Notes Receivable

12 Months Ended

Dec. 31, 2017

Debt Disclosure [Abstract]

Notes Receivable

3. NOTES RECEIVABLE

Alabama Graphite Corp. Note Receivable

In conjunction with the proposed acquisition of with Alabama Graphite Corp., 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 December 31, 2017, the Company has advanced $833,744 on the Loan for principal and accrued interest. Under the terms of the Alabama Graphite Loan, the maturity date was June 30, 2018 and it carries a 3% annual interest rate (payable in shares of Alabama Graphite or cash at the Company’s discretion). The Company can convert the Alabama Graphite Loan into shares of Alabama Graphite common stock at any time prior to the maturity date.

Should the merger be terminated or in the event of a change of control, the Alabama Graphite Loan would become due and payable immediately. The Alabama Graphite Loan is secured against all the assets of Alabama Graphite Corp. and Alabama Graphite Company, Inc.

Upon closing of the pending merger, the Alabama Graphite Loan will become 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 December 31, 2017.

Laramide Note Receivable

As part of the consideration for the sale of Hydro Resources, Inc., (discussed in Note 4 below), the Company holds a $5.0 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 payments of approximately $1.5 million are due and payable on January 5 in each of 2018 and 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 will be 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%.

The following tables show the notes receivable, accrued interest and unamortized discount on the Company’s notes receivable as of December 31, 2017. The Company had no notes receivable at December 31, 2016.

	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

Laramide made the first required principal payment 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.