10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM10-Q

(Mark One)

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

For the quarterly period ended September 30, 2017

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

For the transition period from to

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.)
55 Washington Street - Suite 301, Brooklyn, NY		11201
(Address of principal executive offices)		(Zip Code)
	(800) 356-6463
	(Issuer’s Telephone Number, Including Area Code)

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

Indicate by check 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 ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting 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	☐
						Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transaction 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 ☐ NO ☒

The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding as of November 14, 2017 was 137,638,549.

DOCUMENTS INCORPORATED BY REFERENCE: None.

APPLIED MINERALS, INC.

(An Exploration Stage Company)

THIRD QUARTER 2017 REPORT ON FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
		Page(s)
Item 1.	Condensed Consolidated Financial Statements	3
	Condensed Consolidated Balance Sheets as of September 30, 2017 (unaudited) and December 31, 2016	3
	Condensed Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended September 30, 2017 and 2016	4
	Condensed Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2017 and 2016	5
	Notes to the Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15
Item 4.	Controls and Procedures	15
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	16
Item 1A	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Mine Safety Disclosures	16
Item 5.	Other Information	16
Item 6.	Exhibits	17
Signatures		18

PART I. FINANCIAL INFORMATION

APPLIED MINERALS, INC.

(An Exploration Stage Mining Company)

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2017			2016
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	270,896		$	1,049,880
Accounts receivable		60,528			364,952
Deposits and prepaid expenses		58,909			371,206
Other current receivables		- 0 -			16,801
Total Current Assets		390,333			1,802,839
Property and Equipment, net		3,129,806			4,075,176
Other Assets
Deposits		216,724			200,524
Assets Held for Sale		- 0 -			1,000
Total Other Assets		216,724			201,524
TOTAL ASSETS	$	3,736,863		$	6,079,539
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and accrued liabilities		687,557		$	622,331
Accrued PIK note interest		1,277,900			961,395
Current portion of notes payable		15,553			234,149
Total Current Liabilities		1,981,010			1,817,875
Long-Term Liabilities
Long-term portion of notes payable		1,333			13,073
PIK Notes payable, net of $11,358,212 and $15,143,123 debt discount at September 30, 2017 and December 31, 2016, respectively		29,535,466			23,040,093
PIK Note derivative		1,142,174			2,176,552
Total Long-Term Liabilities		30,678,973			25,229,718
Total Liabilities		32,659,983			27,047,593
Commitments and Contingencies (Note 8)
Stockholders’ Deficit
Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding		- 0 -			- 0 -
Common stock, $0.001 par value, 200,000,000 shares authorized, 133,888,549 and 108,613,549 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		133,888			108,614
Additional paid-in capital		69,537,143			68,506,530
Accumulated deficit prior to the exploration stage		(20,009,496	)		(20,009,496	)
Accumulated deficit during the exploration stage		(78,584,655	)		(69,573,702	)
Total Stockholders’ Deficit		(28,923,120	)		(20,968,054	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	3,736,863		$	6,079,539

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

3

APPLIED MINERALS, INC.

(An Exploration Stage Mining Company)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the three months ended						For the nine months ended
	September 30,						September 30,
	2017			2016			2017			2016
REVENUES	$	148,303		$	975,328		$	2,300,998		$	3,089,422
OPERATING EXPENSES:
Production costs		412,713			539,951			2,125,007			1,572,795
Exploration costs		47,172			270,700			304,631			821,814
General and administrative		664,217			977,716			2,137,655			3,227,852
Depreciation expense		329,357			340,165			989,122			1,014,585
Total Operating Expenses		1,453,459			2,128,532			5,556,415			6,637,046
Operating Loss		(1,305,156	)		(1,153,204	)		(3,255,417	)		(3,547,624	)
OTHER INCOME (EXPENSE):
Interest expense, net, including amortization of deferred financing cost and debt discount		(2,527,374	)		(1,792,412	)		(6,843,524	)		(4,521,672	)
Gain (Loss) on revaluation of PIK Note derivative		(570,473	)		1,134,149			1,066,368			2,425,555
Other income (expense)		(4,064	)		1,042			21,620			106,021
Total Other Income (Expense)		(3,101,911	)		(657,221	)		(5,755,536	)		(1,990,096	)
Net (Loss) Income	$	(4,407,067	)	$	(1,810,425	)	$	(9,010,953	)	$	(5,537,720	)
Net (Loss)Income Per Share (Basic and Diluted)	$	(0.04	)	$	(0.02	)	$	(0.08	)	$	(0.05	)
Weighted Average Shares Outstanding (Basic and Diluted)		118,862,734			108,482,042			112,094,593			101,231,559

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

4

APPLIED MINERALS, INC.

(An Exploration Stage Mining Company)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended
	September 30,
	2017			2016
Cash Flows from Operating Activities:
Net loss	$	(9,010,953	)	$	(5,537,720	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		989,123			1,014,585
Amortization of discount - PIK Notes		3,784,911			1,824,715
Amortization of deferred financing costs		5,625			5,625
Issuance of PIK Notes in payment of interest		2,704,837			2,402,340
Stock issued for director fees and other services		- 0 -			53,914
Stock-based compensation expense		145,887			558,055
Stock issued for employee compensation		- 0 -			57,748
(Gain) loss on revaluation of PIK Note derivative		(1,066,368	)		(2,425,555	)
Gain on sale of property		- 0 -			(108,764	)
Other		1,000			- 0 -
Change in operating assets and liabilities:
Accounts receivable		304,424			(222,522	)
Other current receivables		16,802			94,647
Deposits and prepaids		296,097			251,901
Accounts payable and accrued liabilities		413,720			80,536
Net cash used in operating activities		(1,414,895	)		(1,950,495	)
Cash Flows From Investing Activities:
Sale of property		- 0 -			552,944
Purchases of property and equipment		(43,753	)		(190,019	)
Net cash provided by (used) in investing activities		(43,753	)		362,925
Cash Flows From Financing Activities:
Payments on notes payable		(230,336	)		(204,924	)
Proceeds from sale of common stock and warrants		910,000			1,640,000
Net cash provided by financing activities		679,664			1,435,076
Net change in cash and cash equivalents		(778,984	)		(152,494	)
Cash and cash equivalents at beginning of period		1,049,880			1,803,131
Cash and cash equivalents at end of period	$	270,896		$	1,650,637
Supplemental disclosure of cash flow information:
Cash paid for interest	$	5,301		$	4,647
Supplemental disclosure of noncash financing activity:
Accrued PIK interest paid through issuance of PIK Notes	$	2,704,837		$	2,402,340

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

5

APPLIED MINERALS, INC.

(An Exploration Stage Mining Company)

Notes to the Condensed Consolidated Financial Statements

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Applied Minerals 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. Since December, 2015, the great majority of the Company’s revenue has been related to an 18-month take-or-pay agreement for the sale of AMIRON. Additionally, the Company is currently in various phases of commercial scale trials involving its AMIRON® natural iron oxide and DRAGONITE® halloysite clay-based products for use in a number of markets.

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

Between December, 2015 and June 2017 the Company completed the sale of $5.0 million of AMIRON to a customer as required by the terms of an exclusive, take-or-pay supply agreement entered into by the Company. The exclusivity of the agreement applied to the sale of AMIRON for a specific oilfield application. The customer may elect to make another $5.0 million purchase at the end of five years (December 2020) and extend the exclusivity for this application for a total of ten years. For the nine months ended September 30, 2017, revenues from this customer accounted for 57.8% of total revenues. As of September 30, 2017, amounts owed by this customer totaled $0. The remaining sales recognized during the nine months ended September 30, 2017, included the sale of DRAGONITE to a range of customers who used it in catalyst, molecular sieve, nucleation, paints and coatings and ceramic applications. 

NOTE 2 – LIQUIDITY AND BASIS OF PRESENTATION

The accompanying financial statements have been prepared on a going concern basis. The Company has a history of recurring losses from operations and use of cash in operating activities. For the nine months ended September 30, 2017, the Company's net loss was $9,010,953 and cash used in operating activities was $1,414,895. At September 30, 2017, the Company had negative working capital of $112,857 after taking into account $1,277,900 of accrued PIK Note interest, which the Company expects to pay in-kind and $189,920 of payables for which the Company believes it has a statute of limitations defense. Additionally, the Company also expects to satisfy $112,000 due a vendor in-kind with DRAGONITE. Although the Company obtained funds through a private placement of stock in August 2017, management cannot provide any assurance that it will be able to obtain additional financing needed. Collectively, these factors 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 2018 that the Company requires (i) additional capital either in the form of a private placement of common stock or debt and/or (ii) 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 will be limited.

Based on the Company’s current cash usage expectations, management believes it will not have sufficient liquidity to fund its operations through November 2018. 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 significant additional product sales. Collectively, these factors raise substantial doubt regarding the Company’s ability 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 of the information and footnotes required by GAAP for complete financial statements.

In the opinion of management, these interim unaudited condensed 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 September 30, 2017 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, 2016, included in the Annual Report of Applied Minerals, Inc. on Form 10-K filed with the SEC on March 31, 2017.

The accompanying interim unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes. As of September 30, 2017, 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, 2016. 

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Applied Minerals, Inc. and its inactive subsidiary in northern Idaho.

6

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. In these condensed consolidated financial statements, the PIK Note derivative liability, stock compensation and the assessment of the possible impairment of long-lived assets involve extensive reliance on management’s estimates. Actual results could differ from those estimates.

Fair Value

ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

Level 1 – Quoted prices in active markets for identical assets and liabilities;

Level 2 – Inputs other than level one inputs that are either directly or indirectly observable; and

Level 3 – Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

Liabilities measured at fair value on a recurring basis are summarized as follows:

	Fair value measurement using inputs						Carrying amount
	Level 1		Level 2		Level 3		September 30, 2017		December 31, 2016
Financial instruments:
Series 2023 PIK Note Derivative	$	-0-	$	-0-	$	68,041	$	68,041	$	142,909
Series A PIK Note Derivative	$	-0-	$	-0-	$	1,074,133	$	1,074,133	$	2,033,643

The following table summarizes the activity for financial instruments at fair value using Level 3 inputs:

Balance at December 31, 2016	$	2,176,552
Additions related to the issuance of PIK Notes		31,990
Net unrealized gains included in net (loss)		(1,066,368	)
Balance at September 30, 2017	$	1,142,174

The recorded value of certain financial assets and liabilities, which consist primarily of cash and cash equivalents, receivables, other current assets, and accounts payable and accrued expenses approximates the fair value at September 30, 2017 and December 31, 2016 based upon the short-term nature of the assets and liabilities. Based on borrowing rates currently available to the Company for loans with similar terms, and the remaining short-term period outstanding, the carrying value of notes payable other than PIK Notes approximates fair value. Estimated fair value of the PIK Notes Payable approximate $31,809,504 and $23,361,553, respectively, at September 30, 2017 and December 31, 2016.

