amnl20170506_posam.htm

Useful Life (years)

Building and building improvements

Mining equipment

Office and shop furniture and equipment

POS AM 1 amnl20170506_posam.htm FORM POS AM amnl20170506_posam.htm Table of Contents

As filed with the Securities and Exchange

Commission Registration No. 333-213752

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1 to

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

APPLIED MINERALS, INC.

(Name of small business issuer in its charter)

Delaware

(State of jurisdiction of

incorporation

or organization)

1400

(Primary

Standard Industrial

Classification

Code Number)

82-0096527

(I.R.S. Employer

Identification No.)

55 Washington Street, Suite 302A,

Brooklyn, NY 11201

(212) 226-4265

(Address and telephone number of principal executive offices and principal place of business)

William Gleeson

General Counsel

Applied Minerals, Inc.

55 Washington Street Suite 302A, Brooklyn, NY 11201

(212) 226-4251

(Name, address and telephone number of agent for service)

Approximate date of

proposed sale to the

public:

From time to time after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. X

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering. ☐

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

Large Accelerated

Filer

Accelerated

Filer

Non-accelerated

Filer

Smaller Reporting

Company

Emerging growth

company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Exchange Act. ☐

The Registrant hereby amends this Post-Effective Amendment to the Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Post-Effective Amendment to the Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Amendment to the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.

The prospectus contained in this Post-Effective Amendment to the Registration Statement is a combined prospectus relating to this Post-Effective Amendment to the Registration Statement and also to Registration Statements No. 333-202139 and 333-205179, which are registration statements on Form S-1, and Registration Statement No. 333-179139, which is a registration statement filed on Form S-3 and amended on Form S-1, in each case relating to the resale of shares of common stock of Applied Minerals, Inc.

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PROSPECTUS

APPLIED MINERALS, INC.

52,534,913 Shares of Common Stock

This prospectus relates to the offer and sale by the Selling Stockholders, from time to time, of the following:

●	Up to 27,651,900 shares of Common Stock, issuable on conversion of certain 10% PIK-Election Convertible Notes due 2018 (the “Series A Notes” or the “Notes”) if held to maturity of which on May 1, 2017 $8,316,953 of principal amount is owned by Samlyn Offshore Master Fund, Ltd., $4,439,110 of principal amount is owned by Samlyn Onshore Fund, L.P., $1,206,744 of principal amount is owned by The IBS Turnaround Fund, L.P., $2,423,272 of principal amount is owned by The IBS Turnaround Fund (QP) (A Limited Partnership) and $235,453 of principal amount is owned by The IBS Opportunity Fund, Ltd. At the Company’s election, interest may be paid in cash or in Series A Notes (payment in the form of Notes is referred to as payment-in-kind or “PIK”). As of the date of this prospectus, 15,699,161 shares are issuable on conversion of the Series A Notes that were issued on November 3, 2014 (the date of the initial issuance of Series A Notes) and 4,326,786 shares are issuable on conversion of Series A Notes that have been issued as interest. If the Company issues additional Series A Notes in payment of interest and/or penalties, the number of shares that may be sold pursuant to this Prospectus will increase. If the Company makes all the interest payments by issuing additional Series A Notes and all the Series A Notes remain outstanding until maturity, the additional shares issuable on conversion of the Series A Notes could increase the number of shares issuable on conversion of the Notes by shares. This number is based on the current conversion rate of $0.83 and assumes that, per the terms of the Notes, the conversion price is decreased by $0.10 after November 1, 2018, the interest is decreased to 1% after November 1, 2019 and the maturity date of the Notes is extended to August 1, 2023. Given the Company’s current financial position, it is anticipated that for the foreseeable future, the Company will likely pay interest using Series A Notes issued as payment-in-kind interest. The shares of Common Stock that may be issued on conversion of the Series A Notes are referred to as the “Shares.”

●	20,933,339 outstanding shares of Common Stock of which 10,933,339 were issued as part of a private placement on June 24, 2016, 6,150,000 are owned by Samlyn Offshore Master Fund, Ltd. and 3,850,000 are owned by Samlyn Onshore Fund, L.P.

●	666,391 shares of Common Stock issued as Liquidated Damages pursuant to Section 2c of the Registration Statement Agreement for the Series A Notes. Of these shares 333,443 are owned by Samlyn Offshore Master Fund, Ltd., 177,973 are owned by Samlyn Onshore Fund, L.P., 41,220 are owned by The IBS Turnaround Fund, L.P., 86,634 are owned by The IBS Turnaround Fund (QP) (A Limited Partnership) and 27,121 are owned by The IBS Opportunity Fund, Ltd.

●	3,283,283 shares of Common Stock issuable on the exercise of warrants.

The sellers of the Common Stock referred to above as collectively referred to as the “Selling Stockholders” and the shares referred to above as collectively referred to as the “Shares.

The term “Selling Stockholders” includes the persons listed in the table under “Selling Stockholders ” and also donees, pledgees, transferees or other successors-in-interest selling Common Stock or interests in Common Stock received after the date of this prospectus from a Selling Stockholder as a gift, pledge, partnership distribution or similar transfer. The Selling Stockholders may sell all or any portion of their Common Stock in one or more transactions on any stock exchange, market or trading facility on which the shares are traded or in private, negotiated transactions. Each Selling Stockholder will determine the prices at which the Selling Stockholder’s securities will be sold. Although we will incur expenses in connection with the registration of the shares of Common Stock offered under this prospectus, we will not receive any proceeds from the sale of the shares of Common Stock by the Selling Stockholders. We will, however, receive the exercise price of $0.25 per share for each share issued upon exercise of the Warrants. If all Warrants are exercised, we will receive $820,821.

Our Common Stock is quoted on the OTCQB under the symbol “AMNL.” On May 1, 2017, the closing bid quotation of our Common Stock was $0.05. Our principal executive offices are located 55 Washington Street, Suite 302A, Brooklyn, N.Y. 11201. Our telephone number is (212) 226-4265.

We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should carefully read this entire prospectus and any amendments or supplements to this prospectus as well as material incorporated by reference into this prospectus before you make your investment decision.

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The shares of Common Stock offered under this prospectus involve a high degree of risk. See “Risk Factors.”

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this prospectus is ________, 2017

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TABLE OF CONTENTS

Note Regarding Forward Looking Statements	4
Prospectus Summary	5
Information about the Company	9
Risk Factors	19
Properties	23
Legal Proceedings	25
Market Prices for Our Common Stock	25
Equity Compensation Plans	26
Stock Performance Graph	28
Selected Financial Data	28
Quantitative and Qualitative Disclosures about Market Risk	28
Information about Directors and Officers	29
Executive Compensation	35
Compensation Discussion & Analysis	38
Security Ownership of Certain Beneficial Owners and Management	46
Certain Relationships and Related Transactions	48
Principal Accounting Fees and Services	48
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	49
SEC Position on Indemnification for Securities Act liabilities	49
The Offering	49
Antidilution Provisions	50
Use of Proceeds	51
Description of Capital Stock	51
Selling Stockholders	53
Plan of Distribution	54
Experts	56
Legal Matters	56
Where You Can Find More Information	56
Management’s Discussion and Analysis of Financial Condition and Results of Operations	56
Financial Statements	65

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We have not authorized any person to give you any supplemental information or to make any representations for us. You should not rely upon any information about our Company that is not contained in, or incorporated by reference into, this prospectus or a supplement thereto. Information contained in this prospectus may become stale. You should not assume that the information contained in this prospectus or any prospectus supplement is accurate as of any date other than their respective dates, regardless of the time of delivery of this prospectus or of any sale of the shares. Our business, financial condition, results of operations and prospects may have changed since those dates.

The Selling Stockholders are offering to sell, and seeking offers to buy, Shares only in jurisdictions where offers and sales are permitted.

Unless otherwise specified or the context otherwise requires, references in this prospectus to the “Company,” “we,” “us,” and “our” refer to Applied Minerals, Inc., a Delaware corporation.

NOTE REGARDING FORWARD LOOKING STATEMENTS

This prospectus 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/or 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.

In the discussion under “Business,” the Company discusses a wide range of forward-looking information, including the Company’s beliefs and expectations concerning business opportunities, potential sales, potential customer interest, customer activities (including but not limited to testing, scale-ups, production trials, field trials, product development), markets and potential markets, and the Company’s expectations as to sales, the amount of sales, and the timing of sales. Whether any of the foregoing will actually come to fruition, occur, be successful, or result in sales, and the timing and amount of such sales, is uncertain.

More generally, all 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. Factors that might cause such a difference include, but are not limited to, those discussed in the section of this prospectus entitled “RISK FACTORS.”

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PROSPECTUS SUMMARY

You should read this summary in conjunction with the more detailed information and financial statements in this prospectus and any supplement thereto. This summary does not contain all of the information you should consider before investing in our securities. You should read all of the information in this prospectus and any supplement thereto carefully, especially the risks of investing in our securities (see “Risk Factors”) before making an investment decision.

In this prospectus and any amendment or supplement hereto, unless otherwise indicated, the terms the “Company”, “we”, “us”, and “our” refer and relate to Applied Minerals, Inc.

Securities Being Offered	This prospectus relates to the offer and sale by the Selling Stockholders, from time to time, of the following:
●	Up to 27,651,900 shares of Common Stock, issuable on conversion of certain 10% PIK-Election Convertible Notes due 2018 (the “Series A Notes” or the “Notes”) if held to maturity of which on May 1, 2017 $8,316,953 of principal amount is owned by Samlyn Offshore Master Fund, Ltd., $4,439,110 of principal amount is owned by Samlyn Onshore Fund, L.P., $1,206,744 of principal amount is owned by The IBS Turnaround Fund, L.P., $2,423,272 of principal amount is owned by The IBS Turnaround Fund (QP) (A Limited Partnership) and $235,453 of principal amount is owned by The IBS Opportunity Fund, Ltd. At the Company’s election, interest may be paid in cash or in Series A Notes (payment in the form of Notes is referred to as payment-in-kind or “PIK”). As of the date of this prospectus, 15,699,161 shares are issuable on conversion of the Series A Notes that were issued on November 3, 2014 (the date of the initial issuance of Series A Notes) and 4,326,786 shares are issuable on conversion of Series A Notes that have been issued as interest. If the Company issues additional Series A Notes in payment of interest and/or penalties, the number of shares that may be sold pursuant to this Prospectus will increase. If the Company makes all the interest payments by issuing additional Series A Notes and all the Series A Notes remain outstanding until maturity, the additional shares issuable on conversion of the Series A Notes could increase the number of shares issuable on conversion of the Notes by shares. This number is based on the current conversion rate of $0.83 and assumes that, per the terms of the Notes, the conversion price is decreased by $0.10 after November 1, 2018, the interest is decreased to 1% after November 1, 2019 and the maturity date of the Notes is extended to August 1, 2023. Given the Company’s current financial position, it is anticipated that for the foreseeable future, the Company will likely pay interest using Series A Notes issued as payment-in-kind interest. The shares of Common Stock that may be issued on conversion of the Series A Notes are referred to as the “Shares.”

●	20,933,339 outstanding shares of Common Stock of which 10,933,339 were issued as part of a private placement on June 24, 2016, 6,150,000 are owned by Samlyn Offshore Master Fund, Ltd. and 3,850,000 are owned by Samlyn Onshore Fund, L.P.

●	666,391 shares of Common Stock issued as Liquidated Damages pursuant to Section 2c of the Registration Statement Agreement for the Series A Notes. Of these shares 333,443 are owned by Samlyn Offshore Master Fund, Ltd., 177,973 are owned by Samlyn Onshore Fund, L.P., 41,220 are owned by The IBS Turnaround Fund, L.P., 86,634 are owned by The IBS Turnaround Fund (QP) (A Limited Partnership) and 27,121 are owned by The IBS Opportunity Fund, Ltd.

●	3,283,283 shares of Common Stock issuable on the exercise of warrants.

The sellers referred to above as collectively referred to as the “Selling Stockholders” and the shares referred to above as collectively referred to as the “Shares.

See “The Offering,” “Selling Stockholders,” and “Antidilution Provisions.”

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Antidilution

Provisions

The Series A Notes contain standard antidilution provisions whereby the conversion price of the Notes into Common Stock is reduced upon the occurrence of certain events, including sales of equity securities at price below market price and/or below the then conversion price. The conversion price has already been reduced from $0.92 to $0.83 due to the issuance of equity securities below the current exercise price in June, 2016. This reduction in the conversion price, and any further reduction, means that more shares of Common Stock would be issuable on conversion. The June 2016 Warrants also contain antidilution provisions but not antidilution provisions for sales of equity securities at price below market price and/or below the then conversion price See “Antidilution Provisions” for a detailed description of the antidilution provisions.

Use of Proceeds

The Company will receive none of the proceeds from the sale of the Common Stock by the Selling Stockholders. The proceeds will go to the Selling Stockholders. See “Use of Proceeds.” However, if all of the June 2016 Warrants are exeecised, we will receive $820,821.

Plan of Distribution

The Selling Stockholders may, from time to time, sell any or all of their Common Stock on any stock exchange, market or trading facility on which the Shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may also engage in puts and calls and other transactions in our Common Stock or derivatives of our Common Stock and may sell or deliver the Common Stock in connection with these trades.

Broker-dealers that may be engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated.

See “Plan of Distribution.”

Business

Who We Are and What We Do

Applied Minerals, Inc. (the “Company” or “Applied Minerals”) (OTCQB: AMNL) (OTCBB: AMNL) owns the Dragon Mine in central Utah from which we extract, process and market halloysite clay and iron oxide for sale to a range of end markets. We also engage in research and development and frequently work collaboratively with potential customers, consultants, distributors, and third party processors to engineer and enhance our halloysite clay and iron oxide products to improve the performance of our customers’ existing and new products.

Halloysite

Our halloysite clay, which we market under the DRAGONITE™ trade name, is aluminosilicate clay with a hollow tubular shape. DRAGONITE can utilize halloysite’s shape, high surface area, and reactivity to add significant functionality to a number of applications, including molecular sieves and catalysts, nucleation and/or reinforcement of polymers, fire retardant additives for plastics, and cement.

Iron Oxide

Our iron oxide, which we market under the AMIRON™ tradename, is a high purity product. We currently sell it as an absorbent for hydrogen sulfide gas contained in natural gas. We believe that the high purity of the Dragon Mine’s iron oxide resource positions it to be able to compete cost effectively in the pigment market with higher-cost synthetic iron oxides as a colorant for mulch (typically made out of bark chips) and for other uses.

Sales

In 2016, we recorded revenues of $4,013,134. We currently have seven customers for our halloysite and one customer for our iron oxide.

Characterization of the Mineralization; Research and Development

Over the last eight years, the Company has expended significant resources to determine the amount, character and mineabilitiy of the mineralization of the deposits at the Dragon Mine.

We have also expended significant resources on research and development that focused on exploiting the unique shape and high purity of the Dragon Mine’s mineral resources to develop high-value, eco-friendly solutions. Such solutions either enhance product performance at minimal additional cost or reduce manufacturing costs without sacrificing product performance. We believe that DRAGONITE and AMIRON offer solutions that accomplish both of these objectives.

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Classification for SEC Purposes

The Company is classified as an “exploration stage” company for purposes of Industry Guide 7 of the U.S. Securities and Exchange Commission. Under Industry Guide 7, companies engaged in significant mining operations are classified into three categories, referred to as “stages” - exploration, development, and production. Exploration stage includes all companies that do not have established reserves in accordance with Industry Guide 7. Such companies are deemed to be “in the search for mineral deposits.” Notwithstanding the nature and extent of development-type or production-type activities that have been undertaken or completed, a company cannot be classified as a development or production stage company unless it has established reserves in accordance with Industry Guide 7. The mineralization indicated by the resource study (described below) we have commissioned is not a reserve for purpose of Industry Guide 7.

Processing Capability

We have a mineral processing plant with a capacity of up to 45,000 tons per annum for certain applications. Currently, this facility is dedicated to processing our iron oxide resource. Additionally, the Company has a second processing facility with a capacity of up to 10,000 tons per annum that is dedicated to its halloysite resource.

At the Dragon Mine, we use a dry beneficiation method to process our halloysite products through a micronizing system. Wet processing of halloysite is available through toll processors.

We use a third party processer to convert our iron oxide into pigments.

Distribution Channels

The Company markets and sells its products directly and through distributors. The Company’s CEO spends a significant amount of his time on sales, marketing and product development. The Director of Sales focuses on the marketing of the Company’s DRAGONITE products. The Company also uses several leading distribution organizations, E.T. Horn, Brandt Technologies, LLC, and Azelis to market its products. The Company has a non-exclusive distribution agreement with a distributor for Taiwan and an exclusive agreement with a distributor for Japan.

See “Business,” “Properties,” and “Risk Factors.”

Risk

Factors

An investment in our Common Stock is very speculative and involves a high degree of risk. If you decide to buy our Common Stock, you should be able to afford a complete loss of your investment. Among the risks are the following. You should read the full risk factor section within.

Losses, Deficits, Going Concern

We have experienced annual operating losses for as long as we have financial records (since 1998). For the years ended December 31, 2016 and 2015, the Company sustained losses from continuing operations of $7,639,772 and $9,805,137, respectively. At December 31, 2016 and 2015, the Company had accumulated deficits of $89,583,198 and $81,943,426, respectively. We have limited cash, negative cash flow, and unprofitable operations. Accordingly, our independent public accountant, EisnerAmper, has included a going concern paragraph in its opinion on our financial statements. We may need to seek additional financing to support our continued operations; however, there are no assurances that any such financing can be obtained on favorable terms, if at all, especially in light to the restrictions imposed on senior or pari passu financing by 10% PIK-Election Convertible Notes due 2018 and 10% PIK-Election Convertible Notes due in 2023.

Maturity of Outstanding PIK-Election Convertible Notes.

Unless the Company is able to generate significant cash flow, the Company may not have sufficient funds to pay outstanding PIK-Election Convertible Notes when such notes mature and unless the stock price increases significantly, the Company may not be able to force conversion of the notes before maturity.

The Company has two series of convertible, PIK notes outstanding, 10% PIK-Election Convertible Notes due 2018 ("Series A Notes") and 10% PIK-Election Notes due in 2023 (“Series 2023 Notes”). As of May 1, 2017, the outstanding balance of the Series A Notes was $25,318,852 and the outstanding balance of the Series 2023 Notes was $14,774,554. If the Company continues to pay interest with PIK Notes, the outstanding balances will increase significantly before maturity.

The description of the risks associated with maturity and mandatory conversion set forth below is limited to the Series A Notes, but the risks related to the Series 2013 Notes are similar.

The Series A Notes initially mature in 2018 but the maturity may, under certain circumstances, be extended until 2019 and under other circumstances may be extended until 2023.

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Penetrating Markets

For the Company to survive, we must penetrate our target markets and achieve sales levels and generate sufficient cash flow to break-even. To be a success, we must do better than that. There is significant uncertainty that we will be able to do so.

Competition

Currently there is limited competition involving the sale of halloysite-based products in our advanced applications target markets. If our DRAGONITE penetrates our advanced application target markets, we may face significant competition from such competitors as well as non-halloysite solutions often sold by larger, more established companies. The basis for competition is performance, price and reliability. If we are successful in penetrating our advanced applications target markets, we may face significant competition from producers of halloysite.

When we market halloysite for use in situations where halloysite has not been previously used, or is to be used as an additive in substitution for another additive to enhance certain functionality of an application, we will face competition from suppliers of other solutions and the competition will be based on performance, price and reliability.

We expect to compete with companies that, in some cases, may be larger and better capitalized than us. Because individual iron oxide deposits can differ in significant respects, our iron oxide may not be suitable for certain uses and we may have to demonstrate that our iron oxide will actually work for the manufacturer’s particular need and we can encounter problems in getting manufacturers to test our product and even if such tests are successful, to use our iron oxide.

See “Risk Factors”

Common Stock Rights	Holders of Common Stock are entitled to one vote per share. holders of Common Stock have no cumulative voting rights in the election of directors. Two shareholders have certain rights, which are described in the “Description of Capital Stock -- Common Stock,” to nominate directors.

	Holders of Common Stock are entitled to receive ratably dividends if, as, and when dividends are declared from time to time by our Board of Directors out of funds legally available for that purpose, after payment of dividends required to be paid on outstanding preferred stock or series Common Stock. The Series 2023 Notes and Series A Notes prohibit dividends without the approval of the holders of a majority of the principal amount of the Series 2023 Notes and Series A Notes. The Company has never paid a dividend and does not anticipate paying one in the future. See “Description of Capital Stock.”

Market for Our Common Stock
	Our Common Stock is traded on the OTCBB. On May 1, 2017, the closing market price on the OTCQB was $0.05.

	See “Price Range of our Common Stock.”

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INFORMATION ABOUT THE COMPANY

Applied Minerals, Inc. (the “Company” or “Applied Minerals”) (OTCQB: AMNL) (OTCBB: AMNL) owns the Dragon Mine from which we extract halloysite clay and iron oxide, which we then process and sell. We also engage in research and development and frequently work collaboratively with potential customers, consultants, distributors, and third party processors to engineer and enhance our halloysite clay and iron oxide products to improve the performance of our customers’ existing and new products.

The Dragon Mine is a 267-acre property located in central Utah, approximately 70 miles southwest of Salt Lake City, Utah.

We market our halloysite clay-based line of products under the tradename DRAGONITE. We market our iron oxide line of products under the tradename AMIRON.

THE DRAGON MINE

History of the Dragon Mine

The Dragon Mine was first mined in the third quarter of the 19^th century. It has since been mined by various owners and operators. It was mined for iron oxide from the late nineteenth century until approximately 1931 and it was mined for halloysite clay from approximately 1931 to 1976. From 1949 to 1976, the halloysite was sold for use as a petroleum cracking catalyst. A fire closed the mine in 1976. No mining took place from 1976 until 2001, at which point the Company leased the property with an option to buy it. The Company purchased the property in 2005.

The Company acquired the Dragon Mine primarily to exploit the mine’s halloysite resources. At the time that the Dragon Mine was acquired, it was assumed that the iron oxide mineralization would be useful only for steelmaking. Given historical price conditions and our method of mining (underground), sales of iron oxide for steelmaking would often not be economic and at best would yield marginal or low profits.

Prior to a change in management in 2009, the Company did relatively little to explore the mineralization at the Dragon Mine or to identify and exploit markets for the minerals. Since new management was installed in 2009, the Company has been using a consulting geologist to categorize the mineralization at the Dragon Mine and management has identified and begun to develop and exploit markets for halloysite and iron oxide.

As a result of categorizing the iron oxide mineralization, we believe the iron oxide deposit at the Dragon Mine is a high-quality deposit (due to its high Fe2O3 content, relative chemical purity, good dispersibility, good tinting strength and color saturation, low content of heavy metals, and high surface area, (25 m2/g – 125 m2/g) and reactivity).

Resource Study of the Dragon Mine’s Mineralization

There are two areas of the Dragon Mine minesite at which mining is conducted and they are referred to the “Dragon Pit” are and the “Western Area.” In addition, there are five surface piles on the site, mineralization that was left by prior operators.

The Company has commissioned an ongoing study (and updates) of the mine’s “resources” that was conducted using the standards of the JORC Code of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves. We will refer to the 2013 update as the “study.” The Company has commissioned a further update of the study to consider new information including the ability to wet process halloysite to eliminate substantially all iron oxide in halloysite products and to reevaluate past data and conclusions, in part because of the need to use of a different modeling system to determine tonnage. As a result, there will be changes to the information discussed below. So the information below should be considered preliminary.

The study indicated the existence of JORC “resources” of halloysite clay and iron oxide. Under the JORC Code, resource tonnages are reported in situ (in the ground) and are not net of (i) diluting materials or (ii) losses due to the mining process or (iii) losses due to processing to turn the mined mineral into saleable product.

A JORC resource is defined is a “mineral deposit in such form, grade…and quantity that there are reasonable for prospects for eventual economic extraction.” There are three levels of resources, differentiated by the level of confidence and they are in ascending order of confidence: inferred, indicated, and measured.

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A JORC indicated resource is an economic mineral occurrence that has been sampled (from locations such as outcrops, trenches, pits and boreholes) to a point where an estimate has been made, at a reasonable level of confidence, of its contained metal, grade, tonnage, shape, densities, and physical characteristics.

A JORC measured resource is an indicated resource that has undergone enough further sampling to be an acceptable estimate, at a high degree of confidence, of the grade, tonnage, shape, densities, physical characteristics and mineral content of the mineral occurrence.

The results of the study are summarized below. The tonnages in the Dragon Pit, the Western Area, and in Surface Pile #1 are considered “measured” resources. The tonnages in Waste Piles #2 - #5 are considered “indicated” resources.

The study was performed by Ian Wilson, Ph.D. as our consulting geologist. Dr. Wilson has supervised our drilling program. Dr. Wilson is a member of iom³ (Institute of Materials, Minerals and Mining of the UK). From 1974 to 2001 Mr. Wilson worked with English China Clays/Imerys mainly as a geologist and with management roles in Brazil, Spain, Sweden and China. Since his retirement in 2001, he has worked as an independent consultant dealing with many industrial minerals including halloysite.

Dragon Pit

The Dragon Pit area covers 4.95 acres and is mined underground. There are three separate types of mineralized material in the Dragon Pit area.

The first type is comprised of clay with a relatively high concentration (approximately 94%) of halloysite. The Dragon Pit contains 629,650 tons of this type of mineralized material.

The second type is comprised of a mix of kaolinite, illite-smectite, and halloysite clays. Clays constitute approximately 73.4% of this mineralization, of which halloysite constitutes approximately 42.6%, kaolinite constitutes 19.2% and illite-smectite constitutes 11.6%. The Dragon Pit contains 565,575 tons of this type of mineralized material.

The third type of mineralized material found in the Dragon Pit is comprised of iron-bearing materials. This mineralization contains goethite and hematite. When dehydrated, goethite forms hematite. We will sometimes refer to either minerals or combinations of the minerals as “iron oxide.” The mineralization is approximately 94% iron oxide, of which goethite accounts for 69.7% and hematite 24.3%. There exist separate areas of goethite and hematite but the majority of the iron-bearing mineralization in the Dragon Pit exists as a goethite-hematite mix. The Dragon Pit contains 3,254,989 tons of this iron-bearing mineralization.

The table below describes the clay resource in the Dragon Pit:

Area

Acres

Resource

Status

Clay

(Tons)

Clay Type

Average Clay Content (%)

629,650

Pure

Halloysite

Kaolinite

Illite-Smectite

Total

Dragon Pit

4.95

Measured

Halloysite

94.0

N/A

94.0

565,575 (1)

Mixed

42.6

19.2

11.6

73.4

(1)

The amount is the result of processing to < 45 microns, which eliminated 27% of the starting unprocessed material. The material would have to be wet processed so that the >45 micron material can be removed. The pure halloysite is used in our DRAGONITE products and mixed clays are not used in our DRAGONITE products.

The table below describes the iron oxide resource in the Dragon Pit:

Resource

Iron Oxide

Average Content (%)

Area

Acres

Status

(Tons)

Hematite

Goethite

Fe2O3

LOI (1)

Dragon Pit

4.95

Measured

3,254,989

29.16

63.54

77.47

10.09

(1)

LOI, or Loss on Ignition, is a test used in inorganic analytical chemistry, particularly in the analysis of minerals. It consists of strongly heating ("igniting") a sample of the material at a specified temperature, allowing volatile substances (such as water) to escape, until its mass ceases to change. LOI is generally described as the amount of moisture and trapped volatile oxides or carbonates present in the ore.

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Western Area

The Western area covers 6.33 acres and is mined underground. There are two different types of mineralization in the Western Area.

One type of mineralization in the Western Area is clay. It is comprised primarily of a mix of kaolinite, illite-smectite, and halloysite clays. The clay content of this mineralization is approximately 71.4%, of which kaolinite constitutes 47.2%, illite-smectite constitutes 17.5%, and halloysite constitutes 6.7%. The Western Area contains 862,903 tons of this type of mineralization.

The other type of mineralization is iron bearing. The Western Area contains goethite and hematite. The mineralization is approximately 96% iron oxide on a mineralogical basis, of which hematite accounts for 75.9% and goethite 20.1%. There exist separate areas of goethite and hematite but the majority of the iron-bearing mineralization in the Western Area exists as a goethite-hematite mix. The Western Area contains 797,717 tons of this iron-bearing mineralization.

The table below describes the clay resource in the Western Mine:

Resource

Average Clay Content (%)

Area

Acres

Status

Clay

(tons)

Halloysite

Kaolinite

Ilite-

Smectite

Total

Western Area

6.3

Measured

862,903

6.7

47.2

17.5

71.3

The Western Mine clays are not used in our DRAGONITE products. The table below describes the iron oxide resource in the Western Mine:

Area

Acres

Resource

Status

Iron (tons)

Average Content of Hematite, Goethite, Fe2O3 and

LOI (%)

Hematite

Geothite

Fe2O3

LOI

Western Area

6.33

Measured

797,717

60.03

30.7

8.29

8.04

Surface Piles

There are five surface piles that were created during the mining of halloysite clay between 1949 and 1976 when the Dragon Mine’s halloysite resource for use as a petroleum cracking catalyst. Any clay that contained more than a minimal amount (~ 2%) of iron oxide was not usable for petroleum cracking and was discarded into one of five surface piles.

The following sets forth information about the mineralized material by surface pile:

				Average Clay Content (%)
Surface Pile	Resource Status	Clay (Tons)		Halloysite		Kaolinite		Illite-Smectite		Total
1	Measured		154,500		41.8		25.8		9.4		77.0
2	Indicated		127,100		19.0		33.6		27.8		80.4
3	Indicated		298,900		9.8		30.7		24.9		65.4
4	Indicated		33,280		13.2		31.7		31.8		76.7
5	Indicated		144,100		13.5		31.8		36.5		81.8

These clays are not used in our DRAGONITE products.

In addition to the surface pile material described above, there is a surface pile of approximately 20,000 tons of mined iron oxide on the surface of the Dragon Mine property.

Resource Development/Exploration Drilling Expenses

In 2016 and 2015, the Company spent $981,045 and $3,997,039, respectively, on exploration and resource development.

More Detailed Description of the Mineralization at the Dragon Mine

Clays. Kaolinite and halloysite are clays and members of the kaolin group of clays. Both are aluminosilicate clays. Kaolinite and halloysite are essentially chemically identical, but have different morphologies (shapes). Kaolinite typically appears in plates or sheets. Halloysite, in contrast, typically appears in the shape of hollow tubes. On average, the halloysite tubes have a length in the range of 0.5 - 3.0 microns, an exterior diameter in the range of 50 - 70 nanometers and an internal diameter (lumen) in the range of 15 - 30 nanometers. Formation of halloysite occurs when kaolinite sheets roll into tubes due to the strain caused by a lattice mismatch between the adjacent silicon dioxide and aluminum oxide layers. Halloysite is non-toxic and natural, demonstrating high biocompatibility without posing any risk to the environment.

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Kaolinite is one of the world’s most common minerals. U.S. production in 2014 was approximately 6.3 million tons.

Halloysite is, by comparison, a rarer mineral and we believe worldwide production is less than 25,000 tons.

Illite refers to a group of clays that includes hydrous micas, phengite, brammalite, celadonite, and glauconite. Illite clays are common and large amounts are produced each year.

Smectite refers to a group of clays that includes montmorillonite, bentonite, nontronite, hectorite, saponite and sauconite. Smectite clays are common clay and large amounts are produced each year.

Iron Oxide. Hematite is the mineral form of iron oxide, which exists in a range of colors, including black to steel or silver-gray and brown to reddish brown, or red.

Geothite is an iron hydroxide oxide mineral, which exists in a range of colors, including yellowish to reddish to dark brown. If goethite is sufficiently heated to eliminate its contained water, it is transformed into hematite.

Mixtures of goethite and hematite are the color brown.

STATUS OF THE COMPANY FOR SEC REPORTING PURPOSES

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

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

Exploration stage includes all companies engaged in the search for mineral deposits (that is, reserves), which are not in either the development or production stage. In order to be classified as a development or production stage company, the company must have already established reserves. Notwithstanding the nature and extent of development-type or production-type activities that have been undertaken or completed, a company cannot be classified as a development or production stage company unless it has established reserves.

Under Industry Guide 7, a “reserve” is “that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.” Generally speaking, a company may not declare reserves, unless, among other requirements, a competent professional engineer conducts a detailed engineering and economic study and prepares a “bankable” or “final” feasibility study that “demonstrates that a mineral deposit can be mined profitably at a commercial rate.”

The Company commissioned a study of “resources” under the JORC Code of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves. That study indicated the existence of JORC “resources” of halloysite clay and iron oxide. A JORC resource is defined is a “mineral deposit in such form, grade and quantity that there are reasonable for prospects for eventual economic extraction,” a lower standard than that used for a final feasibility study. Among the differences between resources determined under the JORC Code and Industry Guide 7 is that under the JORC Code resources are measured in situ and are not net of diluting materials and mining losses, while under Industry Guide 7, reserves are net of diluting materials and mining losses. The results of the study are not net of mining and processing losses.

Despite the fact that the Company has not established reserves for purposes of Industry Guide 7, the Company has mined, processed and sold, and intends to continue to mine, process, and sell halloysite clay and iron oxide from the Dragon Mine.

A consequence of the absence of reserves under Industry Guide 7 is that the mining company, such as the Company, is deemed to lack an objective basis to assert that it has a deposit with mineralization that can be economically and legally extracted or produced and sold to produce revenue.

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Processing Facilities at the Dragon Mine

We have a mineral processing plant with a capacity of up to 45,000 tons per annum for certain applications. Currently, this facility is dedicated to processing our iron oxide resource. Typically, the processing involves a preliminary step of crushing the iron oxide in a crusher and a further step of pulverizing the iron oxide in our Hosokawa Alpine table roller mill. Depending on the customer’s specifications, if we need to only process the iron oxide through the preliminary step of crushing, our production capacity would be significantly greater than 45,000 tons per annum. We use a third party processor to further process our processed iron oxide for pigments and in particular for mulch coloring.

