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3. Summary of Significant Accounting Policies | 12 Months Ended
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Dec. 31, 2013
Summary Of Significant Accounting Policies |
Summary of Significant Accounting Policies | Principles of Consolidation The Company's consolidated financial statements include the accounts of BRZ, USAMSA and AM, all wholly-owned subsidiaries. Intercompany balances and transactions are eliminated in consolidation. Use of Estimates The preparation of 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. Significant and critical estimates include property, plant and equipment impairment, accounts receivable allowance, deferred income taxes, environmental remediation liabilities and asset retirement obligations. Actual results could differ from those estimates. Reclassifications Certain reclassifications have been made to the 2012 and 2011 financial statements in order to conform to the 2013 presentation. These reclassifications have no effect on net income (loss), cash flows, total assets or stockholders' equity as previously reported. Cash and Cash Equivalents The Company considers cash in banks and investments with original maturities of three months or less when purchased to be cash equivalents. Restricted Cash Restricted cash at December 31, 2013 and 2012 consists of cash held for reclamation performance bonds, and is held as certificates of deposit with financial institutions. Accounts Receivable Accounts receivable are stated at the amount that management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through an allowance for doubtful accounts. Changes to the allowance for doubtful accounts are based on management’s judgment, considering historical write-offs, collections and current credit conditions. Balances which remain outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to the applicable accounts receivable. Payments received on receivables subsequent to being written off are considered a bad debt recovery. Inventories Inventories at December 31, 2013 and 2012, consisted primarily of finished antimony products, antimony metal, antimony concentrates, antimony ore, and finished zeolite products that are stated at the lower of first-in, first-out cost or estimated net realizable value. Finished antimony products, antimony metal and finished zeolite products costs include raw materials, direct labor and processing facility overhead costs and freight allocated based on production quantity. Stockpiled ore is carried at the lower of average cost or net realizable value. Since the Company's antimony inventory is a commodity with a sales value that is subject to world prices for antimony that are beyond the Company's control, a significant change in the world market price of antimony could have a significant effect on the net realizable value of inventories. The Company periodically reviews its inventories to identify excess and obsolete inventories and to estimate reserves for obsolete inventories as necessary to reflect inventories at net realizable value. Properties, Plants and Equipment Properties, plants and equipment are stated at historical cost and are depreciated using the straight-line method over estimated useful lives of five to twenty-five years. Vehicles and office equipment are stated at cost and are depreciated using the straight-line method over estimated useful lives of three to seven years. Maintenance and repairs are charged to operations as incurred. Betterments of a major nature are capitalized. Expenditures for new property, plant, equipment, and improvements that extend the useful life or functionality of the asset are capitalized. The Company capitalized $3,575,408 and $3,934,961 in plant construction and other capital costs for the years ended December 31, 2013 and 2012, respectively. These amounts include capitalized interest of $24,395 and $14,313, respectively. When assets are retired or sold, the costs and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is reflected in operations. Mineral properties are amortized over the estimated economic life of the mineral resource using the straight-line method or the units-of-production method, based upon estimated units of mineral resource. Management of the Company periodically reviews the net carrying value of all of its long-lived assets. These reviews consider the net realizable value of each asset or group to determine whether a permanent impairment in value has occurred and the need for any asset write-down. An impairment loss is recognized when the estimated future cash flows (undiscounted and without interest) expected to result from the use of an asset are less than the carrying amount of the asset. Measurement of an impairment loss is based on the estimated fair value of the asset if the asset is expected to be held and used. Translations of Foreign Currencies All amounts are presented in United States (US) Dollars, and the US Dollar is the functional currency of the Company and its foreign subsidiaries. All transactions are carried out in US Dollars, or translated at the time of the transaction. There are no material accounts carried in foreign currencies that would require translation at year end. Mineral Rights The cost to obtain the legal right to explore, extract and retain at least a portion of the benefits from mineral deposits are capitalized as mineral rights in the year of acquisition. These capitalized costs will be amortized on the statement of operations using a straight line method over the expected life when placed into production. Mineral rights are assessed for impairment when facts and circumstances indicate that the potential for impairment exists. No impairment has been indicated for the years ended December 31, 2013 or 2012 as a result of this assessment. Mineral rights are subject to write down in the period the property is abandoned. Exploration and Development The Company records exploration costs as operating expenses in the period they occur, and capitalizes development costs on discrete mineralized bodies that have proven reserves in compliance with SEC Industry Guide 7, and are in development or production. Reclamation and Remediation All of the Company's mining operations are subject to reclamation and remediation requirements. Minimum standards for mine reclamation have been established by various governmental agencies. Costs are estimated based primarily upon environmental and regulatory requirements and are accrued. The liability for reclamation is classified as current or noncurrent based on the expected timing of expenditures. Reclamation differs from an asset retirement obligation in that no associated asset is recorded in the case of reclamation