For the Company's PIK Note derivative liabilities, Level 3 fair value hierarchy was estimated using a Monte Carlo Model using the following assumptions:

Series 2023 PIK Note derivative liability	Fair Value Measurements
	Using Inputs
	September 30, 2017			December 31, 2016
Market price and estimated fair value of stock	$	0.04		$	0.12
Exercise price	$	1.14		$	1.28
Term (years)		5.83			6.58
Dividend yield	$	-0-		$	-0-
Expected volatility		107.7	%		86.2	%
Risk-free interest rate		2.02	%		2.18	%

Series A PIK Note derivative liability	Fair Value Measurements
	Using Inputs
	September 30, 2017			December 31, 2016
Market price and estimated fair value of stock	$	0.04		$	0.12
Exercise price	$	0.66		$	0.83
Term (years)		5.83			6.58
Dividend yield	$	-0-		$	-0-
Expected volatility		107.7	%		86.2	%
Risk-free interest rate		2.02	%		2.18	%

7

Per share data

Loss per share for the three months ended September 30, 2017 and 2016, respectively, is calculated based on 118,862,734 and 108,482,042 weighted average outstanding shares of common stock.  Loss per share for the nine months ended September 30, 2017 and 2016, respectively, is calculated based on 112,094,593 and 101,231,559 weighted average outstanding shares of common stock.

At September 30, 2017 and 2016, respectively, the Company had outstanding options and warrants to purchase 31,898,352 and 25,314,940 shares of Company common stock, and had notes payable which were convertible into 52,075,593 and 38,676,232 shares, respectively, of the Company common stock, none of which were included in the diluted computation as their effect would be anti-dilutive.

Recent Accounting Pronouncements

Recently Adopted

In November 2015, FASB issued Accounting Standards Update 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. Accounting Standards Update 2015-17 simplifies current guidance and requires companies to classify all deferred tax assets and liabilities as noncurrent on the balance sheet. Accounting Standards Update 2015-17 can be applied either prospectively or retrospectively and is effective for periods beginning after December 15, 2016, with early adoption permitted. The new guidance which was adopted in the quarter ended March 31, 2017 had no effect on its financial statements and related disclosures.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting”, which simplifies several aspects of the accounting for employee share-based payment transactions. Under this amended guidance, all excess tax benefits and tax deficiencies will be recognized as income tax expense or benefit in the income statement in the period in which the awards vest or are exercised. In the statement of cash flows, excess tax benefits will be classified with other income tax cash flows in operating activities. The amended guidance also gives the option to make a policy election to account for forfeitures as they occur and increases the threshold for awards that are partially settled in cash to qualify for equity classification. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. The new guidance which was adopted in the quarter ended March 31, 2017 had no effect on the financial statements. In accordance with ASU 2016-09, the Company has made the accounting policy election to continue to estimate forfeitures.

Not Yet Adopted

In May 2014, the FASB issued guidance on revenue recognition, which provides a single, comprehensive revenue recognition model for all contracts with customers and superseded most existing revenue recognition guidance. The main principle under this guidance is that an entity should recognize revenue at the amount it expects to be entitled to in exchange for the transfer of goods or services to customers. This guidance is effective for interim and annual reporting periods beginning after January 1, 2018. The Company will adopt the new standard in the first quarter of 2018. The cumulative effect of the initial adoption will be reflected as an adjustment to the opening balance of retained earnings as of the date of the application of the guidance. The Company will finalize its assessment in the fourth quarter of 2017.

In February 2016, the FASB issued ASU 2016-02 (“Topic 842”) new accounting guidance for leases, which supersedes previous lease guidance. Under this guidance, for all leases with terms in excess of one year, including operating leases, the Company will be required to recognize on its balance sheet a lease liability and a right-of-use asset representing its right to use the underlying asset for the lease term. The new guidance retains a distinction between finance leases and operating leases and the classification criteria is substantially similar to previous guidance. Additionally, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect this ASU will have on its consolidated financial statement and disclosures.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which (i) significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model; and (ii) provides for recording credit losses on available-for-sale (AFS) debt securities through an allowance account. The update also requires certain incremental disclosures. The amendments in this ASU are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the effect this ASU will have on its consolidated financial statements and disclosures.

8

NOTE 4 - INCOME TAX

Income tax provisions or benefits for interim periods are computed based on the Company's estimated annual effective tax rate. Based on the Company's historical losses and its expectation of the continuation of losses for the foreseeable future, the Company has determined that it is more likely than not that deferred tax assets will not be realized and, accordingly, has provided a full valuation allowance as of September 30, 2017 and December 31, 2016.

NOTE 5 – CONVERTIBLE DEBT (PIK NOTES)

As of September 30, 2017, 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	$	15,513,290		$	25,388,513		$	40,901,803
Less: Discount		(1,598,654	)		(9,759,558	)		(11,358,212	)
Less: Deferred Financing Cost		(2,992	)		(5,133	)		(8,125	)
PIK Note Payable, Net	$	13,911,644		$	15,623,822		$	29,535,466
PIK Note Derivative Liability	$	68,041		$	1,074,133		$	1,142,174

As of December 31, 2016, 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	$	14,071,008		$	24,125,958		$	38,196,966
Less: Discount		(1,721,898	)		(13,421,225	)		(15,143,123	)
Less: Deferred Financing Cost		(5,064	)		(8,686	)		(13,750	)
PIK Note Payable, Net	$	12,344,046		$	10,696,047		$	23,040,093
PIK Note Derivative Liability	$	142,909		$	2,033,643		$	2,176,552

As of September 30, 2017, the conversion price of the Series 2023 Notes was $1.14 and the conversion price of the Series A Notes was $0.66. These conversion prices were adjusted per the terms of the Series 2023 Notes and Series A Notes, respectively after the Company’s capital raise closed on August 29, 2017.

NOTE 6 - STOCKHOLDERS' EQUITY

During the nine months ended September 30, 2017, the Company issued a total of 250,000 shares of common stock valued at $10,050 to directors and consultants as payments of fees.

During the nine months ended September 30, 2017, the Company issued 22,750,000 shares of common stock valued at $910,000 as part of a private placement (“August 2017 offering”).  In addition, a total of 2,275,000 shares valued at $91,000 were issued in lieu of payment for fees associated with the August 2017 offering.

In connection with the August 2017 offering, the Company entered into registration rights agreements with each of the purchasers. The Company has an option to acquire the warrants; provided, that, the following conditions are met: (a) the average VWAP for the 20 consecutive trading days immediately preceding the date on which the call notice is given is equal or greater than $0.20 and (b) a registration statement covering the resale of shares issuable upon exercise of the warrants is effective.

NOTE 7 - OPTIONS AND WARRANTS TO PURCHASE COMMON STOCK

Outstanding Stock Warrants

A summary of the status of the warrants outstanding and exercisable at September 30, 2017 is presented below:

		Warrants Outstanding and Exercisable
Exercise Price		Number Outstanding		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price
	$0.04		6,256,250		4.92	$	0.04
	$0.25		3,283,283		3.75	$	0.25
	$1.15		461,340		3.58	$	1.15
			10,000,873		4.48	$	0.36

Between January 1, 2017 and September 30, 2017, 6,256,250 warrants were issued as part of the sale of 22,750,000 Units. Each Unit included one (1) share of common stock and a warrant to purchase ¼ of a share of common stock. The intrinsic value of the outstanding warrants was $0 at September 30, 2017.

9

Outstanding Stock Options

A summary of the status and changes of the options granted under stock option plans and other agreements for the nine months ended September 30, 2017 is as follows:

			Weighted		Weighted
			Average		Average Remaining
	Shares		Exercise Price		Contractual Life *
Outstanding at beginning of period		21,277,479	$	0.87		4.00
Issued		650,000		0.25		4.75
Exercised		- 0 -		- 0 -		- 0 -
Forfeited		(30,000)		1.55		- 0 -
Outstanding at end of period		21,897,479	$	0.85		3.72
Exercisable at end of period		21,277,479	$	0.87		4.19

* Measured in years

During the nine months ended September 30, 2017, the Company granted 650,000 options to purchase the Company’s common stock with a weighted average exercise price of $0.25. The options vested immediately. The weighted-average grant-date fair value of the options granted was $0.02.

Compensation expense of $23,077 and $145,832 has been recognized for the vested options for the three months ended September 30, 2017 and 2016, respectively, and $145,887 and $510,877 for the nine months ended September 30, 2017 and 2016, respectively. The aggregate intrinsic value of the outstanding and exercisable options at September 30, 2017 was $0 and $0, respectively. At September 30, 2017, approximately $35,099 of unamortized compensation expense associated with unvested options will be recognized over the next 0.33 years on a weighted average basis.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Office Lease

During 2016, the Company rented office space in New York, NY on a month-to-month basis at a monthly rent of approximately $16,700 per month, for an aggregate of approximately $201,000 for the year ended December 31, 2016. Effective January 1, 2017, the Company moved to a new temporary office location in Brooklyn, NY on a month-to month basis at a monthly rent of approximately $6,000 per month. The temporary office rental was pending completion of the Company’s permanent office location in the same Brooklyn, NY building. On May 16, 2017, the Company entered into a five-year lease agreement for new permanent office space, the Company is obligated to pay a monthly rent of approximately $9,000 for the period from May 16, 2017 through March 31, 2022. 

The following table summarizes the Company’s contractual obligations under the lease agreement referred above:

Payment Due By Year
	2017		2018		2019		2020		2021		2022		Total
Rent Obligations	$	26,100	$	107,010	$	110,222	$	113,530	$	116,934	$	24.480	$	498,285

Contingencies

In accordance with ASC Topic 450, when applicable, we record accruals for contingencies when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. We may become involved in or subject to, routine litigation, claims, disputes, proceedings and investigations in the ordinary course of business, which could have a material adverse effect on our financial condition, cash flows or results of operations.

NOTE 9 - SUBSEQUENT EVENTS

On October 4, 2017 the Company raised $150,000 through the sale of 3,750,000 Units as part of August 2017 offering. Each Unit consisted of one share of Common Stock and one five-year warrant to purchase 0.25 share of Common Stock. Four (4) warrants can be exercised to acquire one whole share of Common Stock for $0.04.

