| 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 Aurielle Enterprises
Inc. (f/k/a Tonopah Milling and Metals Group, Inc.) (“AE”) and its wholly owned subsidiaries Tonopah Custom Processing, Inc.,
(“TCP”) and Tonopah Resources, Inc. (“TR”) All significant intercompany transactions, accounts and balances have
been eliminated in consolidation. Basis of Presentation The accompanying unaudited
condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America (“US GAAP”), for interim financial information pursuant to the rules and regulations of the Securities and
Exchange Commission (the “SEC”). Accordingly, they do not include all the information and footnotes required by US GAAP for
complete financial statements. The unaudited condensed consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2020 filed January 26, 2021.
In the opinion of management, all adjustments (consisting of normal recurring adjustments unless otherwise indicated) considered necessary
for a fair presentation have been included. Operating results for the three months ended March 31, 2021 are not necessarily indicative
of the results that may be expected for the year as a whole. Reclassification of Prior Year Presentation Certain
prior period balance sheet amounts of accounts payable and accrued expenses have been reclassified for consistency with the current year
balance sheet presentation. These reclassifications had no effect on previously reported consolidated financial condition, results of
operations, cash flows, and shareholders’ deficit. Mineral Properties Mineral property acquisition
costs are recorded at cost and are deferred until the viability of the property is determined. No properties have produced operating revenues
at this time. Exploration, mineral property evaluation, option payments, related acquisition costs for mineral properties acquired under
an option agreement, general overhead, administrative and holding costs to maintain a property on a care and maintenance basis are expensed
in the period they are incurred. When reserves are determined for a property and a bankable feasibility study is completed, subsequent
exploration and development costs on the property would be capitalized. If a project were to be put into production, capitalized costs
would be amortized on the unit of production basis. Management reviews the net
carrying value of each mineral property as changes may materialize with a property or at a minimum, on an annual basis. Where information
and conditions suggest impairment, estimated future net cash flows from each property are calculated using estimated future prices, proven
and probable reserves and value beyond proven and probable reserves, and operating, capital and reclamation costs on an undiscounted basis.
If it is determined that the future cash flows are less than the carrying value, a write-down to the estimated fair value is made with
a charge to 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 the rights to some tailings located in Manhattan,
Nevada. The Company has not disturbed or processed any of this material, but recently authorized GPR to examine the economic feasibility
of processing the tailings to reclaim their residual content of valuable in exchange for the
exclusive right to process the tailings should their economic assessment prove positive. The terms of such processing to be mutually agreed
upon between GPR and the Company in the future based on the results of the assessment. In addition, the Company and Sustainable
Metal Solutions, LLC (“SMS”), an affiliate of GPR, agreed to form a joint venture into which the Company will contribute the
solar energy rights attributable to its 1,086 acres in exchange for SMS’s agreement to develop, manage and underwrite the venture.
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 amount of revenues and expenses during the reporting period. Actual results could differ from those
estimates. Revenue Recognition and Deferred Revenue As of March 31, 2021, the
Company has not recognized any revenues from custom permitted processing toll milling. If we achieve revenue generation, the Company plans
to report such revenues consistent with ASC Topic 606. Income Taxes Income taxes are accounted
for based upon an asset and liability approach. Accordingly, deferred tax assets and liabilities arise from the difference between the
tax basis of an asset or liability and its reported amount in the financial statements. Deferred tax amounts are determined using the
tax rates expected to be in effect when the taxes will 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 March 31, 2021 and December 31, 2020.
The Company recognizes interest and penalties due on unrecognized tax benefits as well as interest receivable from favorable tax settlements
within income tax expense. 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. Management believes the provisions of the Tax Reform Law will have a favorable impact on the
Company’s consolidated financial statements should it attain a level of profitable operations. Recent Accounting Standards In December 2019, the FASB
issued ASU 2019-12, Income Taxes-Simplifying the Accounting for Income Taxes ("ASU 2019-12"). Among other items, the amendments
in ASU 2019-12 simplify the accounting treatment of tax law changes and year-to-date losses in interim periods. An entity generally recognizes
the effects of a change in tax law in the period of enactment, however, there is an exception for tax laws with delayed effective dates.
Under current guidance, an entity may not adjust its annual effective tax rate for a tax law change until the period in which the law
is effective. This exception was removed under ASU 2019-12, thereby providing that all effects of a tax law change are recognized in the
period of enactment, including adjustment of the estimated annual effective tax rate. Regarding year-to-date losses in interim periods,
an entity is required to estimate its annual effective tax rate for the full fiscal year at the end of each interim period and use that
rate to calculate its income taxes on a year-to-date basis. However, current guidance provides an exception that when a loss in an interim
period exceeds the anticipated loss for the year, the income tax benefit is limited to the amount that would be recognized if the year-to-date
loss were the anticipated loss for the full year. ASU 2019-12 removes this exception and provides that, in this situation, an entity would
compute its income tax benefit at each interim period based on its estimated annual effective tax rate. ASU 2019-l2 is effective for fiscal
years beginning after December 15, 2020, including interim periods within those annual periods Early adoption is permitted. The Company
is currently evaluating the effect that this update will have on its consolidated financial statements and related disclosures. In June 2016, the FASB issued
ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”)
and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, and ASU 2019-05 (collectively, "Topic 326").
Topic 326 requires measurement and recognition of expected credit losses for financial assets held. The Company will be required to adopt
this ASU for financial years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of topic
326 is not expected to have a material effect on the Company’s consolidated financial statements and financial statement disclosures. During the period ended March
31, 2021 and through the date of this filing, there were several new accounting pronouncements issued by the Financial Accounting Standards
Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption
of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements. |