If demand for halloysite increases beyond our current capacity, we may choose to use a third-party to wet process or, if funds are available, invest in more or different processing capacity.

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Mining and Production Activity in 2016 and 2015

The following table discloses for the 12 months ended December 31, 2016 and 2015, respectively (i) the number of tons of halloysite clay and iron oxide extracted by the Company from the Dragon Mine and (ii) the number of tons of finished product produced by the Company:

	2016		2015
Tons extracted
Halloysite clay		35		550
Iron oxide		8,235		400
Products produced (tons)
Halloysite clay		107		140
Iron oxide		22,428		750

Customers

Amiron

At the current time, we are selling AMIRON iron oxide to one customer on an ongoing basis. That customer uses the AMIRON as a catalyst to adsorb a gas. The agreement with that Company calls for the sale of $5.0 million of AMIRON over a period of 18 months, which commenced in December, 2015. Through December, 2016 the Company sold approximately $3.7 million of the $5.0 million of AMIRON required by the agreement. The Company has agreed not to sell AMIRON to other customers for use in the same application for five years. The customer may elect to make another $5 million purchase at the end of five years and extend the exclusivity for this application for a total of ten years.

In 2015, we sold 20 tons of AMIRON to two other customers for use in commercial sales (as opposed to testing); one of the customers used the AMIRON in a biogas application and the other used it in connection with stain dispersion. The Company received no adverse feedback from such customers.

The Company is exploring whether AMIRON can be sold as an effective and cost-efficient substitute or partial substitute for barite as a weighting agent in certain drilling fluids used in the production of oil and gas. There is no certainty that the Company will be successful in penetrating this market.

The path to commercialization begins with testing by the customer and ends with a customer’s decision to commercialize the product after pilot scale production trials and, in certain cases, commercial scale production trials. The Company is working with many potential customers and individual potential customers are at different stages of the commercialization process. There is no certainty that any potential customer who tests our products will actually become a customer on an ongoing basis.

Dragonite

At the current time, the Company is selling halloysite on an ongoing basis to seven customers. One customer uses the halloysite to manufacture a specialty zeolite, which is used in an adsorption application. The initial purchase order of $228,000 was placed in 2015. The Company also sells to three ceramic companies that use the halloysite as a binder; to a large manufacturing company that uses the halloysite in structural acrylic adhesives; to a customer that uses the halloysite to strengthen epoxy resins; and to a large manufacturer that uses the halloysite for nucleation in extruded polymers.

There is no certainty that any potential customer who tests our products will actually become a customer on an ongoing basis. The Company currently is cautiously optimistic that additional customers could become ongoing customers with additional revenue in 2016 or early 2017.

Sales by Customer Use

The table below discloses the percentage of total revenue by product category for the twelve months ended December 31, 2016 and 2015. “Testing” represents revenue generated from the sale of products used for laboratory testing by customers or potential customers. “Scale-Ups” represents revenue generated from the sale of products to customers or potential customers to determine whether our products perform successfully within a production-scale environment. “Commercial Production” represents revenue generated from the sale of products to customers that are either consumed by the costumer or incorporated into a product that is sold by a customer to a third-party. “Other” represents revenue generated from the sale of products for which the Company is not aware of the use by a potential customer.

	Percentages of Sales Classified by Customer Use
*Sales for:*	2016		2015
Commercial Production		98		70
Scale-Ups		2		20
Testing		*		10
Other		*		*
Total		100		100

* < 1%

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Sales and Marketing

The Company markets and sells its products directly and through distributors. The Company’s CEO spends a significant amount of his time on sales and marketing, directly and assisting the Company’s sales staff, agents, and distributors. The Director of Sales focuses on the marketing of the Company’s DRAGONITE products to high-value application markets and the establishment and management of relationships with distributors.

E.T. Horn acts as exclusive distributor for AMIRON in the following states: Washington, Oregon, Idaho, Montana, Wyoming, California, Nevada, Utah, Arizona, New Mexico. It acts as exclusive distributor of DRAGONITE in those states plus Texas, Oklahoma, Arkansas, and Louisiana.

Brandt Technologies, LLC acts as exclusive distributor for DRAGONITE and AMIRON in North Dakota, South Dakota, Nebraska, Kansas, Missouri, Iowa, Minnesota, Wisconsin, Illinois, Indiana, Kentucky, Ohio, and Michigan.

Azelis, by itself and through its subsidiaries, Ribelin Sales, Inc., E.W. Kaufman Co., and GMZ Inc., acts as exclusive distributor for AMIRON in Mississippi. Alabama, Tennessee, Georgia, Florida, South Carolina, North Carolina, Virginia, West Virginia, Maryland, Delaware, Pennsylvania, New Jersey, Connecticut, New York, Vermont, Massachusetts, New Hampshire, and Maine. The Company intends to engage a distributor for DRAGONITE in these states.

The Company has a non-exclusive distribution agreement with a distributor for Taiwan and an exclusive agreement with a distributor for Japan.

Application Markets

The following discusses the markets into which the Company is marketing its DRAGONITE and AMIRON products. It cannot be assured that we will be successful penetrating these markets. The discussion does not discuss certain problems of selling into these markets, which are discussed elsewhere in the Business section or in the Risk Factors section.

Dragonite

The following is a description of the application markets to which the Company is marketing its halloysite-based DRAGONITE products:

Molecular Sieves and Catalyst.

Molecular Sieves. A molecular sieve is a material with very small holes of precise and uniform size. These holes are small enough to block large molecules while allowing small molecules to pass. Many molecular sieves are used as desiccants (substances that induce or sustain a state of dryness). Zeolites are a form of molecular sieve that are crystalline with a skeletal composed of aluminosilicates. We believe that DRAGONITE works very well with zeolites and helps entrap water and impurities both within halloysite’s hollow tubular structure as well as the porous outer walls, enhancing the drying of natural gas and air, the separation of liquid from product streams, and the separation of impurities from a gas stream.

Catalysts. Halloysite can be used as a catalyst for fluid cracking for oil and in methane to olephin. Crude oil petroleum must be processed in order to make it into gasoline and other fuels. Part of that process includes cracking, whereby large are two general types of cracking, thermal and catalytic. Catalytic cracking involves the addition of a catalyst to speed up the cracking. The reactive nature of halloysite lends itself to being an effective catalyst especially for high sulfur oil. Halloysite can also be used as a support for catalysts, which are applied to the halloysite as a coating.

Halloysite from the Dragon Mine was mined and processed as a catalyst for petroleum cracking from 1949 to 1976.

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Nucleation of Polymers; Reinforcement of Polymers

Nucleation. Plastics and polymers are composed of long molecular chains that form irregular, entangled coils in a melted resin, the phase in which a resin is liquid and its molecules can move about freely. In semi-crystalline polymers, the chains rearrange upon freezing and form partly ordered regions. Examples of semi-crystalline polymers are polyethylene (PE), polypropylene (PP), Nylon 6 and Nylon 6-6. Crystallization of a polymer occurs as a result of nucleation, a process that starts with small, nanometer-sized domains upon which the polymer chains arrange in an orderly manner to develop larger crystals. The overall rate of crystallization of a polymer be can increased by a nucleating agent. In plastic molding processes, especially in injection molding, the plastic part must remain in the mold until crystallization is complete (freezing). To the extent that crystallization is accelerated, the time in the mold can be reduced, thereby resulting in productivity enhancement. We believe that DRAGONITE added to a resin at a loading of just 1% can significantly speed up the process of crystallization.

We believe DRAGONITE can be effective as a nucleating agent for both polyethylene and polypropylene.

Reinforcement Fillers. Many plastics are reinforced with a filler to enhance the mechanical properties of a polymer. Reinforced plastics, in certain instances, can compete with stiffer materials like metal while also offering an opportunity to reduce the weight of a manufactured part (“light-weighting”).

We believe that the utilization of DRAGONITE as a reinforcing filler results in the improvement of one or more mechanical properties of a polymer such as modulus (the measure of how well a polymer resists breaking when pulled apart), strength (the measure of the stress needed to break a polymer), and impact resistance (the measure of a polymer’s resistance when impacted by a sharp and sudden stress) and can offer a value proposition when compared to certain traditional fillers.

Flame Retardant Additives

Flame retardants are widely used in flammable and flame resistant plastics and are found in electronics, building insulation, polyurethane foam, and wire and cable.

Plastic manufacturers typically mix or load a small amount of flame retardant into plastic to lower the risk of flammability of their products. We believe that DRAGONITE can be used as a partial replacement for Alumina Trihydrate (ATH) and Magnesium Hydroxide (MDH) in certain applications and as a synergist to ATH and MDH in other applications.

At typical loadings, ATH and MDH can adversely affect certain mechanical properties of plastics. We believe that DRAGONITE, in conjunction with ATH and MDH, exhibits a synergistic performance. Our research and development indicates that DRAGONITE can be used to replace 50% - 75% of antimony trioxide (ATO) in plastic without affecting flame retardancy, retaining the same rating under UL 94, the Standard for Safety of Flammability of Plastic Materials for Parts in Devices and Appliances testing.

Generally speaking, we believe the use of DRAGONITE instead of other fire retardant products should allow a manufacturer to use less fire retardant. In addition, using DRAGONITE may enable the manufacturer to reduce the weight of the manufactured part.

Other clays compete in the markets for partially replacing ATH, MDH, and ATO.

Cementing

The Company markets its DRAGONITE product to the cement admixture market. Research demonstrates how DRAGONITE, when added to a cement formulation, results in significant improvements in tensile strength that are more than twice the improvements in compressive strength while also reducing in permeability.

Binders for Ceramics

DRAGONITE is an effective binder for traditional ceramic products (any of various hard, brittle, heat-resistant and corrosion-resistant materials made by shaping and then firing a nonmetallic mineral, such as clay, at a high temperature). Binders are substances that improve the mechanical strength of green ceramic bodies so they can pass through production steps before firing without breakage. We believe that DRAGONITE, when used as a binder, also effectuates an improvement in the casting rate of the ceramic manufacturing process. This would equate to an increase in manufacturing efficiency.

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Cosmetics

Halloysite in DRAGONITE has a tubular shape that may be suited for an array of cosmetic applications. We believe that the adsorptive nature of the halloysite found in halloysite clay can serve as a hypoallergenic skin cleanser capable of removing unwanted toxins and oils from the skin without the need for harsh chemicals; of halloysite is also capable of exfoliating the skin; and, halloysite has been shown to be capable of functioning as a non-irritating carrier and release mechanism of cosmetic ingredients for a long lasting application.

Controlled Release Carriers

We believe that the halloysite present in DRAGONITE clay can act as an effective carrier of active ingredients, enabling an agent to be released from the carrier over an extended time frame. We believe that this controlled release capability can be utilized in oilfield applications, paints and coatings.

Amiron

The Company markets its AMIRON line of natural iron oxide-based products to the pigmentary and technical application markets. The iron oxide resource at the Dragon Mine has a high content of Fe2O3, The iron oxide is of high chemical purity, possesses high surface area, fine grains, dispersability, good tinting strength, enhanced color saturation, low color variation, and a low level of heavy metals content, high surface area (25 m2/g – 125 m2/g and reactivity. For these reasons, we refer to the Dragon Mine’s iron oxide resource as an “advanced” natural iron oxide.

Pigments

We can produce natural iron oxide pigments. These compete with synthetic iron oxide pigments that are produced from basic chemicals. Synthetic iron oxides account for approximately 80% of the market; natural iron oxides account for approximately 20%. Generally speaking, synthetic iron oxides cost much more to produce than natural iron oxides and sell for prices significantly in excess of natural iron oxides. Traditionally, natural iron oxides, due to their variance in quality, have not been able to compete with synthetic in the pigment market. We believe that the consistency of purity (high level of Fe2O3), desirable dispersability, color consistency, and UV protection, as well as the lower price, of our iron oxide should enable us to compete to some extent with higher priced synthetic iron oxides.

The major focus of our efforts in the pigment area involves the use of pigments for mulch. We are currently working to perfect a formula that does not run in the rain. We also believe that our AMIRON pigments can be used for artistic paint, semi-transparent and opaque exterior wood stain, semi-transparent cosmetics, food contact colorants, and pharmaceutical applications.

Technical Applications

Among the technical applications for our AMIRON are the following: adsorbents (iron oxide can be used to remove arsenic, copper, lead, chromium, cadmium from drinking water) and to remove contaminants and moisture from gases (under a supply agreement, the Company may not sell, at least until 2020, iron oxide to remove hydrogen sulfide from liquids or gases). Other applications include iron oxide for use in agriculture, as an additive in pet food, and for use in steel casing in foundries.

The Sales Process

The Company sells its products using employees, agents, and distributors, selling on a global basis.

Dragonite

The Company markets its DRAGONITE into two general types of application markets.

The first type is a market in which halloysite has not been previously used, or is to be used as an additive in substitution for another additive, to enhance certain functionality of an application. This type of market requires a number of steps to be completed before a sale can be consummated. Like any new material that will be incorporated into a commercial manufacturing process, a significant amount of testing must be performed by a customer before DRAGONITE can be incorporated into a manufacturing process and a product. Sales of this type require working with the potential customers’ existing formulations, which can vary from potential customer to potential customer.

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This could include identifying a solution, such as (i) surface coating or (ii) when to introduce DRAGONITE into the formulation or (iii) the conditions under which it should be introduced or (iv) changes, deletions, additions, or substitutions involving other elements of the customer’s formulation. Without the customer’s collaboration in identifying a solution, DRAGONITE could be unsuccessful in achieving the customer’s goals. This process can take an extended period of time (years in the case of discoloration of polymers as a result of the introduction of DRAGONITE) and, in some cases, there is no solution. In this type of market, price can be an important consideration and in some cases, we are not able to compete.

The second type of market is one in which halloysite clay is currently being used in traditional application markets. Within these established markets, we believe our DRAGONITE products often offers an enhanced value proposition with respect to purity and other properties sought by customers, although in some cases DRAGONITE’s purity and/or other properties may not be required or useful. The pricing of our products relative to those of our competitors, however, will always be a significant factor in determining our ability to penetrate these markets.

Amiron

The Company encounters the same types of challenges marketing AMIRON, as it faces in marketing DRAGONITE. In particular, the Company must compete on price and quality in relation to competitive materials.

It cannot be assured that we will be successful in further penetrating these markets.

Research, Development and Testing

The Company’s research and development and testing efforts are focused on the continued creation of commercial applications for our halloysite-based products and our iron oxides. The Company conducts significant research and development efforts internally and occasionally through consultants. The Company also conducts product research and development collaboratively with customers and potential customers.

In 2016 and 2015, the Company spent $139,539 and $181,821 for testing and research, respectively.

Trademarks and Patents

We have trademarked the name DRAGONITE and AMIRON. We believe these trademarks are important to the successful marketing of our product offering. We filed a Provisional Application for Patent in October, 2010 related to the use of nucleating agents in polyethylene. As of December 31, 2016, we have been granted this patent in Great Britain, Denmark, France and China. A patent is pending approval in the United States, Canada and Thailand.

Regulation

The Utah Department of Natural Resources sets the guidelines for exploration and other mineral related activities based on provisions of the Mined Land Reclamation Act, Title 40-8, Utah Code Annotated 1953, as amended, and the General Rules and Rules of Practice and Procedures, R647-1 through R647-5.We have received a large mine permit from the Department. The Company does not believe that such regulations, including environmental regulations, have or will adversely affect the Company’s business or have a material impact on capital expenditures, earnings and competitive position of the Company.

We carry a Mine Safety and Health Administration (MSHA) license (#4202383) for the Dragon Mine and report as required to MSHA. The Company is subject to extensive regulation and periodic inspections by the Mine Safety and Health Administration, which was created by the Mine Safety and Health Act of 1977. The regulations generally are designed to assure the health and safety of miners and our mine is periodically inspected by MSHA. The Company does not believe that such regulations have or will materially adversely affect the Company’s business or have a material impact on capital expenditures, earnings and competitive position of the Company.

The clays that the Company mines, including halloysite, may contain various levels of crystalline silica when mined. Crystalline silica is considered a hazardous substance under regulations promulgated by the U.S. Occupational Health and Safety Administration (OSHA) and U.S. Mine Health and Safety Administration (MSHA) and as a result is subject to permissible exposure limits (PELs), both in the mine and at the workplaces of our customers. The Company is required to provide Safety Data Sheets (SDS) at the mine and accompanying sales of products to customers. The Company must also apply hazard warning to labels of containers of the product sold to customers if levels of crystalline silica are present above specified thresholds. Kaolin and halloysite are subject to PELs.

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The EPA has stated that it is developing a test rule under the Toxic Substances Control Act (TSCA) to require manufacturers (which would include the Company) of certain nanoscale materials including kaolin, halloysite, and alumina (which is present in the clays mined by the company) to conduct testing for health effects, ecological effects, and environmental fate, as well as provide material characterization data. The impact of such a rule on the Company cannot be determined at this time. It seems clear, however, that if the results of the testing of particular nanomaterials indicate adverse health, ecological, or environmental effects, the EPA may seek to regulate those nanomaterials more extensively. Such regulation could include, among other things, limiting the uses of the nanoscale materials; requiring the use of personal protective equipment, such as impervious gloves and NIOSH approved respirators, and limiting environmental releases. The EPA is developing a SNUR for nanoscale materials under TSCA.

Employees

As of December 31, 2016, Applied Minerals, Inc. and its subsidiary had 32 employees. None of our employees are covered by a collective bargaining agreement, we have never experienced a work stoppage, and we consider our labor relations to be excellent.

Mining Property

The Dragon Mine property, located in Juab County, Utah, within the Tintic Mining District, has been principally exploited for halloysite clay and iron oxide. It is located approximately 2 miles southwest of Eureka, Utah and can be accessed via state highway and county road. The Union Pacific Railroad has a spur approximately 2 miles from the property. Electrical power is located approximately 1.5 miles from the site and there was no evidence of a water source on the property except in the mine shaft.

The property is located in the Tintic District of Utah, covering approximately 267 acres with a large mining permit covering 40 acres allowing for the extraction of minerals. The property consists of 38 patented and six unpatented mining claims located in the following sections: T10S, R2W, sections 29, 30, 31, and T10S, R3W, Section 36, all relative to the Salt Lake Base Meridian. The Company pays approximately $800 in annual maintenance fees to the U.S. Department of Interior Bureau of Land Management to maintain rights to its unpatented claims. The BLM Claim Numbers are: UMC385543, UMC 385544, UMC394659, UMC394660, UMC408539, and UMC408540. The Company has no underlying royalty agreements with any third-party with respect to the Dragon Mine. 267. We leased the property in 2001 and in 2005 we purchased the property for $500,000 in cash. As more fully explained in the “Business” section, the property has two mining areas, the Dragon Pit, which contains high purity halloysite, Dragon mixed clays and iron oxide and the Western Area, which contains mixed clays and iron oxides. On the property, there are also five large waste piles containing significant amounts of clay.

The Company has two dry-process facilities at its Dragon Mine property. One facility, being used to process iron oxide, has a capacity of up to 45,000 ton per year for certain types of processing and includes a Hosokawa Alpine mill. The other facility is dedicated to the halloysite clay resource and has an annual capacity of up to 10,000 tons per year.

We believe the physical plant and equipment utilized at the Dragon Mine are in satisfactory condition to continue our current mining and processing activity except where the Company anticipates using a third party to beneficiate its halloysite. The Company continually reviews the adequacy of its physical plant and equipment inventory and expects to invest accordingly to ensure that the size and quality of its physical plant and equipment can meet its needs. Currently, our physical plant includes, but is not limited to, two processing mills, a dry house, a site office, a general storage facility, an equipment repair facility, and a structure housing three IR compressors, which are used to power the mill and certain drilling equipment used underground. Our mining equipment includes, but is not limited to, a road header, an underground drill, a deep drill, a Scooptrans, a skid steer, a front-end loader and a number of other pieces traditionally used to mine underground. There are some pieces of equipment we choose to rent on a daily basis rather than own or lease to own. The Company uses diesel fuel as its primary source of power and has water transported to the property from an external source. The property has sufficient access to roads to enable the transportation of materials and products. The property also has a well-equipped laboratory used for quality control and research.

RISK FACTORS

AN INVESTMENT IN OUR SECURITIES IS VERY SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS, ALONG WITH THE OTHER MATTERS RELATED TO RISK REFERRED TO HEREIN THIS ANNUAL REPORT, BEFORE YOU DECIDE TO BUY OUR SECURITIES. IF YOU DECIDE TO BUY OUR SECURITIES, YOU SHOULD BE ABLE TO AFFORD A COMPLETE LOSS OF YOUR INVESTMENT.

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Our business activities are subject to significant risks, including those described below. Every investor, or potential investor, in our securities should carefully consider these risks. If any of the described risks actually occurs, our business, financial position and results of operations could be materially and adversely affected. Such risks are not the only ones we face and additional risks and uncertainties not presently known to us or that we currently deem immaterial may also significantly and adversely affect our business.

SPECIFIC RISKS APPLICABLE TO APPLIED MINERALS

LOSSES, DEFICITS, GOING CONCERN.

MATURITY OF OUTSTANDING PIK-ELECTION CONVERTIBLE NOTES.

The description of the risks associated with maturity and mandatory conversion set forth below is limited to the Series A Notes, but the risks related to the Series 2013 Notes are similar.

The Series A Notes initially mature in 2018 but the maturity may, under certain circumstances, be extended until 2019 and under other circumstances may be extended until 2023.

The holders may convert the Series A Notes into common stock at any time.

The Series A Notes are mandatorily convertible by the Company at any time that is two years after issuance only if either of the following conditions exist:

(A) (i) the maturity date of the Series A Notes has not been extended, (ii) the VWAP over the preceding 10 trading days is at or in excess of $1.00 per share, (iii) the closing market price of the common stock is at or in excess of $1.00 per share on the day before a mandatory conversion notice is issued, (iv) all outstanding amounts, if any, of the Series 2023 Notes or replacement financing for the Series 2023 Notes have been converted into common stock and (v) a registration statement is effective or a holder of the Series A Notes may sell the conversion shares under Rule 144 or

(B) (i) the VWAP over the preceding 20 trading days is in excess of the greater of $1.28 per share, the current conversion price of the Series 2023 Notes, if any, and the conversion price of the Replacement Financing, if any, (ii) the closing market price of the common stock is in excess of the greater of $1.28 per share, the conversion price of the Series 2023 Notes, if any, and the conversion price of the replacement Financing, if any, on the day before a mandatory conversion notice is issued, (iii) all outstanding amounts, if any, of the Series 2023 Notes or Replacement Financing have been converted into common stock and (v) a registration statement is effective or a holder of the Series A Notes may sell the conversion shares under Rule 144. The Series A Notes can mature earlier in the event of an Event of Default under the terms of the Series A Notes. There is not now, and the Company does not anticipate the occurrence of an Event of Default.

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PENETRATING MARKETS

For the Company to survive, we must penetrate our target markets and achieve sales levels and generate sufficient cash flow to break-even. To be a success, we must do better than that. As outlined below, and in light of the disclosures above, there is significant uncertainty that we will be able to do so.

Many of the applications for which we are selling for our halloysite-based material are applications for which halloysite has not been used previously. As a result, there are a number of special obstacles that we need to overcome to achieve sales in these markets. It may be necessary to convince manufacturers to change their manufacturing processes and substitute our halloysite-based material for the product they are currently using, and in some cases, to use our halloysite-based material where no product was used before.

The process beginning with introducing our halloysite-based material to manufacturers and ending with the manufacturers using our products in their production (i) can encounter inertia, skepticism, and different corporate priorities, (ii) requires educating potential customers (some of whom can be resistant) on whether our product actually works for the manufacturer’s particular need, the benefits of our material, and how to test and use our material (how much to add, when to add, and so forth), and (iii) often requires working with potential customers to assure that the potential customers test the materials under proper conditions to assure that our products provide the desired results, do not adversely affect the customer’s product and do not interfere with the other constituents of, or processes to make, the customer’s product. In summary, while we believe that our halloysite-based material often adds significant value, we can say two things about the process that ends with manufacturers using our halloysite-based material: it can take a long time and there is no certainty that we will be able to convince enough manufacturers to use our halloysite-base material.

Similarly, we are trying to sell our iron oxides, which are natural, into markets where synthetic iron oxides have been used in the past. In trying to make such sales, we encounter the same or similar types of problems described in the preceding paragraph

Other applications for which we are selling for our halloysite-based material and our iron oxides are applications for which halloysite or natural iron oxides have been used previously. To penetrate these markets, we face the difficulties encountered by any company trying to enter an established market competing against established players that may be in better financial condition that we are and are already familiar to, and in many cases have relationships with, the potential customers, which may make purchasing from such competitors more attractive than purchasing from us. While we believe that in many cases, our products are superior to those already in the market, there is uncertainty that we will be able to penetrate those markets to a sufficient degree. Because individual halloysite and iron oxide deposits can differ in significant respects, we may have to demonstrate that our halloysite or iron oxide will actually work for the manufacturer’s particular need and thus we can encounter the problems discussed in the third paragraph of this section.

COMPETITION

Competition from Other Miners of Halloysite

Despite the widespread occurrence of halloysite, large deposits from which high purity halloysite can be economically extracted are comparatively rare. These include deposits with high-grade zones that are dominantly halloysite and lower grade deposits where halloysite can be readily separated to give a high purity product. Relatively pure halloysite typically occurs as narrow lenses or pockets in altered rock and often requires selective mining and sorting to produce a high-grade product. Halloysite is often associated with fine-grained kaolinite, silica or other fine-grained mineral contaminants. using beneficiation methods that rely primarily on wet size classification.

The production of high-grade halloysite from large deposits for specialist industrial use at present is limited to the Dragon Mine and open pit mines owned by Imerys, a large French minerals company, in Northland, New Zealand. The New Zealand mines produce about 15,000 tons of halloysite per year. The raw clay from New Zealand contains around 50% halloysite, 50% silica minerals (quartz, cristobalite, tridymite, amorphous silica), and minor feldspar. It must be processed to eliminate the silica materials, which are classified as carcinogens. The exact percentages of silica and cristobalite in Imerys’ halloysite products is not known, but Imerys’ Safety Data Sheet for its premium halloysite filter cake indicates that the levels of cristobalite and silica are less than 10%. The permitted exposure levels for cristobalite are one–half of the permitted exposure levels for crystalline silica. Our Safety Data Sheet indicates that our processed halloysite “may contain naturally occurring Respirable Crystalline Silica (CAS #’s 14808-60-7 and 14464-46-1) at trace concentration levels below HazCom 2012 and GHS Revision 3 hazard classification limits. Per XRC analysis, which combines the analytical capabilities of X-Ray Diffraction, Computer Controlled Scanning Electron Microscopy/Energy Dispersive Spectroscopy and Raman Spectroscopy to conduct particle-by-particle inter-instrumental relocation and physicochemical/mineralogical analysis - naturally occurring trace level substances in these products, including Respirable Crystalline Silica, are inextricably bound, environmentally unavailable and at de minimis concentrations. Thus, in the current and anticipated future physical state of these products, they are believed to be incapable of causing harm under normal conditions of use or as a result of extreme upset.” Our halloysite does not contain cristobalite.

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Imerys’ halloysite has low amounts of Fe2O3. Some of our raw halloysite may contain more Fe2O3 but it can be processed out through bleaching or can be reduced through blending with purer halloysite.

Imerys’ website indicates that its halloysite is sold for use in tableware, but an article from 2000 indicated that a small percentage was being sold for use in synthetic zeolite-base molecular sieves and in the manufacture of honeycomb catalyst supports. We have no information to indicate that it being sold for those purposes now.

Smaller or lower grade deposits occur in many countries including Japan, Korea, China, Thailand, Indonesia, Australia, South America, and Europe. It is reported that halloysite from China, Brazil, and Turkey is sold commercially. Halloysite is typically used for ceramics and for paper coating and a small percentage of the halloysite from Turkey is sold for use in catalysts.

The degree or extent to which the halloysite from other deposits can or will compete with our halloysite-based products is subject to a variety of factors, including the following:

●

Deposits of halloysite are formed under a variety of geological conditions of hydrothermal alteration and weathering. As a result, the nature and extent of impurities, the length of the tube, thickness of the walls, and the size of the pore or lumen can all vary. In many deposits, the halloysite is mixed with other clays, limiting its usefulness for certain applications. Other deposits can contain significant amounts of crystalline silica and/or cristobalite, which may limit the usefulness for certain applications and/or require additional processing, although given the fine grain of silica and cristobalite, there are limits to the ability to eliminate them. Other deposits contain more iron oxide than is acceptable, requiring additional processing

●

Some deposits are subject to difficulties relating to mining. Some deposits are located in geographically isolated areas.

The global resource base for halloysite might be expanded to meet substantial growth in demand, especially if demand was for higher-value markets that would justify higher costs for mining and processing out containments. Such expansion might be anticipated both through the discovery of new deposits and through the adoption of more elaborate process methods to separate halloysite occurring within lower-grade sources. Competition from the other halloysite producers could arise and could adversely affect sales and margins and such competition would be based on performance and/or price.

Competition from Suppliers of Alternative Solutions to Halloysite

Competition for Iron Oxide

There is significant competition within the iron oxide pigment market. We will try to compete directly with established synthetic iron oxide pigments in the coatings markets by selling our pigments at a lower price. In other iron oxide pigment markets, there can be very little product differentiation with competition focused primarily on price, performance and reliability.

THE COMPANY’S SUCCESS DEPENDS ON OUR CEO

Andre Zeitoun is the President and CEO of the Company. Mr. Zeitoun has played a critical role in leading the effort to commercialize our halloysite-based products and iron oxides. If the Company loses the service of Mr. Zeitoun, there is no assurance that the Company would be able to attract and retain a qualified replacement.

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OTHER MORE GENERALIZED RISKS AND UNCERTAINTIES

The actual Dragon Mine profitability or economic feasibility may be adversely affected by any of the following factors, among others:

●

Changes in tonnage, grades and characteristics of mineralization to be mined and processed;

●

Higher input and labor costs;

●

The quality of the data on which engineering assumptions were made;

●

Adverse geotechnical conditions;

●

Availability and cost of adequate and skilled labor force and supply and cost of water and power;

●

Availability and terms of financing;

●

Environmental or other government laws and regulations related to the Dragon Mine;

●

Changes in tax laws, including percentage depletion and net operating loss carryforwards;

●

Weather or severe climate impacts;

●

Potential delays relating to social and community issues;

●

Industrial accidents, including in connection with the operation of mining and transportation equipment and accidents associated with the preparation and ignition of blasting operations, milling equipment and conveyor systems;

●

Underground fires or floods;

●

Unexpected geological formations or conditions (whether in mineral or gaseous form);

●

Ground and water conditions;

●

Accidents in underground operations;

●

Failure of mining pit slopes;

●

Seismic activity; and

●

Other natural phenomena, such as lightning, cyclonic or storms, floods or other inclement weather conditions.

THERE IS COMPREHENSIVE FEDERAL, STATE AND LOCAL REGULATION OF THE EXPLORATION AND MINING INDUSTRY THAT COULD HAVE A NEGATIVE IMPACT OUR MINING OPERATIONS.

Exploration and mining operations are subject to federal, state and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground, the discharge of materials into the environment, restoration the property after mining operations are completed. Exploration and mining operations and some of the products we sell are also subject to federal, state and/or local laws and regulations that seek to maintain health and safety standards. No assurance can be given that standards imposed by federal, state or local authorities will not be changed or that any such changes would not have material adverse effects on our activities, including mine closure. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on our financial position. Additionally, we may be subject to liability for pollution or other environmental damages that we may elect not to insure against due to prohibitive premium costs and other reasons. Additionally, we may be subject to liability for pollution or other environmental damages that we may elect not to insure against due to prohibitive premium costs and other reasons.

PROPERTIES

PRINCIPAL OFFICE

The corporate office is located at 55 Washington Street, Suite 301, Brooklyn, NY, 11201.

MINING PROPERTIES

The following section describes our right, title, or claim to our properties and each property's location. This section also discusses our present plans for exploration of the properties.

JUAB COUNTY, UTAH

Dragon Mine

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As of the filing of this report, the Company was classified as an exploration stage company for purposes of Industry Guide 7 of the U.S. Securities and Exchange Commission.

Under Industry Guide 7, companies engaged in significant mining operations are classified into three categories, referred to as “stages”- exploration, development, and production. Exploration stage includes all companies engaged in the search for mineral deposits (reserves). In order to be classified as a development or production stage company, a company must have already established reserves. Unless a company has established reserves, it cannot be classified as a development or production stage company, notwithstanding the nature and extent of development-type or production- type activities that have been undertaken or completed.

Under Industry Guide 7, a “reserve” is “that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.” Generally speaking, a company may not declare reserves, unless, among other requirements, competent professional engineers conduct a detailed engineering and economic study and prepare a “bankable” or “final” feasibility study that “demonstrates that a mineral deposit can be mined profitably at a commercial rate.”

The Company commissioned a study of “resources” under the JORC Code of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves. The study is in the process of being updated. That study indicated the existence of JORC “resources” of halloysite clay and iron oxide. A JORC resource is defined as a “mineral deposit in such form, grade and quantity that there are reasonable for prospects for eventual economic extraction,” a lower standard than that used for a final feasibility study.

Significant additional steps will be necessary before a “bankable” or “final” feasibility study can be prepared for the Company.

Despite the fact that the Company has not established reserves, the Company has mined, processed and sold, and intends to continue to mine, process, and sell, halloysite clay and iron oxide from the Dragon Mine.

For purposes of Industry Guide 7, a consequence of the absence of reserves is that the mining company, such as the Company, is deemed to lack an objective basis to assert that it has a deposit with mineralization that can be economically and legally extracted or produced and sold to produce revenue.

