 26, 2014, Standard Metals filed a Motion for Summary Judgment. On February 11, 2015, the Court issued an Order granting Standard Metals’ Motion for Summary Judgment and entered a Final Judgment in favor of Standard Metals and terminating the action. As of March 31, 2018, and through the date of this filing, $85,000 has been paid on this settlement.

 

22

 

 

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, 2017, as filed with SEC on June 8, 2018, 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

 

In January 2018 the Company issued three convertible promissory notes in the principal amounts of $8,000, $40,000 and $15,000. The notes are due one year from date of issuance and accrue interest at 6%. The notes are convertible into common shares of the Company at a conversion price of $0.05, with no adjustments to the conversion price. The conversion feature meets the definition of conventional convertible debt and therefore qualifies for the scope exception in Accounting Standards Codification (“ASC”) 815-10-15-74(a) and would not be bifurcated and accounted for separately as a derivative liability. The Company analyzed the conversion feature under ASC 470-20, “Debt with conversion and other options”, and based on the market price of the common stock of the Company on the date of funding as compared to the conversion price, determined there was a $38,000 beneficial conversion feature to recognize, which will be amortized over the term of the note using the effective interest method. Amortization expense of $33,833 was recognized related to these discounts in the three months ended March 31, 2018, including the accelerated amortization upon conversion of two of these notes, as discussed below.

 

On January 29, 2018, five of the outstanding convertible promissory notes payable entered into in the year ending December 31, 2017 and two of the January 2018 convertible promissory notes payable, totaling principal of $144,796 and accrued interest of $3,385, were converted into 2,693,978 shares of restricted common stock, at conversion prices ranging from $0.025 to $0.075. Upon conversion the related unamortized debt discount of $46,250 (including the $33,833 mentioned previously) was immediately expensed. After conversion there was $$253,000 of principal and $8,667 of accrued interest outstanding on the convertible debentures, and a related unamortized discount of $16,276.

 

23

 

 

Sales of the securities identified above were made pursuant to privately negotiated transactions that did not involve a public offering of securities and, accordingly, we believe that these transactions were exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof and rules promulgated thereunder, Based on representations from the above-referenced investors, we have determined that such investors were “accredited investors” (as defined by Rule 501 under the Securities Act) and are acquiring the securities for investment and not distribution, and that they could bear the risks of the investment and could hold the securities for an indefinite period of time, The investors received written disclosures that the securities had not been registered under the Securities Act and that any resale must be made pursuant to a registration or an available exemption from such registration, All of the foregoing securities are deemed restricted securities for purposes of the Securities Act.

 

Item 3. Defaults upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information

 

None.

 

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 XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

 

*Filed herewith.

 

24

 

 

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: July 3, 2018  
     
By: /s/ Sharon Ullman  
Sharon Ullman  
Chief Financial Officer  
(Principal Financial Officer and Principal Accounting Officer)  
Date: July 3, 2018  

  

25

EX-31.1 2 s111216_ex31-1.htm EXHIBIT 31.1

 

Exhibit 31.1

 

STANDARD METALS PROCESSING, INC.

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, J. Bryan Read, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Standard Metals Processing, Inc.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
  (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
  (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
  (c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
  (d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
  (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
  (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

By: /s/ J. Bryan Read  
J. Bryan Read, Chief Executive Officer  
(Principal Executive Officer)  
Date: July 3, 2018  

 

26

EX-31.2 3 s111216_ex31-2.htm EXHIBIT 31.2

 

Exhibit 31.2

 

STANDARD METALS PROCESSING, INC.

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Sharon Ullman, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Standard Metals Processing, Inc.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
  (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
  (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
  (c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
  (d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
  (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
  (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

By:  /s/ Sharon Ullman  
Sharon Ullman, Chief Financial Officer  
(Principal Accounting Officer)  
Date: July 3, 2018  

 

27

EX-32.1 4 s111216_ex32-1.htm EXHIBIT 32.1

 

Exhibit 32.1

 

STANDARD METALS PROCESSING, INC.

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with this Quarterly Report on Form 10-Q of Standard Metals Processing, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

 

1.          The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.          The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

 

By:  /s/ J. Bryan Read  
J. Bryan Read  
Chief Executive Officer  
(Principal Executive Officer)  
Date: July 3, 2018  

 

28

EX-32.2 5 s111216_ex32-2.htm EXHIBIT 32.2

 

Exhibit 32.2

 

STANDARD METALS PROCESSING, INC.

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with this Quarterly Report on Form 10-Q of Standard Metals Processing, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to her knowledge:

 

1.          The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.          The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

 

By:  /s/ Sharon Ullman  
Sharon Ullman  
Principal Accounting Officer  
Date: July 3, 2018  

 