In October, 2017 the Company entered into an exclusive supply and purchase agreement with BASF Corporation. Per the agreement the Company and BASF will develop, co-brand and market halloysite-clay based products to markets that include paints and coatings, inks, rubber, adhesives, paper and ceramic honeycomb catalytic substrates. Both parties to the agreement will share profits.

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

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

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

In late 2015, the Company entered into a $5 million take-or-pay supply agreement for its AMIRON product. The $5 million portion of the take-or-pay agreement was completed in June, 2017. The customer may elect to make another $5.0 million purchase at the end of five years and extend the exclusivity for this application for a total of ten years. The Company currently sells its DRAGONITE product to a manufacturer of advanced industrial molecular sieves, a leading manufacturer of zeolites, a building products manufacturer for use as a nucleating agent, and to a manufacturer of ceramic applications. The Company is involved in a number of advanced-stage product development projects with customers that operate within industries that include, but are not limited to, catalysts, molecular sieves, zeolites, oilfield services applications, flame retardant synergists and functional additives for paints and coatings. The Company has engaged leading special material distribution organizations, HORN, Brandt Technologies and Azelis Americas for the U.S. market, and Fimatec LTD for the Japanese market. In October, 2017 the Company entered into an exclusive supply and purchase agreement with BASF Corporation. Per the agreement the Company and BASF will develop, co-brand and market halloysite-clay based products to markets that include paints and coatings, inks, rubber, adhesives, paper and ceramic honeycomb catalytic substrates. Both parties to the agreement will share profits.

Applied Minerals is a publicly traded company incorporated in the state of Delaware. The common stock trades on the OTCQB 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, 2016. There have been no material changes in our critical accounting policies and estimates during the nine-month period ended September 30, 2017 compared to the disclosures on Form 10-K for the year ended December 31, 2016.

Recent Accounting Pronouncements

For information with respect to recent accounting pronouncements, if any, and the impact of these pronouncements on our Condensed Consolidated Financial Statements, if any, see Note 3 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

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Three Months Ended September 30, 2017 Compared to Three Months Ended September 30, 2016

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
	2017			2016			Amount			%
REVENUES	$	148,303		$	975,328		$	(827,025	)		(84.8%	)
OPERATING EXPENSES:
Production costs		412,713			539,951			(127,238	)		(23.6%	)
Exploration costs		47,172			270,700			(223,528	)		(82.6%	)
General and administrative		664,217			977,716			(313,499	)		(32.1%	)
Depreciation expense		329,357			340,165			(10,808	)		(3.2%	)
Total Operating Expenses		1,453,459			2,128,532			(675,073	)		(31.7%	)
Operating Loss		(1,305,156	)		(1,153,204	)		151,952			13.2	%
OTHER INCOME (EXPENSE):
Interest expense, net, including amortization of deferred financing cost and debt discount		(2,527,374	)		(1,792,412	)		734,962			41.0	%
(Loss) gain on revaluation of PIK Note derivative		(570,473	)		1,134,149			1,704,622			150.3%
Other income (expense)		(4,064	)		1,042			5,106			490.0%
Total Other Income (Expense)		(3,101,911	)		(657,221	)		2,444,690			372.0	%
NET LOSS	$	(4,407,067	)	$	(1,810,425	)	$	2,596,642			143.4	%

Revenue generated during the three months ended September 30, 2017 was $148,303, a decrease of $827,025, or 84.8%, when compared to the same period in 2016. This decrease was due primarily to an $857,000 decline in sales of AMIRON iron oxide to a customer, which had entered into an 18-month take-or-pay supply agreement in November 2015. The Company completed its required delivery of 31,250 tons of AMIRON to the customer in June 2017. The decline was also driven by the decline of $57,000 in sales of DRAGONITE to a customer, which uses it in a molecular sieve application and a decline of $16,000 in sales of DRAGONITE to a customer, which uses it in a specialized zeolite application. The decline was partially offset by a $72,000 increase in the sale of DRAGONITE to a customer, which uses it in a flame retardant application for wood products.

Total operating expenses for the three months ended September 30, 2017 were $1,453,459 compared to $2,128,532 of operating expenses incurred during the same period in 2016, a decrease of $675,073 or 31.7%. The decline in operating costs was driven by primarily by a $313,499, or 32.1%, decline in general and administrative expense, a $223,528, or 82.6%, decline in exploration costs, and a $127,238, or 23.6%, decline in production costs when compared to the same period in 2016.

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 quarter totaled $412,713, a decline of $127,238 or 23.6% when compared to the same period in 2016. The decline was driven primarily by a $210,000 decline in wages incurred during the period related to a reduction in the Company’s workforce due to the completion in June 2017 of the delivery of 31,250 tons of AMIRON to a customer, which had entered into an 18-month take-or-pay supply agreement in November 2015. The completion of the delivery of AMIRON also resulted in a $30,000 decrease in utility expense when compared to the same period in 2016. The decline in production expense was partially offset by the incurrence of $61,000 of freight expense related to the transportation of DRAGONITE halloysite clay to BASF, Kaolin for development work, the incurrence of $26,100 of consulting expense related to the investigation of an accident at the mine and an increase of approximately $23,000 in costs incurred for equipment repairs and rentals.

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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, 2017 were $47,172 compared to $270,700 of costs incurred during the same period in 2016, a decrease of $223,524 or 82.6%. The decline in exploration costs during the period was driven, in large part, by a further reduction in exploration activities at the Dragon Mine. Exploration activities were further reduced as the Company’s operations have become more focused on production.

The Company’s general and administrative expenses are associated with its New York operations. General and administrative expenses incurred during the three months ended September 30, 2017 totaled $664,217 compared to $977,716 of expense incurred during the same period in 2016, a decrease of $313,499, or 32.1%. The decline was driven primarily by a $198,400 decrease in wage expense related to a reduction in both headcount and salaries at the Company’s New York operations, a $129,000 decline in the value of equity-based compensation granted to employees and directors, and a $15,000 decline in rent expense.

Operating loss incurred during the three months ended September 30, 2017 was $1,305,156 compared to a loss of $1,153,204 incurred during the same period in 2016, a change of $151,952 or 13.2%. The increase in operating loss during the quarter was due to an 84.8% decrease in revenue partially offset by a 31.7% decrease in operating expense.

Net loss for the three-month period ending September 30, 2017 was $4,407,067 compared to net loss of $1,810,425 incurred during the same period in 2016, an increase of $2,596,642. The increase in net loss was due primarily to a $151,952 increase in operating loss and a $2,444,690 increase in total other expense. The increase in total other expense was driven by a $1,704,622 change in the gain on revaluation of PIK Note derivative due to a smaller decline in the Company’s stock price when compared to the same period in 2016 and its impact on the calculation of revaluation during the current period and a $734,962 change in interest expense due to an increase in the principal amount of the Company’s Series 2023 and Series A PIK Notes, which has resulted from the payment of interest in additional PIK Notes.

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016

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
	2017			2016			Amount			%
REVENUES	$	2,300,998		$	3,089,422		$	(788,424	)		(25.5	%)
OPERATING EXPENSES:
Production costs		2,125,007			1,572,795			552,212			35.1	%
Exploration costs		304,631			821,814			(517,183	)		(62.9	%)
General and administrative		2,137,655			3,227,852			(1,090,197	)		(33.8	%)
Depreciation expense		989,122			1,014,585			(25,463	)		(2.5	%)
Total Operating Expenses		5,556,415			6,637,046			(1,080,631	)		(16.3	%)
Operating Loss		(3,255,417	)		(3,547,624	)		(292,207	)		(8.2	%)
OTHER INCOME (EXPENSE):
Interest expense, net, including amortization of deferred financing cost and debt discount		(6,843,524	)		(4,521,672	)		2,321,852			51.3	%
(Loss) gain on revaluation of PIK Note derivative		1,066,368			2,425,555			1,359,187			56.0	%
Other income (expense)		21,620			106,021			84,401			79.6	%
Total Other Income (Expense)		(5,755,536	)		(1,990,096	)		3,765,440			189.2	%
NET LOSS	$	(9,010,953	)	$	(5,537,720	)	$	3,473,233			62.7	%

Revenue generated during the nine months ended September 30, 2017 was $2,300,998, compared to $3,089,422 of revenue generated during the same period in 2016, a decrease of $788,424 or 25.5%.  The decline was driven primarily by a $1,382,800 decline in ales of AMIRON iron oxide to a customer, which had entered into an 18-month take-or-pay supply agreement in November 2015. The Company completed its required delivery of 31,250 tons of AMIRON to the customer in June 2017. The decline was partially offset by a $198,400 increase in the sale of DRAGONITE as a nucleating agent to a manufacturer of building products, a $154,400 increase in the sale of DRAGONITE to a manufacturer of molecular sieves, $138,000 of sales of DRAGONITE to a compounder of polymer additives, $72,000 of sales of DRAGONITE to a global manufacturer of wood products for use in a flame retardant application, a $28,500 increase in the sale of DRAGONITE to a manufacturer of specialty zeolytes and a $10,450 increase in the sale of DRAGONITE to a manufacturer of high-performance, polymer-based proppants.

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Total operating expenses for the nine months ended September 30, 2017 were $5,556,415 compared to $6,637,046 of operating expenses incurred during the same period in 2016, a decrease of $1,080,631 or 16.3%. The decline in operating costs was driven primarily by a $1,090,197, or 33.8%, decrease in general and administrative expense and a $517,183, or 62.9%, decrease in exploration costs, partially offset by an increase in production expense of $552,212, or 35.1%.

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 for the nine months ended September 30, 2017 totaled $2,125,007, an increase of $552,212 or 35.1% when compared to the same period in 2016. The increase was the result of the incurrence of $180,500 of expense related to manufacturing of master batch related to a customer sale, the incurrence of $123,300 of expense related to the shipment of DRAGONITE clay to BASF for product development and production, a $125,000 increase in equipment repair expense, a $53,000 increase in equipment rental expense, and a $48,000 increase in shipments of DRAGONITE samples.

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, 2017 were $304,631 compared to $821,814 of costs incurred during the same period in 2016, a decrease of $517,183 or 62.9%. The decline in exploration costs during the period was driven, in large part, by a further reduction in exploration activities at the Dragon Mine. Exploration activities were further reduced as the Company’s operations have become more focused on production.

The Company’s selling and administrative expenses are associated primarily with its New York operations. General and administrative expenses incurred during the nine months ended September 30, 2017 totaled $2,137,655 compared to $3,227,852 of expense incurred during the same period in 2016, a decrease of $1,090,197, or 33.8%. The decline was driven primarily by a $515,500 decrease in wage expense due to a reduction in headcount and salaries of certain executives, a $341,600 decrease in the value of equity option-based compensation granted to employees and directors and a $132,600 decrease in the director compensation due to a reduction in cash compensation and the value of stock-based grants.