liabilities. It is reasonably possible that because of uncertainties associated with defining the nature and extent of environmental contamination, application of laws and regulations by regulatory authorities, and changes in remediation technology, the ultimate cost of remediation and reclamation could change in the future. The Company continually reviews its accrued liabilities for such remediation and reclamation costs as evidence becomes available indicating that its remediation and reclamation liability has changed. The Company records the fair value of an asset retirement obligation as a liability in the period in which the Company incurs a legal obligation for the retirement of long-lived assets, it is probable that such costs will be incurred, and they are reasonably estimable. A corresponding asset is also recorded and depreciated over the life of the assets on a straight line basis. After the initial measurement of the asset retirement obligation, the liability will be adjusted at the end of each reporting period to reflect changes in the estimated future cash flows underlying the obligation. Determination of any amounts recognized upon adoption is based upon numerous estimates and assumptions, including future retirement costs, future inflation rates, and the credit-adjusted risk-free interest rates. Revenue Recognition Sales of antimony and zeolite products are recorded upon shipment and when title passes to the customer. Prepayments received from customers prior to the time that products are processed and shipped are recorded as deferred revenue. When the related products are shipped, the amount recorded as deferred revenue is recognized as revenue. The Company's sales agreements provide for no product returns or allowances. Sales of precious metals are recognized when pervasive evidence of an arrangement exists, the price is reasonably determinable, the product has been delivered, no obligations remain, and collection is reasonably assured. Common Stock Issued for Consideration Other than Cash All transactions in which goods or services are received for the issuance of shares of the Company’s common stock are accounted for based on the fair value of the consideration received or the fair value of the common stock issued, whichever is more readily determinable. Income Taxes Income taxes are accounted for under the liability method. Under this method, deferred income tax liabilities or assets are determined at the end of each period using the tax rate expected to be in effect when the taxes are actually paid or recovered. A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of these deferred tax assets will not be realized. The Company applies generally accepted accounting principles for recognition of uncertainty in income taxes and prescribing a recognition threshold and measurement attribute for the recognition and measurement of a tax position taken or expected to be taken in a tax return. Allowance for Doubtful Accounts The allowance for doubtful accounts is based on management’s regular evaluation of individual customer’s receivables and consideration of a customer’s financial condition and credit history. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received. Interest is not charged on past due accounts. Income (Loss) Per Common Share Basic earnings per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated based on the weighted average number of common shares outstanding during the period plus the effect of potentially dilutive common stock equivalents, including warrants to purchase the Company's common stock and convertible preferred stock. Management has determined that the calculation of diluted earnings per share for the years ended December 31, 2013, 2012 and 2011, adds none, none, and 525,827 shares, respectively, to basic weighted average shares, related to common stock purchase warrants. Shares related to warrants and convertible preferred stock were not added to the weighted average of common stock for 2013 and 2012 because the results would have been anti-dilutive. As of December 31, 2013, 2012 and 2011, potentially dilutive common stock equivalents not included in the calculation of diluted earnings per share are as follows:
|  | December 31, 2013 |  |  | December 31, 2012 |  |  | December 31, 2011 |
Warrants |  |  | 2,489,407 |  |  |  | 1,934,667 |  |  |  | 74,173 |
Convertible preferred stock |  |  | 1,751,005 |  |  |  | 1,751,005 |  |  |  | 1,751,005 |
Total possible dilution |  |  | 4,240,412 |  |  |  | 3,685,672 |  |  |  | 1,825,178 |
The following table represents the calculation of basic and diluted weighted average shares outstanding for December 31, 2013, 2012 and 2011:
|  | December 31, 2013 |  |  | December 31, 2012 |  |  | December 31, 2011 |
Warrants |  |  | 2,489,407 |  |  |  | 1,934,667 |  |  |  | 600,000 |
Convertible preferred stock |  |  | 1,751,005 |  |  |  | 1,751,005 |  |  |  | 1,751,005 |
Total possible dilution |  |  | 4,240,412 |  |  |  | 3,685,672 |  |  |  | 2,351,005 |
Anti - dilutive shares |  |  | (4,240,412 | ) |  |  | (3,685,672 | ) |  |  | (1,825,178 | )
Dilutive effect for earnings per share |  |  | 0 |  |  |  | 0 |  |  |  | 525,827 |
Weighted average shares outstanding-basic |  |  | 62,281,449 |  |  |  | 61,235,365 |  |  |  | 58,855,348 |
Weighted average shares outstanding-diluted |  |  | 62,281,449 |  |  |  | 61,235,365 |  |  |  | 59,381,175 |
Fair Value of Financial Instruments The Company’s financial instruments include cash and cash equivalents, certificates of deposits, restricted cash, due to factor, and long-term debt. The carrying value of certificates of deposit, restricted cash, and due to factor approximates fair value based on the contractual terms of those instruments. Fair Value Measurements ASC 820, “Fair Value Measurements and Disclosures”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value.
● | Level 1: Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
● | Level 2: Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
● | Level 3: Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The table below sets forth our financial assets that were accounted for at fair value on a recurring basis as of December 31, 2013 and 2012, respectively, and the fair value calculation input hierarchy level that we have determined applies to each asset category.
|  |  |  |  |  |  | Input
|  |  |  |  |  |  | Hierarchy
Assets: |  | 2013 |  |  | 2012 |  | Level
Cash and cash equivalents |  | $ | 20,343 |  |  | $ | 1,000,811 |  | Level I
Certificates of deposit |  |  | 246,565 |  |  |  | 243,616 |  | Level I
Restricted cash |  |  | 75,501 |  |  |  | 75,251 |  | Level I
Total Cash |  | $ | 342,409 |  |  | $ | 1,319,678 |  |

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