29

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Written promise to pay a note which can be exchanged for a specified quantity of securities (typically common stock), at the option of the issuer or the holder. Information by type of debt instrument, including, but not limited to, draws against credit facilities. Information by type of debt instrument, including, but not limited to, draws against credit facilities. The amount of debt instrument unamortized discount reviously. Information by range of option prices pertaining to options granted. Information by range of option prices pertaining to options granted. Information by range of option prices pertaining to options granted. Information by range of option prices pertaining to options granted. Information by range of option prices pertaining to options granted. Information by component of equity. Information by category of arrangement, including but not limited to collaborative arrangements and non-collaborative arrangements. Information by type of related party. Related parties include, but not limited to, affiliates; other entities for which investments are accounted for by the equity method by the entity; trusts for benefit of employees; and principal owners, management, and members of immediate families. It also may include other parties with which the entity may control or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. Unrecognized Stock Based Compensation Expense Per share of right weighted exercise price of warrants class of warrant or right weighted exercise price of warrants. Weighted average remaining contractual life excluding in 'PnYnMnDTnHnMnS' format, Information by type of judicial proceeding, alternative dispute resolution or claim. Information by type of judicial proceeding, alternative dispute resolution or claim. It represents as a loss contingency damages interest paid value. It represents as a loss contingency damages interest paid value per day. The price per share of the conversion feature embedded in the debt instrument. Written promise to pay a note which can be exchanged for a specified quantity of securities (typically common stock), at the option of the issuer or the holder. Information by type of debt instrument, including, but not limited to, draws against credit facilities. Information by type of related party. Related parties include, but not limited to, affiliates; other entities for which investments are accounted for by the equity method by the entity; trusts for benefit of employees; and principal owners, management, and members of immediate families. It also may include other parties with which the entity may control or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. Represents debt default additional interest. ConvertibleNotesPayable2Member Assets, Current Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment Assets [Default Label] Liabilities, Current Stockholders' Equity Attributable to Parent Liabilities and Equity Operating Expenses Operating Income (Loss) Interest Expense Amortization of Debt Discount (Premium) Nonoperating Income (Expense) Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest Increase (Decrease) in Prepaid Expense Increase (Decrease) in Accounts Payable Increase (Decrease) in Accrued Liabilities Increase (Decrease) in Outstanding Checks, Operating Activities Net Cash Provided by (Used in) Operating Activities Net Cash Provided by (Used in) Financing Activities Cash and Cash Equivalents, Period Increase (Decrease) Shea Milling And Mining Assets [Policy Text Block] EX-101.PRE 11 smpr-20180331_pre.xml XBRL PRESENTATION FILE XML 12 R1.htm IDEA: XBRL DOCUMENT v3.8.0.1
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2018
Jul. 03, 2018
Document And Entity Information    
Entity Registrant Name Standard Metals Processing, Inc.  
Entity Central Index Key 0000773717  
Document Type 10-Q  
Trading Symbol SMPR  
Document Period End Date Mar. 31, 2018  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity a Well-known Seasoned Issuer No  
Entity a Voluntary Filer No  
Entity's Reporting Status Current Yes  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   129,497,423
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2018  
XML 13 R2.htm IDEA: XBRL DOCUMENT v3.8.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Current assets:    
Cash $ 5,401 $ 2,185
Prepaid expenses related party
Prepaid expenses 8,106 11,145
Assets held for Sale 12,000 12,000
Total current assets 25,507 25,330
Shea Mining and Milling Assets 2,108,300 2,108,300
Property, plant and equipment:    
Machinery and equipment 21,000 21,000
Construction in progress 1,775,224 1,775,224
Property, Plant and Equipment, Gross 1,796,224 1,796,224
Accumulated depreciation (21,000) (21,000)
Net property, plant and equipment 1,775,224 1,775,224
Total Assets 3,909,031 3,908,854
Current liabilities:    
Senior secured promissory note payable, related party 2,229,187 2,229,187
Promissory notes payable - related party 477,500 477,500
Convertible Notes payable, net of Discount of $16,276 and $34,860 at March 31, 2018 and December 31, 2017 236,723 299,936
Accrual for settlement of lawsuits 2,890,623 2,501,000
Due to Wits Basin Precious Minerals Inc. 16,616 16,616
Accounts payable 2,462,294 2,429,387
Accrued interest - Related party $926,778 and $871,317 at March 31, 2018 and December 31, 2017 1,009,641 953,222
Accrued expenses 855,045 855,045
Accounts payable to related party 1,000 1,000
Total current liabilities 10,178,629 9,762,893
Preferred stock, 50,000,000 shares authorized:    
Series A, $.001 par value, 10,000,000 and 10,000,000 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively 10,000,000 10,000,000
Shareholders' deficit:    
Common stock, $0.001 par value, 500,000,000 shares authorized: 127,195,559 issued and 122,195,559 outstanding at March 31, 2018 and 124,501,581 issued and 119,501,581 outstanding at December 31, 2017, respectively 122,196 119,502
Additional paid-in capital 87,384,754 87,201,267
Accumulated deficit (103,776,548) (103,174,808)
Total shareholders' deficit (16,269,598) (15,854,039)
Total Liabilities and Shareholders' deficit $ 3,909,031 $ 3,908,854
XML 14 R3.htm IDEA: XBRL DOCUMENT v3.8.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Debt instrument, unamortized discount, Current $ 16,276 $ 34,860
Due to related parties $ 926,778 $ 871,317
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, authorized 500,000,000 500,000,000
Common stock, issued 127,195,559 124,501,581
Common stock, outstanding 122,195,559 119,501,581
Series A Preferred Stock [Member]    
Preferred stock, par value (in dollars per share) $ 0.001 $ 0.001
Preferred stock, issued 10,000,000 10,000,000
Preferred stock, outstanding 10,000,000 10,000,000
Preferred Stock [Member]    
Preferred stock, authorized 50,000,000 50,000,000
XML 15 R4.htm IDEA: XBRL DOCUMENT v3.8.0.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Income Statement [Abstract]    
Revenues
Operating expenses:    
General and administrative 50,237 69,629
Total operating expenses 50,237 69,629
Loss from operations (50,237) (69,629)
Other income (expense):    
Other income 1,825 2,354
Interest expense, including related party of $55,461 (497,745) (48,243)
Amortization of debt discount (55,583) (67,863)
Total other income (expense) (551,503) (113,752)
Loss before income tax provision (601,740) (183,381)
Income tax provision
Net loss $ (601,740) $ (183,381)
Basic net loss per common share (in dollars per share) $ (0.00) $ (0.00)
Basic weighted average common shares outstanding (in shares) 121,327,499 117,328,622
XML 16 R5.htm IDEA: XBRL DOCUMENT v3.8.0.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Income Statement [Abstract]    
Interest expense, related party $ 55,461 $ 55,461
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.8.0.1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Cash flows from operating activities:    
Net loss $ (601,740) $ (183,381)
Adjustments to reconcile net loss to cash flows used in operating activities:    
Amortization of debt issuance costs 55,583 67,863
Changes in operating assets and liabilities:    
Prepaid expenses 3,039 12,895
Accounts payable 33,907 (10,649)
Accrued expenses 59,804 59,804
Accrual for settlement of lawsuits 389,623
Net cash used in operating activities (59,784) (53,468)
Cash flows from financing activities:    
Proceeds from convertible debentures 63,000 85,000
Net cash provided by financing activities 63,000 85,000
Increase in cash 3,216 31,532
Cash, beginning of period 2,185 1,326
Cash, end of period 5,401 32,858
Supplemental cash flow disclosures    
Cash paid for interest cost 14,101 1,177
Income taxes paid
Supplemental Disclosure of Non-Cash Investing and Financing Activities:    
Debt discount on convertible notes payable 38,000
Conversions of convertible debt and accrued interest into common stock 148,181 60,175
Accrual for settlement of lawsuits paid through issuance of convertible note payable $ 35,000
XML 18 R7.htm IDEA: XBRL DOCUMENT v3.8.0.1
NATURE OF BUSINESS
3 Months Ended
Mar. 31, 2018
Nature Of Business [Abstract]  
NATURE OF BUSINESS

