UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

~~September 30, 2021~~March 31, 2022

¨	Transition report under section 13 or 15(d) of the Exchange Act

For the transition period from

Commission File Number

000-31380

APPLIED MINERALS, ~~INC~~.INC.

(Exact name of registrant as specified in its charter)

Delaware		82-0096527
(State or other jurisdiction of incorporation or organization)		(I. R. S. Employer Identification No.)

1200 Silver City Road, PO Box 432, Eureka, UT		84628
(Address of principal executive offices)		(Zip Code)

	~~(435) 433-2059~~(212) 226-4256
	(Issuer’s Telephone Number, Including Area Code)

Former name, former address, and former fiscal year, if changed since last report

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

YES

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

YES

Indicate by check mark whether the registrant: (1) has 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

~~YES~~ Yes

NONo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller-reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	¨	Accelerated Filer	¨	Non-accelerated Filer	¨	Smaller Reporting Company	x
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 13(a) of the Exchange Act.

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES

The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding as of ~~November~~

May

, ~~2021~~2022 was ~~204,736,762.~~261,831,760.

DOCUMENTS INCORPORATED BY REFERENCE: None.

APPLIED MINERALS, INC.

(An Exploration Stage Company)

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED ~~SEPTEMBER 30, 2021~~MARCH 31, 2022

Consolidated Financial Statements

PART I. FINANCIAL INFORMATION

A~~PPLIED~~APPLIED MINERALS, INC.

(An Exploration Stage Mining Company)

~~CONSOLIDATED~~CONSOLIDATED BALANCE SHEETS

Deposits and prepaid expenses

Total Current Assets

Operating lease right-of-use asset

Finance lease right-of-use asset

Operating lease right-of-use assets

Finance lease right-of-use

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Accounts payable and accrued liabilities

Paycheck Protection Program Loan

PIK Note interest accrual

Current portion of notes payable

Current portion of finance lease liabilities

Current portion of operating lease liabilities

Total Current Liabilities

Long-Term Liabilities

PIK Notes payable, net of $783,561 and $1,082,988 debt discount, respectively

PIK Notes payable, net of $577,289 and $681,102 debt discount, respectively

Finance lease liabilities

Operating lease liabilities

Finance lease liability

Total Long-Term Liabilities

Stockholders’ Deficit

Preferred stock, $0.001 par value, 10,000,000 shares authorized, and 257,136 and 128,000 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

Common stock, $0.001 par value, 700,000,000 shares authorized, and 204,736,762 and 183,938,549 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively (134,336,317 reserved in Treasury)

Preferred stock, $0.001 par value, 10,000,000 shares authorized, and 187,000 and 262,000 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

Common stock, $0.001 par value, 700,000,000 shares authorized, and 252,563,747 and 217,655,150 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively (211,913,925 reserved in Treasury)

Additional paid-in capital

Accumulated deficit prior to the exploration stage

Accumulated deficit during the exploration stage

Total Stockholders’ Deficit

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

The accompanying notes are an integral part of these unaudited consolidated financial statements.

A~~PPLIED~~APPLIED MINERALS, INC.

(An Exploration Stage Mining Company)

~~CONSOLIDATED~~CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended September 30

For the Nine Months Ended September 30

For the Three Months Ended March 31,

General and administrative

Total Operating Expenses

OTHER INCOME (EXPENSES):

OTHER INCOME (EXPENSE):

Interest expense, net (including amortization of deferred financing cost and debt discount)

Change in fair value

Gain on forgiveness of PPP loan

Total Other (Expenses)

Total Other (Expense) Income

Deemed dividend on Series B Convertible preferred stock

Deemed dividend on Series B Convertible Preferred Stock

Net Loss Attributable to Common Shareholders

NET LOSS ATTIBUTABLE TO COMMON SHAREHOLDERS

Net Loss Per Common Share (Basic and Diluted)

Net Loss Per Common Share – Basic and Diluted

Weighted Average Common Shares Outstanding (Basic and Diluted)

Weighted Average Common Shares Outstanding – Basic and Diluted

The accompanying notes are an integral part of these unaudited consolidated financial statements.

A~~PPLIED~~APPLIED MINERALS, INC.

(An Exploration Stage Mining Company)

~~CONSOLIDATED~~CONSOLIDATED STATEMENTS OF CHANGES IN ~~STOCKHOLDERS'~~STOCKHOLDERS’ DEFICIT

(Unaudited)

Three Months Ended

Common
Stock
Shares

Common
Stock
Amount

Preferred
Stock
Shares

Preferred
Stock
Amount

Additional
Paid-in
Capital

Accumulated
Deficit Prior to
Exploration
Stage

Accumulated
Deficit
During
Exploration
Stage

Total
Stockholders’
Deficit

Balance, June 30, 2021

195,105,088

$
195,105

176,136

$
176

$
74,256,128

$
(20,009,496
)

$
(103,693,795
)

$
(49,251,882
)

Shares issued in private placement

0

0

176,000

176

199,824

0

0

200,000

Beneficial conversion feature on Convertible Series B Preferred Stock

-

0

-

0
112,525
0

0

112,525

Deemed dividend from beneficial conversion feature on Convertible Series B Preferred Stock

-

0

-

0

(112,525
)

0

0

(112,525)

Shares issued for conversion of preferred stock

9,638,661

9,638

(95,000
)

(95
)

(8,843
)

-

-

700

Stock option compensation expense

-

0

-

0

147,172

0

0

147,172

Net Loss

-

0

-

0

0

0

(1,019,050
)

(1,019,050
)

Balance, September 30, 2021

204,743,749

$
204,743

257,136

$
257

$
74,594,281

$
(20,009,496
)

$
(104,712,845
)

$
(49,923,060
)

Balance, June 30, 2020

175,638,549

$
175,639

0

0

$
73,786,404

$
(20,009,496
)

$
(100,001,222
)

$
(46,048,675
)

Shares issued in private placement

-

-

128,000

$
128

124,872

-

-

125,000

Beneficial conversion feature on Convertible Series B Preferred Stock

-

0

-

0

23,187

0

0

23,187

Deemed dividend from beneficial conversion feature on Convertible Series B Preferred Stock

-

0

-

0

(23,187
)

0

0

(23,187
)

Stock option compensation expense

-

0

-

0

3,899

0

0

3,899

Net Loss

-

0

-

0

0

0

(1,163,791
)

(1,163,791
)

Balance, September 30, 2020

175,638,549

$
175,639

128,000

$
128

$
73,915,175

$
(20,009,496
)

$
(101,165,013
)

$
(47,083,567
)

Nine Months Ended

Common

Stock

Shares

Common

Stock

Amount

Preferred

Stock

Shares

Preferred

Stock

Amount

Additional

Paid-in

Capital

Accumulated

Deficit Prior to

Exploration

Stage

Accumulated

Deficit
During

Exploration

Stage

Total

Stockholders’

Deficit

Balance, December 31, 2020

183,938,939

$
183,939

128,000

$
128

$
74,008,636

$
(20,009,496
)

$
(102,012,644
)

$
(47,829,437
)

Shares issued for conversion of preferred stock

15,805,934

15,805

(223,000
)

(223
)

(7,202
)

-

-

8,380

Shares issued in private placement

0

0

352,136

$
352

384,648

0

0

385,000

Beneficial conversion feature on Convertible Series B Preferred Stock

-

0

-

0

225,137

0

0

225,137

Deemed dividend from beneficial conversion feature on Convertible Series B Preferred Stock

-

0

-

0

(225,137
)

0

0

(225,137
)

Shares issued for cashless options exercise

3,836,475

3,836

-

-

(3,836
)

-

-

0

Shares issued in lieu of bonus

1,162,791

1,163

-

-

56,977

-

-

58,140

Stock option compensation expense

-

0

-

0

155,058

0

0

155,058

Net Loss

-

0

-

0

0

0

(2,700,201
)

(2,700,201
)

Balance, September 30, 2021

204,743,749

$
204,743

257,136

$
257

$
74,594,281

$
(20,009,496
)

$
(104,712,845
)

$
(49,923,060
)

Balance, December 31, 2019

175,513,549

$
175,514

0

0

$
73,774,766

$
(20,009,496
)

$
(98,724,933
)

$
(44,784,149
)

Shares issued to note holder

125,000

125

0

0

1,125

0

0

1,250

Shares issued in private placement

-

-

128,000

$
128

124,872

-

-

125,000

Beneficial conversion feature on Convertible Series B Preferred Stock

-

-

-

-

23,187

-

-

23,187

Deemed dividend from beneficial conversion feature on Convertible Series B Preferred Stock

-

-

-

-

(23,187
)

-

-

(23,187
)

Stock option compensation expense

-

0

-

0

14,412

0

0

14,412

Net Loss

-

0

-

0

0

0

(2,440,080
)

(2,440,080
)

Balance, September 30, 2020

175,638,549

$
175,639

128,000

$
128

$
73,915,175

$
(20,009,496
)

$
(101,165,013
)

$
(47,083,567
)

~~The accompanying notes are an integral part of these unaudited consolidated financial statements.~~

A~~PPLIED MINERALS, INC.~~

~~(An Exploration Stage Mining Company)~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Unaudited)~~

For the Nine Months Ended

September 30,

2021

2020

Cash Flows from Operating Activities:

Net loss

$
(2,700,201
)

$
(2,440,080
)
Adjustments to reconcile net loss to net cash used in operations:

Depreciation

4,869

0

Amortization of discount – notes payable

0

3,568

Amortization of discount - PIK Notes

299,426

284,107

Amortization of deferred financing costs

0

41,930

Accrued interest on PIK Notes

1,036,691

1,026,249

Stock based compensation expense

213,199

14,412

Non-cash lease expense

80,518

474

Change in fair value

0

23,000

Stock issued for interest

8,379

0

Gain on
f
orgiveness of PPP
loan

(223,075
)

0

Change in operating assets and liabilities:

Operating lease liabilities

(82,584
)

0

Accounts receivable

43,302

(43,475
)
Deposits and prepaids

158,493

260,371

Accounts payable and accrued liabilities

187,151

969,099

Net cash (used in) provided by operating activities

(973,832
)

139,655

Cash Flows from Financing Activities:

Payments on finance lease liability

(6,029
)

0

Proceeds from notes payable

0

113,750

Proceeds from Paycheck Protection Program Loan

264,472

223,075

Payments on notes payable

0

(371,625
)
Proceeds from private placement

385,000

0-

Payments on insurance financing

(133,081
)

(208,731
)
Net cash provided by (used in) financing activities

510,362

(118,531
)

Net change in cash

(463,470
)

21,124

Cash at beginning of period

669,560

52,793

Cash at end of period

$
206,090

$
73,917

Supplemental disclosure of cash flow information:

Cash paid for interest

$
6,037

$
3,739

Cash paid for income taxes

$
0

$
0

Supplemental disclosure of non-cash financing activity:

Capitalization of ROU asset and finance lease liability

$
51,733

$
0

Deemed dividend on convertible Preferred Stock Series B due to BCF

$
225,137

$
23,187

Accrued PIK interest paid through issuance of PIK Notes

$
943,990

$
750,580

Stock issued for cashless options exercised

$
3,836

$
0

Common stock issued to note holders for financing cost

$
0

$
1,250

	Common Stock Shares		Common Stock Amount		Preferred Stock Shares			Preferred Stock Amount			Additional Paid-in Capital			Accumulated Deficit Prior to Exploration Stage			Accumulated Deficit During Exploration Stage			Total Stockholders’ Deficit

Balance, December 31, 2021		217,655,150	$	217,654		262,000		$	262		$	74,686,581		$	(20,009,496	)	$	(105,295,883	)	$	(50,400,882	)

Shares issued upon conversion of Series B Preferred Stock		20,164,153		20,164		(75,000	)		(75	)		(20,089	)		-			-			-

Shares issued as part of settlement of liability		4,444,444		4,444		-			-			49,334			-			-			53,778

Issuance of shares of common stock for debt issuance cost		300,000		300		-			-			1,440			-			-			1,740

Issuance of shares of common stock for consulting services		10,000,000		10,000		-			-			60,000			-			-			70,000

Stock based compensation expense		-		-		-			-			21,211			-			-			21,211

Net Loss		-		-		-			-			-			-			(1,115,665	)		(1,115,665	)

Balance, March 31, 2022		252,563,747	$	252,562		187,000		$	187		$	74,798,477		$	(20,009,496	)	$	(106,411,548	)	$	(51,369,818	)

Balance, December 31, 2020		183,938,549	$	183,939		128,000		$	128		$	74,008,636			(20,009,496	)		(102,012,644	)		(47,829,437	)

Shares issued on conversion of preferred stock		6,167,273		6,167		(128,000	)		(128	)		1,641			-			-			7,680

Shares issued in private placement		-		-		95,000			95			99,905			-			-			100,000

Beneficial conversion feature on Convertible Series B Preferred Stock		-		-		-			-			60,738			-			-			60,738

Deemed dividend from beneficial conversion feature on Convertible Series B Preferred Stock		-		-		-			-			(60,738	)		-			-			(60,738	)

Shares issued for cashless exercise of options		3,836,475		3,836		-			-			(3,836	)		-			-			-

Shares issued to employee in lieu of bonus		1,162,791		1,163		-			-			56,977			-			-			58,140

Stock option compensation expense		-		-		-			-			3,943			-			-			3,943

Net Loss		-		-		-			-			-			-			(845,948	)		(845,948	)

March 31, 2021		195,105,088	$	195,105		95,000		$	95		$	74,167,266		$	(20,009,496	)	$	(102,858,602	)	$	(48,505,632	)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

A~~PPLIED~~APPLIED MINERALS, INC.

