Applied Minerals, Inc. - Quarter Report: 2022 September (Form 10-Q)

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, 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.

(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
	(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

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

, 202

was

390,842,696.

DOCUMENTS INCORPORATED BY REFERENCE: None.

APPLIED MINERALS, INC.

(An Exploration Stage Company)

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2022

TABLE OF CONTENTS

		Page(s)


	PART I. FINANCIAL INFORMATION	3

Item 1.	Consolidated Financial Statements

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

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

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

	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (unaudited)	7

	Notes to the Consolidated Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

Item 1.	Legal Proceedings	30

Item 1A	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 3.	Defaults Upon Senior Securities	30

Item 4.	Mine Safety Disclosures	30

Item 5.	Other Information	30

Item 6.	Exhibits	31

Signatures		32

PART I. FINANCIAL INFORMATION

APPLIED MINERALS, INC.

(An Exploration Stage Mining Company)

CONSOLIDATED BALANCE SHEETS

	September 30, 2022			December 31, 2021
	(unaudited)
ASSETS
Current Assets
Cash	$	729,828		$	74,253
Accounts receivable		92,575			34,309
Deposits and prepaid expenses		20,452			161,999
Total Current Assets		842,855			270,561

Land		500,000			500,000
Operating lease right-of-use asset		-			28,111
Finance lease right-of-use asset		33,893			42,821

Other Assets
Deposits		297,320			336,328
Total Other Assets		297,320			336,328

TOTAL ASSETS	$	1,674,068		$	1,177,821

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and accrued liabilities	$	1,306,219		$	3,017,454
PIK Note interest accrual		623,690			372,028
Current portion of PIK Notes payable, net of $365,529 debt discount		48,298,591			-
Current portion of notes payable		110,880			112,835
Current portion of finance lease liabilities		12,519			11,986
Current portion of operating lease liabilities		-			29,085
Total Current Liabilities		50,351,899			3,543,388

Long-Term Liabilities
PIK Notes payable, net of $681,102 debt discount		-			47,004,480
Deferred revenue		1,000,000			1,000,000
Finance lease liabilities		21,373			30,835
Total Long-Term Liabilities		1,021,373			48,035,315

TOTAL LIABILITIES		51,373,272			51,578,703

Stockholders’ Deficit
Preferred stock, $0.001 par value, 10,000,000 shares authorized, and 164,000 and 262,000 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		78			262
Common stock, $0.001 par value, 700,000,000 shares authorized, and 366,974,683 and 217,655,150 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively (208,818,846 reserved in Treasury)		366,974			217,654
Additional paid-in capital		76,937,697			74,686,581
Accumulated deficit prior to the exploration stage		(20,009,496	)		(20,009,496	)
Accumulated deficit during the exploration stage		(106,994,457	)		(105,295,883	)
Total Stockholders’ Deficit		(49,699,204	)		(50,400,882	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	1,674,068		$	1,177,821

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

APPLIED MINERALS, INC.

(An Exploration Stage Mining Company)

NSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2022			2021			2022			2021

REVENUES	$	111,688		$	360,815		$	295,838		$	1,099,980

OPERATING EXPENSES:
Production costs		140,123			434,225			451,418			1,315,350
Exploration costs		16,098			47,866			266,111			175,715
General and administrative		341,847			443,503			1,082,953			1,244,975

Total Operating Expenses		498,068			925,594			1,800,482			2,736,040

Operating Loss		(386,380	)		(564,779	)		(1,504,644	)		(1,636,060	)

OTHER INCOME (EXPENSES):
Interest expense, net (including amortization of deferred financing cost and debt discount)		(643,933	)		(474,579	)		(1,596,548	)		(1,401,878	)
Gain on forgiveness of PPP loan		-			-			-			223,075
Gain on sale of iron oxide assets		1,938,000			-			1,938,000			-
Other income (expense) , net		(716,800	)		20,308			(535,382	)		114,662
Total Other Income (Expense)		577,267			(454,271	)		(193,930	)		(1,064,141	)

NET INCOME (LOSS)	$	190,887		$	(1,019,050	)	$	(1,698,574	)	$	(2,700,201	)

Net Income ( Loss ) Per Common Share (Basic and Diluted)	$	0.00		$	(0.01	)	$	(0.01	)	$	(0.02	)

Weighted Average Common Shares Outstanding (Basic and Diluted)		321,090,805			199,138,961			276,820,927			194,202,348

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

APPLIED MINERALS, INC.