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 equipment and build a facility on the Tonopah property to serve as a permitted custom processing toll milling facility (which includes an analytical lab, pyrometallugircal 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 three months ended March 31, 2018, the Company had a net loss of approximately $602,000. At March 31, 2018, the Company had an accumulated deficit of approximately $103,777,000 and a working capital deficit of approximately $10,153,000. The Company’s ability to continue as a going concern is dependent on their ability to raise the required additional capital or debt financing to meet short and long-term operating requirements. During the three months ended March 31, 2018, the Company received net cash proceeds of $63,000 from the convertible promissory notes payable. 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 could 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. If the Company is unable to obtain the necessary capital, the Company may have to cease operations.

XML 19 R8.htm IDEA: XBRL DOCUMENT v3.8.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 Tonopah Milling and Metals Group, Inc. and its wholly-owned subsidiaries Tonopah Custom Processing, Inc., and Tonopah Resources, Inc. All significant intercompany transactions, accounts and balances have been eliminated in consolidation. 

 

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 of 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, 2017 filed June 8, 2018. 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 three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year as a whole. 

 

Shea Mining and Milling Assets

 

The Company recorded the estimated fair value of the Shea Mining and Milling assets as an aggregate amount on the condensed balance sheets. The assets include the mine tailings and dumps, the land, water rights and the milling facility (the buildings and equipment). None of the assets have been put into production, nor has the Company performed any repair or updates to any of the equipment or buildings. As such, the Company will continue to classify them under a single listing.

 

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 depleted 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 loss 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 some tailings located in Manhattan, Nevada. The Company has not disturbed or processed any of this material and does not intend to do so in the foreseeable future. 

 

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 to dispose. 

 

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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 

 

Revenue Recognition and Deferred Revenue 

 

As of March 31, 2018, the Company has not recognized any revenues from custom permitted processing toll milling. 

 

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 actually 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 December 31, 2017 and 2016. The Company recognizes interest and penalties on unrecognized tax benefits as well as interest received from favorable tax settlements within income tax expense.

 

On December 22, 2017, the President of the United States signed and enacted into law H.R. 1 (the “Tax Reform Law”). The Tax Reform Law, effective for tax years beginning on or after January 1, 2018, except for certain provisions, resulted in significant changes to existing United States tax law, including various provisions that are expected to impact the Company. The Tax Reform Law reduces the federal corporate tax rate from 34% to 21% effective January 1, 2018. The Company will continue to analyze the provisions of the Tax Reform Law to assess the impact on the Company’s consolidated financial statements.

 

Recent Accounting Standards

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for annual reporting periods for public business entities beginning after December 15, 2017, including interim periods within that reporting period. The new standard permits the use of either the retrospective or cumulative effect transition method. The Company adopted ASU 2014-09 in the three months ended March 31, 2018, and as there have been no revenues to date, the adoption did not have a material impact on the Company’s financial position or results of operations, and no transition method was necessary upon adoption. 