(An Exploration Stage Mining Company)

~~Notes~~CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended

Cash Flows from Operating Activities:

Adjustments to reconcile net loss to net cash used in operations:

Amortization of discount - PIK Notes

Accrued interest on PIK Notes

Stock issued for settlement of liability

Stock-based compensation expense

Non-cash lease expense

Forgiveness of PPP Fund

Change in operating assets and liabilities:

Deposits and prepaids

Operating lease liabilities

Financing lease liabilities

Accounts payable and accrued liabilities

Net cash (used in) operating activities

Cash Flows from Financing Activities:

Proceeds from notes payable

Proceeds from Paycheck Protection Program Loan

Proceeds from Private Placement

Payments on financing lease liability

Payments on notes payable

Payments on insurance financing

Net cash provided by financing activities

Cash at beginning of period

Cash at end of period

Supplemental disclosure of cash flow information:

Cash paid for interest

Cash paid for income taxes

Supplemental disclosure of non-cash financing activity:

Accrued PIK interest paid through issuance of PIK Notes

Deemed dividend on convertible Preferred Stock Series B due to BCF

Common

tock issued for cashless options exercised

Common stock issued upon conversion of Series B Preferred Stock

Common stock issued to note holders for financing cost

The accompanying notes are an integral part of these unaudited consolidated financial statements.

APPLIED MINERALS, INC.

(An Exploration Stage Mining Company)

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 1– ORGANIZATION AND DESCRIPTION OF BUSINESS

Applied Minerals, Inc. (the “Company” ~~or “Applied Minerals” or “we” or “us”~~) ~~(OTCQB: AMNL)~~ is the owner of the Dragon Mine located in the Tintic Mining District of the State of Utah from where it produces halloysite clay and iron oxide. The Company is currently selling its DRAGONITE halloysite clay product regularly to four customers. Several prospective customers are conducting either commercial-scale trials or field trials for an array of products that are expected to use DRAGONITE as a functional additive. In October 2019 the Company entered into an agreement to supply a manufacturer of cement with up to 30,000 tons AMIRON iron oxide per year over a two-year period.

Applied Minerals, Inc. is a publicly traded company incorporated in the state of Delaware. The common stock trades on the ~~OTCQB~~OTC Bulletin Board under the symbol ~~AMNL.~~ “AMNL.”

Status of the Company for SEC Reporting Purposes

The Company is classified as an “exploration stage” company for purposes of Industry Guide 7 of the U.S. Securities and Exchange Commission (“SEC”).

Under Industry Guide 7, companies engaged in significant mining operations are classified into three categories, referred to as “stages” - exploration, development, and production.

Exploration stage includes all companies that do not have established reserves in accordance with Industry Guide 7. Such companies are deemed to be “in the search for mineral deposits.” Notwithstanding the nature and extent of development-type or production-type activities that have been undertaken or completed, a company cannot be classified as a development or production stage company unless it has established reserves in accordance with Industry Guide 7.

Exploration Agreement

On December 22, 2017, the Company and Continental Mineral Claims, Inc. (“CMC”) entered into an Exploration Agreement with Option to Purchase (“Agreement”). The Company granted to CMC the exclusive right and option to enter upon and conduct mineral exploration activities (the “Exploration License”) for Metallic Minerals on the Company’s Dragon Mine minesite in Utah (the “Mining Claims”). Metallic Minerals are defined to include minerals with a high specific gravity and metallic luster, such as gold, silver, lead, copper, zinc, molybdenum, titanium, tungsten, uranium, tin, iron, etc., but shall exclude any such Metallic Minerals that are intermingled within any economically-recoverable, non-metallic mineral deposits located at or above an elevation of 5,590 feet above sea level. Non-metallic minerals include clay and iron oxide, the minerals mined by the Company. The Company believes that all economic recoverable non-metallic mineral deposits are well above 5,590 feet above sea level. The Exploration License is for a period of ten years.

In consideration of the Exploration License CMC paid the Company $350,000 upon the execution of the agreement and paid it $150,000 on the first anniversary of the Exploration License in December 2018. Per the agreement CMC ~~will~~was obligated to pay the Company $250,000 on or before each subsequent anniversary during the Exploration License term following the first anniversary of the Effective Date of ~~this~~the Agreement unless the Exploration License iswas terminated earlier by CMC by exercising the option or failing to make the required payment for the Exploration License.

On March 25, 2020, the Company and Tintic Copper and Gold, Inc. (CMC’s successor) (“Tintic”) agreed to lower the exercise price of the Option to $1,050,000 and Tintic immediately exercised the Option. The proceeds from the exercise of the Option are presented as Other Income. The Company also provided Tintic with a Right of First Offer, which ~~expires~~will expire on December 21, 2027 and can be extended to December 21, 2032 for ~~$250,000.~~a payment of $250,000 by Tintic to the Company.

Upon the exercise of the option, the Company retained the all rights and title to (1) the surface interest (with exception of those rights associated with the Metallic Rights), and (2) all non-metallic minerals (expressly including all industrial minerals including clays and iron oxides).

Upon the exercise of the option the Company retained protections against unreasonable interference of its current and future mining operations by CMC. CMC may not do anything that may, at the Company’s determination, adversely impact the Company’s Mining Operations. “Mining Operations” shall mean the activities incident to mineral extraction, permitting, and any operations by CMC or the Company relating to the removal of minerals, respectively, that are or may reasonably be conducted on the Mining Claims, including the exploration for, and development, active mining, removing, producing and selling of any minerals, including the Metallic Minerals. The Agreement states that the parties understand that the Company iswas willing to enter into the Agreement only if it iswas assured that CMC ~~will~~would not have any right to unreasonably interfere with the Company’s current mining operations and possible future Mining Operations on the Mining Claims.

Impact of COVID–19 Pandemic on Financial Statements

In December 2019, a novel strain of COVID-19 was reported in China. Since then, COVID-19 has spread globally, to include Canada, the United States and several European countries. The spread of COVID-19 from China to other countries has resulted in the World Health Organization (WHO) declaring the outbreak of COVID-19 as a “pandemic,” or a worldwide spread of a new disease, on March 11, 2020. ~~Many~~Since then many countries around the world ~~have~~ imposed quarantines and restrictions on travel and mass gatherings to slow the spread of the virus and have closed non-essential businesses.

~~As local jurisdictions continue to put~~

The effects of the COVID-19 restrictions ~~in place, our ability to continue to operate~~adversely affected our business in 2020 and 2021 as certain customers delayed purchases of our DRAGONITE halloysite clay products. As countries, including the U.S., begin to ease restrictions certain of our customers may ~~also be limited. Such events may result in a period~~resume their previously planned purchases of ~~business, supply and product manufacturing disruption, and in reduced operations, any of which could materially affect~~ our business, financial condition and results of operations. In response to COVID-19, the Company implemented remote working and thus far, has not experienced a significant disruption or delay in our operations.DRAGONITE halloysite clay products during 2022.

To date, COVID-19 has had a financial impact on the Company. In particular certain customers have delayed purchases of DRAGONITE due to the impact of COVID-19 on their business. COVID-19 has, to some extent, impacted the Company’s access to certain of its professional advisors. The small size of the Company’s accounting staff as well as the additional responsibilities assumed by management due to COVID-19 may continue to adversely affect the Company’s ability to complete subsequent reports in a timely manner.

NOTE 2 – GOING CONCERN AND BASIS OF PRESENTATION

The Company has suffered recurring losses from operations and currently a working capital deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management believes that in order for the Company to meet its obligations arising from normal business operations through ~~November~~

~~, 2022~~May 21, 2023 that the Company may be required (i) to raise additional capital either in the form of a private placement of common stock or debt and/or (ii) generate additional sales of its products that will generate sufficient operating profit and cash flows to fund operations. Without additional capital or additional sales of its products, the Company’s ability to continue to operate may be limited.

Based on the Company’s current cash usage expectations, management believes it may not have sufficient liquidity to fund its operations through ~~November~~

~~, 2022.~~May 21, 2023. Further, management cannot provide any assurance that it is probable that the Company will be successful in accomplishing any of its plans to raise debt or equity financing or generate additional product sales. Collectively these factors raise substantial doubt regarding the Company’s ability to continue as going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded assets amounts and classification of liabilities that might be necessary should the Company not be able to continue as a going concern.

NOTE 3 – BASIS OF REPORTING AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements of Applied Minerals, Inc. have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and 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 GAAP for complete financial statements.

In the opinion of management, these interim unaudited consolidated financial statements contain all of the adjustments of a normal and recurring nature, which are considered necessary for a fair presentation of the financial position of the Company and the results of its operations and cash flows for the periods presented. The results of operations for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 are not necessarily indicative of the operating results for the entire year. These financial statements should be read in conjunction with the financial statements and related disclosures for the year ended December 31, ~~2020,~~2021, included in the Annual Report of Applied Minerals, Inc. on Form 10-K filed with the SEC on April ~~15, 2021.~~18, 2022.

The accompanying interim unaudited consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes. As of ~~November~~

~~, 2021~~

,May 21, 2022, the Company’s significant accounting policies and estimates remain unchanged from those detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s Consolidated Condensed Financial Statements and accompanying notes. Actual results may differ materially from those estimates. As of ~~September 30, 2021,~~March 31, 2022, the extent to which the COVID-19 pandemic will impact our business going forward depends on numerous dynamic factors, which we cannot reliably predict. As a result, many of our estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As the events continue to evolve with respect to the pandemic, our estimates may materially change in future periods.

Concentration of Credit Risk

Cash balances, accounts receivable and derivative financial instruments are financial instruments potentially subject to credit risk. Cash and cash equivalents are maintained in bank deposit accounts, which, at times, may exceed the federally insured limits. Management periodically reviews and assesses the financial condition of the banks to mitigate the risk of loss.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ revenues from the Company’s largest customer accounted for ~~66%~~36% and ~~45%~~56% of total revenues, respectively. As of ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ amounts owed from these customers comprised ~~98%~~0% and ~~29%~~42% of accounts receivable, respectively.

Receivables

Trade receivables are reported at outstanding principal amounts, net of an allowance for doubtful accounts.

Management evaluates the collectability of receivable account balances to determine the allowance, if any. Management considers the other party’s credit risk and financial condition, as well as current and projected economic and market conditions, in determining the amount of the allowance. Receivable balances are written off when management determines that the balance is uncollectable. No allowance was required at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

Property and Equipment

Property and equipment are carried at cost net of accumulated depreciation and amortization. Depreciation and amortization is computed on the straight-line method over the estimated useful lives of the assets, or the life of the lease, whichever is shorter, as follows:

	Estimated
	Useful Life (years)
Building and Building Improvements		5 – 40
Mining equipment		2 – 7
Office and shop furniture and equipment		3 – 7
Vehicles		5

Impairment of Long-lived Assets

The Company periodically reviews the carrying amounts of long-lived assets to determine whether current events or circumstances warrant adjustment to such carrying amounts. Long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. When such events occur, the Company compares the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset to its carrying amount. If this comparison indicates that there is an impairment, the amount of the impairment is typically calculated using discounted expected future cash flows where observable fair values are not readily determinable. Considerable management judgment is necessary to estimate the fair value of assets. Assets to be disposed of are carried at the lower of their financial statement carrying amount or fair value, less cost to sell. The Company has determined that there was no impairment of its long-lived assets as of ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.

Revenue Recognition

Revenue includes sales of halloysite clay and iron oxide and is recognized when title passes to the buyer and when collectability is reasonably assured. Title passes to the buyer based on terms of the sales contract. Product pricing is determined based on contractual arrangements with the Company’s customers. The Company’s revenue recognition policies are established in accordance with the Revenue Recognition topics of ASC 606, and accordingly, revenue is recognized when control of the promised goods or services is transferred to our clients, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (1) identify the contracts with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when or as the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods it transfers to the customer. The Company recognizes revenue at a point in time based on management’s evaluation of when performance obligations under the terms of a contract with the customer are satisfied and control of the product has been transferred to the customer. In most situations, transfer of control is considered complete when the products have been shipped to the customer.