(An Exploration Stage Mining Company)

CONSOLIDATED STATEMENTS OF CHANGES IN 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, 2022		285,787,382	$	285,786		164,000		$	164		$	74,861,487		$	(20,009,496	)	$	(107,185,344	)	$	(52,047,403	)

Shares issued upon conversion of Series B Preferred Stock		43,409,524		43,410		(86,000	)		(86	)		(43,324	)		-			-			-

Beneficial conversion feature on Convertible Series B Preferred Stock		-		-		-			-			51,929			-			-			51,929

Deemed dividend from beneficial conversion feature on Convertible Series B Preferred Stock		-		-		-			-			(51,929	)		-			-			(51,929	)

Shares issued as part of liability settlement		17,777,777		17,778		-			-			56,889			-			-			74,667

Forgiveness of related party liabilities		-		-		-			-			1,991,061			-			-			1,991,061

Shares issued to BMI Minerals Company		20,000,000		20,000		-			-			42,000			-			-			62,000

Share issuance cost		-		-		-			-			(20,000	)		-			-			(20,000	)

Stock based compensation		-		-		-			-			49,584			-			-			49,584

Net Income		-		-		-			-			-			-			190,887			190,887

Balance, September 30, 2022		366,974,683	$	366,974		78,000		$	78		$	76,937,697		$	(20,009,496	)	$	(106,994,457	)	$	(49,699,204	)

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 upon conversion of Series B Preferred Stock		9,638,661		9,638		(95,000	)		(95	)		(8,843	)		-			-			700

Shares of Series B Preferred Stock issued in private placement		-		-		176,000			176			199,824			-			-			200,000

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

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

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

Net Loss		-		-		-			-			-			-			(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	)

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

Shares issued for conversion of Series B Preferred Stock		96,797,312		96,798		(262,000	)		(262	)		(96,536	)		-			-			-

Shares of Series B Preferred Stock issued in private placement		-		-		78,000			78			74,922			-			-			75,000

Beneficial conversion feature on Convertible Series B Preferred Stock		-		-		-			-			77,876			-			-			77,876

Deemed dividend from beneficial conversion feature on Convertible Series B Preferred Stock		-		-		-			-			(77,876	)		-			-			(77,876	)

Shares issued as part of liability settlement		22,222,221		22,222		-			-			106,223			-			-			128,445

Forgiveness of related party liability		-		-		-			-			1,991,061			-			-			1,991,061

Shares issued to BMI Minerals Company		20,000,000		20,000		-			-			42,000			-			-			62,000

Share issuance cost		-		-		-			-			(20,000	)		-			-			(20,000	)

Issuance of shares 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 option compensation expense		-				-			-			92,006			-			-			92,006

Net Loss		-		-		-			-			-			-			(1,698,574	)		(1,698,574	)

Balance, September 30, 2022		366,974,683	$	366,974		78,000		$	78		$	76,937,697		$	(20,009,496	)	$	(106,994,457	)	$	(49,699,204	)

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 upon conversion of Series B Preferred Stock		15,805,934		15,805		(223,000	)		(223	)		(7,202	)		-			-			8,380

Shares of Series B Preferred Stock issued in private placement		-		-		352,136			352			384,648			-			-			385,000

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

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

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

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

Stock compensation expense												155,058									155,058

Net Loss		-		-		-			-			-			-			(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	)

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

APPLIED MINERALS, INC.

(An Exploration Stage

Mining

Company)

CONSOLIDATED STATEMENTS

CASH FLOWS

(Unaudited)

	For the Nine Months Ended
	September 30,
	2022			2021

Cash Flows from Operating Activities:
Net income (loss)	$	(1,698,574	)	$	(2,700,201	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation of finance lease		8,928			4,869
Amortization of debt discount		9,566			-
Amortization of discount - PIK Notes		315,573			299,426
Accrued interest on PIK Notes		1,238,435			1,036,691
Stock issued for settlement of liabilities		128,445			-
Stock based compensation expense		162,006			213,199
Non-cash lease expense		28,111			80,518
Gain on sale of obsolete equipment		(50,000	)		-
Gain on sale of iron oxide assets		(1,938,000	)		-
Stock issued for interest		-			8,379
Gain on forgiveness of PPP loan		-			(223,075	)
Change in operating assets and liabilities:
Accounts receivable		(58,266	)		43,302
Deposits and prepaids		180,555			158,493
Operating lease liabilities		(29,085	)		(82,584	)
Financing lease liabilities		(9,076	)		-
Accounts payable and accrued liabilities		271,591			187,151
Net cash (used in) provided by operating activities		(1,439,791	)		(973,832	)

Cash Flows from Investing Activities:
Proceeds from sale of equipment		50,000			-
Proceeds from sale of iron oxide assets		1,938,000			-
Net cash provided by (used in) in vestin g activities		1,988,000			-

Cash Flows from Financing Activities:
Payments on finance lease liability		(5,882	)		(6,029	)
Proceeds from notes payable		200,000			-
Proceeds from Paycheck Protection Program loan		-			264,472
Payments on notes payable		(90,917	)		-
Proceeds from private placement of Series B Preferred Stock		75,000			385,000
Proceeds from sale of shares of common stock , net of issuance costs		42,000			-
Payments on insurance financing		(112,835	)		(133,081	)
Net cash provided by (used in) financing activities		107,366			510,362

Net change in cash		655,575			(463,470	)

Cash at beginning of period		74,253			669,560

Cash at end of period	$	729,828		$	206,090

Supplemental disclosure of cash flow information:
Cash paid for interest	$	31,470		$	6,037
Cash paid for income taxes	$	-		$	-