Operating loss incurred during the nine months ended September 30, 2017 was $3,255,417 compared to a loss of $3,547,624 incurred during the same period in 2016, a decrease of $292,207 or 8.2%. The decrease in operating loss during the nine months ended September 30, 2017 was due to a $1,080,631, or 16.3%, decrease in operating expense, partially offset by a $788,424, or 25.5%, decrease in revenue.

Net loss for the nine months ended September 30, 2017 was $9,010,953 compared to a loss of $5,537,720 incurred during the same period in 2016, an increase of $3,473,233, or 62.7%. The increase in net loss was due primarily to a $3,765,440, or 189.2%, increase in total other expense. The increase in total other expense was driven primarily by a $2,321,852 increase in interest expense due to an increase in the principal amount of the Company Series 2023 and Series A PIK Notes and a $1,359,187 decrease in the gain on revaluation of PIK Note derivative due to a smaller change in the price of the Company’s common stock during the period.

LIQUIDITY AND CAPITAL RESOURCES

The Company has a history of recurring losses from operations and use of cash in operating activities. For the nine months ended September 30, 2017, the Company's net loss was $9,010,953 and cash used in operating activities was $1,414,895. At September 30, 2017, the Company had negative working capital of $122,857 after taking into account $1,277,900 of accrued PIK Note interest, which the Company expects to pay in-kind and $189,920 of payables for which the Company believes it has a statute of limitations defense. Additionally, the Company also expects to satisfy $112,000 due a vendor in-kind with DRAGONITE.

Management believes that in order for the Company to meet its obligations arising from normal business operations through November, 2018 that the Company requires (i) additional capital either in the form of a private placement of common stock or debt and/or (ii) 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 will be limited.

Based on the Company’s current cash usage expectations, management believes it will not have sufficient liquidity to fund its operations through November, 2018. 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 significant additional product sales. Collectively, these factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

Cash used in operating activities during the first nine months of 2017 was $1,414,895 compared to $1,950,495 of cash used during the same period in 2016. The primary driver behind the $535,600 reduction in cash used by operating activities during the period was an $826,481 increase in cash generated from changes in operating assets and liabilities, partially offset by an increase in net loss of $290,881 after adjusted for non-cash expenses and gains.

Cash used by investing activities during 2017 was $43,753 compared to $362,925 provided during the same period in 2016. The decrease in cash generated by investing activities during the period primarily resulted from the absence of proceeds of $552,944 generated from the sale of the Company’s non-core Idaho properties during the same period in 2016.

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Cash provided by financing activities during 2017 was $679,664 compared to $1,435,076 of cash provided during the same period in 2016. The difference was driven primarily by a $730,000 decline in total proceeds raised from the sale of shares of common stock in August 2017 compared to the sale of shares of common stock in June 2016.

Total assets at September 30, 2017 were $3,736,863 compared to $6,079,539 at December 31, 2016, a decrease of $2,342,676 due primarily to a decline in cash of $778,984, a reduction in accounts receivable, deposits and prepaid expenses of $633,522 and a $945,370 decrease in net property and equipment.

Total liabilities were $32,659,983 at September 30, 2017, compared to $27,047,593 at December 31, 2016. The increase in liabilities was driven primarily by the increase in the outstanding balances of the Series 2023 and Series A PIK Notes, which resulted from the payment of interest expense through the issuance of additional Series 2023 and Series A PIK Notes.

ISSUANCE OF CONVERTIBLE DEBT

For information with respect to issuance of convertible debt, see Note 5 of Notes to Condensed 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.

For information with respect to the Company's contractual obligations under the five-year office space lease agreement, see Note 8 of Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

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, effective 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.

As required by Rule 13a-15(d) under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated our internal controls over financial reporting to determine whether any changes occurred during the quarter covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there has been no such change during the quarter covered by this report.

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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.

There were no additions or material changes to the Company’s risk factors disclosed in Item 1A of Part I in the Company’s 2016 Annual Report on Form 10-K.

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

Through November 14, 2017, the Company raised $1,060,000 through the sale of 26,500,000 Units as part of a private placement. Each Unit consisted of one share of Common Stock and one five-year warrant to purchase 0.25 share of Common Stock. Four (4) warrants can be exercised to acquire one whole share of Common Stock for $0.04.

In connection with the August 2017 offering, the Company entered into registration rights agreements with each of the purchasers. The Company has an option to acquire the warrants; provided, that, the following conditions are met: (a) the average VWAP for the 20 consecutive trading days immediately preceding the date on which the call notice is given is equal or greater than $0.20 and (b) a registration statement covering the resale of shares issuable upon exercise of the warrants is effective.

The sale of the unit was exempt under Section 4(2) of the Securities Act of 1933.

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.

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ITEM 6.     EXHIBITS

(a)     Exhibits.

The following exhibits are included in this report:

Exhibit Number	Description of Exhibit
31.1	Certification pursuant to Rule 13a-14 of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, of the Principal Executive Officer
31.2	Certification pursuant to Rule 13a-14 of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, of the Principal Financial Officer
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Principal Executive Officer
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Principal Financial Officer
95	Mine Safety Disclosure
101.INS	XBRL Instance
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation
101.DEF	XBRL Taxonomy Extension Definition
101.LAB	XBRL Taxonomy Extension Labels
101.PRE	XBRL Taxonomy Extension Presentation
XBRL	Information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

17

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 14, 2017	/s/ ANDRE M. ZEITOUN
	By: Andre M. Zeitoun
	Chief Executive Officer
Dated: November 14, 2017	/s/ CHRISTOPHER T. CARNEY
	By: Christopher T. Carney
	Chief Financial Officer

18

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andre Zeitoun, certify that:

1. I have reviewed this Form 10-Q of Applied Minerals, Inc.:

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2017	By:	/s/ ANDRE M. ZEITOUN
		Andre M. Zeitoun
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Christopher T. Carney, certify that:

1. I have reviewed this Form 10-Q of Applied Minerals, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2017	By:	/s/ CHRISTOPHER T. CARNEY
		Christopher T. Carney
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Applied Minerals, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2017 as filed with the Securities and Exchange Commission on the date hereof, I, Andre M. Zeitoun, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: November 14, 2017	By:	/s/ ANDRE M. ZEITOUN
		Andre M. Zeitoun
		Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Applied Minerals, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2017 as filed with the Securities and Exchange Commission on the date hereof, I, Christopher T. Carney, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: November 14, 2017	By:	/s/ CHRISTOPHER T. CARNEY
		Christopher T. Carney
		Chief Financial Officer

EX-95

Exhibit 95

During the third calendar quarter of 2017:

(i) The total number of violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a coal or other mine safety or health hazard under section 104 of the Federal Mine Safety and Health Act of 1977 (30 U.S.C. 814) for which the operator received a citation from the Mine Safety and Health Administration: 7

(ii) The total number of orders issued under section 104(b) of such Act (30 U.S.C. 814(b)): 0

(iii) The total number of citations and orders for unwarrantable failure of the mine operator to comply with mandatory health or safety standards under section 104(d) of such Act (30 U.S.C. 814(d)): 0

(iv) The total number of flagrant violations under section 110(b)(2) of such Act (30 U.S.C. 820(b)(2)) 0

(v) The total number of imminent danger orders issued under section 107(a) of such Act (30 U.S.C. 817(a)): 0

(vi) The total dollar value of proposed assessments from the Mine Safety and Health Administration under such Act (30 U.S.C. 801 et seq.): $502.00

(vii) The total number of mining-related fatalities: 0

(2) A list of coal or other mines, of which the registrant or a subsidiary of the registrant is an operator, that received written notice from the Mine Safety and Health Administration of:

(i) A pattern of violations of mandatory health or safety standards that are of such nature as could have significantly and substantially contributed to the cause and effect of coal or other mine health or safety hazards under section 104(e) of such Act (30 U.S.C. 814(e)); or (ii) The potential to have such a pattern: 0

(3) Any pending legal action before the Federal Mine Safety and Health Review Commission involving such coal or other mine: 1

1. Contests of citations and orders referenced in Subpart B of 29 CFR part 2700: 1;

2. Contests of proposed penalties referenced in Subpart C of 29 CFR part 2700: 0;

3. Complaints for compensation referenced in Subpart D of 29 CFR part 2700: 0;

4. Complaints of discharge, discrimination or interference referenced in Subpart E of 29 CFR part 2700: 0;

5. Applications for temporary relief referenced in Subpart F of 29 CFR part 2700: 0; and

6. Appeals of judges' decisions or orders to the Federal Mine Safety and Health Review Commission referenced in Subpart H of 29 CFR part 2700: 0

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 14, 2017
Document Information [Line Items]
Entity Registrant Name	Applied Minerals, Inc.
Entity Central Index Key	0000008328
Trading Symbol	amnl
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		137,638,549
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Current Assets
Cash and cash equivalents	$ 270,896	$ 1,049,880
Accounts receivable	60,528	364,952
Deposits and prepaid expenses	58,909	371,206
Other current receivables	0	16,801
Total Current Assets	390,333	1,802,839
Property and Equipment, net	3,129,806	4,075,176
Other Assets
Deposits	216,724	200,524
Assets Held for Sale	0	1,000
Total Other Assets	216,724	201,524
TOTAL ASSETS	3,736,863	6,079,539
Current Liabilities
Accounts payable and accrued liabilities	687,557	622,331
Accrued PIK note interest	1,277,900	961,395
Current portion of notes payable	15,553	234,149
Total Current Liabilities	1,981,010	1,817,875
Long-Term Liabilities
Long-term portion of notes payable	1,333	13,073
PIK Notes payable, net of $11,358,212 and $15,143,123 debt discount at September 30, 2017 and December 31, 2016, respectively	29,535,466	23,040,093
PIK Note derivative	1,142,174	2,176,552
Total Long-Term Liabilities	30,678,973	25,229,718
Total Liabilities	32,659,983	27,047,593
Commitments and Contingencies (Note 8)	0	0
Stockholders’ Deficit
Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding	0	0
Common stock, $0.001 par value, 200,000,000 shares authorized, 133,888,549 and 108,613,549 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	133,888	108,614
Additional paid-in capital	69,537,143	68,506,530
Accumulated deficit prior to the exploration stage	(20,009,496)	(20,009,496)
Accumulated deficit during the exploration stage	(78,584,655)	(69,573,702)
Total Stockholders’ Deficit	(28,923,120)	(20,968,054)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$ 3,736,863	$ 6,079,539