Mining Exploration and Development Costs

Land and mining property are carried at cost. The Company expenses prospecting and mining exploration costs. At the point when a property is determined to have proven and probable reserves, subsequent development costs will be capitalized and will be charged to operations using the units-of-production method over proven and probable reserves. Upon abandonment or sale of a mineral property, all capitalized costs relating to the specific property are written off in the period abandoned or sold and a gain or loss is recognized.

Income taxes

The Company uses an asset and liability approach which results in the recognition of deferred tax liabilities and assets for the expected future tax consequences or benefits of temporary differences between the financial reporting basis and the tax basis of assets and liabilities, as well as operating loss and tax credit carry forwards, using enacted tax rates in effect in the years in which the differences are expected to reverse.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of its deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. A full valuation allowance has been provided for the Company’s net deferred tax assets as it is more likely than not that they will not be realized.

Authoritative guidance provides that the tax effects from an uncertain tax position taken or expected to be taken in a tax return can be recognized in our financial statements only if the position is more likely than not of being sustained on audit based on the technical merits of the position. As of March 31, 2022, no benefit from uncertain tax positions was recognized in our financial statements. The Company has elected to classify interest and/or penalties related to income tax matters in income tax expense.

Stock Options and Warrants

The Company follows ASC 718, ~~(Stock Compensation) and ASU 2018-07 (Compensation – Stock Compensation),~~ which provide guidance in accounting for share-based awards exchanged for services rendered and requires companies to expense the estimated fair value of these awards over the requisite service period. The Company instituted a formal long-term and short-term incentive plan on November

20,

, 2012, which was approved by its shareholders. Prior to that date, we did not have a formal equity plan, but all equity grants, including stock options and warrants, were approved by our Board of Directors. We determine the fair value of the stock-based compensation awards granted to non-employees as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either of (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete. Beginning in the quarter ended June 30, 2013 the Company began using the simplified method to determine the expected term for any options granted because the Company did not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The Company previously utilized the contractual term as the expected term.

Environmental Matters

Expenditures for ongoing compliance with environmental regulations that relate to current operations are expensed or capitalized as appropriate. Expenditures resulting from the remediation of existing conditions caused by past operations that do not contribute to future revenue generations are expensed. Liabilities are recognized when environmental assessments indicate that remediation efforts are probable, and the costs can be reasonably estimated.

Estimates of such liabilities are based upon currently available facts, existing technology and presently enacted laws and regulations taking into consideration the likely effects of inflation and other societal and economic factors and include estimates of associated legal costs. These amounts also reflect prior experience in remediating contaminated sites, other companies’ clean-up experience and data released by The Environmental Protection Agency or other organizations. Such estimates are by their nature imprecise and can be expected to be revised over time because of changes in government regulations, operations, technology, and inflation. Recoveries are evaluated separately from the liability and, when recovery is assured, the Company records and reports an asset separately from the associated liability.

The Company has posted a cash bond in the amount of ~~297,000~~$297,000 required by the Utah Department of Oil, Gas and Minerals to cover estimated reclamation costs related the Company large mining permit for its Dragon Mine property.

Note Payable - Convertible

The Company follows ASC 480-10,

Distinguishing Liabilities from Equity

(“ASC 480-10”) in its evaluation of the accounting for a ~~hybrid~~certain instrument. A financial instrument that embodies an unconditional obligation, or a financial instrument other than an outstanding share that embodies a conditional obligation, that the issuer must or may settle by issuing a variable number of its equity shares shall be classified as a liability (or an asset in some circumstances) if, at inception, the monetary value of the obligation is based solely or predominantly on any one of the following: (a) a fixed monetary amount known at inception; (b) variations in something other than the fair value of the issuer’s equity shares; or (c) variations inversely related to changes in the fair value of the issuer’s equity shares. Hybrid instruments meeting these criteria are not further evaluated for any embedded derivatives and are carried as a liability at fair value at each balance sheet date with remeasurements reported in interest expense in the accompanying Consolidated Statements of Operations.

~~Recently~~

Recent Issued Accounting Pronouncements

In ~~December 2019,~~August 2020, the FASB issued ASU ~~No. 2019-12, Income Taxes (Topic 740): Simplifying~~2020-06, which simplifies the ~~Accounting for Income Taxes, as part of its initiative to reduce complexity in accounting standards. The amendments in this update simplify~~guidance on the issuer’s accounting for ~~income taxes~~convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt and will account for a convertible debt instrument wholly as debt, unless certain ~~exceptions to~~other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that is within the ~~general principles in Topic 740. The amendments also improve consistent~~scope of ASU 2020-06. Also, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and ~~simplify GAAP~~treasury stock method will be no longer available. ASU 2020-06 is applicable for other areas of Topic 740 by clarifying and amending existing guidance. The amendments within ASU No. 2019-12 are effective for financial statements issued for fiscal years, and interim periods within those fiscal years beginning after December 15, ~~2020, and~~2021, with early adoption ~~is permitted.~~permitted no earlier than fiscal years beginning after December 15, 2020. The ~~adoption of~~Company adopted ASU ~~2019-12 had no material impact on the Company’s financial results.~~ 2020-06 for its fiscal year ending December 31, 2021.

NOTE 4 – LEASES

~~Operating Leases~~

On March 16, 2017, the Company entered into a 5-year operating lease agreement for permanent office space, base rent payment is approximately $9,000 per month, subject to annual adjustments.

Supplemental cash flow information related to leases:	Three months ended September 30, 2021			Nine months ended September 30, 2021			Three months ended March 31, 2022

Operating leases liabilities	$	(28,227	)	$	(82,584	)
Operating cash flows paid for operating leases							$	29,085
Non-cash lease expense	$	27,253		$	80,518		$	28,111

Supplemental balance sheet information related to leases:

As of September 30,
2021

Operating lease Right-of-use assets

$
55,790

Current portion of operating lease liabilities

$
57,737

Long-term operating lease liabilities

0

Total operating lease liabilities

$
57,737

Weighted average remaining operating lease term

0.50 years

Weighted average discount rate

6
%

~~The following table summarizes the maturity of lease liabilities under operating leases as of September 30, 2021:~~

2021 (remaining three months)

$
29,376

2022

29,376

Total lease payments

58,752

Less: imputed interest

(1,015
)
Total lease liabilities

$
57,737

In July 2020, the Company entered into a sublease agreement with respect to its N.Y. office. The sublease agreement ~~expires~~

expired

in April 2022. The base rent of the sublease agreement is ~~$7,049~~$7,048.50 per month and increases by 2.5% in July 2021.

The Company entered into an agreement to sublet a portion of its office space. The sublease is considered to be an operating lease and the Company has not been released from its obligations under the March 16, 2017, 5-year lease agreement. The Company recognizes income from sublease on a straight-line basis over the term of the sublease, as a reduction to lease expense. The sublease is not measured under ASC 842 since the Company remains the primary obligor under the original lease and the sublease is considered to be an operating lease

On May 14, 2021, the Company entered into a 4-year financing lease agreement for ~~an equipment, base~~a piece of equipment. Base rent payment is approximately $1,107 per month.

Supplemental cash flow information related to leases:

Finance cash flows from finance lease

Operating cash flows from finance lease

Supplemental cash flow information related to leases:

Finance cash flows used in finance lease

Operating cash flows from finance lease

Supplemental balance sheet information related to leases:

Finance lease Right-of-use assets

Current portion of finance lease liability

Long-term finance lease liability

Total finance lease liability

Weighted average remaining operating lease term

Weighted average discount rate

Supplemental balance sheet information related to leases:

Finance lease Right-of-use assets

Current portion of finance lease liability

Long-term finance lease liability

Total finance lease liability

Weighted average remaining

financing

lease term

Weighted average discount rate

The following table summarizes the maturity of lease liability under finance lease as

of ~~September 30, 2021:~~

March 31, 2022:

2021 (remaining three months)

Total lease payments

Less: imputed interest

Total lease liabilities

Less: current portion

Noncurrent lease liabilities

The following is a summary of deposit:

Cash Bond (Mine Permit deposit)

Office Lease Security Deposit

NOTE 6 - NOTES PAYABLE

Notes payable at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 consist of the following:

Note payable to insurance companies, payable $1,839 - $15,124 monthly, (a)

Note payable to insurance companies, payable $1,780 and $12,804 monthly, (a)

Less: Current Portion

Notes Payable, Long-Term Portion

OnIn October ~~2020,~~2021, the Company ~~signed~~entered into two notes payable with interest ~~rate~~rates of 4.04% and ~~6.89%~~6.29% with an insurance company for liability insurance, payable in 10 monthly installment payments,

which started

November

~~2020~~

. 2021.

January

2022, the Company entered into a promissory note agreement for $90,000, including an original issue discount of 16.7% resulting in net proceeds of $75,000. The annual interest rate is 10%. Principal and interest is due to the lender in seven equal monthly payments of $14,142.50 commencing on June 24, 2022 until the promissory note is paid in full no later than January 24, 2023. In the event of default, the lender will have the right to convert the outstanding principal and interest into stock at a price equal to ninety (90) percent of the lowest trading price over a ten (10) day trading period immediately prior to the date of conversion. As part of entering into the promissory note agreement, the Company issued 300,000 restricted shares of common stock under the lender.

In March 2022, the Company entered into a loan payable with a lender for $125,000. Payment of the loan includes one installment of $1,215.19 followed by seventy-nine (79) weekly installments of $2,025.32 totaling $165,000.

The lender has been provided a security interest in certain inventory and equipment. Excluded is the Company’s Alpine mill and related equipment.

During the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company's interest payments totaled ~~$657~~$2,312 and ~~$304, respectively. During the nine months ended September 30, 2021 and 2020, the Company’s interest payments totaled $2,626 and $3,739,~~$985, respectively.

NOTE

7 ~~– PAYCHECK PROTECTION PROGRAM LOAN~~

On May 5, 2020 the Company entered into a promissory note (“PPP Loan”) in the amount of $223,075 from Bank of America, N.A. under the Paycheck Protection Program (“PPP”), which was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration. The term of the promissory note is two years and the annual interest rate is 1.0%, which shall be deferred for the first six months of the term of the loan. Pursuant to the terms of the CARES Act, the proceeds of each PPP Loan may be used for payroll costs, mortgage interest, rent or utility costs.

The promissory note evidencing each PPP Loan contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, or provisions of the promissory note. The occurrence of an event of default may result in a claim for the immediate repayment of all amounts outstanding under such PPP Loan, collection of all amounts owing from the respective Borrower, filing suit and obtaining judgment against the respective Borrower.

Under the terms of the CARES Act, each Borrower can apply for and be granted forgiveness for all or a portion of the PPP Loan. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds in accordance with the terms of the CARES Act, as described above, during the 8-week period after loan origination and the maintenance or achievement of certain employee levels. No assurance is provided that any Borrower will obtain forgiveness under any relevant PPP Loan in whole or in part.

On February 25, 2021, the Company entered into a second promissory note (“Second PPP Loan”) in the amount of $264,472 from Bank of America, N.A. under the Paycheck Protection Program. The terms of the Second PPP Loan are similar to the PPP Loan the Company entered into on May 5, 2020.

~~On March 1, 2021, the Company applied for and was granted full forgiveness of the outstanding principal and accrued interest of the PPP Loan it entered into on May 5, 2020 in the amount of $223,075.~~

On September 17, 2021, the Company applied for full forgiveness of the outstanding principal and accrued interest of the Second PPP Loan. The Second PPP Loan is currently under review for forgiveness by the SBA.

~~NOTE 8~~ – CONVERTIBLE DEBT

PIK Notes

The Company raised $23 million of financing through the issuance of two series of Paid-In-Kind (“PIK”)-Election Convertible Notes in 2013 (“Series 2023 Notes”) and 2014 (“Series A Notes”). The original terms of the Series A Notes included among other things: (i) a maturity of November 1, 2018 with an option to extend to November 1, 2019, (ii) a stated interest rate of 10% paid semi-annually and (iii) a conversion price of $0.90, adjusted downward based on an anti-dilution provision. The original terms of the Series 2023 Notes included among other things: (i) a maturity of August 1, 2023, (ii) a stated interest rate of 10% paid semi-annually and (iii) a conversion price of $1.40, adjusted downward based on an anti-dilution provision. On December 14, 2017, an amendment agreement, entered into between the Company and the holders of the Series A Notes and Series 2023 Notes, went into effect. The agreement resulted in changes to certain terms of the Series A and Series 2023 Notes.

The key terms of the Series A and Series 2023 Notes, as amended, are highlighted in the table below:

Key Terms

Series 2023 Notes

Series A Notes

Inception Date

08/01/2013

11/03/2014

Cash Received

$10,500,000

$12,500,000

Principal (Initial Liability)

$10,500,000

$19,848,486

Maturity (Term)

Matures on August 1, 2023, but convertible into shares of the Company’s common stock at the discretion of the holder or by the Company based on the market price of the Company’s stock;

Matures on May 1, 2023 but extends to August 1, 2023 if the Series 2023 Notes are still outstanding. Convertible into shares of the Company’s common stock at the discretion of the holder or by the Company based on the market price of the Company’s stock;

Exercise Price

$0.56, adjusted downward based on anti-dilution provisions/downround protection

$0.34, adjusted downward based on anti-dilution provisions/down-round protection;

Stated Interest

10% per annum through December 14, 2017, 3% per annum thereafter, due semiannually;

10% per annum through December 14, 2017, 3% per annum thereafter, due semiannually;

Derivative Liability

$2,055,000 established at inception due to the existence of down-round protection; revalued every quarter using Monte Carlo model.