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning January 1, 2019, and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. The Company is currently evaluating the timing of adoption and the potential impact of this standard, but as the Company does not have any significant leases, it does not expect it to have a material impact on its financial position or results of operations. 

 

During the period ended March 31, 2018 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.

 

Management’s Evaluation of Subsequent Events

 

The Company evaluates events that have occurred after the balance sheet date of March 31, 2018, through the date which the consolidated financial statements were issued. Based upon the review, other than described in Note 9 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements.

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.8.0.1
PROPERTY, PLANT AND EQUIPMENT
3 Months Ended
Mar. 31, 2018
Property, plant and equipment:  
PROPERTY, PLANT AND EQUIPMENT

NOTE 3 – PROPERTY, PLANT AND EQUIPMENT

 

The Company is preparing 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 our 21,875 square foot building and servicing and drilling various wells for our future operations.

 

Components of our property, plant and equipment are as follows: 

 

    March 31,
2018
    December 31,
2017
 
Equipment   $ 21,000     $ 21,000  
Construction in Progress     1,775,224       1,775,224  
Less accumulated depreciation     (21,000 )     (21,000 )
    $ 1,775,224     $ 1,775,224
XML 21 R10.htm IDEA: XBRL DOCUMENT v3.8.0.1
CONVERTIBLE NOTES PAYABLE
3 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
CONVERTIBLE NOTES PAYABLE

NOTE 4 – CONVERTIBLE NOTES PAYABLE

 

In January 2018 the Company issued three convertible promissory notes in the principal amounts of $8,000, $40,000 and $15,000. The notes are due one year from date of issuance and accrue interest at 6%. The notes are convertible into common shares of the Company at a conversion price of $0.05, with no adjustments to the conversion price. The conversion feature meets the definition of conventional convertible debt and therefore qualifies for the scope exception in Accounting Standards Codification (“ASC”) 815-10-15-74(a) and would not be bifurcated and accounted for separately as a derivative liability. The Company analyzed the conversion feature under ASC 470-20, “Debt with conversion and other options”, and based on the market price of the common stock of the Company on the date of funding as compared to the conversion price, determined there was a $38,000 beneficial conversion feature to recognize, which will be amortized over the term of the note using the effective interest method. Amortization expense of $33,833 was recognized related to these discounts in the three months ended March 31, 2018, including the accelerated amortization upon conversion of two of these notes, as discussed below.

 

On January 29, 2018, five of the outstanding convertible promissory notes payable entered into in the year ending December 31, 2017 and two of the January 2018 convertible promissory notes payable, totaling principal of $144,796 and accrued interest of $3,385, were converted into 2,693,978 shares of restricted common stock, at conversion prices ranging from $0.025 to $0.075. Upon conversion the related unamortized debt discount of $46,250 (including the $33,833 mentioned previously) was immediately expensed. After conversion there was $$253,000 of principal and $8,667 of accrued interest outstanding on the convertible debentures, and a related unamortized discount of $16,276. 

 

In the year ended December 31, 2011, the Company issued three Convertible promissory notes totaling $175,000, with an interest rate of 6%, and are convertible at $0.50 per share. As of March 31, 2018, all of these Notes are past due, and the original terms apply in the default period. Accrued interest on these notes totaled $70,790 and $68,165 at March 31, 2018 and December 31, 2017, respectively.

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.8.0.1
SHAREHOLDERS' EQUITY
3 Months Ended
Mar. 31, 2018
Stockholders' Equity Note [Abstract]  
SHAREHOLDERS' EQUITY

NOTE 5 – SHAREHOLDERS’ EQUITY

 

Common Stock - Convertible promissory notes conversion

 

On January 29, 2018, five of the outstanding convertible promissory notes payable entered into in the year ending December 31, 2017 and two of the January 2018 convertible promissory notes payable, totaling principal of $144,796 and accrued interest of $3,385, were converted into 2,693,978 shares of restricted common stock, at conversion prices ranging from $0.025 to $0.075. (Note 4)

 

Option Grants

 

The Company uses the Black-Scholes pricing model as a method for determining the estimated fair value for stock awards. Compensation expense for stock awards is recognized on a straight-line basis over the vesting period of service awards and for performance-based awards, the Company recognizes the expense when the performance condition is probable of being met.

 

The Company reviews its current assumptions on a periodic basis and adjusts them as necessary to ensure an accurate valuation. The risk-free interest rate is based on the Federal Reserve Board’s constant maturities of the U.S. Treasury bond obligations with terms comparable to the expected life of the options at their issuance date. The Company uses historical data to estimate expected forfeitures, expected dividend yield, expected volatility of the Company’s stock and the expected life of the options.

 

The Company recorded no compensation expense for the three months ended March 31, 2018 and 2017. As of March 31, 2018, there was $0 in unrecognized compensation expense.

 

The Company did not grant any options during the three months ended March 31, 2018, and no options were exercised, expired, or were cancelled. There are no unvested options as of March 31, 2018.