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
PIK Notes payable, debt discount	$ 11,358,212	$ 15,143,123
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	133,888,549	108,613,549
Common stock, shares outstanding (in shares)	133,888,549	108,613,549

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
REVENUES	$ 148,303	$ 975,328	$ 2,300,998	$ 3,089,422
OPERATING EXPENSES:
Production costs	412,713	539,951	2,125,007	1,572,795
Exploration costs	47,172	270,700	304,631	821,814
General and administrative	664,217	977,716	2,137,655	3,227,852
Depreciation expense	329,357	340,165	989,123	1,014,585
Total Operating Expenses	1,453,459	2,128,532	5,556,415	6,637,046
Operating Loss	(1,305,156)	(1,153,204)	(3,255,417)	(3,547,624)
OTHER INCOME (EXPENSE):
Interest expense, net, including amortization of deferred financing cost and debt discount	(2,527,374)	(1,792,412)	(6,843,524)	(4,521,672)
Other income (expense)	(4,064)	1,042	21,620	106,021
Total Other Income (Expense)	(3,101,911)	(657,221)	(5,755,536)	(1,990,096)
Net (Loss) Income	$ (4,407,067)	$ (1,810,425)	$ (9,010,953)	$ (5,537,720)
Net (Loss)Income Per Share (Basic and Diluted) (in dollars per share)	$ (0.04)	$ (0.02)	$ (0.08)	$ (0.05)
Weighted Average Shares Outstanding (Basic and Diluted) (in shares)	118,862,734	108,482,042	112,094,593	101,231,559
PIK Note Derivative Liability [Member]
OTHER INCOME (EXPENSE):
Gain (Loss) on revaluation of PIK Note derivative	$ (570,473)	$ 1,134,149	$ 1,066,368	$ 2,425,555

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash Flows from Operating Activities:
Net loss	$ (9,010,953)	$ (5,537,720)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation	989,123	1,014,585
Amortization of discount - PIK Notes	3,784,911	1,824,715
Amortization of deferred financing costs	5,625	5,625
Issuance of PIK Notes in payment of interest	2,704,837	2,402,340
Stock issued for director fees and other services	0	53,914
Stock-based compensation expense	145,887	558,055
(Gain) loss on revaluation of PIK Note derivative	(1,066,368)	(2,425,555)
Gain on sale of property	0	(108,764)
Other	1,000	0
Change in operating assets and liabilities:
Accounts receivable	304,424	(222,522)
Other current receivables	16,802	94,647
Deposits and prepaids	296,097	251,901
Accounts payable and accrued liabilities	413,720	80,536
Net cash used in operating activities	(1,414,895)	(1,950,495)
Cash Flows From Investing Activities:
Sale of property	0	552,944
Purchases of property and equipment	(43,753)	(190,019)
Net cash provided by (used) in investing activities	(43,753)	362,925
Cash Flows From Financing Activities:
Payments on notes payable	(230,336)	(204,924)
Proceeds from sale of common stock and warrants	910,000	1,640,000
Net cash provided by financing activities	679,664	1,435,076
Net change in cash and cash equivalents	(778,984)	(152,494)
Cash and cash equivalents at beginning of period	1,049,880	1,803,131
Cash and cash equivalents at end of period	270,896	1,650,637
Supplemental disclosure of cash flow information:
Cash paid for interest	5,301	4,647
Supplemental disclosure of noncash financing activity:
Accrued PIK interest paid through issuance of PIK Notes	2,704,837	2,402,340
Employees [Member]
Adjustments to reconcile net loss to net cash used in operating activities
Stock issued for employee compensation	$ 0	$ 57,748

XML

Note 1 - Organization and Description of Business

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE

1

–

ORGANIZATION AND

DESCRIPTION OF BUSINESS

Applied Minerals 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. Since

December, 2015,

the great majority of the Company

’s revenue has been related to an

18

-month take-or-pay agreement for the sale of AMIRON. Additionally, the Company is currently in various phases of commercial scale trials involving its AMIRON® natural iron oxide and DRAGONITE® halloysite clay-based products for use in a number of markets.

Ap

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

Between

December, 2015

and

June 2017

the Company completed the sale of

$5.0

million of AMIRON t

o a customer as required by the terms of an exclusive, take-or-pay supply agreement entered into by the Company. The exclusivity of the agreement applied to the sale of AMIRON for a specific oilfield application. The customer

may

elect to make another

$5.0

million purchase at the end of

five

years (

December 2020)

and extend the exclusivity for this application for a total of

ten

years. For the

nine

months ended

September 30, 2017,

revenues from this customer accounted for

57.8%

of total revenues. As of

September 30, 2017,

amounts owed by this customer totaled

$0.

The remaining sales recognized during the

nine

months ended

September 30, 2017,

included the sale of DRAGONITE to a range of customers who used it in catalyst, molecular sieve, nucleation, paints and coatings and ceramic applications. 

XML

Note 2 - Liquidity and Basis of Presentation

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Liquidity [Text Block]

NOTE

2

– LIQUIDITY AND BASIS OF PRESENTATION

The accompanying financial statements have been prepared on a going concern basis. The Company has a history of recurring losses from operations and use of cash in operating activities. For the

nine

months ended

September 30, 2017,

the Company's net loss

was

$9,010,953

and cash used in operating activities was

$1,414,895.

At

September 30, 2017,

the Company had negative working capital of

$112,857

after taking into account

$1,277,900

of accrued PIK Note interest, which the Company expects to pay in-kind and

$189,920

of payables for which the Company believes it has a statute of limitations defense. Additionally, the Company also expects to satisfy

$112,000

due a vendor in-kind with DRAGONITE. Although the Company obtained funds through a private placement of stock in

August 2017,

management cannot provide any assurance that it will be able to obtain additional financing needed. Collectively, these factors 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 

2018

that the Company requires (i) additional capital either in the form of a private placement of common stock or debt and/or (ii) 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 will be limited.

Based on the Company

’s current cash usage expectations, management believes it will

not

have sufficient liquidity to fund its operations through

November 

2018.

 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 significant additional product sales. Collectively, these factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

XML

Note 3 - Basis of Reporting and Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Basis of Presentation and Significant Accounting Policies [Text Block]

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 of the information and footnotes required by GAAP for

complete financial statements.

In the opinion of management, these interim unaudited condensed 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

September 30, 2017

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, 2016,

included in the Annual Report of Applied Minerals, Inc. on Form

10

-K filed with the SEC on

March 31, 2017.

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

September 30, 2017,

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, 2016. 

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Applied Minerals, Inc. and its inactive subsidiary in northern Idaho.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. In these condensed consolidated financial statements, the PIK Note derivative liability, stock compensation and

the assessment of the possible impairment of long-lived assets involve extensive reliance on management’s estimates. Actual results could differ from those estimates.

Fair Value

ASC Topic

820,

Fair Value Measurement and Disclosures

, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of

three

levels:

Level

1

– Quoted prices in active markets for identical assets and liabilities;

Level

2

– Inputs other than level

one

inputs that are either directly or indirectly observable; and

Level

3

– Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

Liabilities measured at fair value on a recurring basis are summarized as follows:

	Fair value measurement using inputs						Carrying amount
	Level 1		Level 2		Level 3		September 30, 2017		December 31, 2016
Financial instruments:
Series 2023 PIK Note Derivative	$	-0-	$	-0-	$	68,041	$	68,041	$	142,909
Series A PIK Note Derivative	$	-0-	$	-0-	$	1,074,133	$	1,074,133	$	2,033,643

The following table summarizes the activity for financial instruments at fair value using Level

3

inputs:

Balance at December 31, 2016	$	2,176,552
Additions related to the i ssuance of PIK Notes		31,990
Net unrealized gains included in net (loss)		(1,066,368	)
Balance at September 30, 2017	$	1,142,174

The recorded value of certain financial assets and liabilities, which consist primarily of cash and cash equivalents, receivables, other current assets, and accounts payable and accrued expenses approximates the fair value at

September 30, 2017

and Decemb

er

31,

2016

based upon the short-term nature of the assets and liabilities. Based on borrowing rates currently available to the Company for loans with similar terms, and the remaining short-term period outstanding, the carrying value of notes payable other than PIK Notes approximates fair value. Estimated fair value of the PIK Notes Payable approximate

$31,809,504

and

$23,361,553,

respectively, at

September 30, 2017

and

December 31, 2016.

For the Company's PIK Note derivative liabilities, Level

3

fair value hierarchy was estimated using a Monte Carlo Model using the following assumptions:

Series 2023 PIK Note derivative liability	Fair Value Measurements
	Using Inputs
	September 30, 2017			December 31, 2016
Market price and estimated fair value of stock	$	0.04		$	0.12
Exercise price	$	1.14		$	1.28
Term (years)		5.83			6.58
Dividend yield	$	-0-		$	-0-
Expected volatility		107.7	%		86.2	%
Risk-free interest rate		2.02	%		2.18	%

Series A PIK Note derivative liability	Fair Value Measurements
	Using Inputs
	September 30, 2017			December 31, 2016
Market price and estimated fair value of stock	$	0.04		$	0.12
Exercise price	$	0.66		$	0.83
Term (years)		5.83			6.58
Dividend yield	$	-0-		$	-0-
Expected volatility		107.7	%		86.2	%
Risk-free interest rate		2.02	%		2.18	%

Per share data

Loss per share for the

three

months ended

September 30, 2017

and

2016,

respectively, is calculated based on

118,862,734

and

108,482,042

weighted average outstanding shares of common stock.

  Loss per share for the

nine

months ended

September 30, 2017

and

2016,

respectively, is calculated based on

112,094,593

and

101,231,559

weighted average outstanding shares of common stock.

At

September 30, 2017

and

2016,

respectively, the Company had outst

anding options and warrants to purchase

31,898,352

and

25,314,940

shares of Company common stock, and had notes payable which were convertible into

52,075,593

and

38,676,232

shares, respectively, of the Company common stock,

none

of which were included in the diluted computation as their effect would be anti-dilutive.

Recent Accounting Pronouncements

Recently Adopted

In

November 2015,

FASB issued Accounting Standards Update

2015

-

17,

Income Taxes (Topic

740

): Balance Sheet Classification of Deferred Taxes. Accounting Standards Update

2015

-

17

simplifies current guidance and requires companies to classify all deferred tax assets and liabilities as noncurrent on the balance sheet. Accounting Standards Update

2015

-

17

can be applied either prospectively or retrospectively and is effective for periods beginning after

December 15, 2016,

with early adoption permitted. The new guidance which was adopted in the quarter ended

March 31, 2017

had

no

effect on its financial statements and related disclosures.