$9,212,285 established at inception due to existence of down-round protection; revalued every quarter using a Monte Carlo model.

Key Terms	Series 2023 Notes	Series A Notes
Inception Date	08/01/2013	11/03/2014
Cash Received	$10,500,000	$12,500,000
Principal (Initial Liability)	$10,500,000	$19,848,486
Maturity (Term)	Matures on August 1, 2023, but convertible into shares of the Company’s common stock at the discretion of the holder or by the Company based on the market price of the Company’s stock;	Matures on May 1, 2023 but extends to August 1, 2023 if the Series 2023 Notes are still outstanding. Convertible into shares of the Company’s common stock at the discretion of the holder or by the Company based on the market price of the Company’s stock;
Exercise Price	$0.51, as adjusted downward based on anti-dilution provisions/down - round protection	$0.30, as adjusted downward based on anti-dilution provisions/down-round protection;
Stated Interest	10% per annum through December 14, 2017, 3% per annum thereafter, due semiannually;	10% per annum through December 14, 2017, 3% per annum thereafter, due semiannually;

In April 2019 the Company entered into a settlement agreement with the holders of the Series A Notes and Series 2023 Notes (the “PIK Notes”). Per the terms of the agreement the Company will pay to holders of PIK Notes on a pro rata basis the following percentages of revenue booked during a fiscal quarter: (a) three percent (3%) of gross revenues if cash or cash equivalents on the Company’s balance sheet or otherwise is less than $3 million on the last day of the fiscal quarter; or (b) five percent (5%) of gross revenues if cash or cash equivalents on the Company’s balance sheet or otherwise is greater than $3 million but less than $5 million the last day of the fiscal quarter; or (c) twelve percent (12%) of gross revenues if cash or cash equivalents on the Company’s balance sheet or otherwise is greater than $5 million.

As of ~~September 30,~~March 31, 2022, the liability components of the PIK Notes on the Company’s balance sheet are listed in the following table:

	Series 2023 Notes		Series A Notes			Total
PIK Note Payable, Gross	$	18,025,635	$	29,924,299		$	47,949,934
Less: Discount		-		(577,289	)		(577,289	)
PIK Note Payable, Net	$	18,025,635	$	29,347,010		$	47,372,645

As of December 31, 2021, the liability components of the PIK Notes on the Company’s balance sheet are listed in the following table:

	Series 2023 Notes		Series A Notes			Total			Series 2023 Notes		Series A Notes			Total
PIK Note Payable, Gross	$	17,763,275	$	29,488,868		$	47,252,143		$	17,759,822	$	29,925,760		$	47,685,582
Less: Discount		0		(783,561	)		(783,561	)		-		(681,102	)		(681,102	)
PIK Note Payable, Net	$	17,763,275	$	28,705,307		$	46,468,582		$	17,759,822	$	29,244,658		$	47,004,480

~~As of December 31, 2020, the liability components of the PIK Notes on the Company’s balance sheet are listed in the following table:~~

Series 2023 Notes

Series A
Notes

Total

PIK Note Payable, Gross

$
17,249,430

$
29,069,548

$
46,318,978

Less: Discount

0

(1,082,988
)

(1,082,988
)
PIK Note Payable, Net

$
17,249,430

$
27,986,560

$
45,235,990

Series A Notes (Amended)

On November 3, 2014 (“Issue Date”), the Company issued, in a private placement pursuant to investment agreements, $19,848,486 principal amount of 10% PIK-Election Convertible Notes due 2018 ("Series A Notes") in exchange for $12,500,000 in cash and the cancellation of previously issued warrants held by one investor.

The original terms of the Series A Notes included among other things: (i) a maturity of November 1, 2018 with an option to extend to November 1, 2019, (ii) a stated interest rate of 10% paid semi-annually and (iii) a conversion price of $0.90, adjusted downward based on an anti-dilution provision. The original terms of both the Series A ~~notes~~Notes and Series 2023 Notes can be as exhibits to Forms 8-K filed on November 5, 2014.

~~During~~Below are key amended terms of the ~~nine months ended September 30, 2021, the Company amortized $299,427~~Series A Notes:

●

Maturity

: May 1, 2023.

●

Exercise Price

: $0.40 per share and will be adjusted from time to time pursuant anti-dilution provisions.

●

Stated Interest

: 10% payable semi-annually in arrears through December 14, 2017, 3% payable semi-annually in arrears thereafter.

●

Liquidated Damages

: The Company is required to pay the noteholders 1% of the principal amount of the Series A Notes if a Registration statement is not filed and effective within 90 days of the inception date (and further damages for every 30 days thereafter).

●

The number of shares issuable under the Notes may be affected by the anti-dilution provisions of the Notes. The antidilution provisions adjust the Exercise Price of the Notes in the event of stock dividends and splits, issuance below the market price of the common stock, issuances below the conversion price of the Notes, pro rata distribution of assets, rights plans, tender offers, and exchange offers.

The entire principal amount of ~~debt discount relating to~~ the Series A Notes ~~Payable~~ and accrued interest thereon shall be mandatorily converted into shares of the Company’s common stock if (i) the Volume Weighted Average Price (“VWAP”) of the thirty (30) preceding trading days is at or greater than $1.00 or the VWAP of the ten (10) preceding trading days is at or greater than $1.40; (ii) the closing market price of the shares of the Company’s common stock is at or greater than $1.00; (iii) all outstanding amounts under each Series 2023 Note or replacement financing, if any, shall have been converted into shares of the Company’s common stock pursuant to the terms of such Series 2023 Note or the replacement financing, if any, on or prior to the date on which a notice of mandatory conversion is received; and (iv) either (x) a registration statement is effective and available for the resale of all of the shares into which the Series A Notes convert on the date on which the Series A notes are mandatorily converted and each of the five (5) trading days prior to the date of mandatory conversion and on the date of mandatory conversion the holders of the Series A Notes are not restricted from selling or distributing any shares into which the Series A Notes convert pursuant to the provisions of the Registration Rights Agreement or (y) the holders Series A Notes may sell all such shares into which the Series A Notes convert immediately under Rule 144 under the Securities Act.

The Series A Notes were not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability, or any net investment in a foreign operation. In addition to the customary anti-dilution provisions the notes contain a down-round provision whereby the conversion price would be adjusted downward in the event that additional ~~PIK~~shares of the Company’s common stock or securities exercisable, convertible or exchangeable for the Company’s common stock were issued for cash consideration (e.g. a capital raise) at a price less than the conversion price. Therefore, the estimated fair value of the conversion feature of $9,212,285 (based on observable inputs using a Monte Carlo model) was bifurcated from the Series A Notes and accounted for as a separate derivative liability, which resulted in a corresponding amount of ~~$426,097 in lieu~~debt discount on the Series A Notes. In addition, an additional debt discount of $7,348,486 was recorded as a result of the difference between the $12,500,000 of cash received and the $19,848,486 of principal on the Series A Notes. This combined debt discount of $16,560,771 is being amortized using the effective interest ~~payments.~~ method over the 9-year term of the Notes as Interest Expense, while the PIK Note Derivative is carried at fair value (using a Monte Carlo model) until the Notes are converted or otherwise extinguished. Any changes in fair value are recognized in earnings.

The carrying value of the Series A Notes Payable as of ~~September 30, 2021~~March 31, 2022 was ~~$29,488,868.~~$29,347,010. The amortized debt discount expensed during the three months ended March 31, 2022 was $103,813.

As of ~~September 30, 2021,~~March 31, 2022, the Company was in compliance with the covenants of the Series A Notes.

As of ~~September 30, 2021, The IBS Turnaround Fund, LP, The IBS Turnaround (QP) (A Limited Partnership) and The IBS Opportunity Fund, Ltd.~~March 31, 2022, Geoffrey Scott, a director of the Company owned ~~$1,424,275, $2,860,098 and $277,896, respectively,~~$4,573,534 of principal of the Series A Notes. The IBS Turnaround Fund, LP, The IBS Turnaround (QP) (A Limited Partnership) and The IBS Opportunity Fund, Ltd. are managed by IBS Capital, LLC. At September 30, 2021, IBS Capital, LLC owned 11.6% of the shares of the common stock of the Company.

Series 2023 Notes (Amended)

In August 2013, the Company received $10,500,000 of financing through the private placement of 10% mandatory convertible Notes due 2023 ("Series 2023 Notes"). The principal amount of the Notes is due on maturity. The Company can elect to pay semi-annual interest on the Series 2023 Notes with additional PIK Notes containing the same terms as the Series 2023 Notes, except interest will accrue from issuance of such notes. The Company can also elect to pay interest in cash.

The Series 2023 Notes convert into the Company’s common stock at a conversion price of $0.59 per share, which is subject to customary anti-dilution adjustments; the holders may convert the Series 2023 Notes at any time. The Series 2023 Notes are mandatorily convertible after one year when the weighted average trading price of a share of the common stock for the preceding ten trading days is in excess of the conversion price. The Series 2023 Notes contain customary representations and warranties and several covenants. The proceeds are being used for general corporate purposes. No broker was used and no commission was paid in connection with the sale of the Series 2023 Notes.

These Series 2023 Notes were not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability or any net investment in a foreign operation. In addition to the customary anti-dilution provisions the notes contain a down-round provision whereby the conversion price would be adjusted downward in the event that additional shares of the Company’s common stock or securities exercisable, convertible or exchangeable for the Company’s common stock were issued for cash consideration (e.g. a capital raise) at a price less than the conversion price. Therefore, the estimated fair value of the conversion feature of $2,055,000 (based on observable inputs using a Monte Carlo model) was bifurcated from the Series 2023 Notes and accounted for as a separate derivative liability, which resulted in a corresponding amount of debt discount on the Series 2023 Notes. The debt discount is being amortized using the effective interest method over the 10-year term of the Series 2023 Notes as Interest Expense, while the PIK Note Derivative is carried at fair value (using a Monte Carlo model) until the Series 2023 Notes are converted or otherwise extinguished. Any changes in fair value are recognized in earnings.

During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Company issued additional PIK Notes of ~~$517,893~~$265,813 in lieu of cash interest payments. The carrying value of the Series 2023 Notes Payable was ~~$17,763,275~~$18,025,635 as of ~~September 30, 2021.~~March 31, 2022.

As of ~~September 30, 2021,~~March 31, 2022, the Company was in compliance with the covenants of the Series 2023 Notes.

NOTE 9

– STOCKHOLDERS’ EQUITY

Preferred Stock

The Company is authorized to issue 10,000,000 shares of noncumulative, non-voting, nonconvertible preferred stock, $0.001 par value per share.

At ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020, 257,136~~2021, 187,000 and ~~128,000~~262,000 shares of preferred stock were issued and outstanding, respectively.

2022

During the three months ended March 31, 2022, no shares of preferred stock were issued.

2021

~~On February 17,~~ During the three months ended March 31,

2021

, 95,000 shares of Series B Preferred Stock were issued at a stated price of $1.084 per share for cash proceeds of $100,000, net of $3,000 legal fees.

At the time of issuance, the Company evaluated the nature of Series B Preferred Stock and concluded it more akin to equity and recorded it as permanent equity. The Company also recorded $60,738 beneficial conversion feature to additional paid in capital and amortized at the time of issuance. For the nine months ended September 30, 2021, the Company recorded Deemed dividend on Convertible Series B Preferred Stock of $60,738.

~~On May 24, 2021, 81,136 shares of Series B Preferred Stock were issued at a stated price of $1.084 per share for cash proceeds of $85,000, net of $3,000 legal fees.~~

At the time of issuance, the Company evaluated the nature of Series B Preferred Stock and concluded it more akin to equity and recorded it as permanent equity. The Company also recorded $51,874 beneficial conversion feature to additional paid in capital and amortized at the time of issuance. For the nine months ended September 30, 2021, the Company recorded Deemed dividend on Convertible Series B Preferred Stock of $51,874.

~~On August 24, 2021, 110,000 shares of Series B Preferred Stock were issued at a stated price of $1.1636 per share for cash proceeds of $125,000, net of $3,000 legal fees.~~

At the time of issuance, the Company evaluated the nature of Series B Preferred Stock and concluded it more akin to equity and recorded it as permanent equity. The Company also recorded $70,328 beneficial conversion feature to additional paid in capital and amortized at the time of issuance. On September 30, 2021, the Company recorded Deemed dividend on Convertible Series B Preferred Stock of $70,328.