 

The following tables summarize information about stock options outstanding and exercisable:

 

    Options Outstanding and Exercisable at March 31, 2018  
Range of
Exercise Prices
  Number
Outstanding
    Weighted
Remaining
Contractual
Life
  Weighted
Average
Exercise
Price
    Aggregate
Intrinsic
Value(1)
 
$0.40 to $0.60     5,276,223     2.6 years   $ 0.46     $  
$0.61 to $1.00     9,800,000     2.5 years   $ 0.67     $  
$1.01 to $1.50     14,500,000     2.6 years   $ 1.25     $  
$1.51 to $2.25     3,000,000     3.1 years   $ 1.63     $  
$0.40 to $2.25     32,576,223     2.6 years   $ 0.98     $  

 

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 three months ended March 31, 2018, and no warrants were exercised, expired, or were cancelled. As of March 31, 2018 there were 6,125,640 warrants outstanding, with exercise prices ranging from $0.20 to $1.23, a weighted exercise price of $0.77 and a weighted remaining contractual life of 2 years.

 

The aggregate intrinsic value of the 6,125,640 outstanding and exercisable warrants at March 31, 2018 and December 31, 2017 was $0. The intrinsic value is the difference between the closing stock price on March 31, 2018 and December 31, 2017 and the exercise price, multiplied by the number of in-the-money warrants had all warrant holders exercised their warrants on March 31, 2018 or December 31, 2017.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.8.0.1
COMMITMENTS AND CONTINGENCIES
3 Months Ended
Mar. 31, 2018
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

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 Standard Metals 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, Standard Metals filed an Answer and a Motion to Dismiss or, Alternatively, to Stay or Transfer the action to the United States District Court for the Northern District of Alabama, Middle Division. On January 16, 2015, Standard Metals filed a Motion for Summary Judgment. On January 23, 2015, the Court issued an Order granting in part and denying in part Standard Metals’ Motion to Dismiss or, Alternatively, to Stay or Transfer the action to the United States 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 Standard Metals’ 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 United Stated 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 judgement, through March 31, 2018, for a total of approximately $395,000, included in the Accrual for settlement of lawsuits in the accompanying condensed consolidated balance sheet.

 

Midwest Investment Partners, LLC v. Standard Metals Processing, Inc.

 

On March 17, 2014, Midwest Investment Partners, LLC filed suit against Standard Metals Processing, Inc. in Vanderburgh County Superior Court, Vanderburgh, Indiana, alleging that Standard Metals had wrongfully refused to remove a transfer restriction on Midwest’s shares of Standard Metals stock pursuant to Rule 144 of the Securities Act. On March 27, 2014, Standard Metals filed a Notice of Removal of a Civil Action requesting that the case proceed in the United States District Court for the Southern District of Indiana, Evansville Division as an action properly removed pursuant to 28 U.S.C. §§ 1441 (a) and (b). On April 15, 2014, Standard Metals served and filed its Answer and Affirmative Defenses to Plaintiff’s Complaint and Demand for Jury Trial. On November 26, 2014, Standard Metals filed a Motion for Summary Judgment. On February 11, 2015, the Court issued an Order granting Standard Metals’ Motion for Summary Judgment and entered a Final Judgment in favor of Standard Metals and terminating the action. As of March 31, 2018, and through the date of this filing, $85,000 has been paid on this settlement.

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.8.0.1
RELATED PARTY TRANSACTIONS
3 Months Ended
Mar. 31, 2018
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 7 – RELATED PARTY TRANSACTIONS

 

Pure Path Management Company, LLC (“Pure Path”) is currently the beneficial owner of 18% of the outstanding common stock of the Company.

 

During the Company’s acquisition of the Shea assets in 2011, Pure Path purchased the Loan Modification Agreement and the NJB Forbearance Agreement directly from NJB Mining, Inc. In connection with the assignment of a forbearance agreement the Company and Pure Path executed an Agreement in Principle setting forth terms of the forbearance agreement (collectively the “Pure Path Agreements”). Pursuant to the Pure Path Agreements, Pure Path was to receive participation payments to be received on a quarterly basis for seven years after the final closing at a rate of 5% of adjusted gross revenue as such terms are defined in the Pure Path Agreements, past and future consulting fees for approximately $1,150,000, collection remedies and legal proceedings against the Company including foreclosure on the Deed of Trust, registration rights, rights of first refusal, tag along rights, preemptive rights, exclusive worldwide rights pertaining to financing and joint ventures, and other negative covenants regarding approval of corporate actions.

 

Pursuant to the Settlement and Release Agreement executed October 10, 2013 with the Company, Pure Path relinquished the foregoing rights and obligations owed to it and agreed to forbear collection remedies and legal proceedings against the Company including foreclosure on the Deed of Trust, and, in connection with the settlement and release of various debts of approximately $1,500,000 and the consulting fees owed by the Company, the Company issued 27,000,000 restricted shares and a Promissory Note (the “Pure Path Note”) for an amount of up to $2,500,000 with a beginning principal balance of $1,933,345 bearing interest of 8% per year for the current balance of the amounts owed under the Pure Path Agreements. The outstanding principal balance on the Pure Path Note was $2,229,187 as of both March 31, 2018 and December 31, 2017, with related accrued interest of $815,024 and $768,982, respectively.

 

On February 11, 2015, the Company issued an unsecured promissory note (the “Note”) to Tina Gregerson Family Properties, LLC, an entity controlled by a former director of the Company. The Note for up to $750,000 was provided in tranches. Maturity of each tranche is one year from the date of receipt. Interest accrues at 8% per annum on each tranche. Under the terms of the Note, the Company received $477,500. The Note is in default.