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LEGAL PROCEEDINGS

As of the date of this prospectus, 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.

MARKET PRICES FOR OUR COMMON STOCK

Our Common Stock is quoted on OTCQB under the symbol “AMNL”.

The following table sets forth the high and low bid quotations per share of our Common Stock for the periods indicated. The high and low bid quotations reflect inter- dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

2015	High		Low
First Quarter	$	0.74	$	0.63
Second Quarter	$	0.75	$	0.54
Third Quarter	$	0.56	$	0.22
Fourth Quarter	$	0.43	$	0.16

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2016	High		Low
First Quarter	$	0.32	$	0.15
Second Quarter	$	0.24	$	0.12
Third Quarter	$	0.19	$	0.12
Fourth Quarter	$	0.15	$	0.10

2017	High		Low
First Quarter	$	0.13	$	0.08
Second Quarter through May 1	$	0.08	$	0.05

Dividends

Since we became a reporting company in 2002, we have never declared or paid any cash dividend on our common stock. We have no current plans to declare dividends and we are subject to any restrictions or limitations relating to the declaration or payment of dividends under the terms of the Series A and the Series 2023 Notes.

EQUITY COMPENSATION PLANS

In 2012, the shareholders of the Company approved the adoption of the Applied Minerals, Inc. 2012 Long-Term Incentive Plan (“2012 LTIP”) and the performance criteria used in setting performance goals for awards intended to be performance-based under Code Section 162(m). Under the 2012 LTIP, 8,900,000 shares are authorized for issuance or used as reference purposes.

Prior to the adoption of the 2012 LTIP, stock options were granted under individual arrangements between the Company and the grantees and approved by the Board of Directors without approval of the shareholders.

In May, 2016, the Board of Directors has adopted without shareholder approval the 2016 Long Term Incentive Plan (“2016 LTIP”). The aggregate number of shares of common stock that may be issued or used for reference purposes with respect to which awards may be granted under the 2016 LTIP could not exceed 2,000,000.

In December 2016, the shareholders of the Company approved the adoption of the Applied Minerals, Inc. 2016 Incentive Plan (“2016 Incentive Plan”) and the performance criteria used in setting performance goals for awards intended to be performance-based under Code Section 162(m). Under the LTIP, 15,000,000 shares are authorized for issuance or used as reference purposes. The CEO, the CFO, named executive officers, and directors, among others, are eligible to participate in the LTIP.

Each of the 2012 LTIP, 2016 LTIP, and the 2016 Inventive plan, allowed for the following types of incentive awards: stock options, stock appreciation rights, restricted stock, performance shares, performance units or other stock-based award and provided for wards may be issued to employees (including the CEO, the CFO, named executive officers), consultants and non-employee directors.

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Equity Compensation Information

As of December 31, 2016

	Number of securities to be issued upon exercise of outstanding options, warrants, and rights			Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)			(b)		(c)
Equity compensation plans approved by security holders		8,814,549	(1)	$	0.94		24,171
Equity compensation plans not approved by security holders		12,924,270	(2)	$	0.83		NA
Total		21,738,819		$	0.87

(1)

Includes options granted under the 2012 LTIP and 2016 LTIP

(2)

Grants prior to 2012 LTIP. Options to purchase common stock were issued under individual compensation plans prior to the adoption of the 2012 LTIP as follows: (a) 9,487,930 options were granted to Material Advisors LLC, the entity that provided management personnel to the Company from 2009 to 2013. Mr. Zeitoun was allocated 60% of the options and the other members of Material Advisors LLC, Christopher Carney and Eric Basroon (Mr. Zeitoun’s brother-in-law and Vice President of Business Development), were allocated 20% each. 6,583,277 options have an exercise price of $.70 per share, vested over three years from 2009-2011, and have a ten-year term. 2,904,653 have an exercise price of $.83 per share, vested over one year in 2012, and have a ten-year term; (b) 400,481 options were granted to directors in four grants during 2011 and 2012 with exercise prices ranging from $.83 per share to $1.24 per share. The options had vesting periods of one year and have five-year terms. (c) 650,000 options were granted in two grants to a now-former director during 2008 and 2009 in his capacity as an employee and a consultant. The exercise price was $.70 per share, the options vested immediately and have a ten-year term; (d) 1,622,769 options were granted to employees and consultants in five grants during 2011 and 2012. The exercise prices range from $.78 per share to $2.00 per share, vesting periods ranged from one to three years, and the terms are five or ten years; and (e) 461,340 options were granted to an investment bank in April of 2011 for financial advisory services provided to the Company. The exercise price of the options was $1.15 per share, it vested immediately and has a term of ten years. All of the foregoing options had an exercise price at or above the market price of the common stock on the date of grant.

On May 11, 2016, the Company granted 250,000 nonqualified options to two directors with an exercise price of $0.25 per share. The options vested immediately and expire five years after the date of grant.

On July 6, 2016, the Company granted 500,000 nonqualified options to an officer with an exercise price of $0.16 per share. The options vest ratably over a 12-month period beginning August 15, 2016 and expire in three years.

On August 1, 2016, the Company granted 120,000 nonqualified options to two officers with an exercise price of $0.25 per share. The options vested immediately and expire 10 years after the grant date.

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STOCK PERFORMANCE GRAPH

	Dec-11		Dec-12		Dec-13		Dec-14		Dec-15		Dec-16
Applied Minerals, Inc.	$	100	$	121	$	87	$	57	$	22	$	9
iShares Russell Microcap ® Index ETF	$	100	$	117	$	168	$	172	$	161	$	192
S&P Metals & Mining Index	$	100	$	92	$	86	$	63	$	31	$	62

* Cumulative return assumes a $100 investment of each respective security at December 31, 2011.

SELECTED FINANCIAL DATA

Year Ended December 31 (in 000’s except per share data)	2016			2015			2014			2013			2012
Revenue	$	4,013.1		$	507.5		$	234.2		$	54.8		$	165.7
Loss from continuing operations	$	(7,639.8	)	$	(9,805.1	)	$	(10,316.3	)	$	(13,063.5	)	$	(9,732.4	)
Net loss	$	(7,639.8	)	$	(9,805.1	)	$	(10,316.3	)	$	(13,063.5	)	$	(9,732.4	)
Loss from continuing operations - basic	$	(0.07	)	$	(0.10	)	$	(0.11	)	$	(0.14	)	$	(0.11	)
Net loss - basic	$	(0.07	)	$	(0.10	)	$	(0.11	)	$	(0.14	)	$	(0.11	)
Loss from continuing operations - diluted	$	(0.07	)	$	(0.10	)	$	(0.11	)	$	(0.14	)	$	(0.11	)
Net loss - diluted	$	(0.07	)	$	(0.10	)	$	(0.11	)	$	(0.14	)	$	(0.11	)
Cash and equivalents	$	1,049.9		$	1,803.1		$	10,701.7		$	8,685.6		$	3,356.1
Total assets	$	6,079.5		$	8,339.4		$	18,457.7		$	15,215.3		$	7,818.5
Long-term liabilities	$	25,229.7		$	22,245.4		$	23,119.0		$	11,727.4		$	2,129.4
Shareholders’ equity (deficit)	$	(20,968.1	)	$	(15,739.7	)	$	(7,517.0	)	$	1,486.6		$	3,966.2

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has no virtually exposure to fluctuations in interest rates or foreign currencies.

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INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS

Identification of Directors and Officers

The following table provides the names, positions, ages and principal occupations of our current directors, and our executive officers.

Name and Position with The Company	Age	Director/Officer Since	Principal Occupation

Mario Concha	76	Chairman since 2016; Director since 2013	President, Mario Concha and Associates

John F. Levy	61	Vice Chairman since 2016; Director since 2008	CEO of Board Advisory

Robert T. Betz	75	Director since 2014	Owner, Personal Care Ingredients

David A. Taft	60	Director since 2008	President of IBS Capital

Ali Zamani	36	Director since 2014	Portfolio Manager at Gefinor Capital Management

Andre Zeitoun	44	Director, President, and CEO since January, 2009	President and CEO of the Company

Christopher T. Carney	46	Officer since 2015	Chief Financial Officer of the Company

William Gleeson	74	Officer since 2011	General Counsel of the Company

(1)

The directors are elected to serve until the next annual meeting of shareholders. Officers serve at the pleasure of the Board.

Background of Directors and Officers

Mario Concha, Director

Mr. Concha is the President of Mario Concha and Associates, LLC, a firm providing consulting services to senior executives and members of boards of directors. In addition to providing consulting services, he has served as a director of The Plaza Group, a chemical marketer; Arclin, Ltd., a manufacturer of specialty resins; and Auro Resources, Corp, a mineral exploration company with holdings in Colombia’s gold region. Prior to founding Mario Concha and Associates in 2005, Mr. Concha was an officer of Georgia Pacific Corporation and president of its Chemical Division from 1998 to 2005.

Prior to Georgia Pacific, Mr. Concha participated in the formation of GS Industries, a manufacturer of specialty steels for the mining industry, through a leveraged buyout of Armco Inc’s Worldwide Grinding Systems Division. He then served as President of its International Division from 1992 to 1998. From 1985 to 1992, Mr. Concha was Vice President-International for Occidental Chemical Corporation. Prior to OxyChem, he served in several senior management positions at Union Carbide Corporation in the United States and overseas.

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Mr. Concha is a graduate of Cornell University with a degree in Chemical Engineering. He is a member of the American Chemical Society and of the American Institute of Chemical Engineers.

Key attributes, experience and skills: Mr. Concha has over 40 years experience as a hands-on corporate executive. He has first-hand industry knowledge, gained from senior executive positions in various industries, including chemicals, plastics, forest products, metals, and mining. In addition to manufacturing operations, he has had extensive involvement in marketing, sales, and finance. Mr. Concha also brings corporate governance experience, having served on both public and private company boards.

John F. Levy, Non-Executive Chairman and Director

Mr. Levy became a director of the Company in January 2008. Mr. Levy currently serves as the Chief Executive Officer and principal consultant for Board Advisory (the “Levy Company”), a consulting firm established to assist public companies, or companies aspiring to be public, with corporate governance, corporate compliance, ethics, financial reporting and financial strategies. He has held this role since May 2005. Mr. Levy is a recognized corporate governance and financial reporting expert with over 30 years of progressive financial, accounting and business experience; including nine years in public accounting with three national accounting firms and having served as Chief Financial Officer of both public and private companies for over 13 years. Mr. Levy currently serves on the board of directors of two other public companies: Takung Art Co., Ltd. (since February 2016), operator of an electronic online platform or artists, art dealers and art investors to offer and trade in ownership units over valuable artwork; and Washington Prime Group, Inc. (since June 2016), a retail REIT that owns, develops and manages 114 shopping centers in the United States. Mr. Levy also served on the board of directors of Applied Energetics, Inc., a company specializing in the development and application of high power lasers, high voltage electronics, advanced optical systems and energy management systems technologies, until February 2016; Gilman Ciocia, Inc., a former financial planning and tax preparation firm, until October 2013; BrightPoint, Inc., a former NASDAQ listed device lifecycle services provider to the wireless industry, until October 2012; and China Commercial Credit, Inc., a financial services firm operating in China, until December 2016. Mr. Levy served as Interim Chief Financial Officer of Universal Food & Beverage Company from November 2005 to March 2006. Universal Food & Beverage Company filed a voluntary petition under the provisions of Chapter 11 of the United States Bankruptcy Act on August 31, 2007. Mr. Levy also served as a board member and program chair for the New Jersey Chapter of the National Association of Corporate Directors (“NACD”) from October 2007 to June 2012. Mr. Levy is a frequent speaker on the roles and responsibilities of board members and audit committee members. He has authored and presented numerous courses on finance, management and governance to state accounting societies including THE 21ST CENTURY DIRECTOR: Ethical and Legal Responsibilities of Board Members. Mr. Levy is a Certified Public Accountant with several years of experience. Mr. Levy is a graduate of the Wharton School of Business at the University of Pennsylvania, and received his MBA from St. Joseph's University in Philadelphia, Pennsylvania. Mr. Levy is a NACD Board Leadership Fellow.

Mr. Levy is a Certified Public Accountant with nine years experience with the national public accounting firms of Ernst & Young, Laventhol & Horwath, and Grant Thornton. Mr. Levy has a B.S. degree in economics from the Wharton School of the University of Pennsylvania and received his M.B.A. from St. Joseph's University (PA).

Key attributes, experience and skills: Mr. Levy has over 35 years of progressive financial, accounting, and business experience, including having served as Chief Financial Officer of both public and private companies for over 13 years. Mr. Levy brings to the board expertise in corporate governance and compliance matters along with extensive experience gained from numerous senior executive positions with public companies. Further, Mr. Levy’s service on the boards of directors of public companies in a variety of industries allows him to bring a diverse blend of experiences to the Company’s board.

Robert T. Betz

From 2000 through his retirement in 2002, Mr. Betz was the President of Cognis Corp., the North American division of Cognis GmbH, a $4 billion worldwide supplier of specialty chemicals and nutritional ingredients spun off from Henkel AG & Company ("Henkel"). From 1989 through 2000, Mr. Betz held a number of management positions at Henkel including Executive VP and President of its Emery Group, a leading manufacturer of oleochemicals, and President of its Chemicals Group for North America.

From 1979 through 1989, Mr. Betz worked in a number of manufacturing and operations capacities for the Emery Division of National Distillers and Chemicals Corp., eventually rising to President of the division. Mr. Betz began his career in the specialty chemicals industry by joining Emery Industries in 1963. Between 1963 and 1979 he worked for the company as Market Development Representative, Manager of Corporate Planning, Vice President of Operations - Emery (Canada), Manager of Commercial Development, and General Manager of Business Groups. Emery Industries was sold to National Distillers and Chemicals Corp. in 1979.

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Since 2003, Mr. Betz has been the owner of Personal Care Ingredients, LLC, a privately owned marketer of natural products to the personal care industry. Mr. Betz also serves as a director for Bio-Botanica, a manufacturer of natural extracts, and The Plaza Group, a marketer of petrochemicals.

Mr. Betz holds a B.S. in Chemical Engineering and an M.B.A. from the University of Cincinnati. He's also attended the Program for Management Development at Harvard University.

Key attributes experience and skills. During Mr. Betz’s career, he has been involved in developing new products or new markets for existing products. Several of these products grew into sizeable businesses. He managed multiple chemical manufacturing facilities and managed a multi-billion dollar polyethylene business. He was responsible for profit and loss for businesses with sales of $900 million. While heading the chemical operations, he was responsible for all aspects of the business: manufacturing, sales, R&D, IT, HS&E, HR, purchasing, engineering, and legal. His career has continuously involved developing, manufacturing, and selling products directed at most of the markets that Applied Minerals is attempting to penetrate. Since his retirement, he has served on the boards of three chemical-related, private companies: Plaza, Syrgis, and Bio-Botanica..

David A. Taft, Director

Mr. Taft is the President of IBS Capital LLC, a private investment company based in Boston, Massachusetts, which he founded in 1990. Prior to founding IBS Capital LLC, Mr. Taft spent ten years working in corporate finance with Drexel Burnham Lambert, Winthrop Financial and Merrill Lynch. Mr. Taft is a graduate of Amherst College and Amos Tuck School of Business Administration at Dartmouth College.

Key attributes, experience and skills: Mr. Taft has over 30 years experience as a corporate investment banker and the manager of IBS Capital LLC, a private investment fund. Mr. Taft brings significant leadership, financial expertise, business development skills, and corporate restructuring experience to the Company’s Board of Directors. The investments Mr. Taft has made through his management of the IBS Turnaround Fund has, on occasion, required him to advise companies on issues such as corporate governance, capital raising, balance sheet restructuring, and general business strategy. IBS Capital LLC, under Mr. Taft’s direction, has been a large shareholder of Applied Minerals, Inc. for a number of years.

Ali Zamani, Director

Ali Zamani has served as a Portfolio Manager at Gefinor Capital Management since February 2014 and as Chief Investment Officer of the GEF Opportunities Fund, an opportunistic, value-oriented, liquid public markets fund. Prior to Gefinor, Ali Zamani was a Principal at SLZ Capital Management, a New York-based asset management firm, from July 2012 to December 2013. Prior thereto, he was a Portfolio Manager at Goldman Sachs from 2004 to 2012 where he focused on the energy, materials, utilities and industrials sectors. From 2002 to 2004, Mr. Zamani was a mergers and acquisitions analyst at Dresdner Kleinwort Wasserstein, a boutique New York-based investment bank focused on the energy and utilities sectors.

Mr. Zamani holds a B.S. in Economics from the Wharton School at the University of Pennsylvania, where he graduated magna cum laude.

Key attributes, experience and skills: Mr. Zamani has over 14 years of financial industry experience, including 8 years as a senior investment professional at Goldman Sachs & Co. Mr. Zamani brings significant capital markets expertise, including extensive mining and industrial sector investing experience. Additionally, Mr. Zamani brings a unique shareholder/investor prespective to the board having been a major shareholder in numerous similar companies over his career.

Andre M. Zeitoun, Chief Executive Officer, President, Director

Mr. Zeitoun is President and CEO and has served in those positions since January 1, 2009.

Mr. Zeitoun was a Portfolio Manager at SAC Capital/CR Intrinsic Investors from March 2007 through December 2008. At SAC, he led a team of six professionals and managed a several hundred million dollar investment portfolio focused on companies that required a balance sheet recapitalization and/or operational turnaround. Many of these investments required Mr. Zeitoun to take an active role in the turnaround process. From 2003 to 2006, Mr. Zeitoun headed the Special Situations Group at RBC Dain Rauscher as a Senior Vice President and head of the division. He managed all group matters related to sales, trading, research and the investment of the firm’s proprietary capital. From 1999 to 2003 Mr. Zeitoun was a Senior Vice President at Solomon Smith Barney. In this role, Mr. Zeitoun led a Special Situations sales trading research team serving middle market institutions. Mr. Zeitoun is a graduate of Canisius College.

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Key attributes, experience and skills: Mr. Zeitoun has over 16 years experience identifying, allocating capital to, and taking an active role in corporate situations requiring a balance sheet recapitalization and/or operational restructuring. Since January 2009, Mr. Zeitoun has spearheaded effort to stabilize the Company’s balance sheet, raise critically needed capital, engage industry-leading consultants to quantify and characterize the Company’s Dragon Mine resource, increase processing capabilities, establish a marketing infrastructure, and lead the marketing effort. During his time as President and Chief Executive Officer of Applied Minerals, Inc., Mr. Zeitoun has developed a level of expertise in the area of the commercialization of halloysite and iron oxide applications.

Christopher T. Carney, Chief Financial Officer

From February 2009 through May 2012, Mr. Carney was the Interim Chief Financial Officer of the Company. From May 2012 through August 2015, Mr. Carney was a VP of Business Development for the Company. Mr. Carney was appointed Chief Financial Officer of the Company in August 2015 when previous Chief Financial Officer resigned. From March 2007 until December 2008, Mr. Carney was an analyst at SAC Capital/CR Intrinsic Investors, LLC, a hedge fund, where he evaluated the debt and equity securities of companies undergoing financial restructurings and operational turnarounds. From March 2004 until October 2006, Mr. Carney was a distressed debt and special situations analyst for RBC Dain Rauscher Inc., a registered broker-dealer. Mr. Carney graduated with a BA in Computer Science from Lehman College and an MBA in Finance from Tulane University.

William Gleeson, General Counsel

Prior to joining the Company, Mr. Gleeson was a partner at K&L Gates, LLP for eleven years, focusing on various areas of corporate and securities law. From January 2008 until September 2011 when he joined the Company, he served as Applied Minerals, Inc.’s outside counsel, a time during which he acquired an in-depth understanding of the Company’s business. Mr. Gleeson received his J.D. from the University of Michigan, from which he also received his undergraduate degree.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our officers, directors, and any person who beneficially owns more than 10% of our common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Executive officers, directors, and more than 10% shareholders are required by regulation to furnish us with copies of all Section 16(a) forms which they file. To the best of our knowledge, all filings were made timely in 2016 except for one filing each by Messrs. Taft (and his controlled entity, IBS Capital), Betz, Concha, Zamani, and Levy.

Code of Ethics

We have adopted a Code of Conduct and Ethics for our Chief Executive Officer and our senior financial officers. A copy of our Code of Conduct and Ethics is posted on our website at www.appliedminerals.com and can be obtained at no cost by mail at: Applied Minerals, Inc., 55 Washington Street, New York, N.Y. 11201 We believe our Code of Conduct and Ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely, and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the Code.

Board Meetings

There were ten meetings of the Board of Directors held in 2016. Every director attended at least 75% of all board meetings and all committee meetings of which that director was a member. It is the policy of the Board that all Board members attend the annual meeting of shareholders, if possible.

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Committees of the Board

The following sets forth the Committees of the Board and membership of the committees. The charters of the committees are available at the Company’s website, appliedminerals.com. The Board of Directors has determined that all committee members are independent under the independence definition used by NASDAQ except for Mr. Zeitoun.

	Audit Committee	Governance and Nominating Committee	Compensation Committee	Health, Safety and Environment Committee	Operations Committee
Mario Concha	X	X	X*	X	X*
John Levy		X*	X
Robert Betz	X*	X	X	X*	X
Ali Zamani	X			X
Andre Zeitoun				X	X

* Committee Chairman

The charters of the Committees are available on the Company’s website, www.appliedminerals.com.

The Audit Committee satisfies the definition of Audit Committee in Section 3(a)(58)(A) of the Securities Exchange Act of 1934.

Audit Committee Financial Expert

The Board of Directors has determined that Mr. Zamani is an audit committee financial expert as the term is defined in the rules of the Securities and Exchange Commission and is independent under the independence standards of NASDAQ (the independence standard used by the Company) and the enhanced independence standards of Section 10A-3 of the Securities Exchange Act.

Audit Committee Report

The audit committee has reviewed and discussed the audited financial statements included elsewhere in this Annual Report with management;

The audit committee has discussed with the independent auditors the matters required to be discussed by the Auditing Standards AU Section 380 - The Auditor’s Communication with those charged with Governance as adopted by the Public Company Accounting Oversight Board in Rule 3200T;

The audit committee has received the written disclosures and the letter from the independent accountant required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the audit committee concerning independence and has discussed with the independent accountant the independent accountant's independence; and

Based on the review and discussions referred to in three preceding paragraphs, the audit committee recommended to the board of directors that the audited financial statements be included in the Company's annual report on Form 10-K and in this prospectus for the last fiscal year for filing with the Commission.

Audit Committee

Robert Betz, Chairman

Mario Concha

Ali Zamani

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The Nomination Process

The general criteria that our Board uses to select nominees includes the following: reputation for integrity, honesty and adherence to high ethical standards; demonstrated business acumen, experience, and ability to exercise sound judgments in matters that relate to the current and long-term objectives of the Company; willingness and ability to contribute positively to the decision-making process of the Company; commitment to understand the Company, its risk factors and its industry and to regularly attend and participate in meetings of the Board and its committees; interest and ability to understand the sometimes conflicting interests of the various constituencies of the Company, which include stockholders, employees, customers, creditors and the general public; ability to act in the interests of all stakeholders; and the absence of any appearance of a conflict of interest that would impair the nominee's ability to represent the interests of all of the Company’s stockholders and to fulfill the responsibilities of a director. There are, however, no specific minimum qualifications that nominees must have in order to be selected. The Board will consider director candidates recommended by our stockholders. In evaluating candidates recommended by our stockholders, the Board of Directors applies the same criteria discussed above. Any stockholder recommendations for director nominees proposed for consideration by the Board should include the nominee's name and qualifications for Board membership and should be addressed in writing to the President, Applied Minerals, Inc., 55 Washington Street, Brooklyn, N.Y. 11209 There have been no changes in the procedures by which shareholders may recommend candidates for director.

Compensation Committee

The Committee’s charter provides that the Committee meet at least twice a year and the committee will have the resources and authority necessary to discharge its duties and responsibilities and the committee has sole authority to retain and terminate outside counsel, compensation consultants, or other experts or consultants, as it deems appropriate, including sole authority to approve the fees and other retention terms for such persons.

The principal responsibilities of the Compensation Committee are as follows:

Board Compensation. Periodically review the compensation paid to non-employee directors and make recommendations to the Board for any adjustments.

Chief Executive Officer Compensation.

Assist the Board in establishing CEO annual goals and objectives, if appropriate.

Recommend CEO compensation to the other independent members of the Board for approval.

Other Executive Officer Compensation.

Oversee an evaluation of the performance of the Company's executive officers and approve the annual compensation, including salary and incentive compensation, for the executive officers.

Review the structure and competitiveness of the Company’s executive officer compensation programs considering the following factors: (i) the attraction and retention of executive officers; (ii) the motivation of executive officers to achieve the Company’s business objectives; and (iii) the alignment of the interests of executive officers with the long-term interests of the Company’s shareholders.

Review and approve compensation arrangements for new executive officers and termination arrangements for executive officers.

The Compensation Committee may form and delegate authority to subcommittees and may delegate authority to one or more designated members of the Committee. The Committee may delegate to the Chief Executive Officer the authority to make grants of equity-based compensation in the form of rights or options to eligible officers and employees who are not executive officers, such authority including the power to (i) designate officers and employees of the Company or of any of its subsidiaries to be recipients of such rights or options created by the Company, and (ii) determine the number of such rights or options to be received by such officers and employees; provided, however, that the resolution so authorizing the Chief Executive Officer shall specify the total number of rights or options the Chief Executive Officer may so award. If such authority is delegated, the Chief Executive Officer shall regularly report to the Committee grants so made and the Committee may revoke any delegation of authority at any time. The Compensation Committee has not delegated any authority to the Chief Executive Officer.

Compensation Committee Interlocks and Insider Participation

There were no interlocks during 2016.

Mr. Zeitoun participated in deliberations of the board of directors concerning executive officer compensation other than his own.

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Shareholder Communications to the Board of Directors

Stockholders may communicate with the Board of Directors by sending a letter to Applied Minerals, Inc. Board of Directors, c/o President & CEO, 55 Washington Street, Brooklyn, N.Y. 11209. The President will receive the correspondence and forward it to the individual director or directors to whom the communication is directed or to all directors, if not directed to one or more specifically.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

Name and Principal Position	Year	Salary ($)			Cash Bonus ($)			Option Award ($) (1)			Total ($)
Andre M. Zeitoun	2016		350,000			150,000	(2)		13,600	(3)		513,000
	2015		600,000			299,000	(4)		50,000	(4)		949,000
	2014		600,000			400,000	(5)		--			1,000,000

Christopher Carney (6) (8)	2016		181,250	(7)		- 0 -			3,400			184,650
	2015		200,000			37,500	(9)		54,062	(9) (10)		291,562
	2014		200,000			- 0 -			31,055			231,055

William Gleeson (5) (8)	2016		250,000			- 0 -			3,400	(8)		253,400
	2015		300,000			37,500	(9)		37,500	(9)		375,000
	2014		300,000			- 0 -			270,486	(11)		545,486

(1)

Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For additional information, refer to Note 10 to the Notes to Consolidated Financial Statements found inthis prosp[ectus. These amounts reflect the Company’s accounting expense for these awards, and do not correspond to the amount that will be recognized as income by the named executive officers o the amount that will be recognized as a tax deduction by the Company, if any, upon exercise. The options awards were valued using the Black Scholes Option Valuation Model.

(2)	Mr. Zeitoun’s revenue-related bonus for 2016 was 4% of the first $4 million in revenues up to a bonus of $150,000.

	Revenues for 2015, including a $5 million take-or-pay agreement for the delivery of iron oxide over a period of 18 months, exceeded $5 million. The bonus paid was agreed upon by the Compensation Committee and Mr. Zeitoun.

(3)

Mr. Zeitoun’s 2016 bonus was based on the achievement of personal goals. No determination was made when the performance goals were established as to the probability that the goals would be achieved. The bonus arrangement provided for a maximum bonus of $100,000 for achievement of personal goals payable in stock options. In January, 2017 Mr. Zeitoun was paid this bonus through an award of options to purchase 400,000 shares of common stock for $0.25 per share. The options have a term of five years. The Black Scholes value of each option was $0.034.

(4)	Mr. Zeitoun's 2015 potential bonus arrangement, as determined in February, 2015, was as follows: the total amount of the possible bonus compensation to Mr. Zeitoun would be $500,000; $200,000 would be based on personal performance metrics; $300,000 would be based on revenue goals. Revenues could include the amount of firm commitment and take-and-pay arrangements. The last $100,000 based on revenue goals would be payable in stock or options. If revenues were below $2 million, no revenue-based bonus would be paid; if between $2 million and $2,999,999, $100,000 in cash would be paid; if between $3 and $3,999,999, a total of $150,000 in cash would be paid; if between $4 million and $4,999,999, a total of $200,000 in cash would be paid; if $5 million or more, a total of $200,000 in cash and $100,000 in stock options would be paid. No determination was made when the performance goals were established as to the probability that the goals would be achieved. Revenues for 2015, including a $5 million take-or-pay agreement for the delivery of iron oxide over a period of 18 months, exceeded $5 million. The amount of the 2015 bonus was determined in 2016 by negotiation between the Board and Mr. Zeitoun in January, 2016.

(5)	Mr. Zeitoun’s 2014 bonus was based on full achievement of goals specified by the Board of Directors. No determination was made when the performance goals were established as to the probability that the goals would be achieved.

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(6)	Mr. Carney has served as Vice President Business Development since 2011. In 2015, he was appointed Chief Financial Officer while retaining his position as Vice President Business Development. His compensation did not change upon being appointed CFO.

(7)

Mr. Carney's 2016 salary was at the rate of $200,000 per year for first 7.5 months of 2016 and was at the rate of $150,000 for the final 4.5 months. Mr. Carney agreed to reduce his salary by $50,000 in the period from August 15, 2016 to August 1, 2017 in exchange for options that had a Black Scholes value of approximately $40,500. The options are three-year options, but in accordance with Mr. Carney’s offer to exchange cash for options, the number of options was based on $50,000 divided by the Black Scholes value of five-year options.

(8)

The 2016 bonus arrangements for each of Messrs. Carney and Gleeson were based on the achievement of personal goals. No determination was made when the performance goals were established as to the probability that the goals would be achieved. The bonus arrangement provided for a maximum bonus of $25,000 for achievement of personal goals payable in stock options. In January, 2017, Messrs. Carney and Gleeson were each paid their bonuses through an award of options to purchase 100,000 shares of common stock for $0.25 per share. The Black-Scholes value of each option was $0.034.

(9)	The 2015 potential bonus arrangement for each Messrs. Carney and Gleeson, as determined in February, 2015, was as follows: the total amount of the possible bonus compensation would be $100,000; $25,000 would be based on personal performance metrics; $75,000 would be based on revenue goals. Revenues could include the amount of firm commitment and take-and-pay arrangements. If revenues exceeded f $5 million or more, a total of $75,000 No determination was made when the performance goals were established as to the probability that the goals would be achieved. Revenues for 2015, including a $5 million take-or-pay agreement for the delivery of iron oxide over a period of 18 months, exceeded $5 million. In January, 2016, the Board determined that although all of the goals we satisfied, the total bonus to be paid to each of Messrs. Carney and Gleeson was $75,000 and up to $37,500 would be paid in cash and the remainder would be paid in options. In March, 2016, Messrs. Carney and Gleeson elected to receive $37,500 of his 2015 bonus in cash and the remaining $37,500 of value in options to purchase common stock of the Company. These options provide the right to purchase 248,344 shares of common stock of the Company at a price of $0.24 per share over a five-year period.
(10)	During February, 2015 Mr. Carney was granted options to purchase 50,000 shares of common stock of the Company. The fair value of the options at the time of grant was $16,562. They were granted to Mr. Carney for his performance as VP of Business Development during 2014 but were not part of a pre-defined bonus arrangement. In June, 2014, Mr. Carney was granted options to purchase 75,000 shares of common stock of the Company. The fair value of the options at the time of grant was $31,055. They were granted to Mr. Carney for his performance as VP of Business Development during 2013 but were not part of a pre-defined bonus arrangement.
(11)	In June, 2014 Mr. Gleeson was granted options to purchase 600,000 shares of common stock of the Company. The fair value of the options at the time of grant was $270,486. They were granted to Mr. Gleeson for his performance as General Counsel.

Pensions

The Company does not have any pension plan nor does it have any nonqualified defined contribution and other nonqualified deferred compensation plans.

Potential Payments upon Termination or Change-in-Control.

In accordance with SEC rules, the following statements are based on the assumption that the triggering event took place on December 31, 2016.

In the event Mr. Zeitoun was terminated without Cause or terminated for Good Reason, he would receive, in addition to the accrued obligations, (i) six months of base salary ($175,000), (ii) one-half of bonus amounts not yet earned, and (ii) an amount equal to six months of COBRA payments. For 2016, Mr. Zeitoun's was eligible to receive a revenue-related bonus of up to $150,000 and a performance bonus of up to $500,000 ($400,000 if the Company was cash flow positive and up to $100,000 for personal goals).

Mr. Carney. In the event Mr. Carney was terminated by the Company without Cause or he terminated his employment for Good Reason, he would receive (i) not less than two months of his base salary and (ii) continuation of benefits on the same terms as in effect immediately prior to the date of termination for a period of two months. Mr. Carney's base salary was $200,000.

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Mr. Gleeson. In the event Mr. Gleeson terminated by the Company without Cause or he terminates his employment for Good Reason, he shall receive (i) not less than two months of his base salary and (ii) continuation of benefits (including his family) on the same terms as in effect immediately prior to the date of termination for a period of two months. Mr. Gleeson's base salary was $250,000.

Grants of Plan-Based Awards

The following table lists the plan-based awards granted under the 2012 Long-Term Incentive Plan to Named Executive Officers in 2016. All were granted under the 2016 Long-Term Incentive Plan.