~~On September 17, 2021, 66,000 shares of Series B Preferred Stock were issued at a stated price of $1.1818 per share for cash proceeds of $75,000, net of $3,000 legal fees.~~

At the time of issuance, the Company evaluated the nature of Series B Preferred Stock and concluded it more akin to equity and recorded it as permanent equity. The Company also recorded $42,197 beneficial conversion feature to additional paid in capital and amortized at the time of issuance. On September 30, 2021, the Company recorded Deemed dividend on Convertible Series B Preferred Stock of $42,197.

Each share of Series B Preferred Shares will carry an annual dividend in the amount of twelve percent (12%) of the Stated Value (the ~~“Divided~~ “

Dividend

Rate”), which shall be cumulative and compounded daily, payable solely upon redemption, liquidation or conversion. The Company ~~have~~has the right to redeem all or any portion of the shares within 180 days following the issuance day.

The Holder shall have the right from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the Issuance Date, to convert all or any part of the outstanding Series B Preferred Stock into fully paid and non-assessable shares of Common Stock. The conversion price (the “Conversion Price”) shall equal the 61% multiplied by the Market Price (representing a discount rate of 39%). “Market Price” means the lowest Trading Price for the Common Stock during the twenty (20) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date.

~~2020~~

~~During the year ended December 31, 2020, 128,000 shares of Series B Preferred Stock were issued at a stated price of $1.00 per share for cash proceeds of $125,000, net of $3,000 legal fees.~~

Each share of Series B Preferred Shares will carry an annual dividend in the amount of twelve percent (12%) of the Stated Value (the “Divided Rate”), which shall be cumulative and compounded daily, payable solely upon redemption, liquidation or conversion. The Company have the right to redeem all or any portion of the shares within 180 days following the issuance day.

At the time of issuance, the Company evaluated the nature of Series B Preferred Stock and concluded it more akin to equity and recorded it as permanent equity. The Company also recorded ~~$81,836~~$60,738 beneficial conversion feature to additional paid in capital and amortized at the time of issuance. ~~For the year ended December~~On March 31, ~~2020,~~2021, the Company recorded ~~deemed~~Deemed dividend on Convertible Series B Preferred Stock of ~~$81,836.~~ $14,172.

Common Stock

The Company is authorized to issue 700,000,000 shares of common stock with a $0.001 par value per share.

At ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020, 204,743,749~~2021, 252,563,747 and ~~183,938,549~~217,655,150 shares were issued and outstanding, respectively.

~~2021~~2022

During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, (i) ~~15,805,934~~20,164,153 shares were issued upon the conversion of ~~223,000~~

75,000

shares of Series B Preferred Stock, (ii) 10,000,000 shares were issued as in conjunction with entering into a consulting agreement with an investor relations firm, (iii) 4,444,444 shares were issued to settle certain liabilities and (iv) 300,000 shares were issued as debt issuance cost.

2021

During the three months ended March 31, 2021, (i) 6,167,273 shares were issued upon the conversion of 128,000 shares of Preferred Stock, (ii) 3,836,475 shares were issued upon cashless exercised of 9,528,689 options, and (iii) 1,162,791 shares were issued in lieu of a bonus payment of $58,140.

~~2020~~

During the year ended December 31, 2020, (i) 125,000 shares were issued at a price of $0.01 per share to note holders as a financing cost and (ii) 8,300,000 shares were issued upon the conversion of $40,504 of principal and accrued interest related to the FirstFire Convertible Note.

NOTE 10

– OPTIONS AND WARRANTS TO PURCHASE COMMON STOCK

Outstanding Stock Warrants

A summary of the status and changes of the warrants issued for the ~~nine~~three months ended ~~September 30, 2021:~~March 31, 2022:

	Shares Issuable					Shares Issuable upon Exercise of Outstanding Warrants		Weighted Average Exercise Price
	upon Exercise of			Weighted Average
	Outstanding Warrants			Exercise Price

Outstanding at January 1, 2021		24,619,623		$	0.16
Outstanding at December 31, 2021							11,000,000	$	0.10
Issued		0			0		-		-
Exercised		0		0			-
Forfeited		(13,619,623	)		0.22		-		-
Outstanding at September 30, 2021		11,000,000		$	0.10
Outstanding at March 31, 2022							11,000,000	$	0.10

At ~~September 30, 2021,~~March 31, 2022, the intrinsic value of the outstanding warrants was $0.

A summary of the status of the warrants outstanding and exercisable at ~~September 30, 2021~~March 31, 2022 is presented below:

Warrants Outstanding and Exercisable

Shares Issuable

Weighted Average

upon Exercise of

Remaining

Weighted Average

Exercise Price

Outstanding Warrants

Contractual Life (years)

Exercise Price

$

0.10

11,000,000

1.20

$
0.10

11,000,000

1.20

$
0.10

			Warrants Outstanding and Exercisable
			Shares Issuable	Weighted Average
			upon Exercise of	Remaining		Weighted Average
Exercise Price			Outstanding Warrants	Contractual Life (years)		Exercise Price
	$	0.10	11,000,000	0.71	$	0.10
			11,000,000	0.71	$	0.10

Common Stock Options

~~Outstanding Stock Options~~

On November

20,

, 2012, the shareholders of the Company approved the adoption of the Applied Minerals, Inc.

2012 Long-Term Incentive Plan (“LTIP”) and the Short-Term Incentive Plan (“STIP”) and the performance criteria used in setting performance goals for awards intended to be performance-based. Under the LTIP, 8,900,000 shares are authorized for issuance. The STIP does not refer to a particular number of shares under the LTIP, but would use the shares authorized in the LTIP for issuance under the STIP. The CEO, the CFO, and named executive officers, and directors, among others are eligible to participate in the LTIP and STIP. Prior to the adoption of the LTIP and STIP, stock options were granted under individual arrangements between the Company and the grantees, and approved by the Board of Directors.

On December 7, 2016, the stockholders of the Company approved the 2016 Incentive Plan. The purpose of the 2016 Incentive Plan is to enhance the profitability and value of the Company for the benefit of its stockholders by enabling the Company to offer eligible employees, consultants, and non-employee directors incentive awards in order to attract, retain and reward such individuals and strengthen the mutuality of interests between such individuals and the Company’s stockholders. The aggregate number of shares of Common Stock that may be issued or used for reference purposes under the 2016 Incentive Plan or with respect to which awards may be granted may not exceed 15,000,000 shares, which may be either (i) authorized and unissued Common Stock or (ii) Common Stock held in or acquired for the treasury of the Company.

The Compensation Committee of the Company Board of Directors has full authority to administer and interpret the 2016 Incentive Plan, to grant awards under the 2016 Incentive Plan, to determine the persons to whom awards will be granted, to determine the types of awards to be granted, to determine the terms and conditions of each award, to determine the number of shares of Common Stock to be covered by each award and to make all other determinations in connection with the 2016 Incentive Plan and the awards thereunder as the Committee, in its sole discretion, deems necessary or desirable.

The fair value of each of the Company's stock option awards is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on an average of historical volatility of the Company's common stock. The risk-free interest rate for periods within the contractual life of the stock option award is based on the yield curve of a zero-coupon U.S. Treasury Bond on the date the award is granted with a maturity equal to the expected term of the award. ~~The~~During 2021 the Company ~~did not grant any~~

issued

options to

purchase

9,450,000 shares of its common stock ~~option awards during the~~

~~nine~~

~~months ended~~

~~September~~

~~30, 2021.~~with an exercise price of $0.03 and a term of five years to certain executives and directors.

A summary of the status and changes of the options granted under stock option plans and other agreements during the ~~nine~~three months ended ~~September 30, 2021:~~March 31, 2022:

	Shares Issued			Weighted		Shares Issued Upon Exercise of Options			Weighted Average Exercise Price
	Upon Exercise of			Average
	Options			Exercise Price

Outstanding at December 31, 2020		56,661,515		$	0.28
Outstanding at December 31, 2021							52,790,845		$	0.25
Granted		9,450,000			0.03		-			-
Exercised		(9,528,689	)		0.06		-			-
Forfeited		(3,791,981	)		0.63		(2,904,653	)		0.83
Outstanding at September 30, 2021		52,790,845		$	0.24
Outstanding at March 31, 2022							49,886,192		$	0.21

A summary of the status of the options outstanding at ~~September 30, 2020~~March 31, 2022 is presented below:

Options Outstanding

Options Exercisable

Range of per
share
exercise
price

Shares

Weighted
average
remaining
contractual
life

Per share
weighted
average
exercise
price

Shares

Weighted
average
remaining
contractual
life

Per share
weighted
average
exercise price

$0.02 - $0.03

9,450,000

4.75

$
0.03

4,750,000

4.75

$
0.03

$0.04 - $0.08

28,959,881

6.19

$
0.06

28,959,881

6.19

$
0.06

$0.10 - $0.84

10,338,904

1.80

$
0.46

10,338,904

1.80

$
0.46

$1.10 - $1.90

4,042,060

1.45

$
1.63

4,042,060

1.45

$
1.63

52,790,845

4.58

$
0.24

48,090,845

4.53

$
0.34

	Options Outstanding						Options Exercisable
Range of per share exercise price	Shares		Weighted average remaining contractual life (years)		Per share weighted average exercise price		Shares		Weighted average remaining contractual life (years)		Per share weighted average exercise price
$0.03 - $0.08		38,409,881		5.16	$	0.05		36,834,881		5.20	$	0.05
$0.10 - $0.84		7,434,251		1.67		0.33		7,434,251		1.67		0.33
$1.10 - $1.66		4,042,060		0.71		1.57		4,042,060		0.71		1.57

		49,886,192		4.28	$	0.21		48,311,192		4.28	$	0.23

Compensation expense of ~~$147,172~~$21,211, and ~~$155,058 was~~$3,943, has been recognized for the vested options for the three ~~and nine~~ months ended ~~September 30, 2021. The aggregate intrinsic value of the outstanding options at September 30,~~March 31, 2022 and 2021, ~~was $0.~~respectively.

On August 18, 2017, the Company’s management was granted performance-based options to purchase 27.5 million shares of the Company’s common stock at $0.06 per share. The options expire on August 18, 2027. On November 1, 2017, the first fifty percent (50%) of the performance-based options vested as management was able to (i) close the sale of an aggregate of $600,000 of units (consisting of a share of common stock of the Company and a warrant to buy 0.25 of a share of common stock of the Company) at $0.04 per unit and (ii) establish toll processing arrangements with two toll processors of halloysite that, in management’s good faith belief, can process halloysite to the Company’s specifications. An additional twenty-five percent (25%) of the performance-based options vested on January 18, 2018 when management generated $900,000 of additional cash proceeds through (i) the sale of common stock and (ii) the licensing of a right to explore the Dragon Mine property for certain precious metals.

The vesting of the remaining 8.3%, 8.3% and 8.4% of the performance-based options ~~occurs~~was scheduled to occur when (i) EBITDA is positive over a twelve-month period, (ii) EBITDA is at or greater than $2 million over a twelve-month period and (iii) EBITDA is at or greater than $4 million over a twelve-month period, respectively. Of the 27.5 million performance options granted to management in August 2017, approximately 14.3

million were outstanding at ~~September 30, 2021.~~March 31, 2022. The reduction was due to the forfeiture of options to purchase

0.4

million shares of common stock and the exercise of options to purchase approximately

9.5

million shares of common stock during the three months ended March 31, 2021. ~~At September 30,~~In July, 2021, the board accelerated the vesting of 1,195,138 options granted to Christopher Carney in August, 2017

nd and accelerated the vesting of 333,333 options granted in March 2019 to ~~Shar~~

dSharad Mathur,

~~CTO~~

. CTO.

In July 2021 the board approved a grant to management of options to purchase 5.7 million shares of common stock at $0.03 per share. The options have a term of five years. Fifty percent (

%(50%) of the grant vested in July 2021 and the remainder vests in equal monthly amounts through June 2022. In July 2021 the board approved a grant to the directors and a consultant of options to purchase 3.75 million shares of common stock at $0.03 per share. The options have a term of five years. Fifty percent (50%) of the grant vested in July 2021 and the remainder vests in equal monthly amounts through June 2022.

The f

~~air~~fair value of the options granted in

~~uly~~ July on the grant date using the Black Scholes model was $169,690. As of

~~September 30, 2021 $69,054~~ March 31, 2022, the Company had $26,632 of ~~the fair value was recognized as un~~

~~amortized compensation.~~unamortized compensation expense.

NOTE 11 1

- PER SHARE DATA

The computation of basic earnings (loss) per share of common stock is based on the weighted average number of shares outstanding during the year. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year plus the common stock equivalents that would arise from the exercise of stock options and warrants outstanding under the treasury method and the average market price per share during the year as well as the conversion of notes.

At ~~September 30,~~March 31, 2022, the weighted average shares outstanding excluded options to purchase 49,866,192 shares of common stock of the Company, warrants to purchase 11,000,000 shares of common stock of the Company and 136,515,636 shares of common stock of the Company issuable upon the conversion of notes because their effect would be anti-dilutive.

