10-Q - ACRG - Equibles

UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

WASHINGTON,DC 20549

FORM10-Q

þ QUARTERLY

REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For

the quarterly period ended September 30, 2020

☐ TRANSITION

REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For

the transition period from _______ to _______

Commission

file number 000-14319

STANDARDMETALS PROCESSING, INC.

(Exact

Name of Small Business Issuer as Specified in its Charter)

Nevada	84-0991764
(State<br><br> or Other Jurisdiction of	(I.R.S.<br><br> Employer
Incorporation<br><br> or Organization)	Identification<br><br> Number)

611Walnut Street, Gadsden, Alabama 35901

(Address

of Principal Executive Offices)

(888)960-7347

(Issuer’s

Telephone Number, Including Area Code)

N/A

(Former

Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

Securities

registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common<br><br> Stock $0.001 par value	SMPR	OTC

Indicate

by check mark whether the Registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange

Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports) and

(2) has been subject to such filing requirements for the past 90 days. Yes ☐ No þ

Indicate by check mark whether the Registrant

has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405

of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☐ No þ

Indicate

by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting

company or 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. (Check one):

Large<br><br> accelerated filer	☐	Accelerated<br><br> filer	☐
Non-accelerated<br><br> filer	☐	Smaller<br><br>reporting company	þ
		Emerging<br><br> growth company	☐

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 Securities Act:

☐

Indicate by check mark whether the Registrant

is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

of October 23, 2020, there were 138,630,343 shares of Registrant’s common stock, par value $.001 issued, and 133,630,343

outstanding.

STANDARDMETALS PROCESSING, INC.

FORM10-Q

FORTHE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020

TABLEOF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
ITEM<br><br> 1	Financial<br><br> Statements (unaudited)	1
	Condensed<br><br> Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019	1
	Condensed<br><br> Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019	2
	Condensed<br><br> Consolidated Statements of Cash Flows for the Nine Months Ended September 30,2020 and 2019	3
	Condensed<br><br> Statement of Changes in Shareholders’ Deficit for the Nine Months Ended September 30, 2020 and the Year Ended December<br><br> 31, 2019	4
	Notes<br><br> to Condensed Consolidated Financial Statements	5
ITEM<br><br> 2.	Management’s<br><br> Discussion and Analysis of Financial Condition and Results of Operations	11
ITEM<br><br> 3.	Quantitative<br><br> and Qualitative Disclosures about Market Risk	17
ITEM<br><br> 4.	Controls<br><br> and Procedures	17
PART II - OTHER INFORMATION
ITEM<br><br> 1.	Legal<br><br> Proceedings	18
ITEM 1A.	Risk<br><br> Factors	18
ITEM<br><br> 2.	Unregistered<br><br> Sales of Equity Securities and Use of Proceeds	18
ITEM<br><br> 3.	Defaults<br><br> Upon Senior Securities	18
ITEM<br><br> 4.	Mine<br><br> Safety Disclosures	18
ITEM<br><br> 5.	Other<br><br> Information	18
ITEM<br><br> 6.	Exhibits	18
SIGNATURES		19

SPECIALNOTE REGARDING FORWARD-LOOKING STATEMENTS

This

Form 10-Q contains certain statements which are forward-looking in nature and are based on the current beliefs of our management

as well as assumptions made by and information currently available to management, general trends in our operations or financial

results, plans, expectations, estimates and beliefs. In addition, when used in this Form 10-Q, the words “may,” “could,”

“should,” “anticipate,” “believe,” “estimate,” “expect,” “intend,”

“plan,” “predict” and similar expressions and their variants, as they relate to us or our management,

may identify forward-looking statements. These statements reflect our judgment as of the date of this Form 10-Q with respect to

future events, the outcome of which is subject to risks. We have attempted to identify, in context, certain of the factors that

we believe may cause actual future experience and results to differ materially from our current expectations, which may have a

significant impact on our business, operating results, financial condition or your investment in our common stock, as described

in Part II, Item 1A entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019,

as filed with the Securities and Exchange Commission (“SEC”) on April 2, 2020.

Readers

are cautioned that these forward-looking statements are inherently uncertain. Should one or more of these risks or uncertainties

materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described

herein.

undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future

events or otherwise. However, your attention is directed to any further disclosures made on related subjects in our subsequent

periodic reports filed with the SEC on Forms 10-K, 10-Q and 8-K.

ii

PARTI – FINANCIAL INFORMATION

Item1. Financial Statements

STANDARDMETALS PROCESSING, INC.

CONDENSEDConsolidated Balance Sheets

			December 31, <br> 2019

Assets
Current assets:
Cash	2,316		$	1,945
Prepaid expenses	35,448			-0-
Total current assets	37,764			1,945
Mining and mineral rights	3,883,524			3,883,524
Total Assets	3,921,288		$	3,885,469
Liabilities and Shareholders’<br><br> Deficit
Current liabilities:
Senior secured promissory note payable, related party	2,229,187		$	2,229,187
Promissory notes payable - related party	477,500			477,500
Convertible notes payable, including 204,240 from related<br><br> parties	304,240			113,575
Accrual for settlement of lawsuits	3,314,128			3,164,309
Accounts payable	1,660,478			1,820,741
Accrued interest - Related party<br><br> 1,501,249 and 1,325,558 at September 30, 2020 and December 31, 2019	2,313,131			2,100,592
Total current liabilities	10,298,664			9,905,904
Preferred stock, 50,000,000 shares authorized:
Series A, .001 par value, 10,000,000<br><br> and 10,000,000 shares issued and outstanding at September 30, 2020 and December 31, 2019	10,000,000			10,000,000
Commitments and Contingencies (Note 6)
Shareholders’ deficit:
Common stock, 0.001 par value,<br><br> 500,000,000 shares authorized: 138,630,343 and 133,630,343 issued and 129,497,423 and 128,997,423 outstanding at September<br><br> 30, 2020 and December 31, 2019, respectively	133,630			128,997
Additional paid-in capital	87,930,342			87,712,695
Accumulated deficit	(104,441,348	)		(103,862,127	)
Total shareholders’ deficit	(16,377,376	)		(16,020,435	)
Total Liabilities and Shareholders’<br><br> deficit	3,921,288		$	3,885,469

All values are in US Dollars.