Name	Grant date		All other option awards: Number of securities underlying options (#)		Exercise or base price of option awards ($/Share)		Grant date fair value of stock and option awards ($)

Andre Zeitoun		05-11-16		321,123 (1)		0.24		24,726
Christopher Carney (2)		05-11-16		248,344 (1)		0.24		19,122
		07-06-16		500,000 (2)		0.16		36,000
William Gleeson (2)		05-11-16		248,344 (1)		0.24		19,122

(1)

Granted as bonuses for achievement of personal performance goals in 2016

(2)

Mr. Carney's 2016 salary was at the rate of $200,000 per year for first 7.5 months of 2016 and was at the rate of $150,000 for the final 4.5 months. Mr. Carney agreed to reduce his salary by $50,000 in the period from August 15, 2016 to August 14, 2017 in exchange for options that had a Black Scholes value of approximately $36,000. The options are three-year options, but in accordance with Mr. Carney’s offer to exchange cash for options, the number of options was based on $50,000 divided by the Black Scholes value of five-year options.

Outstanding Equity Awards at December 31, 2016

The following table provides information on the holdings as of December 31, 2016 of stock options granted to the named executive officers. This table includes unexercised and unvested option awards. Each equity grant is shown separately for each named executive officer

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2016
Name	Grant Date		Number of Securities Underlying Unexercised Options: Exercisable		Number of Securities Underlying Unexercised Options: Unexercisable		Equity Incentive Plan Awards Number of Securities Underlying Unexercised Unearned Options		Option Exercise Price		Option Expiration Date

Andre Zeitoun		01-01-09		3,949,966		--		--	$	0.70		01-01-19
		02-08-11		1,742,792		--		--	$	0.83		01-01-22
		11-20-12		1,742,792		--		--	$	1.66		01-01-23
		05-11-16		321,123		--		--	$	0.24		05-11-21
Christopher T. Carney		01-01-09		1,316,655		--		--	$	0.70		01-01-19
		02-08-11		580,930		--		--	$	0.83		01-01-22
		11-20-12		580,931		--		--	$	1.66		01-01-23
		06-10-14		75,000		--		--	$	0.84		06-10-24
		02-05-15		16,665		33,335		--	$	0.68		02-05-25
		05-11-16		248,344		--		--	$	0.24		05-11-21
		07-06-16		500,000		333,333		--	$	0.16		08-15-19
William Gleeson		08-18-11		900,000		--		--	$	1.90		08-18-21
		11-20-12		72,406		--		--	$	1.66		11-20-22
		06-10-14		316,667		83,333		--	$	0.84		06-10-24
		05-11-16		248,344		--		--	$	0.24		05-11-21

Beginning November 20, 2012, all awards were made under the Company's Long Term Incentive Plan approved by stockholders on November 20, 2012.

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Director Compensation for the Year Ended December 31, 2016

The following sets forth compensation to the persons who served as directors in 2016. Mr. Zeitoun receives no fees for service as a director.

Name	Fees Earned or Paid in Cash ($)		Common Stock Awards ($)		Options Awards ($)		Total ($)

John Levy		17,500		- 0 -		38,404		55,904

Robert Betz		15,000		- 0 -		45,942		60,942

Mario Concha		15,000		- 0 -		93,686		108,686

David Taft		8,750		12,500		19,037		40,287,

Bradley Tirpak		- 0 -		12,890		30,765		43,655

Ali Zamani		- 0 -		- 0 -		43,382		43,382

Andre Zeitoun		- 0 -		- 0 -		- 0 -		- 0 --

(1)	Mr. Tirpak resigned as director in February 2017.
(2)	Mr. Zeitoun is not separately compensated for services as a director.

COMPENSATION DISCUSSION AND ANALYSIS

Objectives and Strategy

The Company’s objectives are to develop a range of commercial applications for its halloysite clay-based and iron oxide-based products and to market those applications to industries seeking enhanced product functionality and to market its iron oxides for pigment and other uses. We believe the successful marketing of such applications will generate material profits for the Company, which, in turn, will create significant value for its stockholders. To realize this objective, the Company must attract and retain individuals, including our Named Executive Officers (“Named Executive Officers” or “NEOs”) (Messrs. Zeitoun, Carney and Gleeson), who possess the skill sets and experience needed to effectively develop and implement the business strategies and corporate governance infrastructure necessary to achieve commercial success.

Accordingly, compensation for the Named Executive Officers is designed to:

●

Attract, motivate, and retain qualified Named Executive Officers;

●

Incentivize the Named Executive Officers to lead the Company to profitable operations and to increase stockholder value;

●

Assure that over time a significant part of NEO compensation is linked to the Company’s long-term stock price performance, which aligns the Named Executive Officers’ financial interests with those of the Company’s stockholders

●

Motivate the Named Executive Officers to develop long-term careers at the Company and contribute to its future prospects; and

●

Permit the Named Executive Officers to remain focused on the development of the Company’s business in the midst of actual or potential change-in-control transactions.

The Company does not have a policy concerning minimum ownership or hedging by officers of Company securities.

Compensation of Mr. Zeitoun

Mr. Zeitoun has been president and CEO of the Company since 2009.

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2014 Compensation

Compensation Consultant. In November, 2013, the Compensation Committee retained Compensation Resources, Inc. (“CRI”), a compensation consultant located in Upper Saddle River, New Jersey, as a compensation consultant regarding the 2014 compensation of Mr. Zeitoun.

Interactions of CRI with the Compensation Committee and the Board. Representatives of CRI attended meetings of the Board and/or the Compensation Committee in December, 2013 and February and March, 2014, met (telephonically or in person) with members of the Compensation Committee on four occasions, met with Mr. Zeitoun twice, and met with the Company’s General Counsel (in his capacity of as agent for the Compensation Committee in due diligence matters) four times.

Summary of CRI’s Report to the Compensation Committee. CRI’s “Executive Compensation Study: Report of Findings” was delivered to the Compensation Committee and the Board in March, 2014. Below is a summary of the report.

While the company has previously been identified as a mining company, its operations are much more diversified than what would be considered as typical mining activities. The Company engages in significant research and development activities that are aimed at producing uses for its products with broader applications and thus considers itself more of a specialty chemical company rather than a traditional mining company. Based on the nature of the halloysite clay and its "exclusivity," the Company believes itself more closely aligned with the pharmaceutical industry, which itself has significant research and development activities associated with the development and marketing of proprietary pharmaceuticals. Given that the nature of the Company's business, and the talent needed to expand the business and make it successful, extends into various industry sectors. CRI considered the nature of the Company’s operations in the identification of a relevant peer group for purposes of executive compensation benchmarking.

The process of selecting a group of related peers was based on the nature of the Company’s operations and future strategic direction. The selection was based on the following parameters:

Industry - Comparable industry sectors, from a business perspective, as well as other industries that cultivate a similar level of talent and ability, we used to conduct the analysis. CRI identified comparable companies within the following industry sectors: specialty chemical manufacturing; biotech and pharmaceuticals; software; mining; and environmental/sustainable.

Geographic location - Based on national averages, but in this case, however, CRI applied a geographic differential to the peer data to account for differences in the cost of living between the geographic locations of the peer companies and that of Applied Minerals, which is located in an area with a high cost of living (New York City);

Market Cap - Guidelines set forth by ISS indicate that the generally accepted approach is to identify companies that are approximately 0.2x to 5.0x of the Market Cap of the target company being analyzed. CRI utilized Applied Minerals' Market Cap of approximately $100 million; this would place the Market Cap range of peer companies between $20 million and $500 million. Market Cap, rather than revenue, was utilized as the financial metric for peer selection, as the Company is considered more of a startup with very limited revenue. CRI reviewed the list of peer group companies with the Compensation Committee, the CEO, and the General Counsel, and the list was further refined to reflect more closely a group of companies that would be considered competitors for similar talent.

The peer group consisted of the following companies: Accelrys Inc., American Pacific Corp., Amyris, Inc. Amicus Therapeutics Inc., Authentidate Holding Corp., Biodelivery Sciences, Cytokinetics Inc. International Inc., Energy Recovery, Inc., General Moly Inc., Hemispherx Biopharma Inc., Kior Inc., Metabolix Inc., Pmfg Inc., Pozen Inc., Simulations Plus Inc., Streamline Health Solutions Inc., U S Lime & Minerals, and United-Guardian Inc.

This compensation study analyzed the position of CEO of the Company, comparing it against other top executives within the identified peer marketplace. Based on the discussion of peer selection above, CRI concluded that the larger context of Mr. Zeitoun's responsibilities, based on his knowledge and ability to translate his ideas into creative uses for the Company's products, validated the use of a broader industry view of competitive compensation. CRI found that (I) Mr. Zeitoun's commitment to the Company's success was evidenced through his ability to gain financing for the Company through his personal connections, which enabled him to secure $10 million of capital in 2013 and (ii) Mr. Zeitoun also had become totally conversant in the chemical properties of the clay and its potential commercial applications, and realized the value of its iron oxide deposits and thus developed a new business for this product over the prior two years. CRI indicated that the Company was then at a transition point, where its operations had to move from "process" to "results"; therefore, the CEO's compensation package needed to be structure in a way that recognized the competitive marketplace, with sufficient financial motivation to reward the CEO to move forward with the Company's strategic direction.

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CRI presented its findings with respect to the competitive marketplace for the components of Base Salary and Total Cash Compensation (Base Salary and Annual Bonus/Incentive), along with the value of Total Direct Compensation (Total Cash Compensation, the value of equity, and any other compensation). It said that compensation theory suggests that a Market Range of Compensation around the Market Consensus, rather than a fixed number, is appropriate. CRI said that typically, the Market Range of Base Salary is conservatively considered to be ±10% of the Market Consensus, while the range for Total Cash Compensation varies by ±20% of the Market Consensus, while the range for Total Direct Compensation is wider and usually varies by ±25% of the Market Consensus. Therefore, CRI’s comparative analysis of actual compensation to the marketplace was based on the identified Market Range for the indicated component.

For Mr. Zeitoun's actual compensation, CRI represented the following figures: Base Salary of $600,000, equivalent to his 2013 fixed compensation; Total Cash Compensation which includes Base Salary of $600,000 plus an annual target incentive opportunity of 100% of Base Salary, or $600,000, for a total of $1,200,000; and Total Direct Compensation, which typically includes Base Salary and Total Cash Compensation, plus the three year average of equity compensation, in order to conduct a preliminary comparative analysis with the market findings. However, the Compensation Committee indicated to CRI that (i) the most recent equity grant was specifically provided to Mr. Zeitoun as a one-time award, with the clear understanding that future at-risk compensation will be in the form of short-term incentives; (ii) the short-term incentive opportunity is intended to drive performance towards the Company's most immediate goals of revenue generation and is commensurate with the Compensation Committee's short-term incentive target and (iii) over the next two to three years, it is anticipated that additional equity will not be provided; therefore, CRI’s analysis did not include or provide for any long-term compensation. In this connection, it was noted that the beneficial stock ownership for the majority of the CEO among the peer companies ranged between 1.10% and 6.80% (excluding the outliers which are 13.7% to 38.03%). Mr. Zeitoun's beneficial ownership is 8.6%.

CRI noted that at market average (50% percentile) without equity compensation, Mr. Zeitoun’s represented Base Salary and Total Cash Compensation were above the Market Range and the Total Direct Compensation was within the Market Range, but that at the 75% percentile without equity compensation, Mr. Zeitoun’s represented Base Salary and Total Cash Compensation were within the Market Range and the Total Direct Compensation was below the Market Range.

CRI noted that the methodology used to conduct the competitive market analysis was based on the typical duties and responsibilities associated with the top executive position within the competitive marketplace, and the comparative analysis did not take into consideration the incumbent or any factors relating to that incumbent. CRI noted, however, that it was at the Compensation Committee's discretion to consider Mr. Zeitoun in determining whether his value to the Company was considerable and therefore would justify a higher level of compensation as compared to the marketplace. CRI said that in some cases, a premium can be applied to the market findings to reflect on the incumbent's knowledge, expertise, and contributions (both past and anticipated in the future), and therefore would reflect on a higher percentile positioning due to these factors. CRI noted that in discussions with the Compensation Committee, the Committee believed that it had a significant level of confidence in Mr. Zeitoun's abilities to drive the Company. CRI noted that based on multiple in-depth discussions with the Compensation Committee and their strong belief that Mr. Zeitoun is a crucial and extremely valuable asset to the Company, CRI presented both the Market Average and 75th percentile calculations so that the Compensation Committee would have a broader perspective of the marketplace for pay in consideration of the peer group examined herein.

Compensation Committee Actions. The Compensation Committee met four times regarding Mr. Zeitoun’s compensation and the Board met three times. At its meeting on June 9, 2014, the Compensation Committee determined to recommend to the Board that:

●

Mr. Zeitoun’s salary for 2014 would be $600,000, which was the same salary as in 2013 and was justified by Mr. Zeitoun’s exceptional knowledge and accomplishments.

●

Mr. Zeitoun’s annual target incentive for 2014 would be $400,000 rather than $600,000 (as represented in CRI’s report) and that this would bring the Total Direct Compensation at Market Average (no equity) within the Market Range and Total Cash Compensation at the 75^th percentile would still be within the Market Range, but would be below the Market Consensus. The Compensation Committee further determined that the bonus would be payable in cash in two tranches: (i) $200,000 payable if there were a commercial sale of iron oxide in 2014 and (ii) $200,000 payable if one of the following three were accomplished in 2014: cumulative revenue (accrued or realized) and/or backlog of $1 million; sale of all or a substantial portion of Idaho properties; raising at least $2 million of capital by sale of equity and/or sale of PIK Notes;

●

Mr. Zeitoun would not be awarded any equity compensation for 2014 because he already beneficially owned (through direct ownership and options) 8.6% of the equity of the Company and that ownership provide him with sufficient long-term incentive.

On the same day, the Board adopted the recommendations of the Compensation Committee.

In December, 2014, the Nominating and Governance Committee determined that Mr. Zeitoun had satisfied the conditions of both tranches for payment of the bonus and recommended that the Board approve payment of the bonus. Thereafter, the Board approved payment of a $400,000 bonus.

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2015 Compensation

In October, 2014, the Compensation Committee determined that because of shareholder sensitivity to compensation matters and because of the Company’s cash burn, it was deemed necessary to get the latest comparative data on CEO compensation in order to make good decisions regarding 2015 compensation for Mr. Zeitoun. Accordingly, Committee engaged Compensation Resources to provide an executive compensation study to the Compensation Committee.

Compensation Resources had provided an executive compensation study to the Compensation Committee in March, 2014 in connection with Mr. Zeitoun’s 2014 compensation. Compensation Resources delivered its 2015 executive compensation to the Committee on December 3, 2014.

On December 9, 2014, representatives of Compensation Resources met with the Compensation Committee and told the Committee the following. Compensation Resources was retained to prepare a competitive compensation study of the Company's President and Chief Executive Officer in order to determine the competitive levels of compensation for comparable positions among similar publicly traded companies. The study presented findings with regard to the current competitive levels of the total compensation package (cash and equity compensation) and the findings in the report reflect an update to a study completed on behalf of the Compensation Committee dated March, 2014 and was meant to provide the most recent compensation data from peer organizations, which reflects, for the most part, fiscal years ending December 31, 2013. The study utilized the same list of publicly traded companies benchmarked as part of the March 2014 study, with the exception of Accelrys, Inc., which had been recently acquired.

For purposes of valuing equity awards, the study continued to use a three-year average to more accurately recognize the variety and timing of long-term plans. All data inputs were increased on an annual factor of 3.0% to a common date of January 1, 2015, the percentage representing the average of the actual 2014 merit increase factors for executive positions within the various industries represented in the analysis. To determine “Market Consensus,” Compensation Resources calculated the competitive market level of each compensation element from the peer market analysis and published survey analysis, utilizing multiple measures of central tendency, which included mean: simple average; median: the middle number, 50th percentile; trimmed mean: average that eliminates the highest and lowest data elements (outliers); regression: calculated based on statistical analysis using "Line of Least Square,” which is a mathematical computation used to model a presumed linear relationship between two variables, a dependent variable (compensation element) and an independent variable (Market Cap) (peer analysis only). Market Consensus is the average of the Mean, Median, Trimmed Mean, and Regression; represents the best estimate of the market value (consensus) for the position. To calculate the overall Market Consensus, Compensation Resources calculated a weighted average of peer and published survey data at a ratio of 2:1.

Typically, the market range of base salary is conservatively considered to be ±10% of the market consensus. This range represents the central tendency of the market data. The range for total cash compensation is wider and usually varies by ±20% of the market consensus. The range for total direct compensation is ±25%.

With respect to Mr. Zeitoun's current compensation opportunity, Compensation Resources utilized the following figures: base salary of $600,000; total cash compensation which includes base salary of $600,000 plus an annual incentive opportunity of $400,000, for a total of $1,000,000; and total direct compensation of $1,000,000. Because equity grants in 2011 and 2012 were considered by the Compensation Committee to be one-time awards, Compensation Resources excluded them from the analysis. At the 50^th percentile, Mr. Zeitoun’s base salary and total cash compensation are well above the market consensus as of January 1, 2015 and his total direct compensation is within the market consensus. At the 75^th percentile, Mr. Zeitoun’s base salary and total cash compensation are within the market consensus as of January 1, 2015 and his total direct compensation is below the market consensus.

Mr. Concha, chairman of the Compensation Committee, indicated that the goal of the Compensation Committee with respect to Mr. Zeitoun’s compensation was to provide incentives to Mr. Zeitoun consistent with the desires of shareholders. He noted the difficulties of finding good comparables for Mr. Zeitoun’s compensation and said that compensating Mr. Zeitoun under a strategic leadership model may be more useful.

Thereafter, the directors discussed with Mr. Zeitoun present and later at great length in executive session without Mr. Zeitoun, the structure and amount of Mr. Zeitoun’s 2015 bonus.

It was preliminarily decided at a time when Mr. Zeitoun was not present that Mr. Zeitoun’s bonus would be broken into two parts, one part related to revenues and the other to the achievement of non-revenue goals. The total amount of the possible bonus compensation to Mr. Zeitoun would be $500,000, with the last $100,000 of revenue-based compensation being paid in stock or option and the maximum amount of the revenue-based bonus payable at $5 million in revenues, which could include the amount of firm commitment and take-and-pay arrangements. If Mr. Zeitoun achieved his personal goals and revenue was at least $4 million, his bonus compensation would be $1 million.

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It was determined that Mr. Zeitoun should prepare goals and objectives and submit them to the Compensation Committee and the Board for approval. At the same time that the Compensation Committee and the Board approved the personal goals, it would approve the amounts of the bonus allocated to personal goals and the revenues, the percentages of the revenue-based amounts to be paid on partial achievement of the revenue based-goals, and the revenue points at which such amounts would be paid.

On February 4, 2015, the Compensation Committee reported to the Board that, between December 9, 2014 and February 4, 2015, the it met several times and had discussed and approved the following compensation proposal for Mr. Zeitoun (“Zeitoun Compensation Proposal”): Salary of $600,000, potential bonus of $500,000 of which 40% would depend on the achievement of four personal goals and 60% would be dependent on revenues. If revenues were below $2 million, no revenue-based bonus would be paid; if between $2 million and $2,999,999, $100,000 in cash would be paid; if between $3 million and $3,999,999, a total of $150,000 would be paid; if between $4 million and $4,999,999, a total of $200,000 in cash would be paid; if $5 million or above, a total of $200,000 in cash and $100,000 in stock options would be paid.

Mr. Concha on behalf of the Compensation Committee explained (i) the revenue and non-revenue goals that the Compensation Committee had worked out with Mr. Zeitoun regarding Mr. Zeitoun’s 2015 bonus arrangements, (ii) salary and bonus amounts, and (iii) the reason for not awarding Mr. Zeitoun any equity compensation in respect of 2015.

Mr. Concha, on behalf of the Compensation Committee, recommended to the Board that the Board approve the revenue and non–revenue goals related to Mr. Zeitoun’s 2015 bonus as well as the salary and bonus arrangements.

Mr. Concha noted the Executive Compensation Study Update performed by Compensation Resources (the compensation consultant hired by the Compensation Committee) indicated that (i) at the 50^th percentile, Mr. Zeitoun’s base salary and total cash compensation are well above the market consensus and his total direct compensation is within the market consensus and (ii) at the 75^th percentile, Mr. Zeitoun’s base salary and total cash compensation are within the market consensus as of January 1, 2015 and his total direct compensation is below the market consensus.

There was a general discussion, with Mr. Zeitoun abstaining, of the goals and the compensation elements and amounts and relative mix of elements. After such discussion, the Board, with Mr. Zeitoun abstaining, adopted the Zeitoun Compensation Proposals.

In January, 2016 Mr. Zeitoun and the Board agreed that Mr. Zeitoun satisfied the metrics for the payment of the full bonus amount, but Mr. Zeitoun would receive a bonus for 2015 consisting of $299,000 in cash and $50,000 of five-year options. Cash payments of $200,000 have been made and remaining payments are subject to the condition that no payments will be made unless after such payments the Company’s cash balance is in excess of $1.5 million.

2016 Compensation

In order to assist the Compensation Committee in setting the 2016 compensation, the Compensation Committee hired CRI, the same compensation consultant that the Committee had used in connection with 2014 and 2015. At a meeting with the Compensation Committee on December 8, 2015, CRI presented a written report. The report indicated that CRI redefined the peer group used in connection with Mr. Zeitoun’s 2015 compensation.

The peer group was redefined to provide a “similar industry look.” The peer group companies for purposes of 2016 compensation: (i) were involved in specialty chemical manufacturing, biotech and pharmaceuticals, software, and mining; (ii) were national in geographic location with compensation adjusted to New York City; (iii) had a market capitalization between $20 million and $75 million; and (iv) had less than 50 employees.

The Compensation Consultant assumed that Mr. Zeitoun’s compensation would consist of a base salary of $500,000, a potential personal performance bonus of $200,000 and a potential revenue goal bonus of $100,000 for total direct compensation of $800,000.

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Based on such assumptions measured against the peer group, the Compensation Consultant provided the following findings:

			Market Range	Market Range


	Actual	M/C	(+/-)	Low	High	Relative Position
Base Salary	$500,000	$414,600	10%	$373,100	$465,100	Above
Total Cash Comp.	$800,000	$549,900	20%	$439,900	$659,900	Within
Total Direct Comp.	$800,000	$746,500	25%	$559,900	$933,100	Above

After extensive discussion, the Board decided upon the following compensation package for Mr. Zeitoun in 2016. Salary: $350,000; bonus based on revenues: 4% of revenues up to a maximum bonus of $150,000; bonus if the Company became cash flow positive: $400,000; bonus based on personal goals: up to $100,000, which would be payable in options if the cash flow goal is not met.

Compensation for Messrs. Gleeson and Carney

2014 Compensation of Mr. Carney

Mr. Carney served as Chief Financial Officer from February, 2009 through May, 2012. From May 2012 through early August 2015, he served as Vice President - Business Development. In August, 2015, upon the resignation of the then Chief Financial Officer, he was appointed Chief Financial Officer while also continuing his duties as Vice President – Business Development. During 2014 Mr. Carney received an annual salary of $200,000. On June 10, 2014, Mr. Carney was granted options to purchase 75,000 shares of the Company’s common stock at a price of $0.84 per share. The options vested immediately and had a term of 10 years. At the time of the grant, the options had a Black-Scholes value of $31,055.

2014 Compensation of Mr. Gleeson

For 2014, as a result of exceptional performance, Mr. Gleeson’s salary was increased from $250,000 to $300,000 and he was awarded 600,000 options to purchase common stock at $0.83 per share, such options vesting monthly over a three-year period and having an exercise price equal to the market price on the date of grant.

2015 Compensation for Messrs. Gleeson and Carney

At the February 4, 2015, Board meeting, Mr. Concha, acting on behalf of the Compensation Committee, indicated that the Compensation Committee has discussed and approved a compensation proposal for certain employees, which included Messrs. Gleeson, and Carney (“Management Compensation Proposals”) and that he had sent to each Board member who was not a member of the Compensation Committee a copy of the Management Compensation Proposals. Mr. Concha explained the revenue and non-revenue goals that the Compensation Committee, with the assistance of Mr. Zeitoun, had worked out, with each regarding 2015 bonus arrangements for such persons. He also explained the proposed salary, bonus and equity compensation arrangements for senior management, which had the approval of Mr. Zeitoun.

Under the Management Compensation Proposals,

●

Salaries remained at 2014 levels.

●

Each of Messrs. Gleeson and Carney would be eligible for possible bonus compensation of up to $100,000; $25,000 would be based on personal performance metrics; $75,000 would be based on revenue goals. Revenues could include the amount of firm commitment and take-and-pay arrangements. The last $25,000 based on revenue goals would be payable in five-year stock options. If revenues were below $2 million, no revenue-based bonus would be paid; if between $2 million and $2,999,999, $25,000 in cash would be paid; if between $3 and $3,999,999, a total of $35,000 would be paid; if between $4 million and $4,999,999, a total of $50,000 in cash would be paid; if $5 million or more, A total of $50,000 in cash and $25,000 in stock options would be paid. Revenues in 2015, including a $5 million take-or-pay agreement for the delivery of iron oxide over a period of 18 months, exceeded the $5 million goal for the calculation of bonus arrangements.

Mr. Concha, on behalf of the Compensation Committee, recommended to the Board that the Board approve the revenue and non–revenue goals related to management’s 2015 bonus as well as the salary and bonus arrangements, all as set forth in the Senior Management Compensation Proposals. After a general discussion, the Board gave its approval.

No compensation consultant was used by the Board for the Management Compensation Proposals and no benchmarking against peers was used.

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Revenues for 2015, including a $5 million take-or-pay agreement for the delivery of iron oxide over a period of 18 months, exceeded the $5 million goal for the calculation of bonus arrangements. In January, 2016, the Board reduced the total value of the bonuses to be paid to Messrs. Carney and Gleeson to $75,000. Messrs. Carney and Gleeson would receive a bonus for 2015 consisting of $75,000 of value to be paid, at their election, in stock, five-year options, or cash (up to $37,500) or any combination thereof, payable on March 31, 2016. Each of Messrs. Carney and Gleeson elected to take $37,500 in five year options and $37,500 in cash.

2016 Compensation for Messrs. Gleeson and Carney

On December 9, 2016, the Board determined that the 2016 salary for Mr. Gleeson would be $250,000 and the 2016 Salary for Mr. Carney would be $200,000.

On March 9, 2016, the Board determined that 2016 bonus arrangements for Messrs. Carney, and Gleeson would be as follows:

Up to $25,000 based on achievement of personal goals and $50,000 if (i) the Statement of Cash Flow from Operations in the audited financial statements for the year ended December 31, 2016, adjusted for purposes of determining whether bonuses are payable to assume payment of all such bonuses is positive (based upon the business being operated in the ordinary course consistent with past practices, in the judgment of the Compensation Committee) and (ii) the Compensation Committee believes that it is more likely than not that cash flow from operations in 2017 will be positive. Payments to be made in cash within 15 days after the date of the audited financial statements, but in any case payment will be made, in all events, no later than June 30, 2017, except that if the bonus based on cash flow is not payable, the bonus based on personal goals will be, at the employee’s election, paid in and combination of common stock and/or five or ten year options, the number of which will be determined using a Black-Scholes value as of the date of the audited financial statements (the value as approved by the Chairman of the Board) and the exercise price will be the closing price as of such date.

In July, 2016, Mr. Carney volunteered to exchange $50,000 of salary for options. Mr. Carney agreed to reduce his salary by $50,000 in the period from August 15, 2016 to August 1, 2017 in exchange for options that had a Black Scholes value of approximately $40,500. The options are three-year options, but in accordance with Mr. Carney’s offer to exchange cash for options, the number of options was based on $50,000 divided by the Black Scholes value of five-year options.

The cash flow goal was not met but the personal goals were met. In January, 2017, the Compensation Committee determined that the number of options would be determined by dividing $25,000 by $0.25 and the exercise price would be $0.25 per option. At the time of grant, the market price of the stock was $0.11 and the Black-Scholes value of the options was approximately $0.034 per option.

Tax and Accounting Treatment of Compensation

Tax Deductibility Cap on Executive Compensation

The Compensation Committee is aware that Section 162(m) of the Internal Revenue Code treats certain elements of executive compensation in excess of $1 million a year as an expense not deductible by the Company for federal income tax purposes. Depending on the market price of the Company’s common stock on the date of exercise of options that are not performance-based, the compensation of certain executive officers in future years may be in excess of $1 million for purposes of Section 162(m). The Compensation Committee reserves the right to pay compensation that may be non-deductible to the Company if it determines that it would be in the best interests of the Company.

Tax and Accounting Treatment of Options

We are required to recognize in our financial statements compensation cost arising from the issuance of stock options. GAAP requires that such that compensation cost is determined using fair value principles (we use the Black-Scholes method of valuation) and is recognized in our financial statements over the requisite service period of an instrument. However, the tax deduction is only recorded on our tax return when the option is exercised. The tax benefit received at exercise and recognized in our tax return is generally equal to the intrinsic value of the option on the date of exercise.

Compensation of Policies and Practices as they relate to Risk Management

The Company does not believe that its compensation policies and practices (cash compensation and at-the-market or above-market five- and ten-year options without or without performance standards and with or without vesting schedules) are reasonably likely to have a material adverse effect on the Company as they relate to risk management practices and risk-taking incentives.

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Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Annual Report on Form 10-K and the Company’s next proxy statement for the election of director.

Mario Concha

John Levy

Robert Betz

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of May 1, 2017, information regarding the beneficial ownership of our common stock with respect to each of the named executive officers, each of our directors, each person known by us to own beneficially more than 5% of the common stock, and all of our directors and executive officers as a group. Each individual or entity named has sole investment and voting power with respect to shares of common stock indicated as beneficially owned by such person, subject to community property laws, where applicable, except where otherwise noted. The percentage of common stock beneficially owned is based on 108,613,549 shares of common stock outstanding as of May 1, 2017 plus the shares that a person has a right to acquire within 60 days of May 1, 2017



Name and Address (1)	Number of Shares of Common Stock Beneficially Owned (2)		Percentage of Common Stock Beneficially Owned
Mario Concha (3) (4)		2,033,217		1.9	%
Robert Betz (3) (5)		326,321		1.2	%
John Levy (3) (6)		1,400,701		1.3	%
David Taft (3) (7)		29,131,640		25.6	%
Ali Zamani (3) (8)		555,244		*
Andre Zeitoun (3) (9) (15)		9,134,022		7.8	%
Christopher T. Carney (10) (15)		4,014,368		3.6	%
William Gleeson (11) (15)		1,820,750		1.6	%
All Officers and Directors as a Group		48,416,263		37.4	%
IBS Capital, LLC (7)		29,131,628		25.6	%
Samlyn Capital, LLC (12)		25,879,867		20.9	%
Berylson Master Fund, L.P. (13)		6,701,501		6.2	%
James Berylson (13)		7,974,570		7.3	%
Kingdon Capital Management, LLC (14)		7,405,411		6.5	%

* Less than 1%

	(1)	Unless otherwise indicated, the address of the persons named in this column is c/o Applied Minerals, Inc., 55 Washington Street, Suite 301, New York, NY 11201.
	(2)	Included in this calculation are shares deemed beneficially owned by virtue of the individual’s right to acquire them within 60 days of the date of March 10, 2016 as determined pursuant to Rule 13d-3 of the Securities Exchange Act of 1934.
	(3)	Director
	(4)	Mr. Concha’s holdings include: (i) options to purchase 50,000 shares of common stock at $0.83 per share expiring in March, 2024; (ii) options to purchase 50,000 shares of common stock at $0.66 per share expiring in February, 2025; (iii) options to purchase 50,000 shares of common stock at $0.28 per share expiring in January, 2026; (iv) options to purchase 43,885 shares of common stock at $0.285 per share expiring in January, 2021; (v) options to purchase 30,000 shares of common stock at $0.25 per share and expiring in May, 2021; options to purchase 600,000 shares of common stock at $0.25 expiring in May, 2021; and (vi) options to purchase 70,000 shares of common stock expiring in August, 2026.
	(5)	Mr. Betz’s holdings include: (i) options to purchase 41,500 shares of common stock at $0.83 per share expiring in March, 2024; (ii) options to purchase 50,000 shares of common stock at $0.66 per share expiring in February 2025; (iii) options to purchase 50,000 shares of common stock at $0.28 per share, vesting equally on March 31, June 30, September 30 and December 31, 2016 and expiring in January, 2026; (iv) options to purchase 33,937 shares of common stock at $0.29 per share expiring in January, 2021; (v) options to purchase 32,408 shares of common stock at $0.28 per share expiring in January 2026; (vi) options to purchase 30,000 shares of common stock at $0.25 per share expiring in May, 2021; (vii) options to purchase 150,000 shares of common stock at $0.25 per share expiring in May, 2021; and (viii) options to purchase 60,000 shares of common stock at $0.25 per share expiring in August, 2026.
	(6)	Mr. Levy’s holdings include: (i) options to purchase 100,000 shares of common stock at $1.24 per share expiring in January, 2018; (ii) options to purchase 100,000 shares of common stock at $1.66 per share expiring November, 2022; (iii) options to purchase 50,000 shares of common stock at $0.83 per share expiring in March, 2024; (iv) options to purchase 50,000 shares of common stock at $0.66 per share expiring in February, 2025; (v) options to purchase 50,000 shares of common stock at $0.28 per share, and expiring in January, 2026; (vi) options to purchase 51,170 shares of common stock at $0.29 per share expiring in January, 2026; (vii) options to purchase 40,000 shares of common stock at $0.28 per share expiring in January, 2021; (viii) options to purchase 37,500 shares of common stock at $0.25; and options to purchase 70,000 shares of common stock at $0.25 expiring in August, 2026.