At December 31, 2021, the weighted average shares outstanding excluded options to purchase 52,790,845 shares of common stock of the Company, warrants to purchase 11,000,000 shares of common stock of the Company and ~~119,694,849, shares of common stock of the Company issuable upon the conversion of notes because their effect would be anti-dilutive.~~

At December 31, 2020, the weighted average shares outstanding excluded options to purchase 56,661,515 shares of common stock of the Company, warrants to purchase 24,619,623 shares of common stock of the Company and 107,025,597124,437,208 shares of common stock of the Company issuable upon the conversion of notes payable because their effect would be anti-dilutive.

NOTE 1

– SUBSEQUENT EVENT

On May 2, 2022 the Company issued 9,275,000 upon the conversion of shares of Series B Preferred Stock.

On May 2, 2022, the Company issued 78,000 shares of Series B Preferred Stock for cash proceeds totaling $75,000, net for $3,000 in legal fees. The details of the Series B Preferred Stock are included in a Form 8-K filed on May 6, 2022.

ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-looking Statements

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on our current expectations, assumptions, estimates and projections about our business and our industry. Words such as "believe," "anticipate," "expect," "intend," "plan," "will," "may," and other similar expressions identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements.

Overview

Applied Minerals, Inc. is focused primarily on (i) the development, marketing and sale of ~~our~~ halloysite clay-based DRAGONITE™ line of products for use in advanced applications such as, but not limited to, reinforcement additives for polymer composites, flame retardant additives for polymers, catalysts, controlled release carriers for paints and coatings, strength reinforcement additives for cement, concrete, mortars and grouts, advanced ceramics, rheology additives for drilling fluids, environmental remediation media, and carriers of agricultural agents and (ii) the development, marketing and sale of our AMIRON™ line of iron oxide products for pigmentary and technical applications. Halloysite is an aluminosilicate with a tubular structure that provides functionality for a number of applications. Iron oxides are inorganic compounds that are widely used as pigments in paints, coatings and colored concrete.

The Company owns the Dragon Mine, which has significant deposits of high-quality halloysite clay and iron oxide. The 267-acre property is located in southwestern Utah and its resource was mined for halloysite on a large-scale, commercial basis between 1949 and 1976 for use as a petroleum cracking catalyst. The mine was idle until 2001 when the Company leased it to initially develop its halloysite resource for advanced, high-value applications. We purchased 100% of the property in 2005. After further geological characterization of the mine, the Company identified a high-purity, natural iron oxide resource that it has commercialized to supply certain pigmentary and technical markets.

The Company has a mineral processing plant with a capacity of up to 45,000 tons per annum for certain applications. The Company has a smaller processing facility with a capacity of 5,000 – 10,000 tons per annum that is currently dedicated to its halloysite resource. The Company believes it can increase its halloysite production capacity to meet an increase in demand through (i) an expansion of our on-site production capacity through a relatively modest capital investment and (ii) the use of a manufacturing tolling agreement.

The Company currently sells its DRAGONITE product as functional additive for advanced molecular sieves, as a nucleating agent for injection molding applications and as a binder for ceramic applications. For a number of markets mentioned above, the Company is currently working with a number of customers, which are in the latter stages of commercializing new and existing products that will utilize DRAGONITE as a functional additive.

Applied Minerals is a publicly traded company incorporated in the state of Delaware. The common stock trades on the OTC market under the symbol AMNL.

Critical Accounting Policies and Estimates

A complete discussion of our critical accounting policies and estimates is included in our Form 10-K for the year ended December 31, ~~2020.~~2021. There have been no material changes in our critical accounting policies and estimates during the

~~nine~~

~~-month period~~ three months ended

~~September~~

~~30, 2021~~ March 31, 2022 compared to the disclosures on Form 10-K for the year ended December 31, ~~2020.~~ 2021.

Three Months Ended ~~September 30, 2021~~March 31, 2022 Compared to Three Months Ended ~~September 30, 2020~~March 31, 2021

Results of Operations

The following sets forth, for the periods indicated, certain components of our operating earnings, including such data stated as percentage of revenues:

Three Months Ended September 30,

Variance

2021

2020

$

%

REVENUES

$
360,815

$
222,204

$
138,611

62
%

OPERATING EXPENSES:

Production costs

434,225

396,301

37,924

10
%
Exploration costs

47,866

56,909

(9,043
)

(16
)%
General and administrative

443,503

501,178

(57,675
)

(12
)%

Total Operating Expenses

925,594

954,388

(28,
974
)

(3
)%
Operating Loss

(564,779
)

(732,184
)

(167,405
)

(23
)%
OTHER (EXPENSE) INCOME:

Interest expense, net (including amortization of deferred financing cost and debt discount)

(474,579
)

(463,462
)

11,117

2
%
Change in fair value

-

(23,000
)

(23,000
)

(100
)%
Gain on forgiveness of PPP loan

-

-

-

-
%
Other income, net

20,308

54,855

(34,547
)

(63
)%

Total Other (Expense)

(454,271
)

(431,607
)

22,664

5
%

NET LOSS

$
(1,019,050
)

$
(1,
163
,
791
)

$
(1
44
,
741
)

(1
2
)%

	Three Months Ended March 31,						Variance
	2022			2021			$			%

REVENUES	$	78,045		$	273,672		$	(195,627	)		(71	)%

OPERATING EXPENSES:
Production costs		133,336			462,166			(328,830	)		(71	)%
Exploration costs		243,470			51,590			191,880			372	%
General and administrative		405,378			389,523			15,855			4	%

Total Operating Expenses		782,184			903,279			(121,095	)		(13	)%
Operating Loss		(704,139	)		(629,607	)		74,532			12	%

OTHER INCOME (EXPENSE):
Interest expense, net, including amortization of deferred financing cost and debt discount		(471,898	)		(463,897	)		8,001			2	%
Other income, net		60,372			247,546			(187,174	)		(76	)%

Total Other Expense, net		(411,526	)		(216,351	)		195,175			90	%

NET (LOSS)		(1,115,665	)		(845,958	)		269,707			32	%

Revenue for the three months ended ~~September 30, 2021~~March 31, 2022 totaled ~~$360,815, an increase~~$78,045, a decrease of ~~$138,611~~$195,627 or ~~62%~~71%, compared to the same period in ~~2020. The increase was driven primarily by a $153,534 increase in the sale of AMIRON iron oxide, partially offset by a $14,923 decrease in the sale of DRAGONITE halloysite clay.~~

Sales of AMIRON during the period totaled $153,534, an increase of 103% when compared to the same period in 2020. The increase was due to an increase in sales of AMIRON to a producer of cement. Sales of DRAGONITE halloysite clay during the period totaled $57,783, a decline of 21% when compared to the same period in 2020. The decrease in sales of DRAGONITE halloysite clay was driven primarily by a decrease in sales of DRAGONITE to two customers.

Total operating expenses for the three months ended September 30, 2021 totaled $925,594, a reduction of $28,795, or 3%, compared to the same period in 2020. The reduction was driven primarily by a $57,675, or 12%, decline in general and administrative costs, partially offset by a $37,924, or 10%, increase in production costs.

Production costs include those operating expenses which management believes are directly related to the mining and processing of the Company’s iron oxide and halloysite minerals, which result in the production of its AMIRON and DRAGONITE products for commercial sale. Production costs include, but are not limited to, wages and benefits of employees who mine material and who work in the Company’s milling operations, energy costs associated with the operation of the Company’s two mills, the cost of mining and milling supplies and the cost of the maintenance and repair of the Company’s mining and milling equipment. Wages and energy are the two largest components of the Company’s production costs.

Production costs incurred during the three months ended September 30, 2021 were $434,225, an increase of $37,924, or 10%, compared to the same period in 2020. The increase was driven primarily by an increase in the mining and sale of AMIRON during the period.

Exploration costs include operating expenses incurred at the Dragon Mine that are not directly related to production activities. Exploration costs incurred during the three months ended September 30, 2021 were $47,866, a decrease of $9,043, or 16%, compared to the same period in 2020.

~~General and administrative expenses incurred during the three months ended September 30, 2021 totaled $443,503, a $57,675, or 12%, decline when compared to the same period in 2020.~~2021. The decrease was driven primarily by a ~~$125,517~~$153,562 decrease in wages and related employee expense due to a reduction in the number of employees, a $46,755 reduction in D&O and workers’ compensation expense due to a reduction in coverage and a $25,000 decline in director expense due to a decline in the number of directors, partially offset by a $143,274 increase in equity-based compensation expense related to the grant and acceleration of options to employees and directors.

Operating loss incurred during the three months ended September 30, 2021 was $564,779, a $167,405, or 23%, decrease when compared to the same period in 2020. The decline was driven primarily by a $138,611 increase in revenue and a $57,675 decrease in general and administrative expense, offset by a $37,924 increase in production costs when compared to the same period in 2020.

Total Other Expense was $454,271 for the three months ended September 30, 2021 compared to Total Other Expense of $431,607 in same period in 2020. The $22,664 increase in Total Other Expense was due primarily to a $34,547 reduction in other income and a 11,117 increase in interest expense, partially offset by the elimination of $23,000 expense related to the change in the fair value of a liability.

Net Loss for the three-month period ending September 30, 2021 was $1,019,050, a decline of $144,741, or 12%, when compared to the same period in 2020. The decrease was primarily driven by a $167,405 decline in operating loss.

~~Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020~~

~~Results of Operations~~

~~The following sets forth, for the periods indicated, certain components of our operating earnings, including such data stated as percentage of revenues:~~

Nine Months Ended September 30,

Variance

2021

2020

$

%

REVENUES

$
1,099,980

$
518,272

$
581,708

112
%

OPERATING EXPENSES:

Production costs

1,315,350

846,338

469,012

55
%
Exploration costs

175,715

144,588

31,127

22
%
General and administrative

1,244,975

1,936,301

(691,326
)

(36
)%

Total Operating Expenses

2,736,040

2,927,227

(191,187
)

(7
)%
Operating Loss

(1,636,060
)

(2,408,955
)

(772,895
)

(32
)%

OTHER INCOME (EXPENSE):

Interest expense, net (including amortization of deferred financing cost and debt discount)

(1,401,878
)

(1,363,330
)

38,548

3
%
Change in fair value

-

(23,000
)

(23,000
)

(100
)%
Gain on forgiveness of PPP loan

223,075

-

223,075

-
%
Other income, net

114,662

1,355,205

(1,017,468
)

(75
)%

Total Other Income (Expense)

(1,064,141
)

(31,125
)

(1,033,016
)

3,189
%

NET LOSS

$
(2,700,201
)

$
(2,440,080
)

$
(260,121
)

11
%

~~Revenue for the nine months ended September 30, 2021 totaled $1,099,980, an increase of $581,708, or 112%, compared to the same period in 2020. The increase was driven primarily by a $438,667 increase~~ in the sale of AMIRON iron oxide and a ~~$143,041 increase~~$42,065 decrease in the sale of DRAGONITE halloysite clay.

Sales of AMIRON during the period totaled ~~$733,892, an increase~~$900, a decrease of ~~149%~~99% when compared to the same period in ~~2020.~~2021. The ~~increase~~decrease was due to ~~an increase~~the end of a supply agreement with a cement producer in ~~the production and sale of AMIRON to a producer of cement.~~December 2021. Sales of DRAGONITE halloysite clay during the period totaled ~~$366,126, an increase~~$77,145, a decrease of ~~64%~~36% when compared to the same period in ~~2020.~~2021. The ~~increase~~decrease in sales of DRAGONITE halloysite clay was driven primarily ~~by a general increase~~but the decision of certain customers to delay repeat purchases of DRAGONITE until later in 2022. Despite the decline in sales of DRAGONITE ~~to a number~~during the period, the Company expects total sales of ~~customers for use as a flame retardant additive, a binder for a catalyst and ceramic bodies and as a nucleating agent for polymers.~~

~~Total operating expenses~~DRAGONITE for the ~~nine months ended September 30, 2021 totaled $2,736,040, a decrease~~full year of ~~$191,187, or 7%, compared~~2022 to ~~the same period~~exceed those in ~~2020. The decline was driven primarily by a $691,326, or 36%, decline in general and administrative costs, partially offset by an increase of $469,012 or 55% in production costs.~~2021.

2228

Production costs incurred during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 were ~~$1,315,350, an increase~~$133,336, a decrease of ~~$469,012,~~$328,830, or ~~55%~~71%, compared to the same period in ~~2020.~~2021. The decrease was driven primarily by the elimination of costs associated with mining iron for the supply agreement, which terminated in December 2021. Wages and benefits expense was approximately 50% of production costs during the period and are, to an extent, fixed up to a certain level of production volume. The Company does not expect its wages and benefits expense to increase ~~was due primarily to $354,259 of contract labor expense related to the~~materially if DRAGONITE volumes increase in the Company’s iron production, a $75,956 increase in clay toll processing costs related to sales of certain grades of DRAGONITE, and a $79,103 increase in wages related primarily to the increase in iron productionduring 2022.

