Notes Receivable

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Notes Receivable

3. NOTES RECEIVABLE

Alabama Graphite Corp. Note Receivable

In conjunction with its entry into the arrangement agreement to acquire Alabama Graphite, on December 13, 2017, the Company executed a secured convertible non-revolving line of credit agreement (the “Alabama Graphite Loan”), whereby the Company agreed to provide up to USD $2,000,000 to Alabama Graphite for the purpose of funding operations until the merger could be finalized. As of March 31, 2018, the Company had advanced $1,420,675 on the Alabama Graphite Loan and had accrued interest receivable of $10,554. With completion of the acquisition on April 23, 2018 (as discussed in Note 13), the Alabama Graphite Loan became an amount outstanding between the Company and its wholly owned subsidiary. As of April 23, 2018, the Company had advanced approximately USD $1.8 million in accordance with the Alabama Graphite Loan. This represents the total advances prior to the closing of the acquisition. The Alabama Graphite Loan will be part of the consideration paid for the acquisition and ultimately part of the purchase price allocation to the assets and liabilities of the acquired company. Due to the expected inclusion in the acquisition purchase price, it has been classified as a non-current asset at March 31, 2018 and December 31, 2017.

Laramide Note Receivable

As part of the consideration for the sale of Hydro Resources, Inc., the Company currently holds a $3.5  million promissory note, secured by a mortgage over the Churchrock and Crownpoint projects. The note has a three-year term and carries an initial interest rate of 5% which then increases to 10% upon Laramide’s decision regarding commercial production at the Churchrock project. Principal payment of $1.5 million is due and payable on January 5, 2019, with the balance of $2.0 million due and payable on January 5, 2020. Interest is payable on a quarterly basis, provided however that no interest was payable until March 31, 2018. Laramide will have the right to satisfy up to half of each of these principal payments by delivering shares of its common stock to the Company, which shares will be valued by reference to the volume weighted average price (“VWAP”) for Laramide’s common stock for the 20 trading days before the respective anniversary of January 5, on which each payment is due. The fair value of the notes receivable was determined using the present value of the future cash receipts discounted at a market rate of 9.5%.

Laramide made the first required principal payment of $1.5 million on the promissory note in January 2018, consisting of $750,000 in cash and the issuance of 1,982,483 of Laramide’s common shares. Also, Laramide made the first interest payment in April 2018 for approximately $0.3 million in cash.

The following tables show the notes receivable, accrued interest and unamortized discount on the Company’s notes receivable as of March 31, 2018 and December 31, 2017.

	March 31, 2018
(thousands of dollars)	Note Amount		Plus Accrued Interest		Less Unamortized Note Discount			Note Balance per Balance Sheet
Current Assets
Notes receivable Laramide – current	$	1,500	$	295	$	-		$	1,795
Subtotal Notes Receivable – current	$	1,500	$	295	$	-		$	1,795
Non-current Assets
Notes receivable – Laramide – non-current	$	2,000	$	-	$	(883	)	$	1,117
Notes receivable – Alabama Graphite Corp.		1,420		11		-			1,431
Subtotal Notes Receivable – non-current	$	3,420	$	11	$	(883	)	$	2,548
Total Notes Receivable – current and non-current	$	4,920	$	306	$	(883	)	$	4,343

	December 31, 2017
(thousands of dollars)	Note Amount		Plus Accrued Interest		Less Unamortized Note Discount			Note Balance per Balance Sheet
Current Assets
Notes receivable Laramide – current	$	1,500	$	250	$	-		$	1,750
Subtotal Notes Receivable – current	$	1,500	$	250	$	-		$	1,750
Non-current Assets
Notes receivable – Laramide – non-current	$	3,500	$	-	$	(1,005	)	$	2,495
Notes receivable – Alabama Graphite Corp.		832		1		-			833
Subtotal Notes Receivable – non-current	$	4,332	$	1	$	(1,005	)	$	3,328
Total Notes Receivable – current and non-current	$	5,832	$	251	$	(1,005	)	$	5,078