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(7)

Mr. Taft is President of IBS Capital LLC and deemed to be the beneficial owner of shares held by the funds it manages by virtue of the right to vote and dispose of such securities. The IBS Turnaround Fund (QP) (A Limited Partnership) owns (i) 15,220,583 shares of common stock; (ii) 2,603,478 shares of common stock issuable upon conversion of 10% PIK Election Convertible Notes due 2018 (“Series A Notes”); (iii) options to purchase 49,820 shares of common stock at $0.21 per share expiring in January, 2021; (iv) warrants to purchase 400,000 shares of common stock at $0.25 expiring in June, 2021; and (v) options to purchase 30,100 shares of common stock at $0.25 per share expiring in August, 2026. The IBS Turnaround Fund (A Limited Partnership) owns (i) 7,290,997 shares of common stock; (ii) 1,238,722 shares of common stock issuable upon conversion of the Series A Notes; (iii) options to purchase 25,175 shares of common stock at $0.21 expiring in January, 2021; (iv) warrants to purchase 124,500 shares of common stock at $0.25 per share expiring in June, 2021; and (v) options to purchase 16,000 shares of common stock at $0.25 per share expiring in August, 2026. The IBS Opportunity Fund, Ltd. owns (i) 1,472,154 shares of common stock; (ii) 815,008 shares of common stock issuable upon conversion of the Series A Notes; (iii) options to purchase 6,400 shares of common stock at $0.21 per share expiring in January, 2021; (iv) warrants to purchase 31,000 shares of common stock at $0.25 per share expiring in June, 2021; and (v) options to purchase 7,100 shares of common stock at $0.25 per share expiring in August, 2026.

(8)

Mr. Zamani’s holdings include: (i) options to purchase 50,000 shares of common stock at $0.83 per share expiring in March, 2024; (ii) options to purchase 50,000 shares of common stock at $0.66 per share expiring in February, 2025; (iii) options to purchase 50,000 shares of common stock at $0.28 per share, vesting equally on March 31, June 30, September 30 and December 31, 2016 and expiring in January, 2026; and (iv) 73,099 shares of common stock at $0.285 per share expiring in January, 2021.

(9)

Mr. Zeitoun’s holdings include (i) options (held through Material Advisors) to purchase 3,949,966 shares of common stock at $0.70 per share expiring in January, 2019; (ii) options (held through Material Advisors) to purchase 1,742,792 shares of common stock at $0.83 per share expiring in January, 2021; (iii) options to purchase 1,742,792 shares of common stock at $1.66 per share expiring in November, 2022; and (iv) options to purchase 321,123 shares of common stock at $0.24 per share expiring in March, 2021.

(10)

Mr. Carney’s holdings include: (i) options to purchase 1,316,655 shares of common stock at $0.70 per share expiring in January, 2019; (ii) options to purchase 580,930 shares of common stock at $0.83 per share expiring in January, 2022; (iii) options to purchase 580,931 shares of common stock at $1.66 per share expiring in January, 2023; (iv) options to purchase 75,000 shares of common stock at $0.84 per share expiring in June, 2024; (v) options to purchase 16,665 shares of common stock at $0.68 per share expiring in February, 2025; (vi) options to purchase 248,344 shares of common stock at $0.24 per share expiring in March, 2021; (vii) options to purchase 375,000 shares of common stock at $0.16 per share expiring in August, 2019.

(11)

Mr. Gleeson’s holdings include: (i) options to purchase 900,000 shares of common stock at $1.90 per share expiring in September, 2021; (ii) options to purchase 72,406 shares of common stock at $1.66 per share expiring in November, 2022; (iii) options to purchase 350,000 shares of common stock at $0.84 per share expiring in June, 2024; and (iv) options to purchase 248,344 shares of common stock at $0.24 per share expiring in March, 2021.

	(12)	Samlyn Capital, LLC, 500 Park Avenue, 2nd Floor, New York, N.Y. 10022, is the beneficial owner of shares held by funds it manages by virtue of the right to vote and dispose of the securities. Samlyn Onshore Fund, L.P. owned 9,376,298 shares, including 5,348,325 shares of common stock issuable upon conversion of the Series A Notes and Samlyn Offshore Master Fund, Ltd., owned 16,503,868 shares of common stock, including 10,020,425 shares of common stock issuable upon conversion of the Series A Notes. Robert Pohly is the president of Samlyn Capital, LLC. He has beneficial ownership of shares owned by funds of which Samlyn Capital, LLC is the general partner or investment manager, Mr. Pohly having sole voting and investment power.
	(13)	James Berylson is the sole managing member of Berylson Capital Partners, LLC, which manages the Berylson Master Fund, L.P. Of the 6,701,570 shares owned by the Berylson Master Fund, L.P., 4,397,189 shares are issuable upon conversion of Series 2023 Notes owned by the Berylson Master Fund, L.P. Mr. Berylson may be deemed to beneficially own the 6,701,570 shares. Mr. Berylson owns and additional 1,273,000 shares. The address of Berylson Capital Partners, LLC is 200 Clarendon Street, Boston, MA 02116.
	(14)	Kingdon Capital Management, LLC, 152 West 57^th Street, 50^th Floor, New York, N.Y. 10019, is the beneficial owner of shares of the Company, which are held by funds it manages by virtue of the right to vote and dispose of the securities. Kingdon Associates owns 2,380,628 shares through the conversion of its ownership of Series 2023 and Series A Convertible PIK Notes, Kingdon Family Partnership, L.P. owns 548,025 shares through the conversion of its ownership of Series 2023 and Series A Convertible PIK Notes, and M. Kingdon Offshore Mast Fund, L.P. owns 4,476,788 shares through the conversion of its ownership of Series 2023 and Series A Convertible PIK Notes. Mark Kingdon is the President of Kingdon Capital Management, LLC and may be deemed to beneficially own these shares.
	(15)	Executive officer.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Review, approval or ratification of transactions with related persons.

Our Board of Directors reviews any transaction, except for ordinary business travel and entertainment, involving the Company and a related party before the transaction or upon any significant change in the transaction or relationship. For these purposes, the term "related-party transaction" includes any transaction required to be disclosed pursuant to Item 404 of Regulation S-K of the SEC.

Transactions with Related Persons

In 2016, the Company made a private placement of units consisting of common stock and warrants. The price of a unit was $0.15, with $.12 being allocated to Common stock and $.03 to a warrant. Three and one-third warrants are exercisable for a full share of Common Stock at an exercise price of $.25. Messrs. Levy and Betz each purchased $50,000 of units and IBS Turnaround Fund (QP) (a LTD Partnership), which is managed by IBS Capital, whose president is Davis Taft, purchased $200,000 of units.

Eric Basroon, Mr. Zeitoun’s brother-in-law, is currently employed by the Company and during 2016 he received a cash salary of $180,000 plus $20,000 to be issued at various times during the year upon Mr. Basroon’s request. On March 10, 2016, Mr. Basroonreceived a bonus consisting of (i) $37,500 in cash and (ii) options to purchase 248,344 shares of common stock of the Company at $0.24 per share, which had a Black-Scholes value of $37,500. The bonus granted to Mr. Basroon was for achieving his performance goals during 2015. Mr. Basroon’s 2017 salary is $200,000 and he is eligible for a bonus of up to $50,000 based on the Company’s financial performance.

Director Independence

The directors who are deemed to be independent under the independence standards of NASDAQ (the independence standard used by the Company) are Messrs. Levy, Concha, Betz, and Zamani. They are also independent under the enhanced independence standards of Section 10A-3 of the Securities Exchange Act. Messrs. Zeitoun and Taft are not independent under the NASDAQ standards of independence. Mr. Zeitoun is an employee. Mr. Taft is deemed not independent because of the size of his security holdings.

PRINCIPAL ACCOUNTING FEES AND SERVICES

EisnerAmper LLP was selected by our Board of Directors as the Company’s independent accountant for the years ending December 31, 2016 and 2015.

The following table presents fees for audit services rendered by EisnerAmper, the independent auditor for the audits of the Company’s annual consolidated financial statements for the years ended December 31, 2016 and 2015, respectively.

	December 31, 2016		December 31, 2015

Audit Fees (1)	$	131,300	$	151,500
Prepare for NYS tax examination audit		3,348		--
Tax Fees (2)		12,500		7,500

Total	$	147,148	$	159,000

(1)

Audit fees represent the aggregate fees paid for professional services including: (i) audit, (ii) S-1 filings and (iii) SEC comment letters.

(2)

Tax fees represent aggregate fees paid for professional services, principally including fees for tax compliance and tax advice.

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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

During the years ended December 31, 2016 and 2015, there were no disagreements with our independent registered public accounting firm.

SEC POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

As permitted by the Delaware General Corporation Law, the Bylaws of the Company provide that (i) the Company is required to indemnify its directors and officers to the fullest extent permitted by the Delaware General Corporation Law, (ii) the Company is required to advance expenses, as incurred, to its directors and officers in connection with a legal proceeding to the fullest extent permitted by the Delaware General Corporation Law, subject to certain very limited exceptions, (iii) the Company may indemnify any other person as set forth in the Delaware General Corporation Law, and (iii) the indemnification rights conferred in the Bylaws are not exclusive.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers, and controlling persons pursuant to the provisions described above or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid in a successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the Common Stock being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

THE OFFERING

This prospectus relates to the offer and sale by the Selling Stockholders, from time to time, of the following:

●	Up to 27,651,900 shares of Common Stock, issuable on conversion of certain 10% PIK-Election Convertible Notes due 2018 (the “Series A Notes” or the “Notes”) if held to maturity of which on May 1, 2017 $8,316,953 of principal amount is owned by Samlyn Offshore Master Fund, Ltd., $4,439,110 of principal amount is owned by Samlyn Onshore Fund, L.P., $1,206,744 of principal amount is owned by The IBS Turnaround Fund, L.P., $2,423,272 of principal amount is owned by The IBS Turnaround Fund (QP) (A Limited Partnership) and $235,453 of principal amount is owned by The IBS Opportunity Fund, Ltd. At the Company’s election, interest may be paid in cash or in Series A Notes (payment in the form of Notes is referred to as payment-in-kind or “PIK”). As of the date of this prospectus, 15,699,161 shares are issuable on conversion of the Series A Notes that were issued on November 3, 2014 (the date of the initial issuance of Series A Notes) and 4,326,786 shares are issuable on conversion of Series A Notes that have been issued as interest. If the Company issues additional Series A Notes in payment of interest and/or penalties, the number of shares that may be sold pursuant to this Prospectus will increase. If the Company makes all the interest payments by issuing additional Series A Notes and all the Series A Notes remain outstanding until maturity, the additional shares issuable on conversion of the Series A Notes could increase the number of shares issuable on conversion of the Notes by shares. This number is based on the current conversion rate of $0.83 and assumes that, per the terms of the Notes, the conversion price is decreased by $0.10 after November 1, 2018, the interest is decreased to 1% after November 1, 2019 and the maturity date of the Notes is extended to August 1, 2023. Given the Company’s current financial position, it is anticipated that for the foreseeable future, the Company will likely pay interest using Series A Notes issued as payment-in-kind interest. The shares of Common Stock that may be issued on conversion of the Series A Notes are referred to as the “Shares.”

●	20,933,339 outstanding shares of Common Stock of which 10,933,339 were issued as part of a private placement on June 24, 2016, 6,150,000 are owned by Samlyn Offshore Master Fund, Ltd. and 3,850,000 are owned by Samlyn Onshore Fund, L.P.

●	666,391 shares of Common Stock issued as Liquidated Damages pursuant to Section 2c of the Registration Statement Agreement for the Series A Notes. Of these shares 333,443 are owned by Samlyn Offshore Master Fund, Ltd., 177,973 are owned by Samlyn Onshore Fund, L.P., 41,220 are owned by the IBS Turnaround Fund, L.P., 86,634 are owned by The IBS Turnaround Fund (QP) (A Limited Partnership) and 27,121 are owned by The IBS Opportunity Fund, Ltd.

●	3,283,283 shares of Common Stock issuable on the exercise of warrants.

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The sellers referred to above as collectively referred to as the “Selling Stockholders” and the shares referred to above as collectively referred to as the “Shares.

See “The Offering,” “Selling Stockholders,” and “Antidilution Provisions.”

ANTIDILUTION PROVISIONS

The number of shares issuable under the Series A Notes and the June 2016 Warrants may be affected by the antidilition provisions of the Notes. The Series A Notes’ antidilition provisions adjust the conversion price of the Notes in the event of stock dividends and splits, issuance below the market price of the Common Stock, issuances below the conversion price of the Series A Notes, pro rata distribution of assets, rights plans, tender offers, and exchange offers. The June, 2016 Warrants’antidilition provisions adjust the conversion price of the Notes in the event of stock dividends and splits, pro rata distribution of assets, rights plans, tender offers, and exchange offers

The anti-dilution provisions may be characterized as “broad-based, weighted-average.” Broad-based refers to the fact that the antidilution formulas take into account convertible securities as well as Common Stock. Weighted-average refers to the fact that the adjustment takes into account the number of shares of shares before and after the event in question.

The Company believes that it is unlikely that the antidilution provisions relating to stock dividends and splits, pro rata distribution of assets, rights plans, tender offers, and exchange offers will be triggered in the forseeable future.

Set forth below are the antidilution provisions of the Series A Notes in the event of sales of Common Stock by the Company below market price and below conversion price (initially $0.92 now $0.83 due to a below exercise price equity issuance on June 24, 2016 and reduced to but $0.74 in the event of a certain extension of the maturity date).

Below Market Issuances. If the Issuer, at any time while this Note is outstanding, shall issue shares of Common Stock or Convertible Securities at an Effective Consideration per share that is less than the Market Price on the Trading Day immediately before the issuance is announced, then the Exercise Price shall be adjusted pursuant to the following formula:

N0 + C/M

E = E0 x ------------------

N0 + NA

where:

E	=	the Exercise Price in effect immediately after the Open of Business on the Trading Day of such issuance;
E0	=	the Exercise Price in effect immediately prior to the Open of Business on the Trading Day of such issuance;
N0	=	the number of shares of Common Stock outstanding immediately prior to the Open of Business on the Trading Day of such issuance;
NA	=	the number of shares of Common Stock issued and/or issuable upon exercise, conversion or exchange of any Convertible Securities, full physical settlement assumed;
C	=	the total consideration receivable by the Issuer on issuance and/or the exercise, conversion or exchange of any Convertible Securities, full physical settlement assumed; and
M	=	the Five-Day VWAP as of the Trading Day immediately preceding the date on which such issuance is announced.

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Issuances Below the Exercise Price. If the Issuer, at any time while this Note is outstanding, shall issue shares of Common Stock or Convertible Securities at an Effective Consideration per share that is less than the Exercise Price in effect at the Close of Business on the Trading Day immediately preceding such issuance (other than issuances to directors, officers, employees or consultants of the Issuer as compensation for services rendered to the Issuer by such Persons), then the Exercise Price shall be adjusted pursuant to the following formula:

N0 + C/E0

E = E0 x --------------------

N0 + NA

where:

E =

the Exercise Price in effect immediately after the Open of Business on the Trading Day of such issuance;

E0 =

the Exercise Price in effect immediately prior to the Open of Business on the Trading Day of such issuance;

N0 =

the number of shares of Common Stock outstanding immediately prior to the Open of Business on the Trading Day of such issuance;

NA =

the number of shares of Common Stock issued and/or issuable upon exercise, conversion or exchange of any Convertible Securities, full physical settlement assumed; and

C =

the total consideration receivable by the Issuer on issuance and/or the exercise, conversion or exchange of any Convertible Securities, full physical settlement assumed.

USE OF PROCEEDS

The Company will receive none of the proceeds for the sale of the Common Stock. The proceeds will go to the Selling Stockholders. However, if all of the June 2016 Warrants are exercised, we will receive $820,821.

DESCRIPTION OF CAPITAL STOCK

Set forth below is a description of certain provisions relating to our capital stock. For additional information regarding our capital stock please refer to our Certificate of Incorporation and Bylaws.

Each share of Common Stock entitles the holder to one vote on each matter that may come before a meeting of the stockholders.

There is no right to cumulative voting; thus, except as noted below, the holders of fifty percent or more of the shares outstanding can, if they choose to do so, elect all of the directors.

Samlyn Onshore Fund, LP and Samlyn Offshore Masterfund Ltd are referred hereafter to as the “Samlyn Stockholders.” Until the Samlyn Stockholders, together with their respective affiliates, cease to beneficially own at least 9,700,000 shares of Common Stock (they beneficially own 10,511,416 shares of Common Stock prior to this offering), the Samlyn Stockholders jointly shall have the right to designate one person to be nominated for election to the Board (an “Initial Nominee”), and the Samlyn Stockholders jointly shall exercise this right, in their sole discretion, anytime and from time to time by providing written notice to the Company.

Until the earlier of (i) the Samlyn Stockholders, together with their respective affiliates, ceasing to beneficially own at least 9,700,000 shares of Common and (ii) December 22, 2016, if Andre Zeitoun ceases to serve as a named executive officer of the Company or as chairman of the Board, the Samlyn Stockholders jointly, during such period in which Mr. Andre Zeitoun is not serving in such capacity, shall be entitled to designate a number of additional nominees (each an “Additional Nominee,” and together with the Initial Nominee, the “Nominees”) who, together with the Initial Nominee, shall comprise at least 20% of the total number of Directors, and the number of Directors representing such 20% shall be rounded up to the nearest whole number. The Samlyn Stockholders jointly shall exercise the rights in their sole discretion, anytime and from time to time by providing written notice to the Company.

In the event of a voluntary or involuntary liquidation, all stockholders are entitled to a pro rata distribution after payment of liabilities and after provision has been made for each class of stock, if any, having preference over the Common Stock.

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The holders of the Common Stock have no preemptive rights with respect to future offerings of shares of Common Stock except that the Samlyn Stockholders have preemptive rights by contract under investment agreements (“Investment Agreements”) as follows. If the Company proposes to issue any (i) equity securities or (ii) securities convertible into or exercisable or exchangeable for equity securities, other than any Excluded Securities (the “Dilutive Securities”), the Company shall deliver to each Samlyn Stockholder a written notice (which notice shall state the number of Dilutive Securities proposed to be issued, the purchase price thereof and any other material terms or conditions of the proposed Dilutive Securities and of their issuance, including any linked or grouped securities which comprise Dilutive Securities) of such issuance (the “Preemptive Offer Notice”) at least 5 business days prior to the date of the proposed issuance (such period beginning on the date that the Preemptive Offer Notice is delivered to the Investors and the 5 Business Days following such date being the “Preemptive Offer Period”). Each Investor shall have the option, exercisable at any time during the Preemptive Offer Period by delivering a written notice to the Company (a “Preemptive Offer Acceptance Notice”), to subscribe for up to a number of such Dilutive Securities, equal to the number of such Dilutive Securities proposed to be offered multiplied by a fraction, the numerator of which is the total number of shares of Common Stock beneficially owned by such Investor and any of its affiliates at the time the Company proposes to issue any the securities and the denominator of which is the total number of shares of Common Stock issued and outstanding at such time (“Pro Rata Portion”). The preemptive rights do not apply to the following securities issued by the Company at any time in compliance with the Investment Agreements (the “Excluded Securities”): (i) equity securities or securities convertible into or exercisable or exchangeable for equity securities, in each case issued to directors, officers, employees, or consultants of the Company as compensation for services rendered by such directors, officers, employees, or consultants; (ii) shares of Common Stock issued as a dividend on shares of Common Stock or upon any stock split, reclassification, recapitalization, exchange or readjustment of shares or other similar transaction; (iii) securities issued as consideration in a merger, consolidation, acquisition of all or substantially all of the another person’s assets or any similar transaction involving the Company and a Person (other than the Investors or an Affiliate of the Company), in each case to the extent that such transaction is conducted in compliance with this Agreement; and (iv) securities issued upon the exercise, conversion or exchange of any options, warrants or other derivative securities of the Company issued in compliance with (or otherwise not in violation of) the Investment Agreements.

Holders of Common Stock are entitled to dividends if, as, and when declared by the Board out of the funds legally available therefore. The Series A Notes prohibit dividends without the approval of the holders of a majority of the principal amount of the Series A Notes. It is our present intention to retain earnings, if any, for use in our business. The payment of dividends on our Common Stock is unlikely in the foreseeable future.

The Board of Directors is not classified.

The Company’s Certificate of Incorporation and Bylaws have no restrictions on alienability of the Common Stock and do not contain any provision discriminating against any existing or prospective holder of such Common Stock as a result of such security holder owning or acquiring a substantial amount of Common Stock.

The Delaware General Corporation Law (“GCL”) has a provision called “Business Combinations with Interested Stockholders Act,” by which the Company has elected to be governed.

The Delaware Business Combinations with Interested Stockholders Act generally operates to prevent a wide variety of transactions between the corporation, on one hand, and an “interested shareholder” and its affiliates, on the other hand. It generally prohibits a publicly held Delaware corporation from engaging in a “business combination” with an” interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless prior to such date the Board of Directors of the corporation approved either the business combination or the transaction in which the person became an interested stockholder, (ii) upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owns at least 85% of the outstanding voting stock of the corporation excluding shares owned by officers or directors of the corporation and by certain employee stock plans, or (iii) on or after such date the business combination is approved by the Board of Directors of the corporation and by the affirmative vote of at least 66 2/3% of the outstanding voting stock of the corporation that is not owned by the interested stockholder. The term “business combination” generally includes mergers, asset sales, and similar transactions between the corporation and the interested stockholder, and other transactions resulting in a financial benefit to the stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns 15% or more of the corporation’s voting stock or who is an affiliate or associate of the corporation and, together with his affiliates and associates, has owned 15% or more of the corporation’s voting stock within three years.

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SELLING STOCKHOLDERS

The Selling Stockholders are named in the table below. Each Selling Stockholder acquired the Common Stock to be sold using this prospectus in a private transaction offered and sold by the Company in reliance upon exemptions from registration pursuant to Section 4(2) of the Securities Act or in open market transactions.

The term “Selling Stockholders” includes persons listed in the table below and also includes donees, pledgees, transferees or other successors-in-interest selling shares of Common Stock, or interests in shares of Common Stock, received after the date of this prospectus from a Selling Stockholder as a gift, pledge, partnership distribution or similar transaction. The Selling Stockholders may sell all or any portion of their shares of Common Stock in one or more transactions on any stock exchange, market or trading facility on which the shares are traded or in private, negotiated transactions. Each Selling Stockholder will determine the prices at which the Selling Stockholder’s shares will be sold.

The information below is based in part on information provided by or on behalf of the Selling Stockholders. Beneficial ownership is determined in accordance with the rules of the SEC, and includes voting or investment power with respect to shares, as well as any shares as to which the Selling Stockholder has the right to acquire beneficial ownership within sixty (60) days after May 1, 2017 through the exercise or conversion of any stock options, warrants, convertible debt or otherwise. No estimate can be given as to the amount or percentage of our Common Stock that will be held by the Selling Stockholders after any sales or other dispositions made pursuant to this prospectus because the Selling Stockholders are not required to sell any of the shares being registered under this prospectus. The table below assumes that the Selling Stockholders will sell all of the shares listed in this prospectus.

Unless otherwise indicated in the footnotes to the table, (i) the named persons possess sole voting and investment control with respect to the shares listed (except to the extent such authority is shared with spouses under applicable law) as of May 1, 2017, (ii) the Selling Stockholders have not held any position or office or had any material relationship with our Company or any of its subsidiaries within the past three years, and (iii) the Selling Stockholder is not a broker-dealer, or an affiliate of a broker-dealer.

Selling Stockholder	Shares beneficially owned before the offering(1)	Maximum number of shares to be sold in the offering(2)	Shares beneficially Owned after the offering	Percentage owned after the offering(3)
Samlyn Offshore Master Fund Ltd. (4)	20,285,178	20,319,682	0	0
Samlyn Onshore Fund LP (4)	11,394,543	11,412,960	0	0
IBS Turnaround Fund, L.P. (5)(6)	9,191,595	2,291,276	6,904,585	6.4
IBS Turnaround Fund QP (A Limited Partnership) (5)(7)	19,192,833	4,741,255	14,460,593	13.3
IBS Opportunity Fund (5)(8)	2,659,968	1,286,854	1,375,920	1.3
Fimatec Ltd.(9)	4,334,335	4,334,335	0
Daniel Fitzgerald (10)	1,233,434	433,434	800,000	*
Mark Weinberger (11)	3,946,251	520,120	3,426,131	3.2
Robert Betz (12)	1,209,663	433,434	776,229	*
Joseph Mark (13)	2,867,088	433,434	2,433,654	2.2
Dune Road LLC (14)	2,994,399	433,434	2,560,965	2.4
Goeffrey Scott (15)	5,492,997	910,210	4,582,787	4.2
Kenneth Cornick (16)	1,966,867	866,867	1,080,000	1.0
Justin Erlich	2,600,600	2,600,600	0	*
Jeffrey Silver	827,343	216,717	610,626	*
Cognisant Ltd.	866,867	866,867	0	*
Jon Levy	1,400,801	433,434	967,367	1.0

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(1)

The number of shares in this column includes all shares registered in this offering: (i) 10 million shares held by the Samlyn Entities and (ii) the maximum number of shares issuable on conversion of the Series A Notes, which maximum assumes that all interest payments are paid in kind and the maturity date is extended to 2019 thereby reducing the conversion price from $0.83 to $0.73 and the maturity date is further extended to the maturity date of the Series 2023 Notes; and (iii) as to the Samlyn Entities an aggregate of 10 million shares of Common Stock and (b) other shares beneficially owned.

(2)

The number of shares in this column includes (a) all shares that are registered in this offering.

(3)

As of May 1, 2017, 108,613,549 shares were issued and outstanding. The numerator in the percentage ownership calculation is the same number as in the “shares beneficially owned after the offering” column and the denominator is the number of outstanding shares plus the amount of shares included in the “shares beneficially owned after the offering,” which are issuable upon the conversion of any convertible securities.

(4)

Robert Pohly, the managing member of Samlyn Partners, LLC, which is the general partner of Samlyn Onshore Fund, LP, and Samlyn Capital, LLC, which is the investment manager of Samlyn Offshore Master Fund, Ltd., has sole investment and voting power over the shares.

(5)

David Taft, a current member of the Company’s Board of Directors, is President of IBS Capital LLC, which manages the named funds, has sole investment and voting power over the shares.

(6)

124,624 shares may be acquired through the exercise of the June 2016 Warrants

(7)

244,744 shares may be acquired through the exercise of the June 2016 Warrants

(8)

31,031 shares may be acquired through the exercise of the June 2016 Warrants

(9)

Masato Katayma has sole investment and voting power over the shares. 1,001,001 shares may be acquired through the exercise of the June 2016 Warrants

(10)

100,100 shares may be acquired through the exercise of the June 2016 Warrants

(11)

120,120 shares may be acquired through the exercise of the June 2016 Warrants

(12)

100,100 shares may be acquired through the exercise of the June 2016 Warrants

(13)

100,100 shares may be acquired through the exercise of the June 2016 Warrants

(14)

Joseph Mark has sole investment and voting power over the shares. 100,100 shares may be acquired through the exercise of the June 2016 Warrants

(15)

210,210 shares may be acquired through the exercise of the June 2016 Warrants

(16)

200,200 shares may be acquired through the exercise of the June 2016 Warrants

(17)

600,600 shares may be acquired through the exercise of the June 2016 Warrants

(18)

50,500 shares may be acquired through the exercise of the June 2016 Warrants

(19)

100,100 shares may be acquired through the exercise of the June 2016 Warrants

(20)

Nicholas Gardner has sole investment and voting power over the shares. 200,200 shares may be acquired through the exercise of the June 2016 Warrants

PLAN OF DISTRIBUTION

The term “Selling Stockholders” includes the persons listed in the table under “Selling Stockholders” and also includes donees, pledgees, transferees or other successors-in-interest selling shares of Common Stock or interests in shares of Common Stock received after the date of this prospectus from a Selling Stockholder as a gift, pledge, partnership distribution or similar transaction.

Each Selling Stockholder will determine the prices at which the Stockholder’s Common Stock will be sold. These sales may be at fixed or negotiated prices.

The Selling Stockholders may sell all or any portion of their Common Stock in one or more transactions on any stock exchange, market or trading facility on which the Common Stock are traded or in private transactions.

The Selling Stockholders may use any method or combination of methods, for sale of the Common Stock to the extent permitted by law. Such methods may include:

●

ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers

●

block trades in which the broker-dealer will attempt to sell the Common Stock as agent but may position and resell a portion of the block as principal to facilitate the transaction;

●

purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

●

an exchange distribution in accordance with the rules of the applicable exchange;

●

privately negotiated transactions;

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●

short sales;

●

broker-dealers may agree with the Selling Stockholders to sell a specified number of such Common Stock at a stipulated price per share;

●

a combination of any such methods of sale; and

●

puts and calls and other transactions in our Common Stock or derivatives of our Common Stock, which may involve the sale or delivery of Common Stock in connection with these transactions

The Selling Stockholders may also sell the Common Stock under exemptions for registration under Section 5 of the Securities Act of 1933, as amended (“Securities Act”), including sales under Rule 144 under the Securities Act, if available, rather than under this prospectus.

The Selling Stockholders and any broker-dealers or agents that are involved in selling Common Stock may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the Common Stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.

The Selling Stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the Securities against certain liabilities, including liabilities arising under the Securities Act.

The Selling Stockholders may from time to time pledge or grant a security interest in some or all of the Common Stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the Common Stock from time to time under this prospectus after we have filed a supplement to this prospectus under Rule 424(b)(3) (or other applicable provision under the Securities Act) amending the list of Selling Stockholders to include the pledgee, transferee or other successors in interest as Selling Stockholders under this prospectus.

The Selling Stockholders also may transfer the Common Stock in other circumstances, in which case the transferees, or other successors in interest will be the selling beneficial owners for purposes of this prospectus and may sell the Common Stock from time to time under this prospectus after we have filed a supplement to this prospectus under Rule 424(b)(3) (or other applicable provision under the Securities Act) amending the list of Selling Stockholders to include the transferee or other successors in interest as Selling Stockholders under this prospectus.

Each Selling Stockholder has advised the Company that it acquired the Series A Notes, the June 2016 Warrants and/or the Common Stock in the ordinary course of such Selling Stockholder’s business, that it has not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of the Common Stock, and there is no underwriter or coordinating broker acting in connection with a proposed sale of Common Stock by any Selling Stockholder. If we are notified by any Selling Stockholder that any material arrangement has been entered into with a broker-dealer for the sale of Common Stock, we will file a supplement, if required, to this prospectus disclosing the material facts relating to the arrangement and the related transactions.

If the Selling Stockholders use this prospectus for any sale of the Common Stock, they will be subject to the prospectus delivery requirements of the Securities Act.

The Company has advised each Selling Stockholder that it may not use Common Stock registered on the registration statement of which this prospectus is a part to cover short sales of Common Stock made prior to the date on which this registration statement shall have been declared effective by the SEC.

The Selling Stockholders and other persons participating in the sale or distribution of the Common Stock will be subject to the applicable provisions of the Securities Act and Securities Exchange Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such Selling Stockholders in connection with resales of their respective Common Stock under this registration statement.

In order to comply with the securities laws of some states, if applicable, the Common Stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the Common Stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.

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Although we will incur expenses in connection with the registration of the Common Stock offered under this prospectus, we will not receive any proceeds from the sale of the Common Stock by the Selling Stockholders. However, if all of the June 2016 Warrants are exercised, we will receive $820,821.

We have agreed to indemnify certain Selling Stockholders against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the Common Stock offered by this prospectus.

EXPERTS

The consolidated balance sheets of Applied Minerals, Inc. as of December 31, 2016 and 2015 and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows and financial statement schedule for each of the years in the three-year period ended December 31, 2016 appearing in this prospectus and registration statement, have been audited by EisnerAmper LLP, independent registered public accounting firm, as stated in their report, included elsewhere herein, which report contained an explanatory paragraph describing conditions that raise substantial doubt about the Company’s ability to continue as a going concern. Such financial statements and financial statement schedule have been included herein in reliance on the report of such firm given upon their authority as experts in accounting and auditing.

LEGAL MATTERS

Unless otherwise indicated in any applicable prospectus supplement, the validity of the Common Stock being offered hereby has been passed upon for us by William Gleeson Esq., the General Counsel of the Company. Mr. Gleeson owns options to purchase 1,820,750 shares of Common Stock.

WHERE YOU CAN FIND MORE INFORMATION

We are subject to the informational requirements of the Securities Exchange Act of 1934 and, in accordance therewith, file reports, proxy statements and other information with the SEC. Our reports, proxy statements and other information filed pursuant to the Securities Exchange Act of 1934 are available to the public over the Internet from the SEC’s website at http://www.sec.gov and may be inspected and copied at the public reference facilities maintained by the SEC at 100 F. Street, N.E., Room 1580, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

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

OVERVIEW

Applied Minerals, Inc. is a leading global producer of DRAGONITE halloysite clay and AMIRON advanced natural iron oxides. We are a vertically integrated operation focused on developing grades of DRAGONITE and AMIRON that can be utilized for both traditional and advanced end-market applications. We have mineral production capacity of up to approximately 55,000 tons per year. See “Information about the Company” for further details regarding both our business strategy.

CRITICAL ACCOUNTING POLICIES

The following accounting policies have been identified by management as policies critical to the Company’s financial reporting:

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 – observable inputs other than quoted prices in active markets for identical assets and liabilities

●	Level 3 –significant unobservable inputs

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The recorded value of certain financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, other current assets, and accounts payable and accrued expenses approximate the fair value at December 31, 2016 and 2015 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 the PIK Notes, materially approximate their fair value. The fair value of the PIK Notes payable was estimated using a Monte Carlo Model.

Impairment of Long-Lived Assets

Long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. When such events occur, the Company compares the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset to its carrying amount. If this comparison indicates that there is impairment, the amount of the impairment is typically calculated using discounted expected future cash flows where observable fair values are not readily determinable.

RECENT ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance on revenue recognition, which provides a single, comprehensive revenue recognition model for all contracts with customers and supersedes 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. The Company has identified the predominant changes to its accounting policies resulting from the application of this guidance and is in the process of quantifying the impact on its consolidated financial statements. 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; however, the Company does not expect this guidance to have a significant impact on the Company’s consolidated financial statements on an annual basis. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted.