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.8.0.1
EARNINGS (LOSS) PER SHARE
3 Months Ended
Mar. 31, 2018
Earnings Per Share [Abstract]  
EARNINGS (LOSS) PER SHARE

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 March 31, 2018, the weighted average shares from stock options of 32,576,223, warrants of 6,125,640 and Convertible Promissory note shares of approximately 1,635,000 were excluded from the diluted weighted average common share calculation due to the antidilutive effect such shares would have on net loss per common share.

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.8.0.1
SUBSEQUENT EVENTS
3 Months Ended
Mar. 31, 2018
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 9 – SUBSEQUENT EVENTS

 

On June 14, 2018, the Company entered into a convertible promissory note in the principal amount of $10,000. The note is due December 29, 2018, and accrues interest at 6%. The note is convertible into common shares of the Company at a conversion price of $0.025, with no adjustments to the conversion price. The note was in exchange for $91,463 included in accounts payable, that the noteholder purchased from a vendor on December 29, 2017. Upon conversion of the note into 411,046 common shares of the Company, also on June 14, 2018, the noteholder signed a debt settlement and release agreement for the outstanding accounts payable, resulting in a gain on settlement to be recognized in the six months ending June 30, 2018, of $81,463.

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.8.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
3 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
Principles of Consolidation

Principles of Consolidation

 

The consolidated financial statements include the accounts of Standard Metals Processing, Inc., and its wholly-owned subsidiary Tonopah Milling and Metals Group, Inc. and its wholly-owned subsidiaries Tonopah Custom Processing, Inc., and Tonopah Resources, Inc. All significant intercompany transactions, accounts and balances have been eliminated in consolidation.

Basis of Presentation

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 of 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, 2017 filed June 8, 2018. 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 three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year as a whole.

Shea Mining and Milling Assets

Shea Mining and Milling Assets

 

The Company recorded the estimated fair value of the Shea Mining and Milling assets as an aggregate amount on the condensed balance sheets. The assets include the mine tailings and dumps, the land, water rights and the milling facility (the buildings and equipment). None of the assets have been put into production, nor has the Company performed any repair or updates to any of the equipment or buildings. As such, the Company will continue to classify them under a single listing.

Mineral Properties

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 depleted 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 loss 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 some tailings located in Manhattan, Nevada. The Company has not disturbed or processed any of this material and does not intend to do so in the foreseeable future.

Impairment of Long-Lived Assets and Long-Lived Assets

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 to dispose.

Use of Estimates

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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition and Deferred Revenue

Revenue Recognition and Deferred Revenue

 

As of March 31, 2018, the Company has not recognized any revenues from custom permitted processing toll milling.

Income Taxes

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 actually 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 December 31, 2017 and 2016. The Company recognizes interest and penalties on unrecognized tax benefits as well as interest received from favorable tax settlements within income tax expense.

 

On December 22, 2017, the President of the United States signed and enacted into law H.R. 1 (the “Tax Reform Law”). The Tax Reform Law, effective for tax years beginning on or after January 1, 2018, except for certain provisions, resulted in significant changes to existing United States tax law, including various provisions that are expected to impact the Company. The Tax Reform Law reduces the federal corporate tax rate from 34% to 21% effective January 1, 2018. The Company will continue to analyze the provisions of the Tax Reform Law to assess the impact on the Company’s consolidated financial statements.

Recent Accounting Standards

Recent Accounting Standards 

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for annual reporting periods for public business entities beginning after December 15, 2017, including interim periods within that reporting period. The new standard permits the use of either the retrospective or cumulative effect transition method. The Company adopted ASU 2014-09 in the three months ended March 31, 2018, and as there have been no revenues to date, the adoption did not have a material impact on the Company’s financial position or results of operations, and no transition method was necessary upon adoption.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning January 1, 2019, and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. The Company is currently evaluating the timing of adoption and the potential impact of this standard, but as the Company does not have any significant leases, it does not expect it to have a material impact on its financial position or results of operations.

 

During the period ended March 31, 2018 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.

Management's Evaluation of Subsequent Events

Management’s Evaluation of Subsequent Events 

 

The Company evaluates events that have occurred after the balance sheet date of March 31, 2018, through the date which the consolidated financial statements were issued. Based upon the review, other than described in Note 9 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements.

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.8.0.1
PROPERTY, PLANT AND EQUIPMENT (Tables)
3 Months Ended
Mar. 31, 2018
Property, plant and equipment:  
Components of Property Plant and Equipment

Components of our property, plant and equipment are as follows:

 

    March 31,
2018
    December 31,
2017
 
Equipment   $ 21,000     $ 21,000  
Construction in Progress     1,775,224       1,775,224  
Less accumulated depreciation     (21,000 )     (21,000 )
    $ 1,775,224     $ 1,775,224
XML 29 R18.htm IDEA: XBRL DOCUMENT v3.8.0.1
SHAREHOLDERS' EQUITY (Tables)
3 Months Ended
Mar. 31, 2018
Stockholders' Equity Note [Abstract]  
Schedule of stock options by exercise price range

The following tables summarize information about stock options outstanding and exercisable:

 