Supplemental disclosure of non-cash financing activity:
Capitalization of ROU asset and finance leas e liability	$	-		$	51,733
Boral settlement payable	$	(8,235	)	$	-
Forgiveness of related party liabilities	$	1,991,061		$	-
Deemed dividend on convertible Preferred Stock Series B due to BCF	$	77,876		$	225,137
Accrued PIK interest paid through issuance of PIK Notes	$	986,774		$	943,990
Stock issued for cashless options exercised	$	1,740		$	3,836
Common stock issued upon conversion of Series B Preferred Stock	$	96,798		$	-

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”) (OTC: 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 markets its halloysite clay under the DRAGONITE trade name. The Company markets its DRAGONITE halloysite clay products into the as an additive into the ceramic, molecular sieve, catalyst, polymer, flame retardant, and coatings markets. The Company regularly sells its halloysite clay products to six customers. Several prospective customers are conducting either commercial-scale trials or field trials for an array of products that use DRAGONITE. The Company believes its DRAGONITE halloysite clay has potential use in lithium-ion battery formulations. In particular, halloysite has been shown to be an effective precursor of porous silicon for use as anode material, a coating to improve the conductivity of separators and an additive to improve the conductivity of solid polymer electrolytes.

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

Sale of Iron Oxide Assets

On August 9, 2022 the Company closed on the sale of the rights to its iron oxide resource, 20 million shares of restricted common stock, its Alpine Mill building, and related milling equipment. In exchange for $300,000, less a previously paid down payment of $120,000 and $20,000 of reimbursable legal expenses, the Company sold to BMI Minerals Company

BMCO")

the rights to its iron oxide resource and 20 million restricted shares of common stock of the Company.

The market value of the shares of common stock issued to BMCO was $42,000.

In exchange for $1,700,000, the Company sold to Brady McCasland, Inc.

("BMI")

, a company affiliated with BMCO,

its Alpine Mill building and related iron milling equipment. In conjunction with the sale of the Alpine Mill building the Company entered into (i) a ground lease with a term of 100 years, (ii) a Mining Operations Agreement and a (iii) Milling Operations Agreement.

The net gain

recognized by the Company

on the sale of the iron oxide assets was

$1,938,000 which is

equal to

the gross proceeds of $2,000,000

realized from the sale

less the

$42,000

market value of the

common stock issued to BMCO less $20,000

of legal expenses incurred by BMCO

that were

reimbursed by the Company.

As part of the sale the Company agreed to pay waiver fees of $375,000 to the majority holders of each of its Series A PIK Notes and Series 2023 Notes.

The $750,000 in PIK Note waiver fees is included as other expense in the Company’s Consolidated Statements of Operations. Additionally, to provide the necessary waivers related to the sale of the Iron Oxide Assets, the majority holders of the each of the Series A PIK Notes and Series 2023 Notes required that directors Mario Concha, Robert Betz, John Levy and Geoffrey Scott relinquish approximately $1.9 million of accrued and unpaid fees and related compensation owed to them as of August 2022.

Directors Concha, Betz, Levy and Scott all agreed to relinquish their fees and related compensation, which are included as a capital contribution in the Company’s Consolidated Statements of Equity.

ining Operations Agreement and Milling Operations Agreement

n conjunction with

entering into the sale of the Iron Oxide Assets, the Company entered into a Mining Operations Agreement

with

BMCO

and a Milling Operations Agreement

with

BMI.

Under the

terms of the

Mining Operations Agreement,

AMI will be required to extract, haul, store and prepare for processing the

ron

xide

inerals (“Mining”) for BMCO. BMCO will reimburse AMI for all direct Mining costs and pay AMI 10% of the labor costs included in the Mining costs as a fee. AMI will have direct oversight over all Mining activities including the activities of contract labor that may be utilized for Mining. The Mining Operations Agreement will require AMI to make available to BMCO iron mining equipment owned by AMI. Under the Mining Operations Agreement, BMCO will pay AMI, depending on the sale price, either 20% or 25% of the gross profit of any sales of crushed, screened or milled iron to four Qualified Customers that have been developed by AMI.

Under the terms of the Milling Operations

Agreement,

AMI will be required to mill, package and prepare for shipping (“Milling”) the iron oxide minerals for BMI. BMI will reimburse AMI for any costs it incurs directly related to Milling of iron oxide minerals for BMI. BMI will also pay AMI 10% of the labor costs included in the Milling costs as a fee. AMI will have direct oversight over all Milling activities including the activities of any contract labor that may be utilized for Milling. As part of the Milling Operations Agreement, BMI will agree to allow AMI to utilize any excess capacity of the Mill. BMI and AMI will each pay its share of the maintenance expense of the Mill based on the volume of minerals each processes through the Mill. AMI will maintain ownership of the laboratory equipment located in the Mill and allow BMI to use the equipment for a fee.