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-10): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”) ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Specifically, ASU 2014-15 provides a definition of the term substantial doubt and requires an assessment for a period of one year after the date the financial statements are issued. It also requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans and requires an express statement and other disclosures when substantial doubt is not alleviated. The new standard will be effective for reporting periods beginning after December 15, 2016 with early adoption permitted. The Company adopted this guidance in 2016 (see Note 2).

In November 2015, the FASB issued ASU 2015-17, “Income Taxes”, which requires that deferred tax liabilities and assets be classified as non-current in a classified statement of financial position. The amendments in this ASU apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments. For public business entities, the amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The amendments may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. If an entity applies the guidance prospectively, the entity should disclose in the first interim and first annual period of change the nature of and reason for the change in accounting principle and a statement that prior periods were not retrospectively adjusted. If an entity applies the guidance retrospectively, the entity should disclose in the first interim and first annual period of change the nature of and reason for the change in accounting principle and quantitative information about the effects of the accounting change on prior periods.

If an entity applies the guidance retrospectively, the entity should disclose in the first interim and first annual period of change the nature of and reason for the change in accounting principle and quantitative information about the effects of the accounting change on prior periods.

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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.

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.

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.

In August 2016, FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments,” amended guidance which clarifies how certain cash receipts and cash payments should be presented and classified in the statement of cash flows. The new guidance is intended to reduce the existing diversity in practice in how certain transactions are classified in the statement of cash flows. This guidance is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations: Clarifying the Definition of a Business,” which clarifies the definition of a business and assists entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under this guidance, when substantially all of the fair value of gross assets acquired is concentrated in a single asset (or group of similar assets), the assets acquired would not represent a business. In addition, in order to be considered a business, an acquisition would have to include at a minimum an input and a substantive process that together significantly contribute to the ability to create an output. The amended guidance also narrows the definition of outputs by more closely aligning it with how outputs are described in FASB guidance for revenue recognition. This guidance is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted.

Results of Operations - 2016 Compared to 2015

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

	Twelve Months Ended December 31,												Variance
	2016			% of Rev.			2015			% of Rev.			Amount			%

REVENUES	$	4,013,134			100	%	$	507,474			100	%	$	3,505,660			691	%
OPERATING EXPENSES:
Production costs		2,282,805			57	%		257,654			51	%		2,025,151			786	%
Exploration costs		981,045			24	%		3,997,039			788	%		(3,015,944	)		(75	%)
General and administrative *		4,069,508	*		101	%		4,857,015	*		957	%		(787,507	)		(16	%)
Depreciation expense		1,348,860			34	%		1,312,585			259	%		36,275			3	%
(Gain) from disposition of land		(108,764	)		(3	%)		0			0	%		108,764	)		0	%
Total Operating Expenses		8,573,454			214	%		10,424,293			2,054	%		(1,850,839	)		(18	%)
Operating Loss		(4,560,320	)		(114	%)		(9,916,819	)		(1,954	%)		5,356,499			(54	%)
OTHER INCOME (EXPENSE):
Interest expense, net, including amortization of deferred financing cost and debt discount		(6,308,495	)		(157	%)		(4,567,952	)		(900	%)		(1,740,543	)		38	%
Gain on revaluation of PIK Notes		3,229,043			80	%		5,328,515			1,050	%		(2,099,472	)		(39	%)
Other (expense)		0			0	%		(648,892	)		(128	%)		648,892			(100	%)
Total Other Income (Expense)		(3,079,452	)		(77	%)		111,671			22	%		(3,191,123	)		(2,858	%)
*Net Loss*	$	(7,639,772	)		(190	%)	$	(9,805,148	)		(1,932	%)	$	2,165,376			(22	%)

* Includes $476,493 and $397,417 of noncash stock compensation expense for 2015 and 2014, respectively, relating to employee and consultant stock options.

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Revenue generated during 2016 was $4,013,134, compared to $507,474 of revenue generated during the same period in 2015, an increase of 691.0%. DRAGONITE sales in 2016 were $462,988 and AMIRON sales were $3,550,144. DRAGONITE sales increased by $324,190, or 233.4%, when compared to 2015. This increase resulted primarily from an increase in sales to customers utilizing DRAGONITE in commercial applications that include catalysts, nucleating agents, polymer filler and ceramics. AMIRON sales increased by $3,364,292, or 1,844.6%, due primarily to the inclusion of a full year of the Company’s take-or-pay supply agreement for its AMIRON iron oxide product. This agreement began in December, 2015.

Total operating expenses for 2016 were $8,573,454 compared to $10,424,282 of expenses incurred during the same period in 2015, a decrease of $1,850,828 or 18.0%. The 18.0% decline in operating expenses was primarily due to an 82.0% decline in exploration costs and a 16.0% decline in general and administrative expenses, offset by a 786.0% increase in production expenses and a 3.0% increase in depreciation expense.

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 expenses are the two largest components of the Company’s production costs.

The Company’s production costs during 2016 were primarily associated with a full year of fulfillment of a 5-year, $5 million take-or-pay supply agreement into which the Company entered during December 2015. The Company’s production activity from January, 2015 through November, 2015 was minimal.

Exploration costs include operating expenses incurred at the Dragon Mine that are not directly related to production activities. Exploration costs, excluding depreciation expense, incurred during 2016 were $981,045 compared to $3,997,039 of costs incurred during the same period in 2015, a decrease of 75.0%. The decline in exploration costs during the period was driven, in large part, by a shift in the allocation of employees from exploration to production activities. In addition to this shift of headcount, certain of the Company’s underground exploration activities were completed during 2015 and the labor and other related costs associated with these exploration activities were eliminated.

General and administrative expenses for 2016 totaled $4,069,508 compared to $4,857,000 of expense incurred during the same period in 2015, a decrease of 16%. The Company’s general and administrative expenses are associated with its New York operations. The largest component of the Company’s general and administrative expense includes employee compensation and expense related to the issuance of stock options to employees and consultants.

Employee wages during 2016 totaled $1,981,500, an increase of $12,900 when compared to employee wages incurred during 2015. Employee wage expense during 2016 included (i) $350,400 of compensation paid to employees who left the company during 2016; and (ii) a total of $112,500 in performance bonus payments paid to the Company’s CFO, General Counsel and a third employee for performance goals achieved during 2015.

Expenses incurred on professional services during 2016 totaled $168,200, a decrease of $385,100 or 70%, when compared to 2015. The decline was driven primarily by: (i) the elimination of a need of the Company to utilize outside counsel for certain legal work and (ii) the Company’s decision to cease the use of a consulting firm for certain product development work.

Director expense incurred during 2016 was $180,900 during 2016, a decline of $253,400, or 58.4%, when compared to 2015.The decline was the result of the Company’s directors’ decision to take a significant portion of their fees in options to purchase shares of common stock at Blac-Scholes valuations significantly below the cash equivalent payable to them.

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Shareholder expense incurred during 2016 was $96,700, a decline of $203,900, or 68.0%. The decline was driven primarily be a reduction in compensation to the firm that provides the Company investor relations. During 2016 the Company reduced the monthly fee it pays its investor relations provider and eliminated a stock grant that it paid to the firm during 2015.

Travel and entertainment expense incurred during 2016 was $234,000, a decline of $109,500, or 31.3%, when compared to 2015. The decline was driven primarily by the Company’s decision to (i) allocate its marketing resources on a more focused field of customer targets and (ii) utilize its distributors for other marketing activities.

Operating Loss incurred during the quarter was $4,560,320, a decrease of $5,356,499 when compared to 2015. The reduction was driven primarily by a $3,505,660 increase in revenue and a decrease in Total Operating Expenses of $1,850,839.

Total Other Expense for 2016 was $3,079,452 compared to Total Other Income of $111,671 during the same period in 2015, a decrease of $3,191,123. The decline in Total Other Income was driven primarily by a $2,099,472, or 39.0%, decrease in the gain on the revaluation of PIK Notes derivative due to the decline in the Company’s stock price over the period, a $1,740,543, or 38.0%, increase in interest expense due to an increase in the principal balance of the Series A and Series 2023 Convertible PIK Notes, partially offset by the elimination of $650,000 of other expense primarily related to a penalty the Company had to pay during 2015 related to the Series A and Series 2023 Convertible PIK Notes.,

Net Loss for 2016 was $7,639,772, a decrease of $2,165,376 when compared to a net loss of $9,805,137 for 2015. The decrease in net loss was driven primarily by the decrease in Operating Loss of $5,356,499, partially offset by an increase in Total Other Expense of $3,191,123.

Results of Operations - 2015 Compared to 2014

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

	Twelve Months Ended December 31,												Variance
	2015			% of Rev.			2014			% of Rev.			Amount			%

REVENUES	$	507,474			100	%	$	234,221			100	%	$	273,253			117	%
OPERATING EXPENSES:
Production costs		257,654			51	%		49,464			21	%		208,190			421	%
Exploration costs		3,997,039			788	%		4,626,139			1,975	%		(629,100	)		(14	%)
General and administrative *		4,857,015	*		957	%		5,195,830	*		2,218	%		(338,815	)		(7	%)
Depreciation expense		1,312,585			259	%		1,164,366			497	%		148,219			13	%
Total Operating Expenses		10,424,282			2,054	%		11,035,799			4,712	%		(611,517	)		(6	%)
Operating Loss		(9,916,808	)		(1,954	%)		(10,801,578	)		(4,612	%)		884,770			(8	%)
OTHER INCOME (EXPENSE):
Interest expense, net, including amortization of deferred financing cost and debt discount		(4,567,952	)		(900	%)		(1,667,285	)		(712	%)		(2,900,667	)		174	%
Gain on revaluation of warrants derivative		0			0	%		830,000			354	%		(830,000	)		(100	%)
Gain on revaluation of stock awards		0			0	%		110,000			47	%		(110,000	)		(100	%)
Gain on revaluation of PIK Notes		5,328,515			1,050	%		1,470,798			628	%		3,857,717			262	%
Other (expense)		(648,892	)		(128	%)		(258,252	)		(110	%)		(390,640	)		151	%
Total Other Income (Expense)		111,671			25	%		485,261			(207	%)		(373,590	)		(77	%)
*Net Loss*	$	(9,805,137	)		(1,932	%)	$	(10,316,317	)		(4,405	%)	$	511,180			(5	%)

* Includes $397,417 and $865,716 of noncash stock compensation expense for 2015 and 2014, respectively, relating to employee and consultant stock options.

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Revenue generated during 2015 was $507,474, compared to $234,221 of revenue generated during the same period in 2014, an increase of 117.0%. DRAGONITE sales in 2015 were $324,085 and AMIRON sales were $183,389. DRAGONITE sales increased by approximately $117,000 (56.5%) during 2015 compared to 2014. This increase resulted primarily from a $120,000 increase in sales to customers utilizing DRAGONITE in commercial applications that include catalysts, nucleating agents for plastic and reinforcing fillers for plastics. This increase was partially offset by a decline in sales of DRAGONITE for testing and scale-up purposes. AMIRON sales increased approximately $161,000 (714.3%) compared to 2014. The increase was due to sales made to two customers who are using the material for pigment and catalyst applications.

Total operating expenses for 2015 were $10,424,282 compared to $11,035,799 of expenses incurred during the same period in 2014, a decrease of $611,517 or 6.0%. The components of the Company’s operating expenses include exploration costs and general and administrative expenses. Exploration costs are incurred by our Dragon Mine operation. General and administrative costs primarily include expenses incurred by our New York-based operation. The 6.0% decline in operating expenses was primarily due to an 8.0% decline in exploration costs and a 7% decline in general and administrative expenses, offset by a 13% increase in depreciation expense.

Exploration costs, excluding depreciation expense, incurred during 2015 were $3,997,039 compared to $4,626,139 of costs incurred during the same period in 2014, a decrease of 14.0%. The decline was driven primarily by a $246,700, or 66.7%, decline in the use of outside labs for product development and testing, a $280,200, or 57.8%, decline in the use of geological consulting services, a $86,800, or 5.1%, decline in wage expense, a $61,100 decline in drilling materials and equipment maintenance, and a $57,200, or 24.5%, decline in utility (electricity) charges. These decreases were partially offset by a $163,500, or 328.9% increase in equipment rentals and leases, a $63,500, or 206.7%, increase in safety expense, a $61,300, or 67.1%, increase in building maintenance expense, a $34,600, or 357.6%, increase in consulting expense, and a $29,200 increase in workers’ compensation related to the Dragon Mine operations.

The decrease in expense related to the use of outside labs for product development and testing was driven by the Company’s decision to establish a lab at the Dragon Mine facility and conduct most of its product development and testing in-house. The decline in expense related to the use of geological consulting services is, in large part, due to the completion of the characterization of the Dragon Mine resource. The decline in wage expense, drilling materials costs and equipment maintenance expense were due, in large part, to the completion of certain underground development activities during the latter half of 2016. The increase in equipment rentals and leases was due to equipment needs related to pre-production of the iron oxide contract and equipment needed related to work focused on enhancing our clay processing capabilities. The increase in safety expense is related to the Company’s effort to enhance its compliance with MSHA standards.

The increase in building maintenance expense was due to work needed to enhance the reliability of the Company’s larger mill facility. The increase in consulting expense is due to the hiring of surveyor to perform continued work on the Dragon Mine property. The increase in workers’ compensation expense is related to a slight increase in rates.

General and administrative expenses for 2015 totaled $4,857,015 compared to $5,195,830 of expense incurred during the same period in 2014, a decrease of 6.0%. The decline was driven primarily by a $263,900, or 10.6%, decrease in payroll expense and a $468,300, or 54.1%, decrease in compensation expense, partially offset by a $152,700, or 103.2%, increase in shareholder expenses, a $137,800, or 46.5%, increase in director expense, and a $90,700, or 101.9%, increase in consulting service fees. The decline in payroll expense is the result of a decline in certain executive compensation. The decrease in equity compensation is the result of a decrease in the value of equity granted to employees. The increase in shareholder expense was due primarily to the engagement of a new investor relations firm. The increase in director expense was due to the addition of a director. The increase in consulting expense was due to the engagement of a cosmetic product development lab..

Other income for 2015 was $111,671 compared to other income of $485,261 during the same period in 2014, a decrease of 77%. The $373,590 decline in other income was driven primarily by a $2,900,667, or 174.0%, increase in interest expense, a $3,857,717, or 262.3%, increase in the gain on the revaluation of PIK Notes derivative, and a $390,640, or 151.3%, increase in other expense. The increase in interest expense is due to the issuance of approximately $19.8 million of the 10% Convertible PIK Notes due 2018. The increase in the revaluation of PIK Notes derivative is due to a decline in the Company’s stock price.

Net Loss for 2015 was $9,805,137 compared to a net loss of $10,316,317 for 2014, a decrease of $511,180 or 5%. The improvement in net loss was driven primarily by the 117.0% increase in revenue and 5.0% decrease in operating expense.

LIQUIDITY AND CAPITAL RESOURCES

The Company has a history of recurring losses from operations and the use of cash in operating activities while in the process of developing and commercializing halloysite clay and iron oxide. For the year ended December 31, 2016, the Company’s net loss was $7,639,772 and cash used in operating activities was $2,732,089. As of December 31, 2016, the Company has negative working capital of ($15,036), which takes into account $961,395 of accrued PIK Note interest, which the Company expects to pay in-kind and $156,000 of disputed payables for which the Company believes it has a statute of limitations defense.

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Management believes that in order for the Company to meet its obligations arising from normal business operations through March 31, 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 through March 31, 2018, management believes it will not have sufficient liquidity to fund its operation through March 31, 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 going concern.

Cash used in operating activities in 2016 was $2,732,089 compared to $8,585,600 of cash used during the same period in 2015. Cash used in operating activities during 2016, after adjusting for non-cash items but before adjusting for changes in operating assets and liabilities, was $2,862,022, $4,889,099 less than the comparable period in 2015, driven primarily by the Company’s increase in revenue and reduction of operating expenses. After adjusting for the change in operating assets and liabilities, cash used in operating activities during 2016 was $2,732,089, $5,853,468 less than during 2015.

Cash provided by investing activities during 2016 was $335,700 compared to a use of $251,500 during the same period in 2015. The increase was due primarily to the closing of the sale of certain non-core assets during 2016.

Cash provided by financing activities during 2016 was $1,643,100 compared to a use of $61,923. The increase was due primarily to proceeds generated in June, 2016 from the private placement of $1,640,000 of common stock to certain investors.

Our total assets as of December 31, 2016 were $6,079,539 compared to $8,318,112 as of December 31, 2015, or a decrease of $2,238,573. The decrease in total assets was due primarily to a decrease in cash of $753,251 due primarily to cash used in operating activities and a decrease in property and equipment, net of $1,131,649 due primarily to the depreciation of our new mill assets, partially offset by an increase in prepaid and other long-term assets. Total liabilities were $27,047,593 at December 31, 2016 compared to $24,057,762 at December 31, 2015. The increase in total liabilities was due primarily to a $3,005,537 increase in long-term liabilities, primarily consisting of PIK Notes payable.

ISSUANCE OF CONVERTIBLE DEBT

The Company raised $12.5 million of financing through the issuance of Paid-In-Kind (“PIK”)-Election Convertible Notes in 2014, with key terms highlighted in the table below:

Key Terms	Series A Notes
Inception Date	11/03/2014
Cash Received	$	12,500,000
Principal (Initial Liability)	$	19,848,486
Maturity (Term)	4 years, but may range between 2 years to the full maturity of the Series 2023 Notes, depending on whether a Specified Event occurs and/or an Extension Option is elected (see below for further details)
Exercise Price	$0.92 at inception, adjusted downward based on anti-dilution provisions/down-round protection; also may be reduced by $0.10 based if Extension Option is elected (see below)
Stated Interest	10% per annum, due semiannually, may be reduced to 1% if a Specified Event occurs
Derivative Liability	$9,212,285 established at inception due to existence of down-round protection; revalued every quarter using a Monte Carlo model

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Series A Notes

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

Below are key terms of the Series A Notes:

●

Maturity- November 3, 2018, provided that the Stated Maturity Date may be extended to November 3, 2019 at the option of the Company (the “Extension Option”) if (i) the Company has delivered written notice of its exercise of the Extension Option to the Holder not more than ninety (90) nor less than thirty (30) days prior to November 3, 2018 and (ii) the Company has delivered a certificate, dated as of November 3, 2018, certifying that no Default or Event of Default has occurred and is continuing; provided, further that the Stated Maturity Date shall be extended to the maturity date of the Series 2023 Notes or any Replacement Financing, as applicable, upon the occurrence of a Specified Event (“Specified Extension”).

●

Exercise Price- initially $0.92 per share and will be (i) adjusted from time to time pursuant anti-dilution provisions and (ii) reduced by $0.10 per share if the Company elects to exercise its Extension Option.

●

Stated Interest: 10% payable semiannually in arrears, provided that the interest rate shall be reduced to 1% per annum on the principal amount of the Note upon the occurrence of the Specified Event, as defined below.

●

Specified Event- means the event that may occur after the second anniversary of the Issuer Date if: (i) any amounts under the Series 2023 Notes or any Replacement Financing are outstanding, (ii) the VWAP for the preceding 30 consecutive Trading Days as determined by the Board of Directors of the Issuer in good faith is in excess of the Exercise Price, (iii) the closing Market Price of the common stock is in excess of the Exercise Price on the date immediately preceding the date on which the Specified Event occurs, (iv) no Default or Event of Default has occurred and is continuing and (v) the Issuer has delivered a certificate to each holder of Series A Notes certifying that the conditions set forth in clauses (i) through (iv) above have been met.

●

Extension Option- If stock price is lower than current exercise price ($0.92) prior to the stated maturity (November 3, 2018), then the Company can elect an Extension Option, whereby the maturity is extended by one year (see Maturity definition), but with a reduction in exercise price by $0.10.

●

Liquidated Damages- The Company is required to pay the noteholders 1% of the principal amount of the Series A Notes if a Registration statement is not filed and effective within 90 days of the inception date (and further damages for every 30 days thereafter). The registration statement became effective on July 2015. Liquidation damages of $541,011 and $200,000 have been charged to Other Expenses during 2015 and 2014, respectively, due to the delay of the registration statement’s effective date. During the second quarter of 2015, the Company issued 1,015,086 shares valued at $741,011 to Series A note holders as payment of liquidated damages.

●

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

OFF-BALANCE SHEET ARRANGEMENTS

There are no off-balance sheet arrangements between the Company and any other entity that have, or are reasonably 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.

CONTRACTUAL OBLIGATIONS

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 is pending completion of the Company’s permanent office location in the same Brooklyn, NY building. Upon occupancy of the permanent office space, the Company has entered into a five-year lease agreement. Assuming occupancy of the new office space on April 1, 2017, the Company is obligated to pay a monthly rent of approximately $9,000 for the period from April 1, 2017 through March 31, 2022.

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The following table summarizes our contractual obligations under the five-year lease agreement referred to above:

	Payment due by period
	Total		< 1 year		1 – 3 years		3 – 5 years		> 5 years
Contractual Obligations:
Rent obligations	$	554,000	$	78,000	$	217,000	$	230,000	$	29,000

*Total*	$	554,000	$	78,000	$	217,000	$	230,000	$	29,000

Rent expense for the years ended December 31, 2016, 2015 and 2014 was $200,832, $182,168and $174,091, respectively.

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CONSOLIDATED FINANCIAL STATEMENTS

	Page

Report of Independent Registered Public Accounting Firm	63
Financial Statements:
Consolidated Balance Sheets at December 31, 2016 and 2015	64
Consolidated Statements of Operations for the Years Ended December 31, 2016, 2015 and 2014	65
Consolidated Statements of Stockholders' Equity (Deficit) for each of the Years Ended December 31, 2016, 2015 and 2014	66
Consolidated Statements of Cash Flows for Each of the Years Ended December 31, 2016, 2015 and 2014	67
Notes to Consolidated Financial Statements	69

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of

Applied Minerals, Inc.

We have audited the accompanying consolidated balance sheets of Applied Minerals, Inc. (the “Company") as of December 31, 2016 and 2015, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2016. In connection with our audits of the consolidated financial statements, we have also audited financial statement schedule “Schedule II — Valuation and Qualifying Accounts” for each of the years in the three-year period ended December 31, 2016. The financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Applied Minerals, Inc. as of December 31, 2016 and 2015, and the consolidated results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information stated therein.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has a history of recurring losses from operations and uses of cash in operating activities. In addition, the Company has no committed debt or equity financing and may be unable to meet its obligations arising from normal business operations through March 31, 2018. Collectively these conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ EisnerAmper LLP

New York, New York

March 31, 2017

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APPLIED MINERALS, INC.

(An Exploration Stage Mining Company)

CONSOLIDATED BALANCE SHEETS

December 31,

December 31,

2016

2015

ASSETS

Current Assets

Cash and cash equivalents
$ 1,049,880 $ 1,803,131

Accounts receivable
364,952 176,205

Deposits and prepaid expenses
371,206 322,922

Other current receivables
16,801 94,647

Total Current Assets
1,802,839 2,396,905

Property and Equipment, net
4,075,176 5,206,825

Other Assets

Deposits
200,524 269,202

Assets held for Sale
1,000 445,180

Total Other Assets
201,524 714,382

TOTAL ASSETS
$ 6,079,539 $ 8,318,112

LIABILITIES AND STOCKHOLDERS’ (DEFICIT)

Current Liabilities

Accounts payable and accrued liabilities
$ 622,331 $ 742,745

PIK Notes interest accrual
961,395 880,407

Current portion of notes payable
234,149 210,429

Total Current Liabilities
1,817,875 1,833,581

Long-Term Liabilities

Long-term portion of notes payable
13,073 33,688

PIK Notes payable, net of $15,143,123 (2016) and $17,572,885 (2015) debt discount
23,040,093 17,051,636

PIK Note derivative liability
2,176,552 5,138,857

Total Long-Term Liabilities
25,229,718 22,224,181

Total Liabilities
27,047,593 24,057,762

Commitments

Stockholders’ (Deficit)

Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding

Common stock, $0.001 par value, 250,000,000 and 200,000,000 shares authorized, and 108,613,549 and 97,144,736 shares issued and outstanding at December 31, 2016 and 2015, respectively
108,614 97,145

Additional paid-in capital
68,506,530 66,106,631

Accumulated deficit prior to the exploration stage
(20,009,496
)
(20,009,496
)

Accumulated deficit during the exploration stage
(69,573,702
)
(61,933,930
)

Total Stockholders’ (Deficit)
(20,968,054
)
(15,739,650
)

TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
$ 6,079,539 $ 8,318,112

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

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APPLIED MINERALS, INC.

(An Exploration Stage Mining Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended

December 31,

2016

2015

2014

REVENUES
$ 4,013,134 $ 507,474 $ 234,221

OPERATING EXPENSES:

Production costs
2,282,805 257,654 49,464

Exploration costs
981,045 3,997,039 4,626,139

General and administrative
4,069,508 4,857,015 5,195,830

Depreciation expense
1,348,860 1,312,585 1,164,366

(Gain) from disposition of land (108,764 ) -0- -0-

Total Operating Expenses
8,573,454 10,424,293 11,035,799

Operating Loss
(4,560,320
)
(9,916,819
)
(10,801,578
)

OTHER INCOME (EXPENSE):

Interest expense, net, including amortization of deferred financing cost and debt discount
(6,308,495
)
(4,567,952
)
(1,667,285
)

Gain on revaluation of warrant derivative
-0- -0- 830,000

Gain on revaluation of stock awards
-0- -0- 110,000

Gain on revaluation of PIK Note derivative
3,229,043 5,328,515 1,470,798
)

Other expense
-0- (648,892
)
(258,252
)

Total Other Income
(3,079,452 ) 111,671 485,261

Net loss
$ (7,639,772
)
$ (9,805,148
)
$ (10,316,317
)

Net Loss Per Share (Basic and Diluted)
$ (0.07
)
$ (0.10
)
$ (0.11
)

Weighted Average Shares Outstanding (Basic and Diluted)
103,124,288 96,033,553 94,895,194

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

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APPLIED MINERALS, INC.

(An Exploration Stage Mining Company)

Consolidated Statements of Stockholders’ Equity (Deficit)

Accumulated

Accumulated

Total

Common Stock

Deficit

Deficit

Stock-

Additional

Prior to

During

holders’

Paid-In

Exploration

Exploration

Equity

Shares

Amount

Capital

Stage

Stage

(Deficit)

Balance, December 31, 2013
94,646,013 $ 94,646 $ 63,213,893 $ (20,009,496
)
$ (41,812,476
)
$ 1,486,567

Shares issued for directors fees and other services
408,539 409 326,860 - 0 - - 0 - 327,269

Warrant cancellation
- 0 - - 0 - 120,000 - 0 - - 0 - 120,000

Stock-based compensation expense
- 0 - - 0 - 865,716 - 0 - - 0 - 865,716

Net Loss
- 0 - - 0 - - 0 - - 0 - (10,316,317
)
(10,316,317
)

Balance, December 31, 2014
95,054,552 95,055 64,526,469 (20,009,496
)
(52,128,793
)
(7,516,765
)

Shares issued for directors fees and other services
1,045,788 1,046 378,890 - 0 - - 0 - 379,936

Shares issued for employee bonus
29,310 29 63,859 - 0 - - 0 - 63,888

Shares issued for liquidated damages
1,015,086 1,015 739,996 - 0 - - 0 - 741,011

Stock-based compensation expense
- 0 - - 0 - 397,417 - 0 - - 0 - 397,417

Net Loss
- 0 - - 0 - - 0 - - 0 - (9,805,137
)
(9,805,137
)

Balance, December 31, 2015
97,144,736 97,145 66,106,631 (20,009,496
)
(61,933,930
)
(15,739,650
)

Shares issued for directors fees and other services
203,980 204 53,710 - 0 - - 0 - 53,914

Shares issued for employee compensation
331,494 332 57,416 - 0 - - 0 - 57,748

Shares and warrants issued in private placement
10,933,339 10,933 1,629,067 - 0 - - 0 - 1,640,000

Stock-based compensation expense
- 0 - - 0 - 659,706 - 0 - - 0 - 659,706

Net Loss
- 0 - - 0 - - 0 - - 0 - (7,639,772 ) (7,639,772 )

Balance, December 31, 2016
108,613,549 $ 108,614 $ 68,506,530 $ (20,009,496 ) $ (69,573,702 ) $ (20,968,054 )

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

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APPLIED MINERALS, INC.

(An Exploration Stage Mining Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the year ended

December 31,

2016

2015

2014

Cash Flows From Operating Activities:

Net loss
$ (7,639,772
)
$ (9,805,137
)
$ (10,316,317
)

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

Depreciation
1,348,860 1,312,585 1,164,366

Amortization of discount – PIK Notes
2,696,500 1,259,159 218,031

Amortization of deferred financing costs
7,500 7,500 1,250

Accrued interest on PIK Notes
3,551,195 3,221,035 1,076,250

Stock issued for director and consulting services
53,914 379,936 327,269

Stock-based compensation expense
659,706 397,417 865,716

Stock issued for liquidated damages
-- 741,011 --

Stock issued for employee compensation
57,748 63,888 --

(Gain) on revaluation of warrant derivative
-- -- (830,000
)

(Gain) on revaluation of PIK Notes
(3,229,043
)
(5,328,515
)
(1,470,798 )

(Gain) on revaluation of stock awards for non-employees
-- -- (110,000
)

(Gain) on disposal of property
(108,764 ) -- --

Change in operating assets and liabilities:

Accounts receivable
(188,747
)
(63,374
)
(107,075 )

Other receivables
77,846 (94,646 ) --

Deposits and prepaid expenses
20,394

(33,543 ) 149,239

Accounts payable and accrued expenses
(39,426
)
(642,873 ) 1,028,218

Net Cash (Used In) Operating Activities
(2,732,089
)
(8,585,557
)
(8,003,851
)

Cash Flows From Investing Activities:

Sale of property
552,944 -- --

Purchases of property and equipment
(217,211
)
(251,055
)
(2,039,562
)

Net Cash (Used In) Provided By Investing Activities
335,733 (251,055
)
(2,039,562
)

Cash Flows From Financing Activities:

Payments on notes payable
(237,235
)
(61,923
)
(440,471
)

Proceeds from notes payable
240,340 -- --

Proceeds from PIK notes payable
-- -- 12,499,998

Proceeds from sale of common stock
1,640,000 -- --

Net Cash (Used In) Provided By Financing Activities
1,643,105 (61,923
)
12,059,527

Net (decrease) increase in cash and cash equivalents
(753,251
)
(8,898,535 2,016,114

Cash and cash equivalents at beginning of year
1,803,131 10,701,666 8,685,552

Cash And Cash Equivalents At End Of Year
$ 1,049,880 $ 1,803,131 $ 10,701,666

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

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APPLIED MINERALS, INC.

(An Exploration Stage Mining Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the year ended

December 31,

2016

2015

2014

Supplemental disclosure of cash flow information:

Cash paid during the period for:

Interest
$ 4,956 $ 12,839 $ 10,460

Income taxes
$ 490 $ 13,017 $ 1,431

Supplemental disclosure of noncash investing and financing activities:

Property and equipment financed with note payable
$ -- $ -- $ 149,129

Construction-in-progress in accounts payable
$ -- $ -- $ 120,000

Prepaid insurance financed with note payable
$ 240,340 $ 233,940 $ 245,390

Reclassification of Construction in Progress to building and equipment
$ -- $ -- $ 3,091,163

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

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APPLIED MINERALS, INC.

(An Exploration Stage Mining Company)

Notes to the Consolidated Financial Statements

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Applied Minerals, Inc. (the “Company”) is the owner of the Dragon Mine located in the Tintic Mining District of the State of Utah from where it produces halloysite clay and iron oxide. The Company is currently in various phases of commercial scale trials with several organizations in various markets with respect to uses of halloysite clay and iron oxide.

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

The Company is currently selling one of its products, AMIRON iron oxide, to one customer on an ongoing basis. That customer uses the AMIRON as a catalyst to adsorb a gas. The agreement with the customer calls for the sale of $5.0 million of AMIRON over a period of 18 months, which commenced in December 2015. Through December 2016 the Company sold approximately $3.7 million of the $5.0 million of AMIRON required by the agreement. The Company has agreed not to sell AMIRON to other customers for use in the same application for five years. 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. For the years ended December 31, 2016 and 2015 revenues from this customer accounted for 88% and 26% of total revenues, respectively. As of December 31, 2016 and 2015 amounts owed from this customer comprised 90% and 33% of accounts receivable, respectively.

NOTE 2 - LIQUIDITY AND BASIS OF PRESENTATION

The accompanying consolidated 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 while in the process of developing and commercializing halloysite clay and iron oxide. For the year ended December 31, 2016, the Company’s net loss was $7,639,772 and cash used in operating activities was $2,732,089. As of December 31, 2016, the Company had negative working capital of ($15,036), which takes into account $961,395 of accrued PIK Note interest, which the Company expects to pay in-kind and $156,000 of disputed payables for which the Company believes it has a statute of limitations defense.

Based on the Company’s current cash usage expectations through March 31, 2018, management believes it will not have sufficient liquidity to fund its operations through March 31, 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 going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded assets amounts and classification of liabilities that might be necessary should the Company not be able to continue as a going concern.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Exploration-Stage Company

From 1997 through 2008, the Company’s sole source of revenue and income was derived from its contract mining business through which it provided shaft sinking, underground mine development and mine labor services. At December 31, 2008, the Company discontinued its contract mining efforts due to economic conditions and the desire to concentrate its efforts on the commercialization of the halloysite clay deposit at the Dragon Mine.