    Options Outstanding and Exercisable at March 31, 2018  
Range of
Exercise Prices
  Number
Outstanding
    Weighted
Remaining
Contractual
Life
  Weighted
Average
Exercise
Price
    Aggregate
Intrinsic
Value(1)
 
$0.40 to $0.60     5,276,223     2.6 years   $ 0.46     $  
$0.61 to $1.00     9,800,000     2.5 years   $ 0.67     $  
$1.01 to $1.50     14,500,000     2.6 years   $ 1.25     $  
$1.51 to $2.25     3,000,000     3.1 years   $ 1.63     $  
$0.40 to $2.25     32,576,223     2.6 years   $ 0.98     $  
XML 30 R19.htm IDEA: XBRL DOCUMENT v3.8.0.1
NATURE OF BUSINESS (Detail Narrative) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Dec. 31, 2017
Net loss $ (601,740) $ (183,381)  
Retained earnings (Accumulated deficit) 103,776,548   $ 103,174,808
Working capital deficit 10,153,000    
Convertible Promissory Notes Payable [Member]      
Cash proceeds from short-term debt $ 63,000    
XML 31 R20.htm IDEA: XBRL DOCUMENT v3.8.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)
3 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
Statutory federal tax rate (in percent) 21.00%
Previously Statutory federal tax rate (in percent) 34.00%
XML 32 R21.htm IDEA: XBRL DOCUMENT v3.8.0.1
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Property, Plant and Equipment, Gross $ 1,796,224 $ 1,796,224
Less accumulated depreciation (21,000) (21,000)
Net property, plant and equipment 1,775,224 1,775,224
Construction In Progress [Member]    
Property, Plant and Equipment, Gross 1,775,224 1,775,224
Equipment [Member]    
Property, Plant and Equipment, Gross $ 21,000 $ 21,000
XML 33 R22.htm IDEA: XBRL DOCUMENT v3.8.0.1
CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Jan. 29, 2018
Jan. 29, 2018
Jan. 31, 2018
Mar. 31, 2018
Mar. 31, 2017
Dec. 31, 2017
Dec. 31, 2011
Debt face amount       $ 253,000      
Unamortized debt discount       16,276      
Accrued interest       8,667      
Amortization expense       55,583 $ 67,863    
6% One Convertible Promissory Note [Member]              
Debt face amount     $ 8,000        
Interest rate     6.00%        
Debt term     1 year        
Stock conversion price (in dollars per share)     $ 0.05        
6% Two Convertible Promissory Note [Member]              
Debt face amount $ 144,796 $ 144,796 $ 40,000        
Interest rate     6.00%        
Debt term     1 year        
Stock conversion price (in dollars per share)     $ 0.05        
Unamortized debt discount 46,250 46,250          
Unamortized debt discount previously 33,833 33,833          
Accrued interest $ 3,385 $ 3,385          
6% Two Convertible Promissory Note [Member] | Restricted Stock [Member]              
Number of shares issued upon debt conversion (in shares) 2,693,978 2,693,978          
6% Two Convertible Promissory Note [Member] | Restricted Stock [Member] | Minimum [Member]              
Stock conversion price (in dollars per share) $ 0.025 $ 0.025          
6% Two Convertible Promissory Note [Member] | Restricted Stock [Member] | Maximum [Member]              
Stock conversion price (in dollars per share) $ 0.075 $ 0.075          
6% Three Convertible Promissory Note [Member]              
Debt face amount     $ 15,000        
Interest rate     6.00%        
Debt term     1 year        
Stock conversion price (in dollars per share)     $ 0.05        
6% Convertible Promissory Note [Member]              
Amortization expense       33,833      
Beneficial conversion feature       38,000      
6% Three Convertible Promissory Note [Member]              
Debt face amount             $ 175,000
Interest rate             6.00%
Stock conversion price (in dollars per share)             $ 0.50
Accrued interest       $ 70,790   $ 68,165  
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.8.0.1
SHAREHOLDERS' EQUITY (Details)
3 Months Ended
Mar. 31, 2018
USD ($)
$ / shares
shares
$0.40 to $0.60 [Member]  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Exercise price lower range limit (in dollars per share) $ 0.40
Exercise price upper range limit (in dollars per share) $ 0.60
Number Outstanding (in shares) | shares 5,276,223
Weighted Remaining Contractual Life 2 years 7 months 6 days
Weighted Average Exercise Price (in dollars per share) $ 0.46
Aggregate Intrinsic Value | $ [1]
0.61 to $1.00 [Member]  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Exercise price lower range limit (in dollars per share) $ 0.61
Exercise price upper range limit (in dollars per share) $ 1.00
Number Outstanding (in shares) | shares 9,800,000
Weighted Remaining Contractual Life 2 years 6 months
Weighted Average Exercise Price (in dollars per share) $ 0.67
Aggregate Intrinsic Value | $ [1]
1.01 to $1.50 [Member]  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Exercise price lower range limit (in dollars per share) $ 1.01
Exercise price upper range limit (in dollars per share) $ 1.50
Number Outstanding (in shares) | shares 14,500,000
Weighted Remaining Contractual Life 2 years 7 months 6 days
Weighted Average Exercise Price (in dollars per share) $ 1.25
Aggregate Intrinsic Value | $ [1]
$1.51 to $2.25 [Member]  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Exercise price lower range limit (in dollars per share) $ 1.51
Exercise price upper range limit (in dollars per share) $ 2.25