Exploration costs include operating expenses incurred at the Dragon Mine that are not directly related to production activities. Exploration costs incurred during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 were ~~$175,715,~~$243,470, a ~~$31,127,~~$191,880 or ~~22%~~372%, increase compared to the same period in ~~2020.~~2021. The increase was primarily driven ~~primarily~~ by ~~$19,684~~one-time accrual of ~~workers’ compensation reclassified~~$200,000 related to the settlement of a dispute with a provider of contract mining services the Company used to mine iron during 2021. Excluding the settlement, exploration costs would have totaled $43,470 during the period, ~~as exploration expense.~~a decline of $8,120 compared to 2021.

General and administrative expenses incurred during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 totaled ~~$1,244,975,~~$405,378, a ~~decline of $691,326,~~$15,855, or ~~36%~~4%, increase when compared to the same period in ~~2020.~~2021. During the period the Company recognized $92,211 of equity-based compensation expenses related to the vesting of equity options issued to directors and management, an increase of $29,129 compared to 2021. During the period the Company also incurred $37,525 of legal and consulting expenses it does not expect to incur in the future. Furthermore, the wages expense incurred during the period was $75,000. The Company expects wages expense to be reduced to $37,500 with the departure of an executive in April 2022.

Total operating expenses was $782,184, a decrease $121,195 or 13% when compared to the same period in 2021. The decline was driven ~~primarily~~ by a ~~$511,889 decrease in wages, related payroll taxes and benefits due to a reduction in the number of corporate executives, a reduction of $245,811 in director expense due to a~~$328,830 decline in ~~the number of directors, a $110,123 reduction in D&O and workers’ compensation expense due to a reduction in coverage and a decrease of $40,714 in office rent~~production expense, partially offset by a ~~$198,787~~$191,880 increase in ~~equity-based expense related to the grant and acceleration of options to employees and directors.~~exploration costs.

Operating loss incurred during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was ~~$1,636,060,~~$704,139, a ~~$772,895,~~$74,532, or ~~32%~~12%, ~~decrease~~increase when compared to the same period in ~~2020.~~2021. The ~~decline~~increase was driven primarily by a ~~$581,708 increase~~$195,627 decline in revenue and a ~~$691,326 decrease~~$191,880 increase in ~~general and administrative expense,~~exploration costs, partially offset by a ~~$469,012 increase~~$328,830 decrease in production ~~costs~~expense when compared to the same period in ~~2020.~~2021.

Total ~~Other Expense~~other expense was $411,526 for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to total other expense of $216,351 in same period in 2021. The $195,175 increase in total other expense was ~~$1,064,141, an increase~~due primarily to the elimination of ~~$1,033,016, or 3,189%, when~~the gain associated with the forgiveness of a PPP Loan compared to the same period in 2020. The $1,033,016 increase in Total Other Expense was due primarily due to the absence of a $1,300,000 payment received during the prior period related to the exercise of an option for certain metallic mineral rights of located on the Dragon Mine, partially offset by forgiveness of the Company’s PPP Loan.2021.

Net Loss for the ~~nine months~~three-month period ending ~~September 30, 2021~~March 31, 2022 was ~~$2,700,201,~~$1,115,665, an increase of ~~$260,121,~~$269,707, or ~~11%~~32%, when compared to the same period in ~~2020.~~2021. The ~~increase~~decrease was primarily driven by a ~~$1,033,016~~$74,532 increase in ~~Total Other Expense~~operating loss and a ~~$772,895 decline~~$195,175 increase in ~~operating loss.~~total other expense.

LIQUIDITY AND CAPITAL RESOURCES

Management believes that in order for the Company to meet its obligations arising from normal business operations through ~~November 20, 2022~~May 21, 2023 that the Company may be required (i) to raise additional capital either in the form of a private placement of common stock or debt and/or (ii) generate additional sales of its products that will generate sufficient operating profit and cash flows to fund operations. Without additional capital or additional sales of its products, the Company’s ability to continue to operate may be limited.

Based on the Company’s current cash usage expectations, management believes it may not have sufficient liquidity to fund its operations through ~~November 22, 2022.~~May 21, 2023. Further, management cannot provide any assurance that it is probable that the Company will be successful in accomplishing any of its plans to raise debt or equity financing or generate additional product sales. Collectively these factors raise substantial doubt regarding the Company’s ability to continue as going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded assets amounts and classification of liabilities that might be necessary should the Company not be able to continue as a going concern.

Cash used in operating activities during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was ~~$973,832~~$170,778 compared to ~~$139,655 of cash provided~~$440,254 during the same period in ~~2020.~~2021. The ~~$1,113,487 increase in cash used by operations during the period~~difference was driven primarily by a ~~$260,121 increase in net loss during the period as well as a reduction in payables of $781,948 and a reduction of $101,878 in deposits and prepaids, partially offset by an~~ $314,573

increase in accounts ~~receivable of $86,777.~~

payable and accrued liabilities.

Cash provided by financing activities during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was ~~$510,362~~$146,621 compared to ~~$118,531 used~~$314,566 during the same period in ~~2020.~~2021. The ~~$628,893 increase in cash provided during~~reduction was driven primarily by the ~~period was due primarily to $385,000 of proceeds from a private placement of Series B Preferred Stock during the current period and the (i)~~ absence of ~~$113,750 of~~PPP Loan proceeds ~~from the issuance of notes and (ii) absence of $371,625 of payments to reduce notes payable both of which occurred~~ during ~~the same period in 2020.~~2022.

Total assets at ~~September 30, 2021~~March 31, 2022 were ~~$1,200,228~~$1,061,063 compared to ~~$1,900,307~~$1,177,821 at December 31, ~~2020,~~2021, a decrease of ~~$700,079~~$116,758 due ~~primarily~~ to ~~decrease~~decreases in the ~~Company~~Company’s cash, accounts receivable, prepaid expenses and operating lease right-of-use assets. Total liabilities were ~~$51,123,288~~$52,430,881 compared to ~~$49,729,744~~$51,578,703 at December 31, ~~2020.~~2021. The increase of ~~$1,393,544~~$852,178 in total liabilities was due primarily to the increase in ~~Paycheck Protection Program Loan, increase in~~ accounts payable ~~resulting from cash management, amortization~~and accrued liabilities and the assumption of ~~PIK Notes debt discount which increased~~$200,000 of loans payable during the ~~carrying value of PIK Notes payable, proceeds from issuance of notes payable and offset by repayment of notes payable to related party.~~period.

ISSUANCE OF CONVERTIBLE DEBT

For information with respect to issuance of convertible debt, see Note 8 7

of Notes to Unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report.

OFF-BALANCE SHEET ARRANGEMENTS

There are no off-balance sheet arrangements between the Company and any other entity that have, or are reasonable likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have no exposure to fluctuations in interest rates, foreign currencies, or other factors.

ITEM 4.

CONTROLS AND PROCEDURES

As required by Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter covered by this quarterly report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were, as of the end of the fiscal quarter covered by this quarterly report, ineffective to ensure 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 and is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Notwithstanding the existence of these material weaknesses in our internal control over financial reporting, the management believes that the consolidated financial statements included in this Form 10-Q fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

2432

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

As of the date of this report, there is no pending or threatened litigation. We may become involved in or subject to, routine litigation, claims, disputes, proceedings and investigations in the ordinary course of business, could have a material adverse effect on our financial condition, cash flows or results of operations.

ITEM 1A.

RISK FACTORS.

Except for the below, there were no additions or material changes to the Company’s risk factors disclosed in Item 1A of Part I in the Company’s ~~2020~~2021 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and this Item is included in Exhibit 95 to this Form 10-Q.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a) Exhibits.

The following exhibits are included in this report:

Exhibit Number		Description of Exhibit
31.1		Certification pursuant to Rule 13a-14 of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, of the Principal Executive Officer

31.2		Certification pursuant to Rule 13a-14 of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, of the Principal Financial Officer

32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Principal Executive Officer

32.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Principal Financial Officer

95		Mine Safety Disclosure

101.INS		XBRL Instance

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation

101.DEF		XBRL Taxonomy Extension Definition

101.LAB		XBRL Taxonomy Extension Labels

101.PRE		XBRL Taxonomy Extension Presentation

XBRL		Information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

2633

SIGNATURES

In accordance with 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.

		APPLIED MINERALS, INC.

Dated: ~~November 22, 2021~~May 25 , 2022		/s/ ~~CHRISTOPHER~~CHRISTOHER T. CARNEY
		By: Christopher T. Carney
		Chief Executive Officer

Dated: ~~November 22, 2021~~May 25 , 2022		/s/ CHRISTOPHER T. CARNEY
		By: Christopher T. Carney
		Chief Financial Officer

2734

			Page(s)

PART I. FINANCIAL INFORMATION


Item 1.	Consolidated Financial Statements	3


	Consolidated Balance Sheets as of ~~September 30, 2021~~March 31, 2022 (unaudited) and December 31, ~~2020~~2021	3

	Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (unaudited)	4

	Consolidated Statements of Changes in Stockholders’ Deficit for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (unaudited)	5

	Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (unaudited)	76

	Notes to the Consolidated Financial Statements (unaudited)	87

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2196

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	3242

~~Item 4.~~			~~Controls and Procedures~~	24PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	3253

Item 1A	Risk Factors	3253

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3253

Item 3.	Defaults Upon Senior Securities	3253

Item 4.	Mine Safety Disclosures	3253

Item 5.	Other Information	3253

Item 6.	Exhibits	3263

Signatures		3274

2021 (remaining three months)	$	3,525
2022		14,099		$	10,574
2023		14,099			14,099
2024		14,099			14,099
2025		4,700			4,700
Total lease payments		50,522			43,472
Less: imputed interest		(4,818	)		(3,590	)
Total lease liabilities	$	45,704		$	39,882
Less: current portion					(12,159	)
Noncurrent lease liabilities				$	27,723

	September 30, 2021		December 31, 2020		March 31, 2022		December 31, 2021
Cash Bond (Mine Permit deposit)	$	297,128	$	297,016	$	297,191	$	297,160
Office Lease Security Deposit		39,168		39,168		39,168		39,168
Total	$	336,296	$	336,184	$	336,359	$	336,328

	September 30, 2021			December 31, 2020			March 31, 2022			December 31, 2021
	(unaudited)						(unaudited)
ASSETS
Current Assets
Cash	$	206,090		$	669,560		$	50,096		$	74,253
Accounts receivable		24,255			67,557			19,909			34,309
Deposits and prepaid expenses		32,093			190,698			114,817			161,999
Total Current Assets		262,438			927,815			184,822			270,561

Land		500,000			500,000			500,000			500,000
Operating lease right-of-use asset		55,790			136,308
Finance lease right-of-use asset		45,704			0
Operating lease right-of-use assets								-			28,111
Finance lease right-of-use								39,882			42,821

Other Assets
Deposits		336,296			336,184			336,359			336,328
Total Other Assets		336,296			336,184			336,359			336,328

TOTAL ASSETS	$	1,200,228		$	1,900,307		$	1,061,063		$	1,177,821

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and accrued liabilities	$	2,828,971		$	2,632,156		$	3,289,919		$	3,017,454
Paycheck Protection Program Loan		264,472			223,075
PIK Note interest accrual		457,822			365,121			464,690			372,028
Current portion of notes payable		0			133,081			263,745			112,835
Current portion of finance lease liabilities		11,811			0			12,159			11,986
Current portion of operating lease liabilities		57,737			111,236			-			29,085
Total Current Liabilities		3,620,813			3,464,669			4,030,513			3,543,388

Long-Term Liabilities
PIK Notes payable, net of $783,561 and $1,082,988 debt discount, respectively		46,468,582			45,235,990
PIK Notes payable, net of $577,289 and $681,102 debt discount, respectively								47,372,645			47,004,480
Deferred revenue		1,000,000			1,000,000			1,000,000			1,000,000
Finance lease liabilities		33,893			0
Operating lease liabilities		0			29,085
Finance lease liability								27,723			30,835
Total Long-Term Liabilities		47,502,475			46,265,075			48,400,368			48,035,315

TOTAL LIABILITIES		51,123,288			49,729,744			52,430,881			51,578,703

Stockholders’ Deficit
Preferred stock, $0.001 par value, 10,000,000 shares authorized, and 257,136 and 128,000 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		257			128
Common stock, $0.001 par value, 700,000,000 shares authorized, and 204,736,762 and 183,938,549 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively (134,336,317 reserved in Treasury)		204,743			183,939
Preferred stock, $0.001 par value, 10,000,000 shares authorized, and 187,000 and 262,000 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively								187			262
Common stock, $0.001 par value, 700,000,000 shares authorized, and 252,563,747 and 217,655,150 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively (211,913,925 reserved in Treasury)								252,562			217,654
Additional paid-in capital		74,594,281			74,008,636			74,798,477			74,686,581
Accumulated deficit prior to the exploration stage		(20,009,496	)		(20,009,496	)		(20,009,496	)		(20,009,496	)
Accumulated deficit during the exploration stage		(104,712,845	)		(102,012,644	)		(106,411,548	)		(105,295,883	)
Total Stockholders’ Deficit		(49,923,060	)		(47,829,437	)		(51,369,818	)		(50,400,882	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	1,200,228		$	1,900,307		$	1,061,063		$	1,177,821