Effective January 1, 2009, the Company was, and still is, classified as an exploration company as the existence of proven or probable reserves have not been demonstrated and no significant revenue has been earned from the mine. Under the SEC’s Industry Guide 7, a mining company is considered an exploration stage company until it has declared mineral reserves determined in accordance with the guide and staff interpretations thereof.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Applied Minerals, Inc. and its inactive subsidiary, which holds 100 acres of timber and mineral property 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 consolidated financial statements, the warrant and PIK note derivative liabilities, stock compensation, impairment of long-lived assets and valuation allowance on income taxes involve extensive reliance on management’s estimates. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid investments with a maturity of three months or less. The Company minimizes its credit risk by investing its cash and cash equivalents, which sometimes exceeds FDIC limits, with major financial institutions located in the United States with a high credit rating.

Receivables

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

Management evaluates the collectability of receivable account balances to determine the allowance, if any. Management considers the other party’s credit risk and financial condition, as well as current and projected economic and market conditions, in determining the amount of the allowance. Receivable balances are written off when management determines that the balance is uncollectable. No allowance was required at December 31, 2016 and 2015.

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Property and Equipment

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

Estimated

Useful Life (years)

Building and building improvements

5

–

40

Mining equipment

2

–

7

Office and shop furniture and equipment

3

–

7

Vehicles

5

Depreciation expense for the years ended December 31, 2016, 2015 and, 2014 totaled $1,348,860, $1,312,585, and $1,164,366, respectively.

Impairment of Long-lived Assets

The Company periodically reviews the carrying amounts of long-lived assets to determine whether current events or circumstances warrant adjustment to such carrying amounts. Long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. When such events occur, the Company compares the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset to its carrying amount. If this comparison indicates that there is an impairment, the amount of the impairment is typically calculated using discounted expected future cash flows where observable fair values are not readily determinable. Considerable management judgment is necessary to estimate the fair value of assets. Assets to be disposed of are carried at the lower of their financial statement carrying amount or fair value, less cost to sell. As of December 31, 2016, there was no impairment of long-lived assets.

Revenue Recognition

Revenue includes sales of halloysite clay and iron oxide, and is recognized when title passes to the buyer and when collectability is reasonably assured. Title passes to the buyer based on terms of the sales contract. Product pricing is determined based on contractual arrangements with the Company’s customers.

Mining Exploration and Development Costs

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

Income taxes

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

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

Authoritative guidance provides that the tax effects from an uncertain tax position taken or expected to be taken in a tax return can be recognized in our financial statements only if the position is more likely than not of being sustained on audit based on the technical merits of the position. As of December 31, 2016 no benefit from uncertain tax positions was recognized in our financial statements. The Company has elected to classify interest and/or penalties related to income tax matters in income tax expense.

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Stock Options and Warrants

The Company follows Accounting Standard Codification (“ASC”) 718 (Stock Compensation) and 505-50 (Equity-Based Payments to Non-employees), which provide guidance in accounting for share-based awards exchanged for services rendered and requires companies to expense the estimated fair value of these awards over the requisite service period. The Company instituted a formal long-term and short-term incentive plan on November 20, 2012, which was approved by its shareholders. Prior to that date, we did not have a formal equity plan, but all equity grants, including stock options and warrants, were approved by our Board of Directors. We determine the fair value of the stock-based compensation awards granted to non-employees as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either of (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete. Beginning in the quarter ended June 30, 2013 the Company began using the simplified method to determine the expected term for any options granted because the Company did not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The Company previously utilized the contractual term as the expected term.

Environmental Matters

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

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

Based upon management’s current assessment of its environmental responsibilities, it does not believe that any reclamation or remediation liability exists at December 31, 2016.

Recent Issued Accounting Pronouncements

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NOTE 4 – PROPERTY AND EQUIPMENT

The following is a summary of property, plant, and equipment – at cost, less accumulated depreciation:

2016

2015

Land
$ 500,000 $ 500,000

Land improvements
171,122 164,758

Buildings
3,129,519 3,116,515

Mining equipment
1,775,884 1,697,583

Milling equipment
2,806,834 2,702,969

Laboratory equipment
607,716 594,451

Office equipment
69,900 69,625

Vehicles
150,810 148,673

9,211,785 8,994,574

Less: Accumulated depreciation
5,136,609 3,787,749

Total
$ 4,075,176 $ 5,206,825

NOTE 5 – ASSETS HELD FOR SALE

During the third quarter of 2015, the Company reclassified its non-core Atlas Mine properties, located in and around Mullan, Idaho, from property and equipment to assets held for sale as the Company began exploring various strategic options to further monetize the value of the land and any associated mineral resources.

In December 2015, the Company put four parcels owned in Idaho up for auction. Three of the four properties sold but settled in January 2016 for a gross sales price of $172,948. The Company received net process of $155,187, net of $17,761 of selling expenses. On April 21, 2016, the Company sold the fourth parcel for gross proceeds of $418,000. The Company received net process of $380,000, net of a 10% buyer’s premium paid to the auction firm, J.P. King.

NOTE 6 – FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

●

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.

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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

December 31,

2016

December 31,

2015

Financial instruments:

Series 2023 Note Derivative
$ -0- $ -0- $ 142,909 $ 142,909 $ 262,764

Series A Note Derivative
$ -0- $ -0- $ 2,033,643 $ 2,033,643 $ 4,876,093

The following table summarizes the activity for financial instruments at fair value using Level 3 inputs for 2016 and 2015:

2016

2015

Balance at beginning of year
$ 5,138,857 $ 10,035,625

Issuance of additional Series 2023 Notes
18,807 36,665

Issuance of additional Series A Notes
247,931 395,082

Net unrealized gain included in operations
(3,229,043 ) (5,328,515
)

Balance at end of year
$ 2,176,552 $ 5,138,857

The recorded value of certain financial assets and liabilities, which consist primarily of cash and cash equivalents, receivables, and accounts payable and accrued expenses approximate their fair value at December 31, 2016 and 2015 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 approximate fair value. The estimated fair value of the PIK Notes Payable was approximately $23,361,553 and $21,800,000 at December 31, 2016 and 2015 (Level 3), respectively.

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

Series 2023 Note derivative liability

Fair Value Measurements

Using Inputs

December 31, 2016

December 31, 2015

Market price and estimated fair value of stock
$ 0.12 $ 0.28

Exercise price
$ 1.28 $ 1.36

Term (years)
6.58 7.58

Dividend yield
$ -0- $ -0-

Expected volatility
86.2
%
72.9
%

Risk-free interest rate
2.18
%
2.12
%

Series A Note derivative liability

Fair Value Measurements

Using Inputs

December 31, 2016

December 31, 2015

Market price and estimated fair value of stock
$ 0.12 $ 0.28

Exercise price
$ 0.83 $ 0.92

Term (years)
6.58 2.82

Dividend yield
$ -0- $ -0-

Expected volatility
86.2
%
72.9
%

Risk-free interest rate
2.18
%
2.12
%

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NOTE 7 - NOTES AND LEASES PAYABLE

Notes payable at December 31, 2016 and 2015 consist of the following:

December 31,

2016

2015

Note payable for mining equipment, payable $950 monthly, including interest (a)
$ - 0 - $ 3,714

Note payable for equipment, payable $1,339 monthly, including interest (b)
28,033 42,235

Note payable for mine site vehicle, payable $628 monthly (c)
5,655 13,196

Note payable to an insurance company, payable $9,055 monthly, including interest (d)
- 0 - 60,953

Note payable to an insurance company, payable $18,609 monthly, including interest (e)
- 0 - 124,019

Note payable to an insurance company, payable $6,460 monthly, including interest (f)
51,679 - 0 -

Note payable to an insurance company, payable $16,297 monthly, including interest (g)
161,855 - 0 -

247,222 244,117

Less: Current Portion
(234,149
)
(210,429
)

Notes Payable, Long-Term Portion
$ 13,073 $ 33,688

(a)

On April 17, 2012, the Company purchased mining equipment for $40,565 by issuing a note with an effective interest rate of 11.279%. The note is collateralized by the mining equipment with payments of $950 for 48 months, which started on May 1, 2012.

(b)

On October 31, 2014, the Company purchased mining equipment for $65,120 by paying deposit and issuing a note in the amount of $57,900 with an interest rate of 5.2%. The note is collateralized by the mining equipment with payments of $1,339 for 48 months, which started on November 30, 2014.

(c)

On September 20, 2012, the Company purchased a vehicle for the mine site for $37,701 by issuing a non-interest bearing note. The note is collateralized by the vehicle with payments of $628 for 60 months, which started on October 20, 2012.

(d)

The Company signed a note payable with an insurance company dated October 21, 2015 for liability insurance, due in monthly installments, including interest at 11.845%.

(e)

The Company signed a note payable with an insurance company dated October 17, 2015 for liability insurance, due in monthly installments, including interest at 3.000%.

(f)

The Company signed a note payable with an insurance company dated October 17, 2016 for liability insurance, due monthly installments, including interest at 4.15%

(g)

The Company signed a note payable with an insurance company dated October 17, 2016 for liability insurance, due monthly installments, including interest at 2.60%

The following is a schedule of the principal maturities on these notes as of December 31, 2016:

2017
$ 234,149

2018
13,073

Total Notes Payable
$ 247,222

During the 2016 and 2015, the Company's interest payments totaled $4,956 and $12,839, respectively.

NOTE 8 – CONVERTIBLE DEBT (PIK NOTES)

The Company raised $23 million of financing through the issuance of two series of Paid-In-Kind (“PIK”)-Election Convertible Notes in 2013 and 2014, with key terms highlighted in the table below:

Key Terms

Series 2023 Notes

Series A Notes

Inception Date

08/05/2013

11/03/2014

Cash Received

$10,500,000

$12,500,000

Principal (Initial Liability)

$10,500,000

$19,848,486

Maturity (Term)

10 years, but convertible after 1 year based on the market price of the Company’s stock

4 years, but may range between 2 years to the full maturity of the Series 2023 Notes, depending on whether a Specified Event occurs and/or an Extension Option is elected (see below for further details)

Exercise Price

$1.40 at inception, adjusted downward based on anti-dilution provisions/downround protection

$0.92 at inception, adjusted downward based on anti-dilution provisions/down-round protection; also may be reduced by $0.10 based if Extension Option is elected (see below)

Stated Interest

10% per annum, due semiannually

10% per annum, due semiannually, may be reduced to 1% if a Specified Event occurs

Derivative Liability

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

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

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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 December 31, 2015, 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
$ 12,762,816 $ 21,882,955 $ 34,645,771

Less: Discount
(1,854,894
)
(15,717,991
)
(17,572,885
)

Less: Deferred Financing Cost (7,828 ) (13,422 ) (21,250 )

PIK Note Payable, Net
$ 10,900,094 $ 6,151,542 $ 17,051,636

PIK Note Derivative Liability
$ 262,764 $ 4,876,093 $ 5,138,857

Series A Notes

Below are key terms of the Series A Notes:

●

Maturity- November 3, 2018, provided that the Stated Maturity Date may be extended to November 3, 2019 at the option of the Company (the “Extension Option”) if (i) the Company has delivered written notice of its exercise of the Extension Option to the Holder not more than ninety (90) nor less than thirty (30) days prior to November 3, 2018 and (ii) the Company has delivered a certificate, dated as of November 3, 2018, certifying that no Default or Event of Default has occurred and is continuing; provided, further that the Stated Maturity Date shall be extended to the maturity date of the Series 2023 Notes or any Replacement Financing, as applicable, upon the occurrence of a Specified Event (“Specified Extension”).

●
Exercise Price- initially $0.92 per share (adjusted down to $0.83 per share after the Company’s capital raise closed on June 27, 2016) and will be (i) adjusted from time to time pursuant anti-dilution provisions and (ii) reduced by $0.10 per share if the Company elects to exercise its Extension Option.

●

Stated Interest: 10% payable semiannually in arrears, provided that the interest rate shall be reduced to 1% per annum on the principal amount of the Note upon the occurrence of the Specified Event, as defined below.

●
Specified Event- means the event that may occur after the second anniversary of the Issuer Date if: (i) any amounts under the Series 2023 Notes or any Replacement Financing are outstanding, (ii) the volume weighted average price (“VWAP”) for the preceding 30 consecutive Trading Days as determined by the Board of Directors of the Issuer in good faith is in excess of the Exercise Price, (iii) the closing Market Price of the common stock is in excess of the Exercise Price on the date immediately preceding the date on which the Specified Event occurs, (iv) no Default or Event of Default has occurred and is continuing and (v) the Issuer has delivered a certificate to each holder of Series A Notes certifying that the conditions set forth in clauses (i) through (iv) above have been met.

●

Extension Option- If stock price is lower than current exercise price ($0.92) prior to the stated maturity (November 3, 2018), then the Company can elect an Extension Option, whereby the maturity is extended by one year (see Maturity definition), but with a reduction in exercise price by $0.10.

●

Liquidated Damages- The Company is required to pay the noteholders 1% of the principal amount of the Series A Notes if a Registration statement is not filed and effective within 90 days of the inception date (and further damages for every 30 days thereafter). The registration statement became effective on July 8, 2015. Liquidation damages of $541,011 and $200,000 have been charged to Other Expenses during 2015 and 2014, respectively, due to the delay of the effective date of the registration statement. During the second quarter of 2015, the Company issued 1,015,086 shares, valued at $741,011, to Series A note holders as payment of liquidated damages.

●

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

The Series A Notes are mandatorily convertible by the Company at any time that is two years after issuance only if either of the following conditions exist: (A) (i) the maturity date of the Series A Notes has not been extended, (ii) the VWAP over the preceding 10 trading days is at or in excess of $1.00 per share, (iii) the closing market price of the common stock is at or in excess of $1.00 per share on the day before a mandatory conversion notice is issued, (iv) all outstanding amounts, if any, of the Series 2023 Notes or replacement financing for the Series 2023 Notes have been converted into common stock and (v) a registration statement is effective or a holder of the Series A Notes may sell the conversion shares under Rule 144 or (B) (i) the VWAP over the preceding 20 trading days is in excess of the greater of $1.40 per share, the conversion price of the Series 2023 Notes (currently a $1.28 per share, adjusted for the sale of the Series A Notes), if any, and the conversion price of the Replacement Financing, if any, (ii) the closing market price of the common stock is in excess of the greater of $1.36 per share, the conversion price of the Series 2023 Notes, if any, and the conversion price of the replacement Financing, if any, on the day before a mandatory conversion notice is issued, (iii) all outstanding amounts, if any, of the Series 2023 Notes or Replacement Financing have been converted into common stock and (v) a registration statement is effective or a holder of the Series A Notes may sell the conversion shares under Rule 144.

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These Series A Notes were not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability or any net investment in a foreign operation. In addition to the customary anti-dilution provisions the notes contain a down-round provision whereby the conversion price would be adjusted downward in the event that additional shares of the Company’s common stock or securities exercisable, convertible or exchangeable for the Company’s common stock were issued for cash consideration (e.g. a capital raise) at a price less than the conversion price. Therefore, the estimated fair value of the conversion feature of $9,212,285 (based on observable inputs using a Monte Carlo model) was bifurcated from the Series A Notes and accounted for as a separate derivative liability, which resulted in a corresponding amount of debt discount on the Series A Notes. In addition, an additional debt discount of $7,348,486 was recorded as a result of the difference between the $12,500,000 of cash received and the $19,848,486 of principal on the Series A Notes. This combined debt discount of $16,560,771 is being amortized using the effective interest method over the 4-year term of the Notes as Interest Expense, while the PIK Note Derivative is carried at fair value (using a Monte Carlo model) until the Notes are converted or otherwise extinguished. Any changes in fair value are recognized in earnings.

In May 2016 and November 2016, the Company issued $1,094,148 and $1,148,855, respectively, in additional PIK Notes to the holders to pay the semi-annual interest.

At December 31, 2016, the fair value of the Series A Note Derivative was estimated to be $2,033,643, which includes the value of the derivative related to the additional PIK Notes issued in May and November 2016 for the semi-annual interest payments due. During the year ended December 31, 2016, the Company amortized $2,549,433 of debt discount and deferred financing cost relating to the Series A Notes Payable and issued additional PIK Notes in lieu of interest payments of $2,243,003, increasing the Series A Notes Payable carrying value to $10,696,047 as of December 31, 2016.

Series 2023 Notes

In August 2013, the Company received $10,500,000 of financing through the private placement of 10% mandatory convertible Notes due 2023 ("Series 2023 Notes"). The principal amount of the Notes is due on maturity. The Company can elect to pay semi-annual interest on the Series 2023 Notes with additional PIK Notes containing the same terms as the Series 2023 Notes, except interest will accrue from issuance of such notes. The Company can also elect to pay interest in cash. In February, 2016 and August, 2016, the Company issued $638,140 and $670,048, respectively, in additional PIK Notes to the holders to pay the semi-annual interest. In February, 2015 and August, 2015, the Company issued $578,813 and $607,753, respectively, in additional PIK Notes to the holders to pay the semi-annual interest. In February, 2014 and August, 2014, the Company issued $525,000 and $551,250, respectively, in additional PIK Notes to the holders to pay the semi-annual interest.

The Series 2023 Notes convert into the Company’s common stock at a conversion price of $1.40 per share initially, which is subject to customary anti-dilution adjustments; these anti-dilution adjustments reduced the conversion price to $1.36 after the issuance of the Series A Notes and then adjusted further down to $1.28 after the Company’s capital raise closed on June 27, 2016. As of issuance, principal amount of the Series 2023 Notes were convertible into 7,500,000 shares of the common stock, into 7,720,588 shares after the issuance of the Series A Notes and into 8,203,125 shares of common stock after the private placement in June 2016. The holders may convert the Series 2023 Notes at any time. The Series 2023 Notes are mandatorily convertible after one year when the weighted average trading price of a share of the common stock for the preceding ten trading days is in excess of the conversion price. The Series 2023 Notes contain customary representations and warranties and several covenants. The proceeds are being used for general corporate purposes. No broker was used and no commission was paid in connection with the sale of the Series 2023 Notes. As of December 31, 2016, the Company was in compliance with the covenants.

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

At December 31, 2016, the fair value of the Series 2023 Note Derivative was estimated to be $142,909, which includes the value of the derivative related to additional PIK Notes issued in February and August 2016 for the semi-annual interest payments due. During the year ended December 31, 2016, the Company amortized $154,567 of debt discount and deferred financing cost relating to the Series 2023 Notes Payable and issued additional PIK Notes in lieu of interest payments of $1,308,192, increasing the Series 2023 Notes Payable carrying value to $12,344,046 as of December 31, 2016.

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NOTE 9 – STOCKHOLDERS’ EQUITY

Preferred Stock

The Company is authorized to issue 10,000,000 shares of noncumulative, non-voting, nonconvertible preferred stock, $0.001 par value per share. At December 31, 2016 and 2015, no shares of preferred stock were outstanding.

Common Stock

On December 7, 2016, stockholders of the Company approved to increase the authorized shares of common stock from 200,000,000 to 250,000,000 shares, $0.001 par value per share. At December 31, 2016 and 2015, 108,613,549 and 97,144,736 shares were issued and outstanding, respectively.

2016

During June 2016, the Company issued 10,933,333 shares of common stock together with warrants to acquire 3,283,283 shares of commons stock in a private placement for proceeds of $1,640,000. During 2016 the Company issued a total of 203,980 shares of common stock valued at $53,914 to directors and consultants as payments of fees.

2015

During 2015 the Company issued a total of 1,045,788 shares of common stock valued at $379,936 to directors and consultants as payments of fees.

2014

During 2014 the Company issued a total of 408,539 shares of common stock valued at $327,269 to directors and consultants as payments of fees.

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NOTE 10 – OPTIONS AND WARRANTS TO PURCHASE COMMON STOCK

Derivative Instruments - Warrants

The Company issued 5,000,000 warrants (“Samlyn Warrants”) in connection with the December 22, 2011 private placement of 10,000,000 shares of common stock. The strike price of these warrants was $2.00 per share at the date of grant. These warrants were not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability or any net investment in a foreign operation. In addition to the customary anti-dilution provisions, the notes contain a down-round provision whereby the exercise price would be adjusted downward in the event that additional shares of the Company's common stock or securities exercisable, convertible or exchangeable for the Company's common stock were issued at a price less than the exercise price. Therefore, the fair value of these warrants (based on observable inputs) was recorded as a liability in the balance sheet until they were canceled. On November 3, 2014, the Company cancelled the warrant arrangement, resulting in a $120,000 credit to equity.

During 2014, the Company recorded other income of $830,000, resulting from the changes in the fair value of the warrant liability, mainly due to a lower stock price and a change in the volatility utilized by the Company.

Outstanding Stock Warrants

A summary of the status of the warrants outstanding and exercisable at December 31, 2016 is presented below:

Warrants Outstanding and Exercisable

Exercise Price

Number

Outstanding

Weighted Average

Remaining

Contractual Life (years)

Weighted

Average

Exercise Price

$ 0.25 3,283,283 4.5 $ 0.25

$ 1.15 461,340 4.3 $ 1.15

3,744,623 4.5 $ 0.36

During 2016, warrants to acquire 3,283,283 shares of common stock at an exercise price of $0.25 per share were issued in connection with the private placement of common stock. No warrants were issued in 2015 and 2014.

During 2016, warrants to acquire 267,769 shares of common stock expired.

Outstanding Stock Options

On November 20, 2012, the shareholders of the Company approved the adoption of the Applied Minerals, Inc. 2012 Long-Term Incentive Plan (“LTIP”) and the Short-Term Incentive Plan (“STIP”) and the performance criteria used in setting performance goals for awards intended to be performance-based. Under the LTIP, 8,900,000 shares are authorized for issuance. The STIP does not refer to a particular number of shares under the LTIP, but would use the shares authorized in the LTIP for issuance under the STIP. The CEO, the CFO, and named executive officers, and directors, among others are eligible to participate in the LTIP and STIP. Prior to the adoption of the LTIP and STIP, stock options were granted under individual arrangements between the Company and the grantees, and approved by the Board of Directors.

The fair value of each of the Company's stock option awards is estimated on the date of grant using the Black-Scholes option-pricing model that uses the assumptions noted in the table below. Expected volatility is based on an average of historical volatility of the Company's common stock. The risk-free interest rate for periods within the contractual life of the stock option award is based on the yield curve of a zero-coupon U.S. Treasury Bond on the date the award is granted with a maturity equal to the expected term of the award.

The significant assumptions relating to the valuation of the Company's options issued for 2016 and 2015 were as follows on a weighted average basis:

2016

2015

Dividend Yield
0%

0%

Expected Life (in years)
5.00 7.00

Expected Volatility
85.2%

72.9%

Risk Free Interest Rate
1.24%

2.00%

A summary of the status and changes of the options granted under stock option plans and other agreements for 2016 and 2015 is as follows:

December 31, 2016

December 31, 2015

Weighted

Weighted

Average

Average

Shares

Exercise Price

Shares

Exercise Price

Outstanding at beginning of period
17,806,472 $ 1.00 17,053,116 $ 1.02

Issued
3,771,488 0.24 988,355 0.63

Forfeited
(300,481
)
0.83 (235,000 ) 0.77

Outstanding at end of period
21,277,479 $ 0.87 17,806,472 $ 1.00

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During the year ended December 31, 2016, the Company granted 3,771,488 options to purchase the Company’s common stock with a weighted average exercise price of $0.24. Of the 3,771,488 options granted, the options vest as follows:

Vesting Information

Shares

Frequency

Begin Date

End Date

250,000

Immediately

01/01/2016

01/01/2016

158,206

Immediately

01/05/2016

01/05/2016

43,885

Immediately

01/06/2016

01/06/2016

32,415

Immediately

01/09/2016

01/09/2016

2,013,655

Immediately

05/11/2016

05/11/2016

350,000

Immediately

08/01/2016

08/01/2016

500,000

Monthly

07/06/2016

08/15/2017

81,522

Annually

01/19/2016

01/19/2018

81,395

Annually

01/27/2016

01/27/2018

80,000 Annually 01/28/2016 01/28/2018

144,815

Annually

01/29/2016

01/29/2018

35,595

Annually

02/01/2016

02/01/2018

A summary of the status of the options outstanding at December 31, 2016 is presented below:

Options Outstanding

Options Exercisable

Weighted

Average

Weighted

Weighted

Remaining

Average

Average

Contractual

Exercise

Number

Exercise

Number Outstanding

Life (years)

Price

Exercisable

Price

500,000

9.52

$

0.16

166,667

$

0.16

81,395

7.14

$

0.21

- 0 -

$

N/A

100,000

3.71

$

0.22

100,000

$

0.22

1,066,155

4.36

$

0.24

1,066,155

$

0.24

1,297,500

6.75

$

0.25

1,297,500

$

0.25

35,595

6.29

$

0.27

- 0 -

$

N/A

474,815

7.36

$

0.28

250,000

$

0.28

234,506

6.13

$

0.285

234,506

$

0.285

81,522

4.05

$

0.30

- 0 -

$

N/A

200,000

8.12

$

0.66

200,000

$

0.66

150,000

8.10

$

0.68

49,995

$

0.68

7,233,277

1.99

$

0.70

7,233,277

$

0.70

488,356

8.38

$

0.73

255,011

$

0.73

3,104,653

5.15

$

0.83

3,104,653

$

0.83

975,000

7.45

$

0.84

891,667

$

0.84

300,000

6.64

$

1.10

300,000

$

1.10

300,000

6.48

$

1.15

300,000

$

1.15

100,000

1.08

$

1.24

100,000

$

1.24

115,000

4.24

$

1.35

115,000

$

1.35

125,000

1.08

$

1.45

125,000

$

1.45

330,000

4.95

$

1.55

330,000

$

1.55

7,645

1.67

$

1.58

7,645

$

1.58

3,077,060

5.89

$

1.66

3,077,060

$

1.66

900,000

4.63

$

1.90

900,000

$

1.90

21,277,479

4.60

$

0.87

20,104,136

$

0.87

Compensation expense of $554,288, $397,417, and $865,716 has been recognized for the vested options for the years ended December 31, 2016, 2015 and 2014, respectively. The aggregate intrinsic value of the outstanding options at December 31, 2016 was $0. At December 31, 2016, $145,899 of unamortized compensation expense for unvested options will be recognized over the next 4.12 years on a weighted average basis.

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NOTE 11 - PER SHARE DATA

The computation of basic earnings (loss) per share of common stock is based on the weighted average number of shares outstanding during the year. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year plus the common stock equivalents that would arise from the exercise of stock options and warrants outstanding under the treasury stock method and the average market price per share during the year as well as the conversion of notes. At December 31, 2016, there were options outstanding to purchase 21,277,479 shares of common stock of the Company, warrants outstanding to purchase 3,744,623 shares of common stock of the Company and notes payable outstanding convertible into 40,060,395 shares of common stock of the Company. At December 31, 2015, there were options outstanding to purchase 17,956,742 shares of common stock of the Company, warrants outstanding to purchase 729,109 shares of common stock of the Company and notes payable outstanding convertible into 33,170,241 shares of common stock of the Company. At December 31, 2014, there were options outstanding to purchase 17,053,116 shares of common stock of the Company, warrants outstanding to purchase 1,172,930 shares of common stock of the Company and notes payable outstanding convertible into 30,086,389 shares of common stock of the Company.

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NOTE 12 – INCOME TAXES

The Company calculates its deferred tax assets and liabilities using the federal tax rate of 35% and the following effective state rates, net of Federal benefits: Idaho (0.03%), Utah (2.55%), and New York State/New York City (0.35%).

The tax effect of items that give rise to the deferred tax assets and liabilities are as follows:

December 31, 2016

December 31, 2015

Deferred tax assets:

Net operating loss carryforward
$ 31,980,117 $ 28,475,616

Stock-based compensation
4,496,398 4,240,612

Total deferred tax assets
36,476,515 32,716,228

Deferred tax liabilities:

Fixed assets
(17,261
)
(348,869
)

Less: valuation allowance
(36,459,254
)
(32,367,359
)

$ -- $ --

In assessing the realization of deferred tax assets, management determines whether it is more likely than not some, or all, of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the carryforward period as well as the period in which those temporary differences become deductible. Management considers the reversal of taxable temporary differences, projected taxable income and tax planning strategies in making this assessment. Based upon historical losses and the possibility of continued losses over the periods that the deferred tax assets are deductible, management believes it is more likely than not that the Company will not realize the benefits of these deferred tax assets and thus recorded a valuation allowance against the entire deferred tax asset balance. The valuation allowance increased by $4,091,895, $5,672,480, and $4,935,303in the years ended December 31, 2016, 2015, and 2014, respectively.

At December 31, 2016, the Company had net operating loss carry-forwards of $85,360,835 for Federal income tax purposes and $59,054,627for state and local income tax purposes. The Federal net operating loss carry-forwards are available to be utilized against future taxable income through fiscal year 2036 and state loss carry-forwards expire from 2024 through 2036, subject to substantial restrictions on the utilization of net operating losses in the event of an “ownership change” as defined by the Internal Revenue Code. Utilization of the Company’s Federal and state net operating loss carry-forwards are subject to limitations as a result of these restrictions. No amounts were provided for unrecognized tax benefits attributable to uncertain tax positions as of December 31, 2016 and 2015.

The Internal Revenue Code of 1986, as amended (the Code) provides for a limitation of the annual use of net operating losses following certain ownership changes (as defined by the Code) that could limit the Company’s ability to utilize these carryforwards. At this time, the Company has not completed a study to assess whether an ownership change under Section 382 of the Code has occurred, or whether there have been multiple ownership changes since the Company’s formation, due to the costs and complexities associated with such a study. The Company may have experienced various ownership changes, as defined by the Code, as a result of past financing transactions. Accordingly, the Company’s ability to utilize the aforementioned carryforwards may be limited. Additionally, U.S. tax laws limit the time during which these carryforwards may be applied against future taxes. Therefore, the Company may not be able to take full advantage of these carryforwards for Federal or state income tax purposes

A reconciliation of the differences between the effective and statutory income tax rates is as follows:

December 31, 2016

December 31, 2015

December 31, 2014

Federal statutory rate
$ (2,673,920
)
35.0
%
$ (3,457,068
)
35.0
%
$ (3,610,711
)
35.0
%

State income taxes – Idaho
(2,455
)
0.03
%
(7,652
)
0.1
%
(11,016
)
0.1
%

State income taxes - Utah
(191,070
)
2.5
%
(243,973
)
2.5
%
(239,093
)
2.3
%

State and local income taxes - NY
(28,559
)
0.4
%
(30,468
)
0.3
%
(46,372
)
0.4
%

Change in valuation allowance
4,091,895 (53.6
%)
5,672,480 (57.5
%)
4,935,302 (47.8
%)

Net nontaxable income related to derivatives
(1,214,608
)
15.9
%
(2,005,896
)
20.3
%
(843,861
)
8.2
%

Miscellaneous
18,717 (0.2
%)
72,577
)
(0.70
%%
(184,249 2.0
)

$ -- 0
%
$ -- 0
%
$ -- 0
%

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NOTE 13 – RELATED PARTIES

David A. Taft, a director, is the president of IBS Capital LLC (“IBS”), a Massachusetts limited liability company, whose principal business is investing in securities. IBS is the general partner of the IBS Turnaround Fund (QP), which is a Massachusetts limited partnership, IBS Turnaround Fund (LP), which is a Massachusetts limited partnership and the IBS Opportunity Fund, Ltd.

Mr. Taft participated in the Series A Note financing described in Note 8, with the following investments, which were utilized by the Company to fund its operations:

Investor

Investment

OID/Discount

Principal

Shares Issuable

at 0.83

(excluding

interest)

IBS Turnaround Fund (A Limited Partnership)
$ 531,960 0.66 $ 806,000 971,084

IBS Turnaround Fund QP (A Limited Partnership)
1,118,040 0.66 1,694,000 2,040,964

IBS Opportunity Fund, Ltd.
350,000 0.66 530,303 638,918

$ 2,000,000 $ 3,030,303 3,650,966

NOTE 14 – COMMITMENTS

Office Lease

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

Payment due by period

Total

< 1 year

1 – 3

years

3 – 5

years

> 5 years

Contractual Obligations:

Rent obligations
$ 554,000 $ 78,000 $ 217,000 $ 230,000 $ 29,000

Total
$ 554,000 $ 78,000 $ 217,000 $ 230,000 $ 29,000

Rent expense for the years ended December 31, 2016, 2015 and 2014 was $200,832, $182,168 and $174,091, respectively.

NOTE 15 - FINANCIAL INFORMATION BY QUARTER (UNAUDITED)

2016 For Quarter Ended

December 31

September 30

June 30

March 31

Revenue
$ 923,711 $ 975,328 $ 1,112,467 $ 1,001,628

Operating loss
$ (1,017,490
)
$ (1,153,204
)
$ (1,097,913
)
$ (1,291,713
)

Net (loss)
$ (2,106,846
)
$ (1,810,425
)
$ (3,185,359
)
$ (537,142
)

(Loss) Per Share (Basic and Diluted)
$ (0.02
)
$ (0.02
)
$ (0.03
)
$ (0.01
)

2015 For Quarter Ended

December 31

September 30

June 30

March 31

Revenue
$ 235,586 $ 43,293 $ 65,848 $ 162,747

Operating loss
$ (2,022,257
)
$ (2,415,818
)
$ (2,803,433
)
$ (2,675,300
)

Net income (loss)
$ (4,674,752
)
$ 1,792,956 $ (2,728,876
)
$ (4,194,465
)

Income (Loss) Per Share (Basic and Diluted)
$ (0.02
)
$ 0.02 $ (0.03
)
$ (0.04
)

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth estimated expenses we expect to incur in connection with the resale of the shares being registered. All such expenses are estimated except for the SEC registration fee.