Number Outstanding (in shares) | shares 3,000,000
Weighted Remaining Contractual Life 3 years 1 month 6 days
Weighted Average Exercise Price (in dollars per share) $ 1.63
Aggregate Intrinsic Value | $ [1]
$0.40 to $2.25 [Member]  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Exercise price lower range limit (in dollars per share) $ 0.40
Exercise price upper range limit (in dollars per share) $ 2.25
Number Outstanding (in shares) | shares 32,576,223
Weighted Remaining Contractual Life 2 years 7 months 6 days
Weighted Average Exercise Price (in dollars per share) $ 0.98
Aggregate Intrinsic Value | $ [1]
[1] The aggregate intrinsic value in the table represents the difference between the closing stock price on September 30, 2017 and the exercise price, multiplied by the number of in-the-money options that would have been received by the option holders had all option holders exercised their options on September 30, 2017.
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.8.0.1
SHAREHOLDERS' EQUITY (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Jan. 29, 2018
Jan. 29, 2018
Mar. 31, 2018
Dec. 31, 2017
Jan. 31, 2018
Debt face amount     $ 253,000    
Accrued interest     8,667    
Unrecognized share based compensation Expense     $ 0    
Number of warrant outsanding     6,125,640 0  
Number of weighted exercise price     $ 0.77    
Number of weighted remaining contractual life     2 years    
Minimum [Member]          
Exercise price of warrants (in dollars per share)     $ 0.20    
Maximum [Member]          
Exercise price of warrants (in dollars per share)     $ 1.23    
6% Two Convertible Promissory Note [Member]          
Debt face amount $ 144,796 $ 144,796     $ 40,000
Accrued interest $ 3,385 $ 3,385      
Stock conversion price (in dollars per share)         $ 0.05
6% Two Convertible Promissory Note [Member] | Restricted Stock [Member]          
Number of shares issued upon debt conversion (in shares) 2,693,978 2,693,978      
6% Two Convertible Promissory Note [Member] | Restricted Stock [Member] | Minimum [Member]          
Stock conversion price (in dollars per share) $ 0.025 $ 0.025      
6% Two Convertible Promissory Note [Member] | Restricted Stock [Member] | Maximum [Member]          
Stock conversion price (in dollars per share) $ 0.075 $ 0.075      
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.8.0.1
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)
3 Months Ended
Aug. 12, 2015
Mar. 31, 2018
Stephen E. Flechner v. Standard Metals Processing, Inc [Member]    
Damages paid $ 2,157,000  
Interest damages paid 235,246  
Interest damages paid,per day $ 473  
Midwest Investment Partners, LLC v. Standard Metals Processing, Inc.    
Damages paid   $ 85,000
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.8.0.1
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)
1 Months Ended
Feb. 11, 2015
Oct. 10, 2013
Oct. 10, 2013
Mar. 31, 2018
Dec. 31, 2017
Debt face amount       $ 253,000  
Outstanding principal balance       2,229,187 $ 2,229,187
Promissory notes payable - related party       477,500 477,500
Accrued interest       8,667  
Pure Path Capital Management Company, LLC [Member]          
Interest rate   5.00% 5.00%    
Legal Fees     $ 1,150,000    
Pure Path Capital Management Company, LLC [Member] | Common Stock [Member]          
Interest rate   18.00% 18.00%    
8% Senior Secured Convertible Promissory Note Due on April 10, 2015 [Member]          
Outstanding principal balance       2,229,187 2,229,187
Accrued interest       $ 815,024 $ 768,982
8% Senior Secured Convertible Promissory Note Due on April 10, 2015 [Member] | Pure Path Capital Management Company, LLC [Member] | Restricted Stock [Member]          
Debt face amount   $ 2,500,000 $ 2,500,000    
Interest rate   8.00% 8.00%    
Original principal balance   $ 1,933,345      
Number of shares issued upon debt conversion (in shares)   27,000,000      
Debt default additional interest   15.00%      
8% Unsecured Promissory Note [Member] | Tina Gregerson Family Properties, LLC [Member]          
Debt face amount $ 750,000        
Interest rate 8.00%        
Debt term 1 year        
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.8.0.1
EARNINGS (LOSS) PER SHARE (Details Narrative)
3 Months Ended
Mar. 31, 2018
shares
Convertible Debt Securities [Member]  
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]  
Antidilutive securities excluded from computation of EPS 1,635,000
Warrant [Member]  
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]  
Antidilutive securities excluded from computation of EPS 6,125,640
Employee Stock Option [Member]  
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]  
Antidilutive securities excluded from computation of EPS 32,576,223
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.8.0.1
SUBSEQUENT EVENTS (Details Narrative) - USD ($)
6 Months Ended
Jun. 14, 2018
Jun. 30, 2018
Dec. 29, 2018
Mar. 31, 2018
Debt face amount       $ 253,000
Subsequent Event [Member]        
Debt face amount $ 10,000   $ 91,463  
Interest rate     6.00%  
Stock conversion price (in dollars per share)     $ 0.025  
Number of shares issued upon debt conversion (in shares) 411,046      
Litigation Settlement   $ 81,463    
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