The

accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

STANDARDMETALS PROCESSING, INC.

CONDENSEDConsolidated STATEMENTS OF OPERATIONS

(Unaudited)

						Nine Months Ended
			September 30,<br> <br>2019			September 30, <br> 2020			September 30,<br> <br>2019
Revenues	---		$	---		$	—		$	—
Operating expenses:
General and administrative	106,058			826			222,862			13,163
Total operating expenses	106,058			826			222,862			13,163
Loss from operations	(106,058	)		(826	)		(222,862	)		(13,163	)
Other income (expense):
Other income	2,099			1,825			6,296			6,083
Derecognition of debt	----			----			115,424			---
Loss on modification of options and warrants	(115,722	)		---			(115,722	)		---
Interest expense, including<br><br> related party of 175,681	(157,493	)		(153,340	)		(362,357	)		(475,825	)
Total other income (expense)	(271,116	)		(151,515	)		(356,359	)		(469,742	)
Loss before income tax provision	(377,174	)		(152,341	)		(579,221	)		(482,905	)
Income tax provision	---			---			—			—
Net loss	(377,174	)	$	(152,341	)	$	(579,221	)	$	(482,905	)
Basic net loss per common share	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Basic weighted average common shares outstanding	131,698,652			124,497,423			129,995,646			124,497,423

All values are in US Dollars.

The

accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

STANDARDMETALS PROCESSING, INC.

CONDENSEDConsolidated STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended
	September 30,<br><br>2020		September 30, <br> 2019
Cash flows from operating activities:
Net loss		)	$	(482,905	)
Adjustments to reconcile net loss to cash flows provided<br><br> by (used in) operating activities:
Gain on derecognition of certain accounts payable and accrued expenses		)		---
Expenses paid directly by related party				---
Expenses paid directly by exercise of options and warrants				---
Loss on modification of options and warrants				---
Changes in operating assets and liabilities
Prepaid expenses				---
Accounts payable		)		---
Accrued interest				340,357
Accrual for settlement of lawsuits				144,192
Net cash provided by (used in) operating<br><br> activities		)		1,644
Cash flows from investing activities:				—
Cash flows from financing activities:				---
Proceeds from exercise of stock options				---
Net cash provided by financing activities
Increase in Cash			$	1,644
Cash, beginning of period				1,001
Cash, end of period			$	2,645
Supplemental cash<br><br> flow disclosures
Cash paid for interest cost
Income taxes paid			$	---
			$	—
Supplemental Disclosure<br><br> of Non-Cash Investing and Financing Activities:
Settlement of liabilities through<br><br> direct payment by related party			$	109,055
Debt discount on through direct<br><br> payment of convertible notes payable			$	---
Conversions of convertible debt and<br><br> accrued interest into common stock			$	---
Expenses paid by exercise of options<br><br> and warrants			$	---
Expenses prepaid by exercise of options<br><br> and warrants			$	---

All values are in US Dollars.

The

accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

STANDARDMETALS PROCESSING, INC.

CONDENSEDCONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT

FORTHE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND

THEYEAR ENDED DECEMBER 31, 2019

						Accumulated
		Amount		APIC		Deficit			Total
Balance at December 31, 2018	124,497,423		124,497		87,525,115		(103,184,962	)		(15,535,350	)
Shares issued upon exercise of stock option	4,500,000		4,500		187,580		-			192,080
Net loss	---		-		-		(677,165	)		(677,165	)
Balance at December 31, 2019	128,997,423	$	128,997	$	87,712,695	$	(103,862,127	)	$	(16,020,435	)
Shares issued upon exercise of stock options and warrants<br><br> including 115,722 modification loss	4,632,920		4,633		217,647		--			222,280
Net loss	---		---		---		(579,221	)		(579,221	)
Balance at September 30,2020	133,630,343	$	133,630	$	87,930,342	$	(104,441,348	)	$	(16,377,376	)

All values are in US Dollars.

The

accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

STANDARDMETALS PROCESSING, INC.

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FORTHE NINE MONTHS ENDED SEPTEMBER 30, 2020

(unaudited)

NOTE1 – NATURE OF BUSINESS

Standard

Metals Processing, Inc. (“we,” “us,” “our,” “Standard Metals” or the “Company”)

is an exploration stage company, incorporated in Nevada having offices in Gadsden, Alabama and through its subsidiary, a property

in Tonopah, Nevada. The business plan is to purchase and install the equipment necessary to complete a facility on the Tonopah

property to serve as a permitted custom processing toll milling facility (which includes an analytical lab, pyrometallurgical

plant, and hydrometallurgical recovery plant).

The

Company plans to perform permitted custom processing toll milling which is a process whereby mined material is crushed and ground

into fine particles to ease the extraction of any precious minerals contained therein, such as minerals in the gold, silver and

platinum metal groups. Custom milling and refining can include many different processes that are designed specifically for each

ore load and to maximize the extraction of precious metals from carbon or concentrates. These toll-processing services also distill,

dry, mix, or mill chemicals and bulk materials on a contractual basis and provide a chemical production outsourcing option for

industrial companies, which lack the expertise, capacity, or regulatory permits for in-house production.

are required to obtain several permits before we can begin construction of a small-scale mineral processing facility to conduct

permitted processing toll milling activities and construction of the required additional buildings and well relocation necessary

for us to commence operations.

GoingConcern

The

accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally

accepted in the United States of America, assuming we will continue as a going concern, which contemplates the realization of

assets and satisfaction of liabilities in the normal course of business. For the nine months ended September 30, 2020, the Company

had a net loss of $579,221. At September 30, 2020, the Company had an accumulated deficit of $104,441,348 and a working capital

deficit of $10,260,900. Additionally, all of the Company’s assets are under lien pursuant to the First Deed of Trust, UCC

filings and the pledge of 100% of the common stock of the Company’s subsidiary Tonopah Milling and Metals Group, Inc. and

that of its wholly owned subsidiaries Tonopah Custom Processing, Inc., (“TCP”) and Tonopah Resources, Inc. (“TR”).