Settlement with Mining Services Contractor

In March 2022, the Company entered into a Settlement Letter with a former contractor for an amount equal to $200,000. Under the terms of the Settlement Letter, the Company agreed to (i) make ten consecutive monthly cash payments of $10,000 to the former contractor beginning in April 2022 and (ii) issue 4,444,444 restricted shares of common stock to the former contractor. If the weighted average trading price of the shares of the Company’s common stock over the five trading days immediately preceding October 1, 2022 (“WATP”) was less than $0.0225 per share, the Company agreed, at its option, to (a) issue to the former contractor a number of shares of common stock equal to ((4,444,444 x (0.0225 – WATP)) / (0.9 x WATP)) or (b) make a cash payment to the former contractor equal to ((4,444,444 x (0.0225 – WATP)).

Prior to the close of the sale of the iron oxide assets, the contractor filed a lien on the Dragon Mine property related to amounts owed under the March 2022 settlement agreement. In July 2022, the Company and the contractor entered into a final settlement agreement under which, upon the close of the sale of the iron oxide, the Company paid the contractor $49,732 in cash and issued to the contractor an additional 17,777,777 restricted shares of common stock. In total the Company paid the contractor $111,111 in cash and issued to the contractor 22,222,221 restricted shares of common stock.

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. CMC will 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 Agreement unless the Exploration License is 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 Company also provided Tintic with a Right of First Offer, which expires on December 21, 2027 and can be extended to December 21, 2032 for $250,000.

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 is willing to enter into the Agreement only if it is assured that CMC will 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. Since then, many countries around the world imposed quarantines and restrictions on travel and mass gatherings to slow the spread of the virus and have closed non-essential businesses.

The effects of the COVID-19 restrictions 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 some of our customers have begun, during 2022, to resume their previously planned purchases of our DRAGONITE halloysite clay products.

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 2

, 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 2

, 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 months ended Septe

ber 30, 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, 2021, included in the Annual Report of Applied Minerals, Inc. on Form 10-K filed with the SEC on April 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 2

, 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, 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, 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 months ended September 30, 2022 and 2021, revenues from the Company’s largest customer

s (each representing 10% or more of total

revenue)

accounted for 68% and 67% of total revenues, respectively. As of September 30, 2022 and 2021, amounts owed from these customers comprised 90% and 98% 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, 2022 and December 31, 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 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, 2022 and 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

September

30, 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 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 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 re-measurements reported in interest expense in the accompanying Consolidated Statements of Operations.

Recent Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, which simplifies the guidance on the issuer’s accounting for 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 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 scope of ASU 2020-06. Also, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and treasury stock method will be no longer available. ASU 2020-06 is applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company adopted ASU 2020-06 for its fiscal year ending December 31, 2021.

NOTE 4 – LEASES

Finance Lease

On May 14, 2021, the Company entered into a 4-year financing lease agreement for laboratory equipment. The base rent payment is approximately $1,175 per month.

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

Finance cash flows from finance lease	$	(3,161	)	$	(9,076	)
Operating cash flows from finance lease	$	3,161		$	9,076

Supplemental balance sheet information related to leases:	As of September 30, 2022

Finance lease Right-of-use assets	$	33,893

Current portion of finance lease liabilities	$	12,519
Long-term finance lease liabilities		21,374
Total finance lease liabilities	$	33,893

Weighted average remaining operating lease term		2.50 years
Weighted average discount rate		6	%

The following table summarizes the maturity of lease liability under finance lease as of September 30, 2022

2022 (remaining three months)	$	3,525
2023		14,099
2024		14,099
2025		4,700
Total lease payments		36,423
Less: imputed interest		(2,530	)
Total lease liabilities	$	33,893

NOTE 5 – DEPOSIT

The following is a summary of deposit:

	September 30, 2022		December 31, 2021
Cash Bond (Mine Permit deposit)	$	297,320	$	297,160
Office Lease Security Deposit		-		39,168
Total	$	297,320	$	336,328

NOTE 6 - NOTES PAYABLE

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

	September 30, 2022			December 31, 2021

Note payable to insurance companies, payable $1,780 and $12,804 monthly, (a)	$	-		$	112,835
Promissory note (b)	$	31,399		$	-
Loan payable (c)	$	79,481		$
	$	110,880		$	112,835
Less: Current Portion	$	(110,880	)	$	(112,835	)

Notes Payable, Long-Term Portion	$	-		$	-

(a)

In October 2021, the Company entered into two notes payable with interest rates of 4.04% and 6.29% with an insurance company for liability insurance, payable in 10 monthly installment payments, which started in November 2021.

(b)

In 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.

(c)

In March 2022, the Company entered into a loan payable with a lender for $125,000

principal and an origination fee of $

35,000

Payment of the loan includes one installment of $1,215.19 followed by seventy-nine (79) weekly installments of $2,025.32 totaling

approximately

$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 nine months ended September 30, 2022 and 2021, the Company's interest payments totaled $14,241 and $2,626, respectively

NOTE 7 – 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	$0.43 as adjusted downward based on anti-dilution provisions/down-round protection	$0.23 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, 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	$	18,294,121	$	30,369,999		$	48,664,120
Less: Discount		-		(365,529	)		(365,529	)
PIK Note Payable, Net	$	18,294,121	$	30,004,470		$	48,298,591

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
PIK Note Payable, Gross	$	17,759,822	$	29,925,760		$	47,685,582
Less: Discount		-		(681,102	)		(681,102	)
PIK Note Payable, Net	$	17,759,822	$	29,244,658		$	47,004,480

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 and Series 2023 Notes can be as exhibits to Forms 8-K filed on November 5, 2014.