	Three Months Ended
	Common Stock Shares		Common Stock Amount		Preferred Stock Shares			Preferred Stock Amount			Additional Paid-in Capital			Accumulated Deficit Prior to Exploration Stage			Accumulated Deficit During Exploration Stage			Total Stockholders’ Deficit

Balance, June 30, 2021		195,105,088	$	195,105		176,136		$	176		$	74,256,128		$	(20,009,496	)	$	(103,693,795	)	$	(49,251,882	)

Shares issued in private placement		0		0		176,000			176			199,824			0			0			200,000

Beneficial conversion feature on Convertible Series B Preferred Stock		-		0		-			0			112,525			0			0			112,525

Deemed dividend from beneficial conversion feature on Convertible Series B Preferred Stock		-		0		-			0			(112,525 )			0			0			(112,525)

Shares issued for conversion of preferred stock		9,638,661		9,638		(95,000	)		(95	)		(8,843	)		-			-			700

Stock option compensation expense		-		0		-			0			147,172			0			0			147,172

Net Loss		-		0		-			0			0			0			(1,019,050	)		(1,019,050	)

Balance, September 30, 2021		204,743,749	$	204,743		257,136		$	257		$	74,594,281		$	(20,009,496	)	$	(104,712,845	)	$	(49,923,060	)

Balance, June 30, 2020		175,638,549	$	175,639		0			0		$	73,786,404		$	(20,009,496	)	$	(100,001,222	)	$	(46,048,675	)

Shares issued in private placement		-		-		128,000		$	128			124,872			-			-			125,000

Beneficial conversion feature on Convertible Series B Preferred Stock		-		0		-			0			23,187			0			0			23,187

Deemed dividend from beneficial conversion feature on Convertible Series B Preferred Stock		-		0		-			0			(23,187	)		0			0			(23,187	)

Stock option compensation expense		-		0		-			0			3,899			0			0			3,899

Net Loss		-		0		-			0			0			0			(1,163,791	)		(1,163,791	)

Balance, September 30, 2020		175,638,549	$	175,639		128,000		$	128		$	73,915,175		$	(20,009,496	)	$	(101,165,013	)	$	(47,083,567	)

	Nine Months Ended
	Common Stock Shares		Common Stock Amount		Preferred Stock Shares			Preferred Stock Amount			Additional Paid-in Capital			Accumulated Deficit Prior to Exploration Stage			Accumulated Deficit During Exploration Stage			Total Stockholders’ Deficit

Balance, December 31, 2020		183,938,939	$	183,939		128,000		$	128		$	74,008,636		$	(20,009,496	)	$	(102,012,644	)	$	(47,829,437	)

Shares issued for conversion of preferred stock		15,805,934		15,805		(223,000	)		(223	)		(7,202	)		-			-			8,380

Shares issued in private placement		0		0		352,136		$	352			384,648			0			0			385,000

Beneficial conversion feature on Convertible Series B Preferred Stock		-		0		-			0			225,137			0			0			225,137

Deemed dividend from beneficial conversion feature on Convertible Series B Preferred Stock		-		0		-			0			(225,137	)		0			0			(225,137	)

Shares issued for cashless options exercise		3,836,475		3,836		-			-			(3,836	)		-			-			0

Shares issued in lieu of bonus		1,162,791		1,163		-			-			56,977			-			-			58,140

Stock option compensation expense		-		0		-			0			155,058			0			0			155,058

Net Loss		-		0		-			0			0			0			(2,700,201	)		(2,700,201	)

Balance, September 30, 2021		204,743,749	$	204,743		257,136		$	257		$	74,594,281		$	(20,009,496	)	$	(104,712,845	)	$	(49,923,060	)

Balance, December 31, 2019		175,513,549	$	175,514		0			0		$	73,774,766		$	(20,009,496	)	$	(98,724,933	)	$	(44,784,149	)

Shares issued to note holder		125,000		125		0			0			1,125			0			0			1,250

Shares issued in private placement		-		-		128,000		$	128			124,872			-			-			125,000

Beneficial conversion feature on Convertible Series B Preferred Stock		-		-		-			-			23,187			-			-			23,187

Deemed dividend from beneficial conversion feature on Convertible Series B Preferred Stock		-		-		-			-			(23,187	)		-			-			(23,187	)

Stock option compensation expense		-		0		-			0			14,412			0			0			14,412

Net Loss		-		0		-			0			0			0			(2,440,080	)		(2,440,080	)

Balance, September 30, 2020		175,638,549	$	175,639		128,000		$	128		$	73,915,175		$	(20,009,496	)	$	(101,165,013	)	$	(47,083,567	)

	For the Nine Months Ended
	September 30,
	2021			2020

Cash Flows from Operating Activities:
Net loss	$	(2,700,201	)	$	(2,440,080	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation		4,869			0
Amortization of discount – notes payable		0			3,568
Amortization of discount - PIK Notes		299,426			284,107
Amortization of deferred financing costs		0			41,930
Accrued interest on PIK Notes		1,036,691			1,026,249
Stock based compensation expense		213,199			14,412
Non-cash lease expense		80,518			474
Change in fair value		0			23,000
Stock issued for interest		8,379			0
Gain on f orgiveness of PPP loan		(223,075	)		0
Change in operating assets and liabilities:
Operating lease liabilities		(82,584	)		0
Accounts receivable		43,302			(43,475	)
Deposits and prepaids		158,493			260,371
Accounts payable and accrued liabilities		187,151			969,099
Net cash (used in) provided by operating activities		(973,832	)		139,655

Cash Flows from Financing Activities:
Payments on finance lease liability		(6,029	)		0
Proceeds from notes payable		0			113,750
Proceeds from Paycheck Protection Program Loan		264,472			223,075
Payments on notes payable		0			(371,625	)
Proceeds from private placement		385,000			0-
Payments on insurance financing		(133,081	)		(208,731	)
Net cash provided by (used in) financing activities		510,362			(118,531	)

Net change in cash		(463,470	)		21,124

Cash at beginning of period		669,560			52,793

Cash at end of period	$	206,090		$	73,917

Supplemental disclosure of cash flow information:
Cash paid for interest	$	6,037		$	3,739
Cash paid for income taxes	$	0		$	0

Supplemental disclosure of non-cash financing activity:
Capitalization of ROU asset and finance lease liability	$	51,733		$	0
Deemed dividend on convertible Preferred Stock Series B due to BCF	$	225,137		$	23,187
Accrued PIK interest paid through issuance of PIK Notes	$	943,990		$	750,580
Stock issued for cashless options exercised	$	3,836		$	0
Common stock issued to note holders for financing cost	$	0		$	1,250

	For the Three Months Ended
	March 31,
	2022			2021

Cash Flows from Operating Activities:
Net loss	$	(1,115,665	)	$	(845,958	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation		8,782			-
Amortization of discount - PIK Notes		103,813			98,501
Accrued interest on PIK Notes		314,907			350,433
Stock issued for settlement of liability		53,778			-
Stock-based compensation expense		91,211			62,083
Non-cash lease expense		28,111			26,430
Dividend		-			7,680
Forgiveness of PPP Fund		-			(223,075	)
Change in operating assets and liabilities:
Accounts receivable		14,400			32,687
Deposits and prepaids		47,151			57,143
Operating lease liabilities		(29,085	)		(26,548	)
Financing lease liabilities		(2,754	)		-
Accounts payable and accrued liabilities		314,573			20,370
Net cash (used in) operating activities		(170,778	)		(440,254	)

Cash Flows from Financing Activities:
Proceeds from notes payable		200,000			-
Proceeds from Paycheck Protection Program Loan		-			264,472
Proceeds from Private Placement		-			100,000
Payments on financing lease liability		(6,029	)		-
Payments on notes payable		(4,379	)		-
Payments on insurance financing		(42,971	)		(49,906	)
Net cash provided by financing activities		146,621			314,566

Net change in cash		(24,157	)		(125,688	)

Cash at beginning of period		74,253			669,560

Cash at end of period	$	50,096		$	543,872

Supplemental disclosure of cash flow information:
Cash paid for interest	$	2,312		$	4,395
Cash paid for income taxes	$	-		$	-

Supplemental disclosure of non-cash financing activity:
Accrued PIK interest paid through issuance of PIK Notes	$	265,813		$	408,807
Deemed dividend on convertible Preferred Stock Series B due to BCF	$	-		$	60,738
Common s tock issued for cashless options exercised	$	-		$	3,836
Common stock issued upon conversion of Series B Preferred Stock	$	20,164		$	-
Common stock issued to note holders for financing cost	$	1,740		$	-

Supplemental balance sheet information related to leases:	As of September 30, 2021

Operating lease Right-of-use assets	$	55,790

Current portion of operating lease liabilities	$	57,737
Long-term operating lease liabilities		0
Total operating lease liabilities	$	57,737

Weighted average remaining operating lease term		0.50 years
Weighted average discount rate		6	%

2021 (remaining three months)	$	29,376
2022		29,376
Total lease payments		58,752
Less: imputed interest		(1,015	)
Total lease liabilities	$	57,737

Supplemental cash flow information related to leases:	Three months ended September 30, 2021			Nine months ended September 30, 2021

Finance cash flows from finance lease	$	(4,001	)	$	(6,029	)
Operating cash flows from finance lease	$	2,995		$	4,869

Supplemental balance sheet information related to leases:	As of March 31, 2022

Finance lease Right-of-use assets	$	39,882

Current portion of finance lease liability	$	12,159
Long-term finance lease liability		27,723
Total finance lease liability	$	39,882

Weighted average remaining operating lease term		3.08 years
Weighted average discount rate		6	%

	Options Outstanding						Options Exercisable
Range of per share exercise price	Shares		Weighted average remaining contractual life		Per share weighted average exercise price		Shares		Weighted average remaining contractual life		Per share weighted average exercise price
$0.02 - $0.03		9,450,000		4.75	$	0.03		4,750,000		4.75	$	0.03
$0.04 - $0.08		28,959,881		6.19	$	0.06		28,959,881		6.19	$	0.06
$0.10 - $0.84		10,338,904		1.80	$	0.46		10,338,904		1.80	$	0.46
$1.10 - $1.90		4,042,060		1.45	$	1.63		4,042,060		1.45	$	1.63

		52,790,845		4.58	$	0.24		48,090,845		4.53	$	0.34

	Three Months Ended September 30,						Variance
	2021			2020			$			%

REVENUES	$	360,815		$	222,204		$	138,611			62	%

OPERATING EXPENSES:
Production costs		434,225			396,301			37,924			10	%
Exploration costs		47,866			56,909			(9,043	)		(16	)%
General and administrative		443,503			501,178			(57,675	)		(12	)%

Total Operating Expenses		925,594			954,388			(28, 974	)		(3	)%
Operating Loss		(564,779	)		(732,184	)		(167,405	)		(23	)%
OTHER (EXPENSE) INCOME:
Interest expense, net (including amortization of deferred financing cost and debt discount)		(474,579	)		(463,462	)		11,117			2	%
Change in fair value		-			(23,000	)		(23,000	)		(100	)%
Gain on forgiveness of PPP loan		-			-			-			-	%
Other income, net		20,308			54,855			(34,547	)		(63	)%

Total Other (Expense)		(454,271	)		(431,607	)		22,664			5	%

NET LOSS	$	(1,019,050	)	$	(1, 163 , 791	)	$	(1 44 , 741	)		(1 2	)%

	Nine Months Ended September 30,						Variance
	2021			2020			$			%

REVENUES	$	1,099,980		$	518,272		$	581,708			112	%

OPERATING EXPENSES:
Production costs		1,315,350			846,338			469,012			55	%
Exploration costs		175,715			144,588			31,127			22	%
General and administrative		1,244,975			1,936,301			(691,326	)		(36	)%

Total Operating Expenses		2,736,040			2,927,227			(191,187	)		(7	)%
Operating Loss		(1,636,060	)		(2,408,955	)		(772,895	)		(32	)%

OTHER INCOME (EXPENSE):
Interest expense, net (including amortization of deferred financing cost and debt discount)		(1,401,878	)		(1,363,330	)		38,548			3	%
Change in fair value		-			(23,000	)		(23,000	)		(100	)%
Gain on forgiveness of PPP loan		223,075			-			223,075			-	%
Other income, net		114,662			1,355,205			(1,017,468	)		(75	)%

Total Other Income (Expense)		(1,064,141	)		(31,125	)		(1,033,016	)		3,189	%

NET LOSS	$	(2,700,201	)	$	(2,440,080	)	$	(260,121	)		11	%