Held by GPR, a related party. These circumstances raise substantial doubt about the Company’s ability to continue as a going

concern. The Company’s ability to continue as a going concern is dependent on their ability to raise the required additional

capital or debt financing to meet short and long-term operating requirements. During the nine months ended September 30, 2020,

a related party advanced $190,665 on the Company’s behalf to pay certain operating expenses directly. As the related party

intends to apply its advance toward a convertible note, it has been classified as such at September 30, 2020.

Management

believes that private placements of equity capital and/or additional debt financing will be needed to fund our long-term operating

requirements. The Company may also encounter business endeavors that require significant cash commitments or unanticipated problems

or expenses that could result in a requirement for additional cash. If the Company raises additional funds through the issuance

of equity or convertible debt securities, the percentage ownership of our current shareholders could be reduced, and such securities

might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable

terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be able to

take advantage of prospective business endeavors or opportunities, which could significantly and materially restrict our operations.

We are continuing to pursue external financing alternatives to improve our working capital position. If the Company is unable

to obtain the necessary capital, the Company may have to cease operations.

NOTE2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principlesof Consolidation

The

consolidated financial statements include the accounts of Standard Metals Processing, Inc., and its wholly owned subsidiary Tonopah

Milling and Metals Group, Inc. and its wholly owned subsidiaries Tonopah Custom Processing, Inc., (“TCP”) and Tonopah

Resources, Inc. (“TR”) All significant intercompany transactions, accounts and balances have been eliminated in consolidation.

Basisof Presentation

The

accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles

generally accepted in the United States of America (“US GAAP”), for interim financial information pursuant to the

rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all

of the information and footnotes required by US GAAP for complete financial statements. The unaudited condensed consolidated financial

statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our

Form 10-K for the year ended December 31, 2019 filed April 2, 2020. In the opinion of management, all adjustments (consisting

of normal recurring adjustments unless otherwise indicated) considered necessary for a fair presentation have been included. Operating

results for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the

year as a whole.

MineralProperties

Mineral

property acquisition costs are recorded at cost and are deferred until the viability of the property is determined. No properties

have produced operating revenues at this time. Exploration, mineral property evaluation, option payments, related acquisition

costs for mineral properties acquired under an option agreement, general overhead, administrative and holding costs to maintain

a property on a care and maintenance basis are expensed in the period they are incurred. When reserves are determined for a property

and a bankable feasibility study is completed, subsequent exploration and development costs on the property would be capitalized.

If a project were to be put into production, capitalized costs would be depleted on the unit of production basis.

Management

reviews the net carrying value of each mineral property as changes may materialize with a property or at a minimum, on an annual

basis. Where information and conditions suggest impairment, estimated future net cash flows from each property are calculated

using estimated future prices, proven and probable reserves and value beyond proven and probable reserves, and operating, capital

and reclamation costs on an undiscounted basis. If it is determined that the future cash flows are less than the carrying value,

a write-down to the estimated fair value is made with a charge to loss for the period. Where estimates of future net cash flows

are not available and where other conditions suggest impairment, management assesses if the carrying value can be recovered.

Management’s

estimates of gold prices, recoverable reserves, probable outcomes, operating capital and reclamation costs are subject to risks

and uncertainties that may affect the recoverability of mineral property costs. The Company does not own any mining claims. It

owns tailings located on the Tonopah property and some tailings located in Manhattan, Nevada. The Company has not disturbed or

processed any of this material and does not intend to do so in the foreseeable future.

Impairmentof Long-Lived Assets and Long-Lived Assets

The

Company will periodically evaluate the carrying value of long-lived assets to be held and used, including but not limited to,

mineral properties, mine tailings, mine dumps, capital assets and intangible assets, when events and circumstances warrant such

a review and at least annually. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted

cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized

based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily

using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed

of are determined in a similar manner, except that fair values are reduced for the cost to dispose.

Useof Estimates

Preparing

financial statements in conformity with accounting principles generally accepted in the United States of America requires management

to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets

and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting

period. Actual results could differ from those estimates.

RevenueRecognition and Deferred Revenue

of September 30, 2020, the Company has not recognized any revenues from custom permitted processing toll milling. If we achieve

revenue generation, the Company plans to report such revenues consistent with ASC Topic 606.

IncomeTaxes

Income

taxes are accounted for based upon an asset and liability approach. Accordingly, deferred tax assets and liabilities arise from

the difference between the tax basis of an asset or liability and its reported amount in the financial statements. Deferred tax

amounts are determined using the tax rates expected to be in effect when the taxes will actually be paid or refunds received,

as provided under currently enacted tax law. Valuation allowances are established when necessary to reduce deferred tax assets

to the amount expected to be realized. Income tax expense or benefit is the tax payable or refundable, respectively, for the period

plus or minus the change in deferred tax assets and liabilities during the period.

Accounting

guidance requires the recognition of a financial statement benefit of a tax position only after determining that the relevant

tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not

threshold, the amount recognized in the financial statements is the largest benefit that has a greater than fifty percent likelihood

of being realized upon ultimate settlement with the relevant tax authority. The Company believes its income tax filing positions

and deductions will be sustained upon examination and accordingly, no reserves, or related accruals for interest and penalties

have been recorded at September 30, 2020 and December 31, 2019. The Company recognizes interest and penalties on unrecognized

tax benefits as well as interest received from favorable tax settlements within income tax expense.

December 22, 2017, the President of the United States signed and enacted into law H.R. 1 (the “Tax Reform Law”). The

Tax Reform Law, effective for tax years beginning on or after January 1, 2018, except for certain provisions, resulted in significant

changes to existing United States tax law, including various provisions that are expected to impact the Company. The Tax Reform

Law reduces the federal corporate tax rate from 34% to 21% effective January 1, 2018. Management believes the provisions of the

Tax Reform Law will have a favorable impact on the Company’s consolidated financial statements should it attain a level

of profitable operations.