Below are key amended terms of the 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 the Series A Notes 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 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 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 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.

During the nine months ended September 30, 2022, the Company issued additional Series A Notes of $449,384 in lieu of cash interest payments. The carrying value of the Series A Notes payable as of September 30, 2022 was $30,004,470.

The amortized debt discount expensed during the three months ended September 30, 2022 was $106,575.

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

As of September 30, 2022, Geoffrey Scott, a director of the Company owned $4,642,137 of principal of the Series A Notes.

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 months ended September 30, 2022, the Company issued additional PIK Notes of $537,390 in lieu of cash interest payments. The carrying value of the Series 2023 Notes Payable was $18,294,121 as September 30, 2022.

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

NOTE 8 – 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, 2022 and December 31, 2021, 78,000 and 262,000 shares of Series B Preferred Stock were issued and outstanding, respectively.

2022

On May 3, 2022, 78,000 shares of Series B Preferred Stock were issued at a stated price of $1.00 per share for cash proceeds of $75,000, net of $3,000 in 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 a $25,947 beneficial conversion feature to additional paid in capital and amortized at the time of issuance.

2021

On February 17, 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 a $60,738 beneficial conversion feature to additional paid in capital and amortized at the time of issuance.

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 in 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 a $51,874 beneficial conversion feature to additional paid in capital and amortized at the time of issuance.

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 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.

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, 2022 and December 31, 2021, 366,974,683 shares and 217,655,150 shares were issued and outstanding, respectively.

2022

During the nine months ended September 30, 2022, (i) 20,164,153 shares of common stock were issued upon the conversion of 75,000 shares of Series B Preferred Stock issued in August 2021, (ii) 10,000,000 shares of common stock were issued as in conjunction with entering into a consulting agreement with an investor relations firm

with a fair value of $70,000

, (iii) 4,444,444 shares were issued to settle certain liabilities, (iv) 300,000 shares of common stock were issued as debt issuance cost, (v) 9,275,000 shares of common stock were issued upon the conversion of 35,000 shares of Series B Preferred Stock issued in August 2021, (vi) 23,948,635 shares of common stock issued upon the conversion of 66,000 shares of Series B Preferred Stock issued in September 2021 (v) 43,409,526 shares of common stock were issued upon the conversion of 86,000 shares of Series B Preferred Stock issued in December 2021; (vi) 20,000,000 shares of common stock were issue to BMI Minerals Company as part of its purchase of the rights to the Company’s iron oxide resource and (vii) 17,777,777 shares were issued to Provo Mining & Construction, Inc. related to a settlement of amounts owed.

2021

During the nine months ended September 30, 2021, (i) 15,805,934 shares were issued upon the conversion of 223,000 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

NOTE 9 – OPTIONS AND WARRANTS TO PURCHASE COMMON STOCK

Outstanding Stock Warrants

A summary of the status and changes of the warrants issued for the nine months ended September 30, 2022:

	Shares Issuable
	upon Exercise of		Weighted Average
	Outstanding Warrants		Exercise Price

Outstanding at December 31, 2021		11,000,000	$	0.10
Issued		10,860,000		0.046
Exercised		-		-
Forfeited		-		-
Outstanding at September 30, 2022		21,860,000	$	0.0526

At September 30, 2022 the intrinsic value of the outstanding warrants was $16,290.

In August 2022 the Company granted a financial advisory firm warrants to purchase 9.86 million shares of common stock at $0.005 per share and 1 million shares of

common

stock at $0.001 per share. The financial advisory firm provided, among other things, capital introduction services to the Company. The warrants were issued with a 5-year term

and vested immediately

. The Black Scholes fair value of the warrants on the grant date totaled $31,056.

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

			Warrants Outstanding and Exercisable
				Weighted Average
			Shares Issuable upon Exercise of	Remaining Contractual Life		Weighted Average
Exercise Price			Outstanding Warrants	(years)		Exercise Price
	$	0.10	11,000,000	0.20	$	0.10
	$	0.005	9,860,000	4.86		0.005
	$	0.001	1,000,000	4.86	$	0.001
			21,860,000	2.51	$	0.0526

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.

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

	Shares Issued Upon Exercise of Options			Weighted Average Exercise Price

Outstanding at December 31, 2021		52,790,845		$	0.25
Granted		4,000,000			0.001
Exercised		-			-
Forfeited		(3,854,653	)		0.79
Outstanding at September 30, 2022		52,936,192		$	0.19

In August 2022 the Company granted a financial advisory firm an option to purchase 4 million shares of common stock at $

0.001

per share. The financial advisory firm provided, among other things, capital introduction services to the Company.