In

March 2016,

the FASB issued ASU

2016

-

09,

“Improvements to Employee Share-Based Payment Accounting”, which simplifies several aspects of the accounting for employee share-based payment transactions. Under this amended guidance, all excess tax benefits and tax deficiencies will be recognized as income tax expense or benefit in the income statement in the period in which the awards vest or are exercised. In the statement of cash flows, excess tax benefits will be classified with other income tax cash flows in operating activities. The amended guidance also gives the option to make a policy election to account for forfeitures as they occur and increases the threshold for awards that are partially settled in cash to qualify for equity classification. This guidance is effective for interim and annual reporting periods beginning after

December 15, 2016,

with early adoption permitted. The new guidance which was adopted in the quarter ended

March 31, 2017

had

no

effect on the financial statements. In accordance with ASU

2016

-

09,

the Company has made the accounting policy election to continue to estimate forfeitures.

Not

Yet Adopted

In 

May 2014,

the FASB issued guidance on revenue recognition, which provides a single, comprehensive revenue recognition model for all contracts with customers and superseded most existing revenue recognition guidance. The main principle under this guidance is that an entity should recognize revenue at the amount it expects to be entitled to in exchange for the transfer of goods or services to customers. This guidance is effective for interim and annual reporting periods beginning after

January 1, 2018.

The Company will adopt the new standard in the

first

quarter of

2018.

The cumulative effect of the initial adoption will be reflected as an adjustment to the opening balance of retained earnings as of the date of the application of the guidance.

The Company will finalize its assessment in the

fourth

quarter of

2017.

In

February 2016,

the FASB issued ASU

2016

-

02

(“Topic

842”

) new accounting guidance for leases, which supersedes previous lease guidance. Under this guidance, for all leases with terms in excess of

one

year, including operating leases, the Company will be required to recognize on its balance sheet a lease liability and a right-of-use asset representing its right to use the underlying asset for the lease term. The new guidance retains a distinction between finance leases and operating leases and the classification criteria is substantially similar to previous guidance. Additionally, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have

not

significantly changed. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. This guidance is effective for interim and annual reporting periods beginning after

December 15, 2018,

with early adoption permitted.

 The Company is currently evaluating the effect this ASU will have on its consolidated financial statement and disclosures.

In

June 2016,

the FASB issued ASU

2016

-

13,

“Financial Instruments-Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments,” which (i) significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model; and (ii) provides for recording credit losses on available-for-sale (AFS) debt securities through an allowance account. The update also requires certain incremental disclosures. The amendments in this ASU are effective for fiscal years beginning after

December 15, 2020,

including interim periods within those fiscal years. The Company is currently evaluating the effect this ASU will have on its consolidated financial statements and disclosures.

XML

Note 4 - Income Tax

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

4

- INCOME TAX

Income tax provisions or benefits for interim periods are computed based on the Company's estimated annual effective tax rate. Based on the Company's historical losses and its expectation of the continuation of losses for the foreseeable future, the Company has determined that it is more likely than

not

that deferred tax assets will

not

be realized and, accordingly, has provided a full valuation allowance as of

September 30, 2017

and

December 31, 2016.

XML

Note 5 - Convertible Debt (PIK Notes)

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Convertible Debt [Text Block]

NOTE

5

– CONVERTIBLE DEBT (PIK NOTES)

As of

September 30, 2017,

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	$	15,513,290		$	25,388,513		$	40,901,803
Less: Discount		(1,598,654	)		(9,759,558	)		(11,358,212	)
Less: Deferred Financing Cost		(2,992	)		(5,133	)		(8,125	)
PIK Note Payable, Net	$	13,911,644		$	15,623,822		$	29,535,466
PIK Note Derivative Liability	$	68,041		$	1,074,133		$	1,142,174

As of

December 31,

2016,

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	$	14,071,008		$	24,125,958		$	38,196,966
Less: Discount		(1,721,898	)		(13,421,225	)		(15,143,123	)
Less: Deferred Financing Cost		(5,064	)		(8,686	)		(13,750	)
PIK Note Payable, Net	$	12,344,046		$	10,696,047		$	23,040,093
PIK Note Derivative Liability	$	142,909		$	2,033,643		$	2,176,552

As of

September 30, 2017,

the conversion price of the Series

2023

Notes was

$1.14

and the conversion price of the Series A Notes was

$0.66.

These conversion prices were adjusted per the terms of the Series

2023

Notes and Series A Notes, respectively after

the Company’s capital raise closed on

August 29, 2017.

XML

Note 6 - Stockholders' Equity

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE

6

- STOCKHOLDERS' EQUITY

During the

nine

months ended

September 30, 2017,

the Company issued a total of

250,000

shares of common stock valued at

$10,050

to directors and consultants as payments of fees.

During the

nine

months ended

September 30, 2017,

the Company issued

22,750,000

shares of common stock valued at

$910,000

as part of a private placement (“

August 2017

offering”).  In addition, a total of

2,275,000

shares valued at

$91,000

were issued in lieu of payment for fees associated with the

August 2017

offering.

In connection with the

August 2017

offering, the Company entered into registration rights agreements with each of t

he purchasers. The Company has an option to acquire the warrants; 

provided

, that, the following conditions are met: (a) the average VWAP for the

20

consecutive trading days immediately preceding the date on which the call notice is given is equal or greater than

$0.20

and (b) a registration statement covering the resale of shares issuable upon exercise of the warrants is effective.

XML

Note 7 - Options and Warrants to Purchase Common Stock

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Options And Warrants To Purchase Common Stock [Text Block]

NOTE

7

- OPTIONS AND WARRANTS TO PURCHASE COMMON STOCK

Outstanding Stock Warrants

A summary of the status of the warrants outstanding and exercisable at

September 30, 2017

is presented below:

		Warrants Outstanding and Exercisable
Exercise Price		Number Outstanding		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price
	$0.04		6,256,250		4.92	$	0.04
	$0.25		3,283,283		3.75	$	0.25
	$1.15		461,340		3.58	$	1.15
			10,000,873		4.48	$	0.36

Between

January 1, 2017

and

September 30, 2017,

6,256,250

warrants were issued as part of the sale of

22,750,000

Units. Each Unit included

one

(

1

) share of common stock and a warrant to purchase ¼

of a share of common stock. The intrinsic value of the outstanding warrants was

$0

at

September 30, 2017.

Outstanding Stock Options

A summary of the status and changes of the options granted under stock option plans and other agreements for the

nine

months ended

September 30, 2017

is as follows:

			Weighted		Weighted
			Average		Average Remaining
	Shares		Exercise Price		Contractual Life *
Outstanding at beginning of period		21,277,479	$	0.87		4.00
Issued		650,000		0.25		4.75
Exercised		- 0 -		- 0 -		- 0 -
Forfeited		(30,000)		1.55		- 0 -
Outstanding at end of period		21,897,479	$	0.85		3.72
Exercisable at end of period		21,277,479	$	0.87		4.19

* Measured in years

During the

nine

months ended

September 30, 2017,

the Company granted

650,000

options to purchase the Company’s common stock with a weighted average exercise price of

$0.25.

The options vested immediately. The weighted-average grant-date fair value of the options granted was

$0.02.

Compensation expense of

$23,077

and

$145,832

has been recognized for the vested options for the

three

months ended

September 30, 2017

and

2016,

respectively, and

$145,887

and

$510,877

for the

nine

months ended

September 30, 2017

and

2016,

respectively. Th

e aggregate intrinsic value of the outstanding and exercisable options at

September 30, 2017

was

$0

and

$0,

respectively. At

September 30, 2017,

approximately

$35,099

of unamortized compensation expense associated with unvested options will be recognized over the next

0.33

years on a weighted average basis.

XML

Note 8 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE

8

- COMMITMENTS AND CONTINGENCIES

Office Lease

During

2016,

the Company rented office space in New York, NY on a month-to-month basis at a monthly rent of approximately

$16,700

per month, for an aggregate of approximately

$201,000

for the year ended

December 31, 2016.

Effective

January 1, 2017,

the Company moved to a new temporary office location in Brooklyn, NY on a month-to month basis at a monthly rent of approximately

$6,000

per mon

th. The temporary office rental was pending completion of the Company’s permanent office location in the same Brooklyn, NY building. On

May 16, 2017,

the Company entered into a

five

-year lease agreement for new permanent office space, the Company is obligated to pay a monthly rent of approximately

$9,000

for the period from

May 16, 2017

through

March 31, 2022. 

The following table summarizes the Company

’s contractual obligations under the lease agreement referred above:

Payment Due By Year
	2017		2018		2019		2020		2021		2022		Total
Rent Obligations	$	26,100	$	107,010	$	110,222	$	113,530	$	116,934	$	24.480	$	498,285

Contingencies

In accordance with ASC Topic

450,

when applicable, we record accruals for contingencies when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. We

may

become involved in or subject to, routine litigation, claims, disputes, proceedings and investigations in the ordinary course of business, which

 could have a material adverse effect on our financial condition, cash flows or results of operations.

XML

Note 9 - Subsequent Events

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE

9

-

SUBSEQUENT EVENTS

On

October 4, 2017

the Company raised

$150,000

through the sale of

3,750,000

Units as part of

August 2017

offering. Each Unit consisted of

one

share of Common Stock and

one five

-year warrant to purchase

0.25

share of Common S

tock. Four (

4

) warrants can be exercised to acquire

one

whole share of Common Stock for

$0.04.

In

October, 2017

the Company entered into an exclusive supply and purchase agreement with BASF Corporation. Per the agreement the Company and BASF will develop, c

o-brand and market halloysite-clay based products to markets that include paints and coatings, inks, rubber, adhesives, paper and ceramic honeycomb catalytic substrates. Both parties to the agreement will share profits.