RecentAccounting Standards

February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires all leases that have a term of

over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use

asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these

leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs

of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term.

Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use

asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual

periods beginning January 1, 2019 and must be applied on a modified retrospective basis to leases existing at, or entered into

after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. The

Company has adopted the standard during 2018, but as the Company does not have any significant leases, it does not expect it to

have a material impact on its financial position or results of operations.

During

the nine months ended September 30, 2020 and through the date of this filing, there were several new accounting pronouncements

issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by

the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material

impact on the Company’s consolidated financial statements.

NOTE3 – MINING AND MINERAL RIGHTS

The

Company is preparing the Tonopah property site for the construction of a permitted custom processing toll milling facility including

grading the land, installing fencing and working with contractors for our planned 21,875 square foot building and servicing and

drilling various wells for our future operations.

The

Company has continued to assess the realizability of its mining and mineral rights. Based on an assessment the Company conducted

in January 2020. The Company decided its land, mineral rights and water rights are inseparable and depend upon each other in value

creation. Accordingly, during the year ended December 31, 2018, the Company combined the carrying value of the assets to present

more clearly their intended use together.

NOTE4 – CONVERTIBLE NOTES PAYABLE

March 16, 2020 the Company executed a Line of Credit (“LOC”) with Granite Peak Resources, LLC (“GPR”),

a related party, evidenced by a convertible promissory note. The LOC is for up to $2,500,000, provides that all requests for funds

may be approved or disapproved in GPR’s sole discretion, matures over three years, bears interest at 10% per annum, is convertible

into shares of the Company’s common stock at a per share price of $0.04, and will be secured by the real and personal property

GPR already has under lien or in pledge. See Note 7. The LOC is for funding operating expenses critical to the Company’s

redirection including the resolution, on terms and conditions satisfactory to GPR, of the Company’s claims. However, GPR

and the Company make no representation that the Company’s claims can be satisfactorily resolved voluntarily. Accordingly,

GPR and the Company reserve all rights to employ every means legally available to seek the Company’s recapitalization.

December 31, 2019, GPR had advanced $13,575 in contemplation of the LOC. During the nine months ended September 30, 2020 GPR advanced

an additional $190,665 which it used to pay directly certain operating expenses on the Company’s behalf. Both advances,

amounting to $204,230 in total, have been included in the convertible promissory note issued by the Company in connection with

the LOC and classified accordingly at September 30, 2020.

Including

the foregoing advances under the LOC, there was $304,240 of principal and $114,069 of accrued interest outstanding on convertible

debentures at September 30, 2020. With exception of the $204,240 of principal advanced under the LOI to date, the pre-existing

convertible note is in default.

NOTE5 – SHAREHOLDERS’ DEFICIT

CommonStock

CommonStock issued on conversion of notes payable

December 21, 2019 a promissory note payable totaling $192,080 was exchanged as consideration for exercising a stock option for

4,500,000 restricted common shares at a Board approved reduced exercise price of $0.0426, which was the market price on exercise.

OptionGrants

OptionGrants

The

Company recorded no compensation expense for the nine months ended September 30, 2020 and 2019. As of September 30, 2020, there

was $0 in unrecognized compensation expense.

During

the nine months ended September 30, 2020, the Company did not grant any options, 826,223 options expired, and none were cancelled.

In addition, 2,750,000 options were exercised at the reduced price of $0.023 per share based upon market conditions. Of the options

exercised 2,250,000 were modified as to exercise date resulting in a loss on modification of $63,000.

The

following tables summarize information about stock options outstanding and exercisable:


Range of Exercise Prices		Weighted <br> Remaining <br><br><br> Contractual <br> Life	Weighted <br> Average <br><br><br> Exercise <br> Price		Aggregate <br> Intrinsic<br><br><br> Value ^(1)^
0.40 to 0.60	250,000	.04 years	$	0.60	$	—
0.61 to 1.00	9,000,000	.04 years	$	0.66	$	—
1.01 to 1.50	13,000,000	.06 years	$	1.25	$	—
1.51 to 2.25	2,250,000	.51 years	$	1.93	$	—
0.40 to 2.25	24,500,000	.09 years	$	1.07	$	—

All values are in US Dollars.

(1)	The<br><br> aggregate intrinsic value in the table represents the difference between the closing stock price on September 30, 2020 and<br><br> December 31, 2019, and the exercise price, multiplied by the number of in-the-money options that would have been received<br><br> by the option holders had all option holders exercised their options on September 30, 2020 and December 31, 2019.

Common

Stock Purchase Warrants

For

warrants granted to non-employees in exchange for services, the Company recorded the fair value of the equity instrument using

the Black-Scholes pricing model unless the value of the services is more reliably measurable.

The

Company did not grant any warrants during the nine months ended September 30, 2020, 1,882,290 warrants were exercised, 2,732,720

expired, and none were cancelled. The 1,882,290 warrants were exercised at the reduced price of $0.023 per share and modified

as to exercise date resulting in a loss on modification of $52,722. At September 30, 2020 there were 307,500 more warrants outstanding

The

aggregate intrinsic value of the outstanding and exercisable warrants at September 30, 2020, was $0. The intrinsic value is the

difference between the closing stock price on September 30, 2020 and the exercise price, multiplied by the number of in-the-money

warrants had all warrant holders exercised their warrants on September 30, 2020.

NOTE6 – COMMITMENTS AND CONTINGENCIES

LegalMatters

StephenE. Flechner v. Standard Metals Processing, Inc.