The option was issued with a 5-year term and vested immediately. The Black Scholes fair value of the option on the grant date was $13,107.

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

	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
$0.001 - $0.08		42,409,881		4.68	$	0.05		42,409,881		4.68	$	0.05
$0.10 - $0.84		6,784,251		1.32		0.34		6,784,251		1.32		0.34
$1.10 - $1.66		3,742,060		0.26		1.57		3,742,060		0.26		1.57

		52,936,192		2.89	$	0.19		52,936,192		2.89	$	0.19

Compensation expense of $92,006 and $155,058 was recognized for the vesting of options during the nine months ended September 30, 2022 and 2021, respectively. The aggregate intrinsic value of the outstanding options at September 30, 2022 was $0.

NOTE 10 - 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, 2022, the weighted average shares outstanding excluded options to purchase 52,936,192 shares of common stock of the Company, warrants to purchase 21,860,000 shares of common stock of the Company and 176,663,277 shares of common stock of the Company issuable upon the conversion of Series A Notes and Series 2023 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 124,437,208 shares of common stock of the Company issuable upon the conversion of Series A Notes and Series 2023 Notes because their effect would be anti-dilutive.

NOTE 11 – SUBSEQUENT EVENTS

On October 7, 2022, 4,000,000 shares of common stock were issued upon the exercise of a common stock option granted to a financial advisory firm for services provided through August 2022.

On October 19, 2022, the Company entered into a financing agreement to fund the insurance premium related to its D&O policy. The total premium financed was $106,854.

On October 19, 2022, the Company entered into a financing agreement to fund the insurance premium related to its general liability insurance policy. The total premium financed was $15,386.

On November 3, 2022, 20,000 shares of Series B Preferred Stock, issued in May 2022, plus associated accrued interest were converted by the holder into 6,625,000 shares of common stock of the Company.

On November 11, 2022, 30,000 shares of Series B Preferred Stock, issued in May 2022, plus associated accrued interest were converted by the holder into 13,250,000 shares of common stock of the Company.

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 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, strength reinforcement additives for cement, concrete, mortars and grouts, advanced ceramics, rheology additives for drilling fluids, environmental remediation media, and carriers of agricultural agents. Halloysite is an aluminosilicate with a tubular structure that provides functionality for a number of applications.

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. In August 2022 the Company sold the rights to its iron oxide resource as well as title to its Hosokawa Alpine table roller mill and related building.

The Company owns a mineral processing facility with a capacity of 5,000 - 10,000 tons tons per annum depending on the grade of clay mineral its produces. Furthermore, the Company has use of any unused capacity available on the Alpine Hosokawa table roller mill sold to a third-party in August 2022.

The Company currently sells its DRAGONITE product as a binder molecular sieve applications, as a nucleating agent for resin applications and as a binder for ceramic applications. The Company is working with current and prospective customers, which are in the latter stages of commercializing new products that will utilize DRAGONITE as a functional additive.

In August 2022, the Company received a $1,150,000 U.S. DOE STTR Phase II award to develop a process that produces halloysite-derived porous silicon for use as anode material

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, 2021. There have been no material changes in our critical accounting policies and estimates during the nine-month period ended September 30, 2022 compared to the disclosures on Form 10-K for the year ended December 31, 2021.

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 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
	2022			2021			$			%

REVENUES	$	111,688		$	360,815		$	(249,127	)		(69	)%

OPERATING EXPENSES:
Production costs		140,123			434,225			(294,102	)		(68	)%
Exploration costs		16,098			47,866			(31,768	)		(66	)%
General and administrative		341,847			443,503			(101,656	)		(23	)%

Total Operating Expenses		498,068			925,594			(427,526	)		(46	)%
Operating Loss		(386,380	)		(564,779	)		(178,399	)		(32	)%
OTHER INCOME (EXPENSE):
Interest expense, net (including amortization of deferred financing cost and debt discount)		(643,933	)		(474,579	)		(169,354	)		36	%
Gain on sale of iron oxide assets		1,938,000			-			1,938,000			100	%
Other income (expense) , net		(716,800	)		20,308			(737,108	)		(3,630	)%

Total Other Income (Expense)		577,267			(454,271	)		(1,031,538	)		(227	)%

NET INCOME (LOSS)	$	190,887		$	(1,019,050	)	$	(1,209,937	)		(119	)%

Revenue for the three months ended September 30, 2022 totaled $111,688, a decrease of $249,127 or 69%, compared to the same period in 2021. The decrease was driven primarily by a $301,833 decline in sales of AMIRON iron oxide, partially offset by an increase of $53,906 in sales of DRAGONITE halloysite clay.

Sales of AMIRON iron oxide during the period totaled $1,200, a decrease of 100% when compared to the same period in 2021. The decrease was due to t

he expiration in December 2021 of a supply agreement with a producer of cement. Sales of DRAGONITE halloysite clay totaled $110,488 during the period, an increase of 91% when compared to the same period in 2021. During the period the Company increased its sales of DRAGONITE to current customers and a number of new customers.