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Applied Minerals, Inc. and its inactive subsidiary in northern Idaho.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. In these condensed consolidated financial statements, the PIK Note derivative liability, stock compensation and

the assessment of the possible impairment of long-lived assets involve extensive reliance on management’s estimates. Actual results could differ from those estimates.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value

ASC Topic

820,

Fair Value Measurement and Disclosures

, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of

three

levels:

Level

1

– Quoted prices in active markets for identical assets and liabilities;

Level

2

– Inputs other than level

one

inputs that are either directly or indirectly observable; and

Level

3

– Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

Liabilities measured at fair value on a recurring basis are summarized as follows:

	Fair value measurement using inputs						Carrying amount
	Level 1		Level 2		Level 3		September 30, 2017		December 31, 2016
Financial instruments:
Series 2023 PIK Note Derivative	$	-0-	$	-0-	$	68,041	$	68,041	$	142,909
Series A PIK Note Derivative	$	-0-	$	-0-	$	1,074,133	$	1,074,133	$	2,033,643

The following table summarizes the activity for financial instruments at fair value using Level

3

inputs:

Balance at December 31, 2016	$	2,176,552
Additions related to the i ssuance of PIK Notes		31,990
Net unrealized gains included in net (loss)		(1,066,368	)
Balance at September 30, 2017	$	1,142,174

The recorded value of certain financial assets and liabilities, which consist primarily of cash and cash equivalents, receivables, other current assets, and accounts payable and accrued expenses approximates the fair value at

September 30, 2017

and Decemb

er

31,

2016

based upon the short-term nature of the assets and liabilities. Based on borrowing rates currently available to the Company for loans with similar terms, and the remaining short-term period outstanding, the carrying value of notes payable other than PIK Notes approximates fair value. Estimated fair value of the PIK Notes Payable approximate

$31,809,504

and

$23,361,553,

respectively, at

September 30, 2017

and

December 31, 2016.

For the Company's PIK Note derivative liabilities, Level

3

fair value hierarchy was estimated using a Monte Carlo Model using the following assumptions:

Series 2023 PIK Note derivative liability	Fair Value Measurements
	Using Inputs
	September 30, 2017			December 31, 2016
Market price and estimated fair value of stock	$	0.04		$	0.12
Exercise price	$	1.14		$	1.28
Term (years)		5.83			6.58
Dividend yield	$	-0-		$	-0-
Expected volatility		107.7	%		86.2	%
Risk-free interest rate		2.02	%		2.18	%

Series A PIK Note derivative liability	Fair Value Measurements
	Using Inputs
	September 30, 2017			December 31, 2016
Market price and estimated fair value of stock	$	0.04		$	0.12
Exercise price	$	0.66		$	0.83
Term (years)		5.83			6.58
Dividend yield	$	-0-		$	-0-
Expected volatility		107.7	%		86.2	%
Risk-free interest rate		2.02	%		2.18	%

Earnings Per Share, Policy [Policy Text Block]

Per share data

Loss per share for the

three

months ended

September 30, 2017

and

2016,

respectively, is calculated based on

118,862,734

and

108,482,042

weighted average outstanding shares of common stock.

  Loss per share for the

nine

months ended

September 30, 2017

and

2016,

respectively, is calculated based on

112,094,593

and

101,231,559

weighted average outstanding shares of common stock.

At

September 30, 2017

and

2016,

respectively, the Company had outst

anding options and warrants to purchase

31,898,352

and

25,314,940

shares of Company common stock, and had notes payable which were convertible into

52,075,593

and

38,676,232

shares, respectively, of the Company common stock,

none

of which were included in the diluted computation as their effect would be anti-dilutive.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

Recently Adopted

In

November 2015,

FASB issued Accounting Standards Update

2015

-

17,

Income Taxes (Topic

740

): Balance Sheet Classification of Deferred Taxes. Accounting Standards Update

2015

-

17

simplifies current guidance and requires companies to classify all deferred tax assets and liabilities as noncurrent on the balance sheet. Accounting Standards Update

2015

-

17

can be applied either prospectively or retrospectively and is effective for periods beginning after

December 15, 2016,

with early adoption permitted. The new guidance which was adopted in the quarter ended

March 31, 2017

had

no

effect on its financial statements and related disclosures.

In

March 2016,

the FASB issued ASU

2016

-

09,

“Improvements to Employee Share-Based Payment Accounting”, which simplifies several aspects of the accounting for employee share-based payment transactions. Under this amended guidance, all excess tax benefits and tax deficiencies will be recognized as income tax expense or benefit in the income statement in the period in which the awards vest or are exercised. In the statement of cash flows, excess tax benefits will be classified with other income tax cash flows in operating activities. The amended guidance also gives the option to make a policy election to account for forfeitures as they occur and increases the threshold for awards that are partially settled in cash to qualify for equity classification. This guidance is effective for interim and annual reporting periods beginning after

December 15, 2016,

with early adoption permitted. The new guidance which was adopted in the quarter ended

March 31, 2017

had

no

effect on the financial statements. In accordance with ASU

2016

-

09,

the Company has made the accounting policy election to continue to estimate forfeitures.

Not

Yet Adopted

In 

May 2014,

the FASB issued guidance on revenue recognition, which provides a single, comprehensive revenue recognition model for all contracts with customers and superseded most existing revenue recognition guidance. The main principle under this guidance is that an entity should recognize revenue at the amount it expects to be entitled to in exchange for the transfer of goods or services to customers. This guidance is effective for interim and annual reporting periods beginning after

January 1, 2018.

The Company will adopt the new standard in the

first

quarter of

2018.

The cumulative effect of the initial adoption will be reflected as an adjustment to the opening balance of retained earnings as of the date of the application of the guidance.

The Company will finalize its assessment in the

fourth

quarter of

2017.

In

February 2016,

the FASB issued ASU

2016

-

02

(“Topic

842”

) new accounting guidance for leases, which supersedes previous lease guidance. Under this guidance, for all leases with terms in excess of

one

year, including operating leases, the Company will be required to recognize on its balance sheet a lease liability and a right-of-use asset representing its right to use the underlying asset for the lease term. The new guidance retains a distinction between finance leases and operating leases and the classification criteria is substantially similar to previous guidance. Additionally, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have

not

significantly changed. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. This guidance is effective for interim and annual reporting periods beginning after

December 15, 2018,

with early adoption permitted.

 The Company is currently evaluating the effect this ASU will have on its consolidated financial statement and disclosures.

In

June 2016,

the FASB issued ASU

2016

-

13,

“Financial Instruments-Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments,” which (i) significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model; and (ii) provides for recording credit losses on available-for-sale (AFS) debt securities through an allowance account. The update also requires certain incremental disclosures. The amendments in this ASU are effective for fiscal years beginning after

December 15, 2020,

including interim periods within those fiscal years. The Company is currently evaluating the effect this ASU will have on its consolidated financial statements and disclosures.

XML

Note 3 - Basis of Reporting and Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Fair Value, Liabilities Measured on Recurring Basis [Table Text Block]

	Fair value measurement using inputs						Carrying amount
	Level 1		Level 2		Level 3		September 30, 2017		December 31, 2016
Financial instruments:
Series 2023 PIK Note Derivative	$	-0-	$	-0-	$	68,041	$	68,041	$	142,909
Series A PIK Note Derivative	$	-0-	$	-0-	$	1,074,133	$	1,074,133	$	2,033,643

Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

Balance at December 31, 2016	$	2,176,552
Additions related to the i ssuance of PIK Notes		31,990
Net unrealized gains included in net (loss)		(1,066,368	)
Balance at September 30, 2017	$	1,142,174

Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions [Table Text Block]

Series 2023 PIK Note derivative liability	Fair Value Measurements
	Using Inputs
	September 30, 2017			December 31, 2016
Market price and estimated fair value of stock	$	0.04		$	0.12
Exercise price	$	1.14		$	1.28
Term (years)		5.83			6.58
Dividend yield	$	-0-		$	-0-
Expected volatility		107.7	%		86.2	%
Risk-free interest rate		2.02	%		2.18	%

Series A PIK Note derivative liability	Fair Value Measurements
	Using Inputs
	September 30, 2017			December 31, 2016
Market price and estimated fair value of stock	$	0.04		$	0.12
Exercise price	$	0.66		$	0.83
Term (years)		5.83			6.58
Dividend yield	$	-0-		$	-0-
Expected volatility		107.7	%		86.2	%
Risk-free interest rate		2.02	%		2.18	%

XML

Note 5 - Convertible Debt (PIK Notes) (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Convertible Debt [Table Text Block]

	Series 2023 Notes			Series A Notes			Total
PIK Note Payable, Gross	$	15,513,290		$	25,388,513		$	40,901,803
Less: Discount		(1,598,654	)		(9,759,558	)		(11,358,212	)
Less: Deferred Financing Cost		(2,992	)		(5,133	)		(8,125	)
PIK Note Payable, Net	$	13,911,644		$	15,623,822		$	29,535,466
PIK Note Derivative Liability	$	68,041		$	1,074,133		$	1,142,174

	Series 2023 Notes			Series A Notes			Total
PIK Note Payable, Gross	$	14,071,008		$	24,125,958		$	38,196,966
Less: Discount		(1,721,898	)		(13,421,225	)		(15,143,123	)
Less: Deferred Financing Cost		(5,064	)		(8,686	)		(13,750	)
PIK Note Payable, Net	$	12,344,046		$	10,696,047		$	23,040,093
PIK Note Derivative Liability	$	142,909		$	2,033,643		$	2,176,552

XML

Note 7 - Options and Warrants to Purchase Common Stock (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

		Warrants Outstanding and Exercisable
Exercise Price		Number Outstanding		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price
	$0.04		6,256,250		4.92	$	0.04
	$0.25		3,283,283		3.75	$	0.25
	$1.15		461,340		3.58	$	1.15
			10,000,873		4.48	$	0.36

Share-based Compensation, Stock Options, Activity [Table Text Block]

			Weighted		Weighted
			Average		Average Remaining
	Shares		Exercise Price		Contractual Life *
Outstanding at beginning of period		21,277,479	$	0.87		4.00
Issued		650,000		0.25		4.75
Exercised		- 0 -		- 0 -		- 0 -
Forfeited		(30,000)		1.55		- 0 -
Outstanding at end of period		21,897,479	$	0.85		3.72
Exercisable at end of period		21,277,479	$	0.87		4.19

XML

Note 8 - Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Contractual Obligation, Fiscal Year Maturity Schedule [Table Text Block]

Payment Due By Year
	2017		2018		2019		2020		2021		2022		Total
Rent Obligations	$	26,100	$	107,010	$	110,222	$	113,530	$	116,934	$	24.480	$	498,285

XML

Note 1 - Organization and Description of Business (Details Textual) - One Customer [Member] - USD ($)	9 Months Ended	19 Months Ended
	Sep. 30, 2017	Jun. 30, 2017
Sales Revenue, Net [Member] | Customer Concentration Risk [Member]
Concentration Risk, Percentage	57.80%
AMIRON Products [Member]
Revenue, Net		$ 5,000,000
Supply Commitment, Additional Amount the Customer May Elect Upon Extension	$ 5,000,000
Supply Commitment, Agreement Period	5 years
Supply Commitment, Agreement Period After Extension	10 years
Accounts Receivable, Net	$ 0