April 29, 2014, Stephen E. Flechner filed suit in the United States District Court for the District of Colorado against Standard

Metals Processing, Inc. alleging that Standard Metals had refused to allow him to exercise stock options granted to him pursuant

to a Stock Option Agreement, dated April 1, 2010, and a second Stock Option Agreement, dated January 21, 2011. On June 12, 2014,

Standard Metals filed an Answer and a Motion to Dismiss or, Alternatively, to Stay or Transfer the action to the United States

District Court for the Northern District of Alabama, Middle Division. On January 16, 2015, Standard Metals filed a Motion for

Summary Judgment. On January 23, 2015, the Court issued an Order granting in part and denying in part Standard Metals’ Motion

to Dismiss or, Alternatively, to Stay or Transfer the action to the United States District Court for the Northern District of

Alabama, Middle Division. The Court in its Order stayed further proceedings in Colorado pending the issuance of orders by the

Alabama court. Thereafter, on January 26, 2015, the Court issued an Order vacating the February 20, 2015 Trial Preparation Conference

and the March 9, 2015 Bench Trial. On March 23, 2015, the Court issued an Order denying Standard Metals’ Motion for Summary

Judgment. On March 30, 2015, Flechner filed a Motion to Lift the Stay. On March 31, 2015, the Court issued an Order granting Flechner’s

Motion to Lift the Stay. On April 6, 2015, the Court issued an Order scheduling a Bench Trial for July 29, 2015. On April 9, 2015,

Flechner filed a Motion for Reconsideration of the Court’s March 23, 2015 Order Denying Flechner’s Motion to Enforce

the Confidential Settlement Agreement to Settle Certain Issues. On May 1, 2015, the Court issued an Order Granting Flechner’s

Motion to Enforce the Confidential Settlement Agreement to Settle Certain Issues. On August 12, 2015 the United Stated District

Court for the District of Colorado issued a judgment in favor of Stephen E. Flechner for $2,157,000. An amended final judgment

was ordered in adjudication of the Complaint by the U.S. District Court for the District of Colorado (the “Court”)

on August 28, 2015 in favor of Flechner in the amount of $2,157,000, plus interest through the date of judgment of $235,246, plus

interest of $472.76/day from August 28, 2015 until paid in full. The Company, in good faith anticipation of a settlement did not

appeal the judgment and therefore, the Company’s notice of appeal was dismissed on November 17, 2015. This judgment is now

non-appealable. The Company has recognized the daily interest due from the date of the August 28, 2015 judgment through September

30, 2020, totaling $921,882, resulting in a total amount of $3,314,128 being included in the Accrual for settlement of lawsuits

relating to this matter in the accompanying September 30, 2020 condensed consolidated balance sheet.

NOTE7 – RELATED PARTY TRANSACTIONS

During

March 2019, the Company was informed that a change of control of the Company had occurred. Granite Peak Resources, LLC (“GPR”)

through its members (including Pure Path Capital Management LLC) acquired 69,464,434 shares of common stock (including 4,500,000

warrants to purchase common stock). The members transferred their shares of common stock of the Company in exchange for a pro-rata

ownership interest in GPR. GPR also acquired the senior secured creditor position previously held by Pure Path Capital Group LLC,

which includes a $2,500,000 First Deed of Trust on the Tonopah property and an outstanding promissory note with a principal balance

of $2,229,187 and accrued interest of $1,283,644 as of September 30, 2020. The members of Granite Peak Resources LLC are listed

in the Schedule 13D filed by GPR on March 29, 2019. GPR has not communicated to the Company any plans to change any of the current

officers or directors or governing documents and has expressed the purpose of its acquisition is to assist the Company execute

on its business plan and resolve its current obligations and other claims. Neither GPR nor the Company, however, can give any

assurances that such creditors or claimants will be amicably resolved. As of the date of this filing, GPR is the beneficial owner

of 56.4% of the Company’s common stock and the Company’s largest secured creditor. The background regarding Pure Path’s

Senior Secured Note is described below.

During

the Company’s acquisition of the Shea assets in 2011, Pure Path purchased the Loan Modification Agreement and the NJB Forbearance

Agreement directly from NJB Mining, Inc. In connection with the assignment of a forbearance agreement the Company and Pure Path

executed an Agreement in Principle setting forth terms of the forbearance agreement which were subsequently further revised pursuant

to Settlement and Release Agreement executed October 10, 2013 with the Company (collectively the “Pure Path Agreements”).The

Pure Path Agreements provided for Pure Path’s forbearance of collection remedies and legal proceedings against the Company

including foreclosure on the Deed of Trust, and, in connection with the settlement and release of various debts of approximately

$1,500,000 and the consulting fees owed by the Company, the Company issued 27,000,000 restricted shares and a Promissory Note

(the “Pure Path Note”) for an amount of up to $2,500,000 with a beginning principal balance of $1,933,345 bearing

interest of 8% per year for the current balance of the amounts owed under the Pure Path Agreements. The forbearance period has

long since expired and the Pure Path Note has retained all of its original remedies under its First Deed of Trust. In addition,

pursuant to a Forbearance Agreement with GPR dated December 20, 2019, the Company pledged of 100% of its stock in Tonopah Milling

and Metals Group, Inc. and that of its subsidiaries TCP and TR, in exchange for GPR’s agreement to forbear foreclosure proceedings

for six months further securing GPR’s combined Pure Path Note and LOC positions. The outstanding principal balance on the

Pure Path Note was $2,229,187 as of both September 30, 2020 and December 31, 2019, with related accrued interest of $1,283,644

and $1,143,474, respectively. This Senior Secured Note is in default. GPR’s LOC position is described in Note 4.

February 11, 2015, the Company issued an unsecured promissory note (the “Note”) to Tina Gregerson Family Properties,

LLC, an entity controlled by a former director of the Company. The Note for up to $750,000 was provided in tranches. Maturity

of each tranche is one year from the date of receipt. Interest accrues at 8% per annum on each tranche. Under the terms of the

Note, the Company received $477,500. At September 30, 2020 and December 31, 2019, there is $210,761 and $182,084 interest

accrued. This Note is in default.

April 17, 2020, the Company and Sustainable Metal Solutions, LLC (“SMS”), an affiliate of GPR, agreed to form a joint

venture styled Esmeralda Renewal Energy Zone (“EREZ”). The Company has agreed to contribute the solar energy rights

attributable to its 1,083 acres to EREZ in exchange for SMS’s agreement to develop, manage and underwrite the EREZ venture.