Total operating expenses for the three months ended September 30, 2022 totaled $498,068, a reduction of 46% when compared to the same period in 2021. The reduction was driven primarily by a $294,102 decline in production costs and a 101,656 decline in general and administrative expense.

Production costs include those operating expenses which management believes are directly related to the mining and processing of the Company’s 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, 2022 were $140,123, a decrease of 68% when compared to the same period in 2021.

The decrease was driven primarily by a reduction in contract labor, wage and mining materials related expenses associated with the expiration in December 2021 of a contract to supply iron to a producer of cement.

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, 2022 were $16,098, a decrease of 66% when compared to the same period in 2021.

General and administrative expenses incurred during the three months ended September 30, 2022 totaled $341,847, a 23% decrease when compared to the same period in 2021. The decrease was driven primarily by a decrease in wages and related employee expense due to a reduction in the number of employees, decline in director expense due to a decline in the number of directors and a decline in equity-linked compensation expense. Approximately $66,700 of general and administrative expense was related to the Company’s STTR DOE Phase I award and was reimbursed by the DOE during the period and recorded as other income. Approximately $96,000 of general and administrative expense was paid to a financial advisor for capital raising and related services. The Company does not expect to incur a similar expense in the future.

Operating loss incurred during the three months ended September 30, 2022 was $386,378, a 32% decrease when compared to the same period in 2021. The decrease was driven by a $427,526 decline in total operating expenses, partially offset by a $249,127 decline in revenue.

Total other income was $577,267 for the three months ended September 30, 2022 compared to total other expense of $454,271 in same period in 2021. The $1,031,538 decrease in total other expense was due primarily to a $1,938,000 gain on the sale of the Company’s

rights to its iron oxide resource as well as title to its Hosokawa Alpine table roller mill and related building (“iron oxide assets”),

partially offset by a (i) decrease in other income of $737,108 of which $750,000 was the payment of a PIK Note waiver fee related to the sale of the iron oxide assets and (ii) a $169,354 increase in interest expense due to an increase in the outstanding principal balance of the Company’s PIK Notes when compared to the same period in 2021.

Net income for the three-month period ending September 30, 2022 was $190,887, compared to a net loss of $1,019,050 during the same period in 2021. The decrease in net loss was due primarily to the $1,938,000 gain realized on the sale of the iron oxide assets, partially offset by the $737,108 decline in other income.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 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:

	Nine Months Ended September 30,						Variance
	2022			2021			$			%

REVENUES	$	295,838		$	1,099,980		$	(804 ,142	)		(73	)%

OPERATING EXPENSES:
Production costs		451,418			1,315,350			(863,932	)		(66	)%
Exploration costs		266,111			175,715			90,396			51	%
General and administrative		1,082,953			1,244,975			(162,022	)		(13	)%

Total Operating Expenses		1,800,482			2,736,040			(935,558	)		(34	)%
Operating Loss		(1,504,644	)		(1,636,060	)		(131,416)			(8	)%

OTHER INCOME (EXPENSE):
Interest expense, net (including amortization of deferred financing cost and debt discount)		(1,596,548	)		(1,401,878	)		194,670			14	%
Gain on forgiveness of PPP loan		-			223,075			(223,075	)		(100	)%
Gain on sale of iron oxide assets		1,938,000			-			1,938,000			(100	)%
Other income (expense) , net		(535,382	)		114,662			(650,044	)		(570	)%

Total Other Income Expense		(193,930	)		(1,064,141	)		(870,211	)		(82	)%

NET LOSS	$	(1,698,574	)	$	(2,700,201	)	$	( 1,001,627	)		(37	)%

Revenue for the nine months ended September 30, 2022 totaled $295,838, a decrease of 73% when compared to the same period in 2021. The decrease was driven primarily by a $714,562 decrease in the sale of AMIRON iron oxide and a $89,798 decrease in the sale of DRAGONITE halloysite clay.

Sales of AMIRON iron oxide during the period totaled $19,330, a decrease of 97% when compared to the same period in 2021. The decrease in sales of AMIRON was due to t

he expiration in December 2021 of a supply agreement with a producer of cement. Sales of DRAGONITE halloysite clay totaled $276,508 during the period, a decrease of 25% when compared to the same period in 2021. The decline in sales of DRAGONITE was due, large part, to the absence of purchases for field trials by certain customers that occurred during the same period in 2021.

Total operating expenses for the nine months ended September 30, 2022 totaled $1,800,482, a decrease of 34% when compared to the same period in 2021. The decrease was driven by a 66% decline in production costs and 13% decline in general and administrative expense, partially offset by a 51% increase in exploration 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 nine months ended September 30, 2022 were $415,418, a decrease of 66%, compared to the same period in 2021. The decrease was

driven primarily by a reduction in contract labor, wage and mining materials related expenses associated with the expiration in December 2021 of a contract to supply iron to a producer of cement.