XML

Note 2 - Liquidity and Basis of Presentation (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net Income (Loss) Attributable to Parent	$ (4,407,067)	$ (1,810,425)	$ (9,010,953)	$ (5,537,720)
Net Cash Provided by (Used in) Operating Activities			(1,414,895)	$ (1,950,495)
Working Capital	(112,857)		(112,857)
Satisfaction of Payables with DRAGONITE [Member]
Accounts Payable	112,000		112,000
Current Liabilities [Member]
Disputed Accrued Expenses	189,920		189,920
Payment in Kind (PIK) Note [Member]
Interest Payable	$ 1,277,900		$ 1,277,900

XML

Note 3 - Basis of Reporting and Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Weighted Average Number of Shares Outstanding, Basic and Diluted	118,862,734	108,482,042	112,094,593	101,231,559
Outstanding Options and Warrants to Purchase Common Stock Not Included in Diluted Computation	31,898,352	25,314,940	31,898,352	25,314,940
Convertible Debt Securities [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			52,075,593	38,676,232
Payment in Kind (PIK) Note [Member]
Convertible Debt, Fair Value Disclosures	$ 31,809,504		$ 31,809,504		$ 23,361,553

XML

Note 3 - Basis of Reporting and Significant Accounting Policies - Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Series 2023 PIK Note Derivative Liability [Member]
Derivative liability	$ 68,041	$ 142,909
Series 2023 PIK Note Derivative Liability [Member] | Fair Value, Inputs, Level 1 [Member]
Derivative liability	0
Series 2023 PIK Note Derivative Liability [Member] | Fair Value, Inputs, Level 2 [Member]
Derivative liability	0
Series 2023 PIK Note Derivative Liability [Member] | Fair Value, Inputs, Level 3 [Member]
Derivative liability	68,041
Series A PIK Note Derivative Liability [Member]
Derivative liability	1,074,133	$ 2,033,643
Series A PIK Note Derivative Liability [Member] | Fair Value, Inputs, Level 1 [Member]
Derivative liability	0
Series A PIK Note Derivative Liability [Member] | Fair Value, Inputs, Level 2 [Member]
Derivative liability	0
Series A PIK Note Derivative Liability [Member] | Fair Value, Inputs, Level 3 [Member]
Derivative liability	$ 1,074,133

XML

Note 3 - Basis of Presentation and Significant Accounting Policies - Derivatives Measured at Fair Value (Details) - Fair Value, Inputs, Level 3 [Member]	9 Months Ended
	Sep. 30, 2017 USD ($)
Balance at beginning of year	$ 2,176,552
Additions related to the issuance of PIK Notes	31,990
Net unrealized gains included in net (loss)	(1,066,368)
Balance at end of year	$ 1,142,174

XML

Note 3 - Basis of Presentation and Significant Accounting Policies - Valuation Assumptions (Details) - Fair Value, Inputs, Level 3 [Member] - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Series 2023 PIK Note Derivative Liability [Member]
Market price and estimated fair value of stock (in dollars per share)	$ 0.04	$ 0.12
Exercise price (in dollars per share)	$ 1.14	$ 1.28
Term (years) (Year)	5 years 302 days	6 years 211 days
Dividend yield	0.00%	0.00%
Expected volatility	107.70%	86.20%
Risk-free interest rate	2.02%	2.18%
Series A PIK Note Derivative Liability [Member]
Market price and estimated fair value of stock (in dollars per share)	$ 0.04	$ 0.12
Exercise price (in dollars per share)	$ 0.66	$ 0.83
Term (years) (Year)	5 years 302 days	6 years 211 days
Expected volatility	107.70%	86.20%
Risk-free interest rate	2.02%	2.18%

XML

Note 5 - Convertible Debt (PIK Notes) (Details Textual) - Payment in Kind (PIK) Note [Member]	Sep. 30, 2017 $ / shares
Series 2023 Notes [Member]
Debt Instrument, Convertible, Conversion Price	$ 1.14
Series A Notes [Member]
Debt Instrument, Convertible, Conversion Price	$ 0.66

XML

Note 5 - Convertible Debt (PIK Notes) - Convertible Debt PIK Notes (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Less: Discount	$ (11,358,212)	$ (15,143,123)
Payment in Kind (PIK) Note [Member]
PIK Note Payable, Gross	40,901,803	38,196,966
Less: Discount	(11,358,212)	(15,143,123)
Less: Deferred Financing Cost	(8,125)	(13,750)
PIK Note Payable, Net	29,535,466	23,040,093
PIK Note Derivative Liability	1,142,174	2,176,552
Payment in Kind (PIK) Note [Member] | Series 2023 Notes [Member]
PIK Note Payable, Gross	15,513,290	14,071,008
Less: Discount	(1,598,654)	(1,721,898)
Less: Deferred Financing Cost	(2,992)	(5,064)
PIK Note Payable, Net	13,911,644	12,344,046
PIK Note Derivative Liability	68,041	142,909
Payment in Kind (PIK) Note [Member] | Series A Notes [Member]
PIK Note Payable, Gross	25,388,513	24,125,958
Less: Discount	(9,759,558)	(13,421,225)
Less: Deferred Financing Cost	(5,133)	(8,686)
PIK Note Payable, Net	15,623,822	10,696,047
PIK Note Derivative Liability	$ 1,074,133	$ 2,033,643

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Note 6 - Stockholders' Equity (Details Textual) - USD ($)	1 Months Ended	9 Months Ended
	Aug. 31, 2017	Sep. 30, 2017
Stock Issued During Period, Shares, New Issues		22,750,000
Stock Issued During Period, Shares, in Lieu of Payment for Fees Associated with Private Placement		2,275,000
Stock Issued During Period, Value, in Lieu of Payment for Fees Associated with Private Placement		$ 91,000
Private Placement [Member]
Stock Issued During Period, Shares, New Issues		22,750,000
Stock Issued During Period, Value, New Issues		$ 910,000
Option to Acquire Warrants, Prerequisite, Minimum Average VWAP	$ 0.20
Directors and Consultants [Member]
Stock Issued During Period, Shares, Issued for Services		250,000
Stock Issued During Period, Value, Issued for Services		$ 10,050

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Note 7 - Options and Warrants to Purchase Common Stock (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Warrants Issued			6,256,250
Stock Issued During Period, Shares, New Issues			22,750,000
Intrinsic Value of Outstanding Warrants	$ 0		$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross			650,000
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price			$ 0.25
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value			$ 0.02
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value	0		$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value	0		0
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	$ 35,099		$ 35,099
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right	0.25		0.25
Employee Stock Option [Member]
Allocated Share-based Compensation Expense	$ 23,077	$ 145,832	$ 145,887	$ 510,877
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition			120 days

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Note 7 - Options and Warrants to Purchase Common Stock - Summary of the Status of the Warrants Outstanding (Details)	9 Months Ended
	Sep. 30, 2017 $ / shares shares
Warrants Outstanding and Exercisable Number Outstanding (in shares) | shares	10,000,873
Warrants Outstanding and Exercisable Weighted Average Remaining Contractual Life (Year)	4 years 175 days
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ / shares	$ 0.36
Exercise Price 1 [Member]
Warrants Outstanding and Exercisable Number Outstanding (in shares) | shares	6,256,250
Warrants Outstanding and Exercisable Weighted Average Remaining Contractual Life (Year)	4 years 335 days
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ / shares	$ 0.04
Exercise Price 2 [Member]
Warrants Outstanding and Exercisable Number Outstanding (in shares) | shares	3,283,283
Warrants Outstanding and Exercisable Weighted Average Remaining Contractual Life (Year)	3 years 273 days
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ / shares	$ 0.25
Exercise Price 3 [Member]
Warrants Outstanding and Exercisable Number Outstanding (in shares) | shares	461,340
Warrants Outstanding and Exercisable Weighted Average Remaining Contractual Life (Year)	3 years 211 days
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) | $ / shares	$ 1.15

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Note 7 - Options and Warrants to Purchase Common Stock - Summary of the Status and Changes of the Options Granted Under the Stock Option Plans and Other Agreements (Details) - $ / shares		9 Months Ended	12 Months Ended
		Sep. 30, 2017	Dec. 31, 2016
Outstanding, shares (in shares)		21,277,479
Outstanding, weighted average exercise price (in dollars per share)		$ 0.87
Outstanding, weighted average remaining contractual life (Year)	[1]	3 years 262 days	4 years
Issued (in shares)		650,000
Issued, weighted average exercise price (in dollars per share)		$ 0.25
Issued, weighted average remaining contractual life (Year)	[1]	4 years 273 days
Exercised (in shares)		0
Exercised (in dollars per share)		$ 0
Forfeited (in shares)		(30,000)
Forfeited (in dollars per share)		$ 1.55
Outstanding, shares (in shares)		21,897,479	21,277,479
Outstanding, weighted average exercise price (in dollars per share)		$ 0.85	$ 0.87
Exercisable, shares (in shares)		21,277,479
Exercisable, weighted average exercise price (in dollars per share)		$ 0.87
Exercisable, weighted average remaining contractual life (Year)	[1]	4 years 69 days

[1] Measured in years

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Note 8 - Commitments and Contingencies (Details Textual) - USD ($)		12 Months Ended
	May 16, 2017	Dec. 31, 2016	Sep. 30, 2017
New York, NY [Member]
Operating Leases Monthly Rent		$ 16,700
Operating Leases, Rent Expense, Net		$ 201,000
Brooklyn, NY [Member] | Temporary Location Lease [Member]
Operating Leases Monthly Rent			$ 6,000
Brooklyn, NY [Member] | Permanent Location Lease [Member]
Operating Leases Monthly Rent	$ 9,000
Lessee, Operating Lease, Term of Contract	5 years

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Note 8 - Commitments and Contingencies - Contractual Obligations (Details)	Sep. 30, 2017 USD ($)
Rent Obligations, remainder of year	$ 26,100
Rent Obligations, year two	107,010
Rent Obligations, year three	110,222
Rent obligations, year four	113,530
Rent obligations, year five	116,934
Rent obligations, greater than 5 years	24.48
Rent obligations	$ 498,285

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Note 9 - Subsequent Events (Details Textual) - USD ($)	Oct. 04, 2017	Sep. 30, 2017
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right		0.25
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.36
Subsequent Event [Member]
Unit Issued During Period, Value, New Issues	$ 150,000
Unit Issued During Period, Shares, New Issues	3,750,000
Number of Securities Called by Each Unit	1
Warrant Term	5 years
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right	0.25
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.04