NOTE8 – EARNINGS (LOSS) PER SHARE

Basic

net loss per common share is computed by dividing net loss applicable to common shareholders by the weighted average number of

common shares outstanding during the periods presented. Diluted net loss per common share is determined using the weighted average

number of common shares outstanding during the periods presented, adjusted for the dilutive effect of common stock equivalents,

consisting of shares that might be issued upon exercise of options, warrants and conversion of convertible debt. In periods where

losses are reported, the weighted average number of common shares outstanding excludes common stock equivalents, because their

inclusion would be anti-dilutive.

September 30, 2020 the weighted average shares from stock options of 24,500,000, warrants of 250,000, and Convertible Promissory

note shares of 5,306,000 , and at December 31, 2019 the weighted average shares from stock options of 32,576,223 warrants of 4,865,640

and Convertible Promissory note shares of 650,869 were excluded from the diluted weighted average common share calculation due

to the antidilutive effect such shares would have on net loss per common share.

NOTE9 – SUBSEQUENT EVENTS

October 15, 2020, options to purchase 21,750,000 common shares expired reducing the 24,500,000 options outstanding at September

30, 2020 to 2,750,000.

ITEM2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The

following management discussion and analysis of financial condition and results of operations should be read in connection with

the accompanying unaudited condensed financial statements and related notes thereto included elsewhere in this report and the

audited consolidated financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended

December 31, 2019, as filed with the SEC on April 2, 2020.

CautionaryNotice Regarding Forward Looking Statements

Readers

are cautioned that the following discussion contains certain forward-looking statements and should be read in conjunction with

the “Special Note Regarding Forward-Looking Statements” appearing at the beginning of this Quarterly Report.

The

information contained in this Item 2 contains forward-looking statements within the meaning of Section 27A of the Securities Act

of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may materially differ

from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report.

Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable,

there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different

from expectations expressed in this report.

used in this Quarterly Report on Form 10-Q and unless otherwise indicated, the terms “Company,” “we,”

“us,” and “our” refer to Standard Metals Processing, Inc. and our wholly-owned subsidiary, Tonopah Milling

and Metals Group, Inc. (“TMMG”), and TMMG’s wholly-owned subsidiaries Tonopah Custom Processing, Inc. (“TCP”)

and Tonopah Resources, Inc. (“TR”). Unless otherwise specified, all dollar amounts are expressed in United States

dollars.

CorporateHistory

were incorporated in the State of Colorado on July 10, 1985 and re-domiciled in Nevada in March 2013. In 2011, we closed a series

of transactions, whereby we acquired certain assets of Shea Mining & Milling, LLC, which assets include land, buildings, a

dormant milling facility, abandoned milling equipment, water permits, mine tailings, mine dumps and the assignment of a note payable,

a lease and a contract agreement with permits. We completed the Shea Exchange Agreement in order to offer toll milling services

of precious minerals. Toll milling is a process whereby mined material is crushed and ground into fine particles to ease the extraction

of any precious minerals contained therein, such as gold, silver, and platinum group metals. Custom milling and refining can include

many different processes to extract precious metals from carbon or concentrates. These toll-processing services also distill,

dry, mix, or mill chemicals and bulk materials on a contractual basis and provide a chemical production outsourcing option for

industrial companies which lack the expertise, capacity, or regulatory permits for in-house production.

Overviewof the Company

have an office in Gadsden, Alabama and, through a subsidiary, a property in Tonopah, Nevada. Our business plan is to purchase

equipment and build a facility on the Tonopah property to serve as a permitted custom processing toll milling facility which includes

an analytical lab, pyrometallurgical plant, and hydrometallurgical recovery plant. We are required to obtain several permits before

we can begin construction of a small-scale mineral processing facility and the required additional buildings to conduct permitted

processing toll milling activities and commence operations.

WaterPollution Control Permit with Nevada Department of Environmental Protection

Through

the Company’s wholly owned subsidiaries, a Water Pollution Control Permit (“WPCP”) Application was filed with

the Nevada Department of Environmental Protection (“NDEP”) Bureau of Mines and Mining Reclamation (“BMMR”)

for the approval of the permits necessary for a small-scale mineral processing facility planned for the Tonopah property. The

plant will perform laboratory testing, pilot testing, and custom processing of precious metal ores and concentrates from mining

industry clients. Processing of ore materials will employ standard mineral processing techniques including gravity concentration,

froth flotation and chemical leaching and carbon stripping.

The

WPCP must be approved prior to commencing the planned construction of our processing plant in Tonopah, Nevada.

connection with our WPCP application, NDEP suggested that we take the following actions: (i) retain a Nevada Certified Environmental

Manager (“CEM”), (ii) perform Meteoric Profile II water testing on ground water directly below the mill as well as

surrounding wells located off site, and (iii) determine baseline values of water using the Meteoric Profile II results. NDEP regulations

require that the Company delay any new construction planned for “metal extraction” until after the permits are in

place.

Advanced

Surveying & Professional Services, a Professional Land Surveyor (“PLS”), completed surveys and testing of the

Tonopah property required for the application of our required permits. After completion of the survey, it was determined the property

is 1,186 acres. The scope of work the PLS completed includes: (i) setting a total of 19 permanent monuments at angle points along

lines, (ii) setting eight permanent monuments locating US Hwy 95, (iii) recording a professional map indicating longitude and

latitude for all corners, and (iv) providing a digital map accessible in Auto Cad software.

Site

Preparation

have completed the initial grading of specific designated areas on the 40 undisturbed acres of land including clearing all vegetation,

removing of all scrap metal, and the excavation of the building pad for preparation of the our planned new 21,875 square foot

processing plant and have completed the removal of all the extra and unnecessary materials and old equipment that has accumulated

on the land. We have also refurbished a trailer that will act as our construction office.