Registration Fee – Securities and Exchange Commission

$

248

Accounting Fees and Expenses

4,000

Legal Fees and Expenses

-0-

Miscellaneous

-0-

TOTAL

$

4,248

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

We currently maintain liability insurance for our directors and officers. In connection with this offering, we expect to obtain additional liability insurance for our directors and officers. Such insurance would be available to our directors and officers in accordance with its terms.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

1. Offerings to investors for cash to raise working capital.

No underwriter or placement agent was used and no underwriting, placement agent fee or commission was paid. All of the issuances described in this section were exempt from registration pursuant to Section 4(2) of the Securities Act, as transactions not involving a public offering. The sales were separate transactions and were not part of a continuous offering. With respect to each transaction listed, no general solicitation was made by either the Company or any person acting on our behalf; the number of purchasers was limited; the securities sold are subject to transfer restrictions; each purchaser was an accredited investor and sophisticated; each purchaser had access to the Company’s public filings and could ask questions of management; and the certificates for the shares contained an appropriate legend stating such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom.

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

Maturity Date of the Series A Notes.

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“Stated Maturity Date” means November 3, 2018, provided that the Stated Maturity Date may be extended to November 3, 2019 at the option of the Company (the “Extension Option”) if (i) the Company has delivered written notice of its exercise of the Extension Option to the holder not more than ninety (90) nor less than thirty (30) days prior to November 3, 2018 and (ii) the Company has delivered a certificate, dated as of November 3, 2018, certifying that no Default or Event of Default has occurred and is continuing; provided, further that the Stated Maturity Date shall be extended to the maturity date of the Series 2023 Notes or any Replacement Financing, as applicable, upon the occurrence of a Specified Event (“Specified Extension”).

Interest in the Series A Notes.

The Company will pay in kind interest for each interest period on the Note by adding the full amount of interest due on each interest payment date to the principal amount of the Note on each interest payment date, unless it elects to pay interest entirely in cash.

The principal amount of the Series A Notes bears interest at the rate of 10% payable semiannually in arrears, provided that the interest rate shall be reduced to 1% per annum on the principal amount of the Note upon the occurrence of the Specified Event, as defined below.

The term “Specified Event” means the event that will occur after the second anniversary of the Issue Date if: (i) any amounts under the Series 2023 Notes (as defined below) or any Replacement Financing (as defined below) are outstanding, (ii) the VWAP (volume weighted average price) for the preceding 30 consecutive trading days is in excess of the Exercise Price (as defined below), (iii) the closing market price of the Common Stock is in excess of the Exercise Price on the date immediately preceding the date on which the Specified Event occurs, and (iv) no default or event of default under the Series A Notes has occurred and is continuing.

The term “Series 2023 Notes” means the series of 10% PIK-Election Convertible Notes due 2023 issued by the Company on August 2, 2013 in the initial principal amount of $10,500,000.

The term “Replacement Financing” means unsecured indebtedness of the Company in a principal amount not to exceed $10,500,000 plus any accrued interest thereon (including any interest paid in kind) so long as (1) no default or event of default under the Series A Notes shall have occurred and be continuing or would result therefrom, (2) all outstanding amounts under each Series 2023 Note shall have been converted into the Common Stock of the Company pursuant to the terms of such Series 2023 Note prior to the date on which such Indebtedness is incurred, (3) the maturity date of such Indebtedness shall not be earlier than the maturity date under the Series 2023 Notes, (4) such indebtedness is not subject to scheduled amortization, redemption, sinking fund or other payment in cash prior to the maturity date of such Indebtedness, (5) such indebtedness does not include any terms that are more restrictive or onerous on the Company or its Subsidiaries in any respect than any comparable term in the Series A Note, (6) such indebtedness shall only be guaranteed by a party that is providing a guarantee of the Series A Notes (the Series A Notes are not guaranteed), (7) such indebtedness shall have an interest rate less than or equal to 10% and (8) if applicable, the exercise price, strike price or similar term with respect to the conversion of such indebtedness into the Common Stock of the Company shall be greater than or equal $1.40 and shall be subject to the adjustments on the same terms as the Series 2023 Notes.

Conversion of the Series A Notes into Common Stock.

The number of Shares to be issued upon conversion of a Note is obtained by: (i) adding (A) the principal amount or portion thereof of the Note to be converted and (B) the amount of any accrued but unpaid interest on the portion of the Note to be converted; and (ii) dividing the result obtained pursuant to clause (i) above by the per share Exercise Price (as defined below) then in effect.

The term “Exercise Price” means initially $0.92 per share and will be (i) adjusted from time to time pursuant antidilution provisions and (ii) reduced by $0.10 per share if the Company elects to exercise its Extension Option.

The Series A Notes may be voluntarily converted at any time.

The entire principal amount of the Series A Notes and accrued interest thereon shall be mandatorily converted into Shares on the earliest date that is not earlier than two years after the Issue Date that all of the following conditions are satisfied and appropriate notice given:

(1)

if on or prior to November 3, 2019 and a Specified Extension has not occurred, the VWAP for the preceding 30 consecutive trading days is at or greater than $1.00 or (2) the VWAP for the preceding 10 consecutive trading days as determined is in excess of the greater of (x) $1.40, (y) the strike price (or similar term) set forth in the Series 2023 Notes and (z) the strike price (or similar term) set forth in the Replacement Financing, if any;

(2)

if on or prior to November 3, 2019 and a Specified Extension has not occurred, the closing market price of the Common Stock is at or greater than $1.00 or (2) the closing market price of the Common Stock is in excess of the greater of (x) $1.40, (y) the strike price (or similar term) set forth in the Series 2023 Notes and (z) the strike price (or similar term) set forth in the Replacement Financing, if any, in each case, on the date immediately preceding the date on which the mandatory conversion notice is received;

(3)

all outstanding amounts under each Series 2023 Note or Replacement Financing, if any, shall have been converted into the Common Stock pursuant to the terms of such Series 2023 Note or the Replacement Financing, if any; and

(4)

either (x) a registration statement is effective and available for the resale of all of the Shares to be issued on conversion on the conversion date and each of the five (5) trading days prior to the conversion date and on the conversion date the holder is not restricted from selling or distributing any of such its Shares to be issued on conversion pursuant to the provisions of the Registration Rights Agreement between the holder and the Company or (y) the holder may sell all such Conversion Shares immediately under Rule 144 under the Securities Act.

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Antidilution Provisions of the Series A Notes.

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

The anti-dilution provisions are of the type known as “broad-based, weighted-average.” Broad-based refers to the fact that the antidilution formulas take into account convertible securities as well as Common Stock. Weighted-average refers to the fact that the adjustment takes into account the number of shares of shares before and after the event in question. By way of example, if the Company issues shares of Common Stock or convertible securities at an effective consideration per share that is less than the Exercise Price of the Notes then in effect (other than issuances to directors, officers, employees or consultants of the Company as compensation for services), then the conversion price will be adjusted pursuant to the following formula:

N0 + C/E0

E = E0 x -------------

where: E = the Exercise Price in effect immediately after such issuance; E0 = the Exercise Price in effect immediately prior to such issuance; N0 = the number of shares of Common Stock outstanding immediately prior to the open of business on the trading day of such issuance; NA = the number of shares of Common Stock issued and/or issuable upon exercise, conversion or exchange of any convertible securities, full physical settlement assumed; and C = the total consideration receivable by the Company on issuance and/or the exercise, conversion or exchange of any convertible securities, full physical settlement assumed.

If any single action would require more than one adjustment of the Exercise Price under the antidilution provisions, only one adjustment shall be made and such adjustment shall be the amount of adjustment that has the highest absolute value.

2. Compensatory grants of shares or options

The grants were made in exchange for services and the services did not relate to raising capital. No payments of cash were made to the Company in connection with the grants. No underwriter or placement agent was used and no underwriting, placement agent fee or commission was paid. All of the issuances described in this section were exempt from registration pursuant to Section 4(2) of the Securities Act, as transactions not involving a public offering. With respect to each transaction listed above, no general solicitation was made by either the Company or any person acting on our behalf; the securities sold are subject to transfer restrictions; each purchaser was an accredited investor or sophisticated; each purchaser had access to the Company’s public filings and could ask questions of management; and the certificates for the shares contained an appropriate legend stating such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom. Only one person of those listed below has sold stock.

(i) Issuances or Exercises by Third Parties

(a) On the dates set forth below, shares of common stock were issued to MZHCI, LLC, pursuant to an agreement related to providing investor relations consulting services for the Company.

Grant Date

Number of

Shares

Stock Price on

Grant Date ($)

03/02/15

100,000

0.74

06/15/15

50,000

0.65

10/13/15

50,000

0.45

01/28/16

50,000

0.20

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ITEM 16A. EXHIBITS

Exhibit

Number

Description of Exhibit

3.1

Amended and Restated Articles of Incorporation

(1)

3.2

Bylaws, as amended

(2)

4.1

Form of 10% PIK Election Convertible Note due 2023 used in connection with August, 2013 capital raise

(3)

4.2

Form of 10% PIK Election Convertible Note due 2018 used in connection with November, 2014 capital raise

(4)

10.1

Form of Investment Agreement used in connection with November, 2014 capital raise

(5)

10.2

2012 Long Term Option Plan

(6)

10.3

Form of Stock Option Agreement under 2012 LTIP

(7)

10.4

Short Term Incentive Plan

(8)

10.5

2016 Long Term Incentive Plan and form of option agreement

(9)

10.6

2016 Incentive Plan and form of option agreement

(10)

10.7

Form of warrant issued in June, 2016

(11)

23.1

Consent of EisnerAmper LLP, Independent Registered Public Accounting Firm

*

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

**

* Filed herewith

** 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.

(1)

Filed as Exhibit 3.1 to the Annual Report for the year ended December 31, 2016 filed on March 31, 2017

(2)

Filed as Exhibit 3.2 to the Annual Report for the year ended December 31, 2016 filed on March 30, 2017

(3)

Incorporated by reference to Exhibit 99.2 included in the Registrant's Current Report on Form 8-K, filed on August 5, 2013

(4)

Incorporated by reference to Exhibit 99.2 included in the Registrant's Current Report on Form 8-K, filed on November 5, 2014

(5)

Incorporated by reference to Exhibit 99.4 included in the Registrant's Current Report on Form 8-K, filed on November 5, 2014

(6)

Incorporated by reference to Exhibit 99.2 included in the Registrant's Current Report on Form 8-K, filed on November 26, 2012

(7)

Incorporated by reference to Exhibit 99.3 included in the Registrant's Current Report on Form 8-K, filed on November 26, 2012

(8)

Incorporated by reference to Exhibit 99.4 included in the Registrant's Current Report on Form 8-K, filed on November 26, 2012

(9)

Incorporated by reference to Exhibit 10.6 included in the Registrant’s Annual Report of Form 10-K, filed on March31, 2017

(10)

Incorporated by reference to Items 10.7 included in Registrant’s Annual Report of Form 10-K, filed on March31, 2017.

(11)

Filed as Exhibit 10.8 included in the Registrant’s Annual Report for the year ended December 31, 2016f iled on March 31, 201

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ITEM 16B. SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS

Balance at

Beginning

of

Year

Additions

Charged

to

Expenses/

Other

Accounts

Net

(Deductions)

Recoveries

Balance at

End of

Year

Valuation allowance for deferred tax assets

2016
$ 32,367,359 $ 4,091,895 $ -- $ 36,459,254

2015
$ 26,694,879 $ 5,672,480 $ -- $ 32,367,359

2014
$ 21,759,577 $ 4,935,302 $ -- $ 26,694,879

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ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes:

1.

to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to:

(i)

include any prospectus required by section 10(a)(3) of the Securities Act;

(ii)

reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii)

include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information on the registration statement.

2.

that, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

3.

to remove from registration by means of post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

4.

that, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

5.

that insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person to the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this amendment to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of New York, New York, on May 9, 2017.

APPLIED MINERALS, INC.

May 9, 2017

By:

/s/ ANDRE ZEITOUN

Andre Zeitoun

Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Eric Basroon and Christopher Carney, and each of them, with full power to act without the other, such person’s true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign this the Registration Statement, any and all amendments thereto (including post-effective amendments), any subsequent Registration Statements pursuant to Rule 462 of the Securities Act of 1933, as amended, and any amendments thereto and to file the same, with exhibits and schedules thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature

Title

Date

/s/ Andre Zeitoun

Director and Chief Executive Officer

May 9, 2017

/s/ Christopher T. Carney

Chief Financial Officer

May 9, 2017

(Principal Financial and Accounting Officer)

/s/ John F. Levy*

Director, Chairman of the Board of Directors

May 9, 2017

/s/ David Taft*

Director

May 9, 2017

/s/ Mario Concha*

Director

May 9, 2017

/s/ Robert Betz*

Director

May 9, 2017

/s/ Ali Zamani*

Director

May 9, 2017

* By Christopher Carney, attorney in fact.

	December 31,			December 31,
	2016			2015

ASSETS
Current Assets
Cash and cash equivalents	$	1,049,880		$	1,803,131
Accounts receivable		364,952			176,205
Deposits and prepaid expenses		371,206			322,922
Other current receivables		16,801			94,647
Total Current Assets		1,802,839			2,396,905
Property and Equipment, net		4,075,176			5,206,825
Other Assets
Deposits		200,524			269,202
Assets held for Sale		1,000			445,180
Total Other Assets		201,524			714,382
TOTAL ASSETS	$	6,079,539		$	8,318,112

LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
Current Liabilities
Accounts payable and accrued liabilities	$	622,331		$	742,745
PIK Notes interest accrual		961,395			880,407
Current portion of notes payable		234,149			210,429
Total Current Liabilities		1,817,875			1,833,581
Long-Term Liabilities
Long-term portion of notes payable		13,073			33,688
PIK Notes payable, net of $15,143,123 (2016) and $17,572,885 (2015) debt discount		23,040,093			17,051,636
PIK Note derivative liability		2,176,552			5,138,857
Total Long-Term Liabilities		25,229,718			22,224,181
Total Liabilities		27,047,593			24,057,762
Commitments
Stockholders’ (Deficit)
Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding
Common stock, $0.001 par value, 250,000,000 and 200,000,000 shares authorized, and 108,613,549 and 97,144,736 shares issued and outstanding at December 31, 2016 and 2015, respectively		108,614			97,145
Additional paid-in capital		68,506,530			66,106,631
Accumulated deficit prior to the exploration stage		(20,009,496	)		(20,009,496	)
Accumulated deficit during the exploration stage		(69,573,702	)		(61,933,930	)
Total Stockholders’ (Deficit)		(20,968,054	)		(15,739,650	)
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT)	$	6,079,539		$	8,318,112

	For the years ended December 31,
	2016			2015			2014

REVENUES	$	4,013,134		$	507,474		$	234,221

OPERATING EXPENSES:
Production costs		2,282,805			257,654			49,464
Exploration costs		981,045			3,997,039			4,626,139
General and administrative		4,069,508			4,857,015			5,195,830
Depreciation expense		1,348,860			1,312,585			1,164,366
(Gain) from disposition of land		(108,764	)		-0-			-0-
Total Operating Expenses		8,573,454			10,424,293			11,035,799

Operating Loss		(4,560,320	)		(9,916,819	)		(10,801,578	)

OTHER INCOME (EXPENSE):
Interest expense, net, including amortization of deferred financing cost and debt discount		(6,308,495	)		(4,567,952	)		(1,667,285	)
Gain on revaluation of warrant derivative		-0-			-0-			830,000
Gain on revaluation of stock awards		-0-			-0-			110,000
Gain on revaluation of PIK Note derivative		3,229,043			5,328,515			1,470,798	)
Other expense		-0-			(648,892	)		(258,252	)
Total Other Income		(3,079,452	)		111,671			485,261

Net loss	$	(7,639,772	)	$	(9,805,148	)	$	(10,316,317	)

Net Loss Per Share (Basic and Diluted)	$	(0.07	)	$	(0.10	)	$	(0.11	)

Weighted Average Shares Outstanding (Basic and Diluted)		103,124,288			96,033,553			94,895,194

							Accumulated			Accumulated			Total
	Common Stock						Deficit			Deficit			Stock-
					Additional		Prior to			During			holders’
					Paid-In		Exploration			Exploration			Equity
	Shares		Amount		Capital		Stage			Stage			(Deficit)

Balance, December 31, 2013		94,646,013	$	94,646	$	63,213,893	$	(20,009,496	)	$	(41,812,476	)	$	1,486,567

Shares issued for directors fees and other services		408,539		409		326,860		- 0 -			- 0 -			327,269

Warrant cancellation		- 0 -		- 0 -		120,000		- 0 -			- 0 -			120,000

Stock-based compensation expense		- 0 -		- 0 -		865,716		- 0 -			- 0 -			865,716

Net Loss		- 0 -		- 0 -		- 0 -		- 0 -			(10,316,317	)		(10,316,317	)

Balance, December 31, 2014		95,054,552		95,055		64,526,469		(20,009,496	)		(52,128,793	)		(7,516,765	)

Shares issued for directors fees and other services		1,045,788		1,046		378,890		- 0 -			- 0 -			379,936

Shares issued for employee bonus		29,310		29		63,859		- 0 -			- 0 -			63,888

Shares issued for liquidated damages		1,015,086		1,015		739,996		- 0 -			- 0 -			741,011

Stock-based compensation expense		- 0 -		- 0 -		397,417		- 0 -			- 0 -			397,417

Net Loss		- 0 -		- 0 -		- 0 -		- 0 -			(9,805,137	)		(9,805,137	)

Balance, December 31, 2015		97,144,736		97,145		66,106,631		(20,009,496	)		(61,933,930	)		(15,739,650	)

Shares issued for directors fees and other services		203,980		204		53,710		- 0 -			- 0 -			53,914

Shares issued for employee compensation		331,494		332		57,416		- 0 -			- 0 -			57,748

Shares and warrants issued in private placement		10,933,339		10,933		1,629,067		- 0 -			- 0 -			1,640,000

Stock-based compensation expense		- 0 -		- 0 -		659,706		- 0 -			- 0 -			659,706

Net Loss		- 0 -		- 0 -		- 0 -		- 0 -			(7,639,772	)		(7,639,772	)

Balance, December 31, 2016		108,613,549	$	108,614	$	68,506,530	$	(20,009,496	)	$	(69,573,702	)	$	(20,968,054	)

	For the year ended
	December 31,
	2016			2015			2014

Cash Flows From Operating Activities:
Net loss	$	(7,639,772	)	$	(9,805,137	)	$	(10,316,317	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation		1,348,860			1,312,585			1,164,366
Amortization of discount – PIK Notes		2,696,500			1,259,159			218,031
Amortization of deferred financing costs		7,500			7,500			1,250
Accrued interest on PIK Notes		3,551,195			3,221,035			1,076,250
Stock issued for director and consulting services		53,914			379,936			327,269
Stock-based compensation expense		659,706			397,417			865,716
Stock issued for liquidated damages		--			741,011			--
Stock issued for employee compensation		57,748			63,888			--
(Gain) on revaluation of warrant derivative		--			--			(830,000	)
(Gain) on revaluation of PIK Notes		(3,229,043	)		(5,328,515	)		(1,470,798	)
(Gain) on revaluation of stock awards for non-employees		--			--			(110,000	)
(Gain) on disposal of property		(108,764	)		--			--
Change in operating assets and liabilities:
Accounts receivable		(188,747	)		(63,374	)		(107,075	)
Other receivables		77,846			(94,646	)		--
Deposits and prepaid expenses		20,394			(33,543	)		149,239
Accounts payable and accrued expenses		(39,426	)		(642,873	)		1,028,218
Net Cash (Used In) Operating Activities		(2,732,089	)		(8,585,557	)		(8,003,851	)

Cash Flows From Investing Activities:
Sale of property		552,944			--			--
Purchases of property and equipment		(217,211	)		(251,055	)		(2,039,562	)
Net Cash (Used In) Provided By Investing Activities		335,733			(251,055	)		(2,039,562	)

Cash Flows From Financing Activities:
Payments on notes payable		(237,235	)		(61,923	)		(440,471	)
Proceeds from notes payable		240,340			--			--
Proceeds from PIK notes payable		--			--			12,499,998
Proceeds from sale of common stock		1,640,000			--			--
Net Cash (Used In) Provided By Financing Activities		1,643,105			(61,923	)		12,059,527

Net (decrease) increase in cash and cash equivalents		(753,251	)		(8,898,535			2,016,114
Cash and cash equivalents at beginning of year		1,803,131			10,701,666			8,685,552
Cash And Cash Equivalents At End Of Year	$	1,049,880		$	1,803,131		$	10,701,666

	For the year ended December 31,
	2016		2015		2014

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	4,956	$	12,839	$	10,460
Income taxes	$	490	$	13,017	$	1,431

Supplemental disclosure of noncash investing and financing activities:
Property and equipment financed with note payable	$	--	$	--	$	149,129

Construction-in-progress in accounts payable	$	--	$	--	$	120,000

Prepaid insurance financed with note payable	$	240,340	$	233,940	$	245,390

Reclassification of Construction in Progress to building and equipment	$	--	$	--	$	3,091,163

	2016		2015
Land	$	500,000	$	500,000
Land improvements		171,122		164,758
Buildings		3,129,519		3,116,515
Mining equipment		1,775,884		1,697,583
Milling equipment		2,806,834		2,702,969
Laboratory equipment		607,716		594,451
Office equipment		69,900		69,625
Vehicles		150,810		148,673
		9,211,785		8,994,574
Less: Accumulated depreciation		5,136,609		3,787,749
Total	$	4,075,176	$	5,206,825

	Fair value measurement using inputs						Carrying amount
	Level 1		Level 2		Level 3		December 31, 2016		December 31, 2015

Financial instruments:
Series 2023 Note Derivative	$	-0-	$	-0-	$	142,909	$	142,909	$	262,764
Series A Note Derivative	$	-0-	$	-0-	$	2,033,643	$	2,033,643	$	4,876,093

	2016			2015
Balance at beginning of year	$	5,138,857		$	10,035,625
Issuance of additional Series 2023 Notes		18,807			36,665
Issuance of additional Series A Notes		247,931			395,082
Net unrealized gain included in operations		(3,229,043	)		(5,328,515	)

Balance at end of year	$	2,176,552		$	5,138,857

Series 2023 Note derivative liability	Fair Value Measurements
	Using Inputs
	December 31, 2016			December 31, 2015

Market price and estimated fair value of stock	$	0.12		$	0.28
Exercise price	$	1.28		$	1.36
Term (years)		6.58			7.58
Dividend yield	$	-0-		$	-0-
Expected volatility		86.2	%		72.9	%
Risk-free interest rate		2.18	%		2.12	%

Series A Note derivative liability	Fair Value Measurements
	Using Inputs
	December 31, 2016			December 31, 2015

Market price and estimated fair value of stock	$	0.12		$	0.28
Exercise price	$	0.83		$	0.92
Term (years)		6.58			2.82
Dividend yield	$	-0-		$	-0-
Expected volatility		86.2	%		72.9	%
Risk-free interest rate		2.18	%		2.12	%

	(e)	The Company signed a note payable with an insurance company dated October 17, 2015 for liability insurance, due in monthly installments, including interest at 3.000%.
	(f)	The Company signed a note payable with an insurance company dated October 17, 2016 for liability insurance, due monthly installments, including interest at 4.15%
	(g)	The Company signed a note payable with an insurance company dated October 17, 2016 for liability insurance, due monthly installments, including interest at 2.60%

Key Terms	Series 2023 Notes	Series A Notes
Inception Date	08/05/2013	11/03/2014
Cash Received	$10,500,000	$12,500,000
Principal (Initial Liability)	$10,500,000	$19,848,486
Maturity (Term)	10 years, but convertible after 1 year based on the market price of the Company’s stock	4 years, but may range between 2 years to the full maturity of the Series 2023 Notes, depending on whether a Specified Event occurs and/or an Extension Option is elected (see below for further details)
Exercise Price	$1.40 at inception, adjusted downward based on anti-dilution provisions/downround protection	$0.92 at inception, adjusted downward based on anti-dilution provisions/down-round protection; also may be reduced by $0.10 based if Extension Option is elected (see below)
Stated Interest	10% per annum, due semiannually	10% per annum, due semiannually, may be reduced to 1% if a Specified Event occurs
Derivative Liability	$2,055,000 established at inception due to the existence of down-round protection; revalued every quarter using Monte Carlo model	$9,212,285 established at inception due to existence of down-round protection; revalued every quarter using a Monte Carlo model

		Warrants Outstanding and Exercisable
Exercise Price		Number Outstanding		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price
$	0.25		3,283,283		4.5	$	0.25
$	1.15		461,340		4.3	$	1.15
			3,744,623		4.5	$	0.36

	December 31, 2016					December 31, 2015
				Weighted					Weighted
				Average					Average
	Shares			Exercise Price		Shares			Exercise Price

Outstanding at beginning of period		17,806,472		$	1.00		17,053,116		$	1.02
Issued		3,771,488			0.24		988,355			0.63
Forfeited		(300,481	)		0.83		(235,000	)		0.77
Outstanding at end of period		21,277,479		$	0.87		17,806,472		$	1.00

	Vesting Information
Shares	Frequency	Begin Date	End Date
250,000	Immediately	01/01/2016	01/01/2016
158,206	Immediately	01/05/2016	01/05/2016
43,885	Immediately	01/06/2016	01/06/2016
32,415	Immediately	01/09/2016	01/09/2016
2,013,655	Immediately	05/11/2016	05/11/2016
350,000	Immediately	08/01/2016	08/01/2016
500,000	Monthly	07/06/2016	08/15/2017
81,522	Annually	01/19/2016	01/19/2018
81,395	Annually	01/27/2016	01/27/2018
80,000	Annually	01/28/2016	01/28/2018
144,815	Annually	01/29/2016	01/29/2018
35,595	Annually	02/01/2016	02/01/2018

Options Outstanding					Options Exercisable


	Weighted
	Average		Weighted				Weighted
	Remaining		Average				Average
	Contractual		Exercise		Number		Exercise
Number Outstanding	Life (years)		Price		Exercisable		Price

500,000		9.52	$	0.16		166,667	$	0.16
81,395		7.14	$	0.21		- 0 -	$	N/A
100,000		3.71	$	0.22		100,000	$	0.22
1,066,155		4.36	$	0.24		1,066,155	$	0.24
1,297,500		6.75	$	0.25		1,297,500	$	0.25
35,595		6.29	$	0.27		- 0 -	$	N/A
474,815		7.36	$	0.28		250,000	$	0.28
234,506		6.13	$	0.285		234,506	$	0.285
81,522		4.05	$	0.30		- 0 -	$	N/A
200,000		8.12	$	0.66		200,000	$	0.66
150,000		8.10	$	0.68		49,995	$	0.68
7,233,277		1.99	$	0.70		7,233,277	$	0.70
488,356		8.38	$	0.73		255,011	$	0.73
3,104,653		5.15	$	0.83		3,104,653	$	0.83
975,000		7.45	$	0.84		891,667	$	0.84
300,000		6.64	$	1.10		300,000	$	1.10
300,000		6.48	$	1.15		300,000	$	1.15
100,000		1.08	$	1.24		100,000	$	1.24
115,000		4.24	$	1.35		115,000	$	1.35
125,000		1.08	$	1.45		125,000	$	1.45
330,000		4.95	$	1.55		330,000	$	1.55
7,645		1.67	$	1.58		7,645	$	1.58
3,077,060		5.89	$	1.66		3,077,060	$	1.66
900,000		4.63	$	1.90		900,000	$	1.90
21,277,479		4.60	$	0.87		20,104,136	$	0.87

	December 31, 2016			December 31, 2015
Deferred tax assets:
Net operating loss carryforward	$	31,980,117		$	28,475,616
Stock-based compensation		4,496,398			4,240,612
Total deferred tax assets		36,476,515			32,716,228

Deferred tax liabilities:
Fixed assets		(17,261	)		(348,869	)
Less: valuation allowance		(36,459,254	)		(32,367,359	)
	$	--		$	--

	December 31, 2016					December 31, 2015					December 31, 2014

Federal statutory rate	$	(2,673,920	)	35.0	%	$	(3,457,068	)	35.0	%	$	(3,610,711	)	35.0	%
State income taxes – Idaho		(2,455	)	0.03	%		(7,652	)	0.1	%		(11,016	)	0.1	%
State income taxes - Utah		(191,070	)	2.5	%		(243,973	)	2.5	%		(239,093	)	2.3	%
State and local income taxes - NY		(28,559	)	0.4	%		(30,468	)	0.3	%		(46,372	)	0.4	%
Change in valuation allowance		4,091,895		(53.6	%)		5,672,480		(57.5	%)		4,935,302		(47.8	%)
Net nontaxable income related to derivatives		(1,214,608	)	15.9	%		(2,005,896	)	20.3	%		(843,861	)	8.2	%
Miscellaneous		18,717		(0.2	%)		72,577	)	(0.70	%%		(184,249		2.0	)
	$	--		0	%	$	--		0	%	$	--		0	%

Investor	Investment		OID/Discount		Principal		Shares Issuable at 0.83 (excluding interest)

IBS Turnaround Fund (A Limited Partnership)	$	531,960		0.66	$	806,000		971,084

IBS Turnaround Fund QP (A Limited Partnership)		1,118,040		0.66		1,694,000		2,040,964

IBS Opportunity Fund, Ltd.		350,000		0.66		530,303		638,918
	$	2,000,000			$	3,030,303		3,650,966

2016 For Quarter Ended	December 31			September 30			June 30			March 31
Revenue	$	923,711		$	975,328		$	1,112,467		$	1,001,628
Operating loss	$	(1,017,490	)	$	(1,153,204	)	$	(1,097,913	)	$	(1,291,713	)
Net (loss)	$	(2,106,846	)	$	(1,810,425	)	$	(3,185,359	)	$	(537,142	)
(Loss) Per Share (Basic and Diluted)	$	(0.02	)	$	(0.02	)	$	(0.03	)	$	(0.01	)

2015 For Quarter Ended	December 31			September 30			June 30			March 31
Revenue	$	235,586		$	43,293		$	65,848		$	162,747
Operating loss	$	(2,022,257	)	$	(2,415,818	)	$	(2,803,433	)	$	(2,675,300	)
Net income (loss)	$	(4,674,752	)	$	1,792,956		$	(2,728,876	)	$	(4,194,465	)
Income (Loss) Per Share (Basic and Diluted)	$	(0.02	)	$	0.02		$	(0.03	)	$	(0.04	)

Registration Fee – Securities and Exchange Commission	$	248
Accounting Fees and Expenses		4,000
Legal Fees and Expenses		-0-
Miscellaneous		-0-
TOTAL	$	4,248

Grant Date	Number of Shares		Stock Price on Grant Date ($)
03/02/15		100,000		0.74
06/15/15		50,000		0.65
10/13/15		50,000		0.45
01/28/16		50,000		0.20

Exhibit Number	Description of Exhibit
3.1	Amended and Restated Articles of Incorporation	(1)
3.2	Bylaws, as amended	(2)
4.1	Form of 10% PIK Election Convertible Note due 2023 used in connection with August, 2013 capital raise	(3)
4.2	Form of 10% PIK Election Convertible Note due 2018 used in connection with November, 2014 capital raise	(4)
10.1	Form of Investment Agreement used in connection with November, 2014 capital raise	(5)
10.2	2012 Long Term Option Plan	(6)
10.3	Form of Stock Option Agreement under 2012 LTIP	(7)
10.4	Short Term Incentive Plan	(8)
10.5	2016 Long Term Incentive Plan and form of option agreement	(9)
10.6	2016 Incentive Plan and form of option agreement	(10)
10.7	Form of warrant issued in June, 2016	(11)
23.1	Consent of EisnerAmper LLP, Independent Registered Public Accounting Firm	*
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	**

(1)	Filed as Exhibit 3.1 to the Annual Report for the year ended December 31, 2016 filed on March 31, 2017
(2)	Filed as Exhibit 3.2 to the Annual Report for the year ended December 31, 2016 filed on March 30, 2017
(3)	Incorporated by reference to Exhibit 99.2 included in the Registrant's Current Report on Form 8-K, filed on August 5, 2013
(4)	Incorporated by reference to Exhibit 99.2 included in the Registrant's Current Report on Form 8-K, filed on November 5, 2014
(5)	Incorporated by reference to Exhibit 99.4 included in the Registrant's Current Report on Form 8-K, filed on November 5, 2014
(6)	Incorporated by reference to Exhibit 99.2 included in the Registrant's Current Report on Form 8-K, filed on November 26, 2012
(7)	Incorporated by reference to Exhibit 99.3 included in the Registrant's Current Report on Form 8-K, filed on November 26, 2012
(8)	Incorporated by reference to Exhibit 99.4 included in the Registrant's Current Report on Form 8-K, filed on November 26, 2012
(9)	Incorporated by reference to Exhibit 10.6 included in the Registrant’s Annual Report of Form 10-K, filed on March31, 2017
(10)	Incorporated by reference to Items 10.7 included in Registrant’s Annual Report of Form 10-K, filed on March31, 2017.
(11)	Filed as Exhibit 10.8 included in the Registrant’s Annual Report for the year ended December 31, 2016f iled on March 31, 201

	Balance at Beginning of Year		Additions Charged to Expenses/ Other Accounts		Net (Deductions) Recoveries		Balance at End of Year
Valuation allowance for deferred tax assets
2016	$	32,367,359	$	4,091,895	$	--	$	36,459,254
2015	$	26,694,879	$	5,672,480	$	--	$	32,367,359
2014	$	21,759,577	$	4,935,302	$	--	$	26,694,879

		APPLIED MINERALS, INC.

May 9, 2017	By:	/s/ ANDRE ZEITOUN
		Andre Zeitoun
		Chief Executive Officer

Signature	Title	Date

/s/ Andre Zeitoun	Director and Chief Executive Officer	May 9, 2017


/s/ Christopher T. Carney	Chief Financial Officer	May 9, 2017
	(Principal Financial and Accounting Officer)

/s/ John F. Levy*	Director, Chairman of the Board of Directors	May 9, 2017


/s/ David Taft*	Director	May 9, 2017


/s/ Mario Concha*	Director	May 9, 2017


/s/ Robert Betz*	Director	May 9, 2017


/s/ Ali Zamani*	Director	May 9, 2017