Production expense during the period included $39,500 related to a settlement with a contract miner entered into in March 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 months ended September 30, 2022 were $266,111, a 51%, increase compared to the same period in 2021. The increase was driven primarily by a $200,000 charge related to a settlement agreement with a contract miner entered into in March 2022.

General and administrative expenses incurred during the nine months ended September 30, 2022 totaled $1,082,953, a decline of 13%, when compared to the same period in 2021. The decrease was driven primarily by a decline in wages and related employee expense due to a reduction in the number of employees, decline in director expense due to a decline in the number of directors and a decline in equity-linked compensation expense. Approximately $80,000 of general and administrative expense during the period was related to the Company’s STTR DOE Phase I award and was reimbursed by the DOE during the period and recorded as other income. Approximately $96,000 of general and administrative expense was paid to a financial advisor for capital raising and related services. The Company does not expect to incur a similar expense in the future.

Operating loss incurred during the nine months ended September 30, 2022 was $1,504,644, an 8% decrease when compared to the same period in 2021. The decline was driven primarily by a $863,932 decrease in production costs and a $162,022 decrease in general and administrative expense, offset by a $90,396 increase in exploration costs when compared to the same period in 2021.

Total other expense for the nine months ended September 30, 2022 was $193,930, compared to total other expense of $1,064,141 during the same period in 2021. The $870,211 decrease in total other expense was due primarily to a $1,938,000 gain on the sale of the Company’s iron oxide assets in August 2022, partially offset by (i) a $650,044 decrease in other income $750,000 of which is a PIK Note waiver paid in conjunction with the sale of the Company’s iron oxide assets, (ii) the absence of a $223,000 gain related to the forgiveness of a Payroll Protection Program loan and (iii) a $194,670 increase in interest expense due to an increase in the outstanding principal balance of the Company’s PIK Notes when compared to the same period in 2021

Net loss for the nine months ending September 30, 2022 was $1,698,574 a decline of $1,001,627 when compared to the same period in 2021. The decrease in net loss was due primarily to a decrease in total other expense of $870,211 and a decrease in operating loss of $131,416.

LIQUIDITY AND CAPITAL RESOURCES

Management believes that in order for the Company to meet its obligations arising from normal business operations through November 29, 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 29, 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 months ended September 30, 2022 was $1,439,791 compared to $973,832 of cash used during the same period in 2021. Cash used by operations during the nine months ended September 30, 2022, before accounting for the changes in operating assets and liabilities, was $1,795,510 compared to $1,280,194 during the same period in 2021. The primary reason for the increase was the $750,000 paid as a waiver fee to the majority holders of the Company’s Series A and Series 2023 PIK Notes related to the sale of the Company’s iron oxide assets. Cash generated from the change in operating assets and liabilities during the nine months ended September 30, 2022 was $355,720 compared to $306,362 during the same period in 2021.

Cash used by investing activities during the nine months ended September 30, 2022 was $1,988,000 compared to $0 during the same period in 2021. The $1,988,000 increase was due to $1,938,000 of net proceeds generated from the sale of the Company’s iron oxide assets and $50,000 of proceeds generated from the sale of obsolete equipment.

Cash provided by financing activities during the nine months ended September 30, 2022 was $107,366 compared to $510,362 used during the same period in 2021. The $402,966 decrease in cash provided during the period was due primarily to a $310,000 reduction in proceeds from a private placement of Series B Preferred Stock during the current period, the absence of $264,472 of proceeds from a Paycheck Protection Program loan and principal payments of approximately $91,000 which did not occur during the same period in 2021, partially offset by $200,000 in proceeds from the issuance of notes payable, $42,000 of net proceeds from the issuance of shares of common stock and a reduction of approximately $20,000 of insurance financing payments.

Total assets at September 30, 2022 were $1,674,068 compared to $1,177,821 at December 31, 2021, an increase of $396,247 due primarily to an increase in the Company’s cash and accounts receivable, partially offset by a reduction in prepaid expenses. Total liabilities were $51,373,272 compared to $51,578,703 at December 31, 2021, a decrease of $205,431 due to a reduction in accrued liabilities, partially offset by an increase in the balance of the Company’s PIK Notes.

ISSUANCE OF CONVERTIBLE DEBT

For information with respect to issuance of convertible debt, see Note 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 months ended September 30, 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.

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 2021 Annual Report on Form 10-K.

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

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
10.1		Form of Iron Sale Agreement
10.2		Form of Mill Sale Agreement
10.3		Form of Mining Operations Agreement
10.4		Form of Milling Operations Agreement
10.5		Form of First Amendment to Iron Sale Agreement
10.6		Form of First Amendment to Mill Sale Agreement
10.7		Form of First Amendment to Mining Operations Agreement
10.8		Form of First Amendment to Milling Operations Agreement
10.9		Form of Ground Lease
10.10		Form of General Warranty Deed
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.

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 30, 2022		/s/ CHRISTOPHER T. CARNEY
		By: Christopher T. Carney
		Chief Executive Officer

Dated: November 30, 2022		/s/ CHRISTOPHER T. CARNEY
		By: Christopher T. Carney
		Chief Financial Officer