BusinessPlan

The

Company is reexamining its next steps for developing a processing facility. In an effort to move the Company’s business

plan forward, the Company may evaluate opportunities to acquire, license, or joint venture with other parties involved in toll

milling, processing, or mining related activities, which may include Granite Peak Resources, LLC and its affiliated entities including,

but not limited to, Sustainable Metal Solutions LLC, NovaMetallix, Inc, and Black Bear Natural Resources, LTD.

March 27, 2020 GPR engaged NovaMetallix, Inc. (“NMX”), a member of the Sustainable Metal Solutions LLC, and a GPR

affiliate, to conduct a study of the quantity and quality of the Company’s historic mine tailings which are subject to GPR’s

First Deed of Trust, and the economic feasibility of processing them to reclaim their residual content of gold, silver, and other

valuable metals. NMX, a firm comprised of world class mining, geological and metallurgical engineering professionals, is

the leading force in the rapidly developing field of sustainable metals. NMX has agreed to conduct the study of the Company’s

tailings in exchange for GPR’s agreement to underwrite its cost and expense, and the exclusive right to process the tailings

should their economic assessment prove positive. The terms of such processing to be mutually agreed upon between GPR, NMX

and the Company in the future based on the results of the assessment. It was previously erroneously disclosed the Company had

engaged NMX.

April 17, 2020, the Company and Sustainable Metal Solutions, LLC (“SMS”), an affiliate of GPR, agreed to form a joint

venture styled Esmeralda Renewal Energy Zone, LLC (“EREZ”). The Company has agreed to contribute the solar energy

rights attributable to its 1,083 acres to EREZ in exchange for SMS’s agreement to develop, manage and underwrite the EREZ

venture.

Productsand Services

plan to establish ourselves as a custom processing and permitted toll milling service provider. Our business plan is to build

a facility on our Tonopah property, which includes an analytical lab, pyrometallurgical, and hydrometallurgical recovery plant.

The

Company’s intention is to become a full service permitted custom toll milling and processing company that facilitates the

extraction of precious and strategic minerals from mined material. The Company is in the process of obtaining the permits needed

for construction and operation of our permitted custom processing toll milling facility with state of the art equipment capable

of processing gold, silver and platinum metal groups. Many junior miners do not have the capital or the ability to permit a processing

facility, yet they have a large supply of mined material that requires milling be performed. It is often cost prohibitive or impractical

for these mine operators to send their materials to processing mills owned by the large mining companies, or to other customers

with badly needed milling and processing services.

While

Nevada has a historic role as a mining center with good proximate geology and ample mined product, very little custom processing

toll milling capacity remains in the state. During the last several decades, other processing facilities have been shuttered due

to high costs of regulations and the vertical integration of milling within large mining companies leaving junior miners with

few options for local milling services. As a result, we are in a unique position among processing facilities because we are capable

of true permitted custom processing. We have the only ball mill located within a custom toll milling facility within 300 miles

allowing us to serve miners in the western United States, Canada, Mexico, and Central America.

Many

junior miners are undercapitalized, have limited access to capital markets and have a large supply of mined material that requires

milling be performed. Many large mining companies reserve their milling capacity for their inventory, which does not make providing

third party services worthwhile. This provides the Company with an opportunity to provide these potential customers with badly

needed milling and processing services. Some of our mining customers will be able to take their tailings (the material left over

after the desired minerals have been extracted) from the material they deposited with the Company and put it back in the exact

same mines those particular tailings came from. This eliminates the need for the Company to dispose of those tailings.

Resultsof Operation

Comparisonof Three Months and Nine Months Ended September 30, 2020 to Three Months and Nine Months Ended September 30, 2019

Revenues

had no revenues from any operations for the three months and nine months ended September 30, 2020 and 2019. Furthermore, we do

not anticipate any significant future revenue until we have sufficiently funded construction and begin operations.

General

and Administrative Expenses

General

and administrative expenses were $106,058 for the three months ended September 30, 2020, as compared to $862 for the same period

in 2019. For the three months ended September 30, 2019, general and administrative expenses declined materially due to reduced

office costs consistent with lack of funding. In the three months ended September 30, 2020, the $106,058 total related principally

to resumption of normal accounting and legal costs plus the additional cost of the combined loss on modification of options and

warrants. We anticipate that that operating expenses will increase during the remainder of 2020 as we continue to access more

funding support.

Other

Income and Expenses

receive monthly lease payments of from American Tower Corporation for a cellular tower located on our Tonopah land. As such Other

Income for the three months ended September 30, 2020 was $2,099 compared to $1,825 for the respective period in 2019.

Periodically

the Company reviews the outstanding claims that have not been satisfactorily resolved. In some instances, these claims remain

outstanding beyond their statutory limit on collection in which case they are written off. The gain on derecognition of claims

during the nine months ended September 30, 2020 amounted to $115,424 resulting in a $579,221 net loss for the period.

Interest

expense for the nine months ended September 30, 2020 was $362,357, compared to $475,825 for the same period in 2019. During the

nine months ended September 30, 2020 the rate of interest being accrued on certain delinquent vendor claims was reexamined and

reduced to a rate more likely to apply to the claims upon resolution. This interest accrual reduction of approximately 25% resulted

in a cumulative savings of $143,312 in the nine months ended September 30, 2020.

Liquidityand Capital Resources

Liquidity

is a measure of an entity’s ability to secure enough cash to meet its contractual and operating needs as they arise. We

have funded our operations and satisfied our capital requirements through the issuance of convertible debt during the nine months

ended September 30, 2020 and 2019. We do not anticipate generating sufficient net positive cash flows from our operations to fund

the next twelve months. We had a working capital deficit of $10,260,900 at September 30, 2020. Cash was $2,316 at September 30,

2020, as compared to cash of $1,945 at December 31, 2019.

Our

cash reserves will not be sufficient to meet our operational needs and thus, we need to raise additional capital to pay for our

operational expenses and provide for capital expenditures. Our basic operational expenses are currently estimated at approximately

$20,000 per month. Above the basic operational expenses, we estimate that we need approximately $10,000,000 to begin limited toll

milling operations. If we are not able to raise additional working capital, we may have to cease operations altogether.

RecentFinancings

During

the nine months ended September 30, 2020, a related party advanced $190,665 which it used to pay directly, on the Company’s

behalf, to reduce certain accounts payable and assist with operating expenses. The advance was made by Granite Peak Resources,

LLC (“GPR”), a related party which intends to convert the advance into a convertible promissory note. Additionally,

$106,558 was provided by the exercise of options and warrants in May and August, 2020 at a reduced price of $0.023 per

share providing $106,558 for operations. As the options and warrants exercised in August 2020 were modified as to exercise

date, their modification resulted in a combined loss of $115,722 .

March 16, 2020 the Company executed a Line of Credit (“LOC”) with GPR, a related party, evidenced by a convertible

promissory note. The LOC is for up to $2,500,000, matures over three years, bears interest at 10% per annum, is convertible into

shares of the Company’s common stock at a per share price of $0.04, and will be secured by the real and personal property

GPR already has under lien and pledge. The LOC is for funding operating expenses critical to the Company’s redirection and

all requests for funds may be approved or disapproved in GPR’s sole discretion.

GoingConcern

The

condensed consolidated financial statements contained in this quarterly report on Form 10-Q have been prepared assuming that the

Company will continue as a going concern. The Company has accumulated losses from inception through the period ended September

30, 2020 of $104,441,348 and a working capital deficit of $10,260,900 as well as negative cash flows from operating activities.

Presently, the Company does not have sufficient cash resources to meet its debt obligations in the twelve months following the

date of this filing. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management

is in the process of evaluating various financing alternatives to finance its capital requirements, as well as for general and

administrative expenses. These alternatives include raising funds through public or private equity markets and either through

institutional or retail investors. Although there is no assurance that the Company will be successful with its fund-raising initiatives,

management believes that the Company will be able to secure the necessary financing as a result of ongoing financing discussions

with third party investors and existing shareholders.

The

consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue

as a going concern. The Company’s continuation as a going concern is dependent on its ability to obtain additional financing

as may be required and ultimately to attain profitability. If the Company raises additional funds through the issuance of equity,

the percentage ownership of current shareholders could be reduced, and such securities might have rights, preferences or privileges

senior to the rights, preferences and privileges of the Company’s common stock. Additional financing may not be available

upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may

not be able to take advantage of prospective business endeavors or opportunities, which could significantly and materially restrict

its future plans for developing its business and achieving commercial revenues. If the Company is unable to obtain the necessary

capital, the Company may have to cease operations.

WorkingCapital Deficiency

	September 30,<br> 2020			December 31,<br> 2019
Current assets	$	37,764		$	1,945
Current liabilities		10,298,664			9,905,904
Working capital deficiency	$	(10,260,900	)	$	(9,903,959	)

The

balance and components of current assets are fairly consistent between periods. The increase in current liabilities is primarily

due to accrual of interest on settlement of lawsuits and notes due related parties.

CashFlows

	Nine Months Ended<br> <br>September 30,
	2020			2019
Net cash provided by (used in) operating activities	$	(106,187	)	$	1,644
Net cash provided by financing activities		106,558			---
Increase (Decrease) in cash	$	371		$	1,644

Operating

Activities

Net

cash (used in) provided by operating activities was $(106,187) and $1,644, during the nine months ended September 30, 2020 and

2019, respectively. During the nine months ended September 30, 2019 cash was provided by operating activities primarily due to

the significant reductions in legal and accounting services and normal office expenses as a result of lack of funding.

Financing

Activities

For

the nine months ended September 30, 2020, net cash provided by financing activities was $106,558, primarily due to the exercise

of stock options and warrants. For the nine months ended September 30, 2019, net cash provided by financing activities was $-0-.

Off-BalanceSheet Arrangements

During

the nine months ended September 30, 2020, we did not engage in any off-balance sheet arrangements as defined in item 303(a)(4)

of the SEC’s Regulation S-K.

Effectsof Inflation

do not believe that inflation has had a material impact on our business, revenues or operating results during the periods presented.

CriticalAccounting Policies and Estimates

Our

significant accounting policies are more fully described in the notes to our financial statements included herein for the nine

months ended September 30, 2020 and in the notes to our audited consolidated financial statements included in our Annual Report

on Form 10-K for the year ended December 31, 2019. We believe that the accounting policies below are critical for one to fully

understand and evaluate our financial condition and results of operations.

Impairmentof Long-lived Assets

review our property and mining and mineral rights subject to amortization and other long-lived assets for impairment whenever

events or changes in circumstances indicate that the carrying amount of an asset class may not be recoverable. Indicators of potential

impairment include: an adverse change in legal factors or in the business climate that could affect the value of the asset; an

adverse change in the extent or manner in which the asset is used or is expected to be used, or in its physical condition; and

current or forecasted operating or cash flow losses that demonstrate continuing losses associated with the use of the asset. If

indicators of impairment are present, the asset is tested for recoverability by comparing the carrying value of the asset to the

related estimated undiscounted future cash flows expected to be derived from the asset. If the expected cash flows are less than

the carrying value of the asset, then the asset is considered to be impaired and its carrying value is written down to fair value,

based on the related estimated discounted cash flows. During the three months ended September 30, 2019, the company evaluated

that the carrying value of our mining and mineral assets, while not impaired, should be combined as they are inseparable and depend

upon each other in value creation. See Note 3. There were no impairment charges in the nine months ended September 30, 2020.

RecentAccounting Standards

May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

No. 2014-09, “Revenue from Contracts with Customers,” which requires an entity to recognize the amount of revenue

to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most

existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for annual reporting

periods for public business entities beginning after December 15, 2017, including interim periods within that reporting period.

The new standard permits the use of either the retrospective or cumulative effect transition method. The Company adopted ASU 2014-09

January 1, 2018, and as there have been no revenues to date, the adoption did not have a material impact on the Company’s

financial position or results of operations, and no transition method was necessary upon adoption.